In May of 2022, the Ninth Circuit Federal Court affirmed a district court’s ruling that hemp derived cannabinoids that are compliant with only delta-9 tetrahydrocannabinol (delta-9 THC) are still hemp under the Farm Bill. The court applied the plain meaning of the definition of “hemp” under federal law and made a bright line regarding the demarcation of hemp from marijuana under federal law.
Ak Futures, LLC v. Boyd Street Distro, LLC.
An e-cigarette company, AK Futures, LLC (“AK Futures”), created a delta-8 tetrahydrocannabinol (“delta-8 THC”) vape brand and trademarked it under federal law. A competitor, Boyd Street Distro, LLC (“Boyd”), did not contest the district court’s finding of counterfeiting AK Futures’ brand to sell its own Delta-8 THC vape products.
Instead, Boyd asserted that AK Futures could not possibly have trademark or copyright protection because federal law forbids possession and sale of Delta-8 THC. The district court panel held that the plain and unambiguous text of the 2018 Agricultural Improvement Act (the “Farm Bill”) compels the conclusion that AK Futures’ Delta-8 THC products are legal and eligible for federal trademark registration and copyright protection. The Ninth Circuit Court of Appeals affirmed the district court’s findings in the case of Ak Futures, LLC v. Boyd Street Distro, LLC.
The AK Futures case from 2022 is the first holding that the plain and unambiguous text of the 2018 Farm Bill’s definition of hemp as all parts of the plant cannabis sativa, whether growing or not and the seeds thereof, with a Delta-9 THC level of no more than 0.3%. Cannabis is the only plant legally two different things under federal law.
Most cannabis, and its seeds, contain no Delta-9 THC. Delta-9 THC only begins concentrating in the female flowers of the cannabis plant to enable pollen to stick to it. This only occurs during flowering, sometimes forced, of the female plants to create the products that are smoked, vaped, or eaten.
Delta-8 THC and Hemp Trademark Legality
Only lawful use in commerce gives rise to trademark protection. An incoherent result occurs if a party is trying to use legal trademark protection to violate the law that provides the protection. However, according to Justice Thomas, federal cannabis laws provide for episodic more than coherent results.
The IRS will audit the dispensary, but the DEA no longer raids them. The DOJ does not prioritize enforcement of the law, or has been completely defunded by Congress. Treasury has guidance for banks to compliantly commit money laundering and other violations of the Bank Secrecy Act. If any law could fail the rational basis test, schedule I marijuana under the Controlled Substances Act (CSA) is that law. The longer it lasts the more absurd it becomes.
The AK Futures case provides a test used by a federal circuit court to determine what constitutes hemp. Unsurprisingly, the Ninth Circuit applied the plain meaning of the text of the Farm Bill. It removed “hemp” from the CSA and defined it as a subset of cannabis. The Farm Bill also removed THC from hemp from the CSA. The Ninth Circuit quoted verbatim from the definition of hemp passed by Congress in the Farm Bill. The law is clear and unambiguous and the court gave meaning to its terms. Here is the definition of hemp under the Farm Bill in full:
The term “hemp” means the plant Cannabis sativa L.a and any part of the plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acides, sales and salts of isomers, whether growing or not, with a delta-9 THC concentration of not more than 0.3 percent on a dry weight basis.
The Ninth Circuit really stressed that the “only statutory metric for distinguishing controlled marijuana from legal hemp is the delta-9 THC concentration level. In additional, the definition extends beyond just the plant to ‘all derivatives, extracts [and] cannabinoids.’” Citations omitted. The court went on to refer to other holdings regarding the usage of the term “all” in previous cases to indicate a sweeping statutory reach.
AK Futures Case Text
Conclusion regarding delta-8 THC’s legality
The AK Futures case provides safe-harbor for countless hemp entrepreneurs in the United States. The only cannabis that is marijuana under federal law is if it has greater than 0.3 percent delta-9 THC. That includes basically all of the plant until the females go into flower, all the THC derived from hemp provided that it is delta-9 THC compliant, and all cannabis seeds.
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