Texas Judge Temporarily Blocks State’s Delta-8 Ban
Law360 (November 9, 2021, 5:44 PM EST) — A Texas judge has temporarily blocked the state’s ban on delta-8 THC, finding that a group of businesses and consumers showed “a probable right to declaratory and injunctive relief” because the state health agency’s amendment of certain definitions didn’t comply with certain rules.
In a Monday order, Judge Jan Soifer directed the Texas Department of State Health Services to remove its most recent modifications of the definitions of “tetrahydrocannabinols” and “marihuana extract” until further notice. The court also temporarily blocked the agency’s rule that delta-8 THC in any concentration is considered a Schedule I substance, which is stated on the agency’s website.
“The harm to the plaintiffs if this temporary injunction is not granted outweighs any potential harm to the defendants by this temporary injunction’s issuance,” Judge Soifer said. “Granting injunctive relief will benefit the public interest.”
The ban will last until the end of a trial in the case, which is scheduled for Jan. 28, 2022, or until further notice of the court.
Judge Soifer said the plaintiffs — Sky Marketing Corp., which does business as the CBD store Hometown Hero, vape store Create A Cig Temple, and consumers Darrell Suriff and David Walden — brought a valid cause of action under the Administrative Procedures Act against the Texas Department of State Health Services for changes the agency made to its website to proclaim that any concentration of delta-8 is a Schedule I controlled substance.
The court also found that the plaintiffs brought a valid ultra vires claim against John Hellerstedt, commissioner of the Texas Department of State Health Services, for declaratory and injunctive relief over his amendments to the definitions of “tetrahydrocannabinols” and “marihuana extract” in the agency’s 2021 Schedule of Controlled Substances.
In making the amendments, Hellerstedt failed to meet requirements under the Texas Health & Safety Code, and DSHS’ rule regarding delta-8 failed to meet rulemaking requirements under the Administrative Procedures Act, Judge Soifer said.
Those violations will cause the plaintiffs to suffer imminent and irreparable harm, including, among other things, brand erosion, reputational damage, loss of market share, lost revenue and “costs incurred by not being able to manufacture, process, distribute, or sell hemp products that fall within the newly adopted definitions for ‘tetrahydrocannabinol’ and/or ‘marihuana extract.'”
And consumers such as Suriff and Walden will have no effective treatment for ailments including anxiety, depression, insomnia and nausea, among other things, Judge Soifer said, which may force consumers to seek “dangerous alternatives, like opioids or street drugs.”
“Plaintiffs cannot be adequately compensated in damages because the damages are not quantifiable and there is no monetary relief that can be obtained from defendants,” Judge Soifer said. “Such injuries would be compounded should defendants not be immediately restrained from their activities.”
David Sergi of David K. Sergi & Associates PC, counsel for the plaintiffs, told Law360 he is grateful to the judge for granting the injunction, calling it a victory for open government, veterans and those who rely on delta-8.
Another plaintiffs’ attorney, Andrea Steel of Frost Brown Todd LLC, said in a statement that DSHS added language effectively banning hemp and full-spectrum hemp products altogether after making clear missteps in the amendment process, including conducting the process outside the public’s knowledge.
“If this were any other subject matter, the case would be open and shut,” Steel said. “I’m glad the judge was able to see through the confusing and distracting issues brought up by the state and conclude there was enough in question and enough at stake to rule in favor of Hometown Hero and the other plaintiffs.”
A representative of DSHS said Tuesday that the agency was reviewing the order, declining to comment further.
Monday’s order came two weeks after a different judge rejected Hometown Hero’s request for a temporary restraining order.
Hometown Hero had filed a petition the prior week against DSHS, claiming the agency didn’t abide by procedures required under the Texas Health & Safety Code to make such modifications. The company also said the agency buried new definitions for THC and marijuana extract in a nonsearchable image in the Texas Register.
“After extensive investigation into how DSHS could make overnight potential felons out of several thousand businesses and consumers, it was uncovered that DSHS modified the Schedule of Controlled Substances in blatant violation of state law through multiple errors and in a manner that failed to properly notify the public of its significant positional change,” Hometown Hero claimed.
DSHS updated its Consumable Hemp Program webpage on Oct. 15 to say that state law allows for consumable hemp products that do not exceed 0.3% delta-9 THC, but that all other forms of THC, including delta-8 in any concentration, are considered Schedule I controlled substances, according to Hometown Hero’s petition.
The company said that until that update, businesses and consumers assumed that hemp and THC in hemp weren’t controlled substances “with the common understanding based on the law that concentrations of delta-9 THC in excess of 0.3% were illegal.”
DSHS failed to abide by state rules concerning hearings and providing time for objections in making its changes, Hometown Hero alleged.
In August 2020, the U.S. Drug Enforcement Administration published an interim final rule removing hemp from the definitions of marijuana extract and THC, after the 2018 Farm Bill took hemp out of the federal list of controlled substances.
The following month, DSHS filed a notice in the Texas Register objecting to the DEA’s modifications, according to Hometown Hero’s petition.
But Hometown Hero claimed the state improperly objected to the DEA’s modifications under a state statute that is triggered when federal law “designates, reschedules, or deletes a substance from being controlled,” Hometown Hero said, adding that no hemp industry stakeholders were made aware that the objection was filed.
In October 2020, DSHS held a public hearing over Zoom about the objection, but the hearing ended after less than six minutes and had no commenters, according to Hometown Hero’s petition.
The company said no industry stakeholders knew about the hearing until May 2021, when a DSHS representative discussed the objection on record during a state senate committee hearing.
DSHS had previously argued that Hometown Hero is unlikely to succeed on the merits for its declaratory relief claim because delta-8 is a Schedule I controlled substance under federal law and has been a Schedule I controlled substance in Texas for more than 40 years.
The agency also argued that Hometown Hero could be adequately compensated in damages, and it pointed to warnings from federal agencies about delta-8 that indicated the substance may be billed as “weed light” but can still cause intense intoxication and adverse effects.
Hometown Hero, Create A Cig Temple, Suriff and Walden are represented by David Sergi and Katherine Frank of David K. Sergi & Associates PC, Andrea Hope J. Steel of Frost Brown Todd LLC, Scott K. Field of Butler Snow LLP and Rod Kight of Kight Law Office PC.
The state is represented by Cynthia O. Akatugba of the state’s attorney general’s office.
The case is Sky Marketing Corp. v. Texas Department of State Health Services et al., case number D- 1-GN-21-006174, in the 126th District Court of Travis County, Texas.