Hemp beverage sales remain accessible, at least in the town of Fremont, as a judge halts enforcement, deeming Ohio's cannabinoid ban likely unconstitutional. A legal battle over interstate commerce begins.
A Sandusky County court of common pleas judge has ruled that Ohio's new law banning the sale of intoxicating hemp-derived cannabinoids except at licensed marijuana retailers is likely unconstitutional and has issued a temporary restraining order blocking the Fremont Police Department from enforcing it.
The ruling impacts only the Fremont Police Department and "all who may act in concert with them" and remains in effect only until April 28. It comes in a case brought by Seattle-based Cycling Frog, a hemp cannabinoid beverage company that sells its products throughout Ohio, including Sandusky County.
Judge Jeremiah Ray held that the new law created by the passage of Senate Bill 56 appears to violate the Dormant Commerce Clause of the US Constitution. That law effectively gives the state's licensed marijuana dispensaries a monopoly over what are federally legal hemp-derived products, Judge Ray held. (Congress voted to radically restrict hemp-derived cannabinoids last November, but that law does not go into effect until this coming November.)
"The practical effect is to immunize Ohio’s in-state marijuana industry, which Ohio law requires to have an in-state physical presence, from out-of-state competition with respect to federally legal hemp products otherwise sold in interstate commerce," Judge Ray said, noting the law also discriminates against in-state businesses.
"The parallel intrastate discrimination is no defense to the interstate discrimination. Indeed, the existence of parallel intrastate discrimination makes the protectionist effect of the ordinance more acute," he wrote. "This is because the licensed dispensaries and their attendant supply chain benefit from a lack of competition from either inside or outside Ohio. This is, thus, inherently discriminatory on its face."
The attorney representing Cycling Frog, Andy Mayle, said he asked Judge Ray to make the temporary restraining order a class action that would block all law enforcement agencies in the state from enforcing the law.
"That’s the next step in the case," Mayle said. "If he does, then basically the bill — with respect to the traditional hemp industry — will not be enforceable in Ohio."
The regulation of interstate commerce is the province of Congress, not the state of Ohio, Mayle added.
"If Ohio elects to allow these goods in Ohio, which they have — they’re just calling them marijuana now, and they can be bought at dispensaries — they can’t discriminate against the goods on the basis of their origin, which is the practical effect of the redefinition of hemp," he said. "What they’ve done is criminalize interstate commerce. This is just a garden variety Dormant Commerce Clause violation."
State officials disagree, and Attorney General Dave Yost (R) has filed a motion to intervene in the Sandusky case, arguing that he has the right to defend state laws created by SB 56 and that the law required consistent enforcement statewide.
"The attorney general’s participation in this case will ensure statewide consistency between the various actions challenging SB 56," Yost wrote, pointing to pending action in the Franklin County Court of Common Pleas. "Represented by the same counsel representing the plaintiff here, the Saucy Seltzer plaintiffs’ motion for temporary restraining order was denied on March 19," Yost noted.
In that case, however, while the presiding judge denied the hemp company's request for a temporary restraining order, she also set an April 10 date for a preliminary injunction hearing on the issue.
A group representing the state's licensed marijuana industry, the Ohio Cannabis Coalition, criticized the hemp industry for challenging SB 56.
"The hemp industry has continuously worked to exploit a loophole in an effort to profit off of consumers. That continues to be true today," coalition executive director David Bowling said. "SB 56 was meant to protect Ohioans from unsafe, untested products. The Ohio legislature and federal government are in line on this issue."