Business

Hemp Grower Sues DEA, Alleges Agents Destroyed $3.5M in product

By Willis Jacobson Oct 26, 2020
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Willis Jacobson is an award-winning journalist whose career has spanned both coasts. Now based on the Central Coast of California, he has covered cannabis news and issues since 2015.
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Willis Jacobson is an award-winning journalist whose career has spanned both coasts. Now based on the Central Coast of California, he has covered cannabis news and issues since 2015.
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U.S. Drug Enforcement Administration (DEA) agents were among officers who illegally seized more than $3M worth of hemp from a California farm, according to a lawsuit filed by the cultivator. The case highlights the growing tension between the DEA – a longtime nemesis of cannabis legalization advocates – and the nascent hemp industry.

Wyoming-based Agro Dynamics had been legally cultivating hemp in San Diego County when, according to the lawsuit in federal court in California, law enforcement officers spotted the grow via helicopter in September 2019 and apparently mistook it for an illicit cannabis farm. After obtaining a search warrant, officers raided the farm that same month and seized and destroyed about 3,000 industrial hemp plants with a value near $3.5M, according to the suit.

The suit names as defendants the DEA, San Diego County and several individual agents. It alleges the officers dismissed the company’s offers to show them its valid licensing. It further alleges the plants seized and destroyed by the officers were legal, as a recent lab test showed they contained less than 0.1% THC – well below the 0.3% threshold used by the DEA to determine if a plant is legal hemp or illegal marijuana.

Agro Dynamics is seeking damages for what it alleges are violations of its U.S. and California constitutional rights against unreasonable search and seizure and having its property taken without just compensation.

The suit notes that the seized plants would have led to multiple revenue streams for Agro Dynamics, including potential monetization for CBD, fats and waxes, terpenes, rare cannabinoids like CBN, hemp fibers and hemp oil.

“In addition, and wholly apart from the lost revenue streams from Plaintiff’s commercialization of its hemp, Defendants’ misconduct also directly caused damages to Plaintiff’s business contracts and business expectations,” the suit reads.

The lawsuit is one of the latest moves in what has been a contentious year between the DEA and hemp growers.

A controversial DEA interim rule that went into effect in August largely centers on that 0.3% maximum THC limit for hemp, which was broadly legalized in the U.S. with the passage of the 2018 Farm Bill. That rule has drawn ire – and some lawsuits – from people within the industry who have interpreted it to mean the DEA could prosecute operators who work with hemp plants, or its extracts, that even temporarily surpass that threshold.

This is particularly problematic, industry insiders say, because many extracts regularly pass that limit during manufacturing before dropping back below 0.3% before going to market.

A federal lawsuit filed on behalf of the Hemp Industries Association and South Carolina-based hemp manufacturer RE Botanicals that challenges the DEA rule is pending.

Agro Dynamics, in its lawsuit, notes that the 0.3% rule was never discussed when its facility was raided, as it alleges the officers on scene had no interest in learning about the recent lab results.

The suit further accuses the officers of obtaining their search warrant under false pretenses, and incorrectly executing the search warrant. 

According to the suit, the search warrant authorized the seizure of, among other things, bulk and processed marijuana, along with marijuana trimmings, cigarettes, and plants, seeds and derivatives.

“The Warrant did not authorize the seizure of industrial hemp,” the suit states.

Agro Dynamics also raises concerns in the suit with the officers not confirming the company’s licensing with San Diego County before executing the search warrant and seizing the plants.

Agro Dynamics filed administrative claims with the DEA and San Diego County. It was after those claims were rejected – first by the DEA in January and then by San Diego County in April – that the company took the matter to court. The suit was first filed in San Diego County Superior Court in September before being removed this month to federal court.

Agro Dynamics is represented by S. Edward Wicker, of the San Diego-based E. Wicker Law Office. Wicker did not respond to a message Monday seeking comment.

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