A group of shops and people who sell marijuana-like substances that were legal in Wyoming until July 2024 failed to show that the state's new ban on those substances violates their rights, the 10th Circuit Court of Appeals ruled Monday.
Wyoming in 2024 banned the distribution of marijuana-like substances that include more than 0.3% of delta-9 THC, and/or or concoctions of delta-8 THC.
Wyoming businesspeople who “benefitted for several years from operating within a legal (hemp) market” under the 2018 Farm Bill, which distinguished low-concentration THC from illegal marijuana, sued Wyoming authorities over the new law in July 2024.
In that case, Green Room v. Wyoming, businesses claimed federal law preempted Wyoming’s ban, the state law would burden interstate commerce, it amounted to the government taking property through overregulation, and it was written too vaguely to be constitutional.
The U.S. District Court for Wyoming rejected all four arguments and dismissed the case in August 2024, prompting the businesses to appeal through their attorney Donna Domonkos to the 10th Circuit Court of Appeals.
A three-judge panel of the 10th Circuit on Monday sided with the Wyoming-based federal court, rejecting the appeal.
Domonkos on Monday told Cowboy State Daily she had not yet conferred with her clients on whether to appeal the 10th Circuit’s decision. She declined further comment.
The Grey Area
As it occurs naturally, delta-8 THC is less potent than delta-9 THC. Some products contain a concentrated, synthesized delta-8 presence, which can be psychoactive.
The 2018 Farm Bill, a federal law, carved out legal status for products with a delta-9 concentration of less than 0.3% of their dry weight, calling those products “hemp.”
Wyoming lawmakers in 2023 and 2024 lamented what they called a grey area wrought by the Farm Bill, by which state residents could obtain psychoactive substances.
The Legislature in 2024 narrowed its own definition of “hemp” to be more stringent than the Farm Bill’s terms. It excluded synthetic substances from the state’s legal-hemp exemption, which had mirrored the federal law prior.
It roped both natural and synthetic delta-8 into its definition of psychoactive THC, alongside delta-9.
And it banned people from producing, processing or selling substances with more than 0.3% THC (of either variety), according to this more restrictive set of terms.
Yeah, But …
The businesses in Green Room v. Wyoming said Wyoming’s new law narrowed the federal law’s terms impermissibly, and so federal law should preempt it.
But the argument for preemption isn’t strong enough in this case, 10th Circuit Judges Carolyn B. McHugh, Nancy L. Moritz, and Harris L. Hartz countered in a Monday opinion that Hartz penned.
That’s because the businesses failed to show Wyoming violated a federal right of theirs, says the opinion.
The Farm Bill doesn’t call out specific groups of people for protection from specific government actions, the judge wrote, so no specific federal rights serve to block the state’s regulation.
Flow Of Commerce
The hemp shops’ next argument was that Wyoming had burdened interstate commerce — an area of federal rule — by banning the sale of products that federal law calls legal.
The proper argument here would have been to show that Wyoming burdened interstate commerce clearly beyond the commonly accepted local benefits, the 10th Circuit judges wrote.
“Yet they do not even attempt to show that the balance of interests weighs in their favor in this case,” says the order.
The shops didn’t allege that they transport hemp products across state lines, the judges added.
The federal appeals court voiced a reluctance to interpret the new law as banning cross-state sale of Farm Bill products until and unless Wyoming’s state courts do it first.
It is for state courts to interpret those meanings of the law in ways that avoid conflicts with state laws, before federal courts do it for them, says the order.
Overregulation
Industries like alcohol and video poker weather changes and attacks from state regulation, and they have to be prepared for that. So too with hemp sellers, says the Monday order.
That’s in response to the hemp sellers’ argument that the sudden switch in regulation amounts to an unconstitutional government taking of their property.
The Fifth Amendment to the U.S. Constitution says private property shall not be taken for public use without just compensation, and the U.S. Supreme Court has interpreted some instances of federal regulation as the same as government taking.
But that provision has applied to real property, not personal property, the judges said Monday.
“Thus, any investment-backed business expectations of Plaintiffs must be tempered by recognition of the reality of the government’s (authorized) powers,” the order reads.
It cites a prohibition-era ruling in which alcohol vendors complained, “after de-alcoholization, (of) a heavy loss.”
It also cited a South Carolina regulation on video poker.
“The pendulum of politics swings periodically between restriction and permission in such matters, and prudent investors understand the risk,” the judges quoted from a 2007 Fourth Circuit Court of Appeals ruling.
Vagueness
If a law is written so vaguely that people don’t know how to follow it, it’s unconstitutional.
Wyoming’s hemp-market encroachment isn’t unconstitutionally vague, the 10th Circuit judges concluded.
The distributors argued, and the state conceded, that CBD itself isn’t psychoactive.
It can be modified to be psychoactive.
Though parties can argue the term “psychoactive” in differing case contexts, the term itself isn’t vague, says the order.
Its dictionary definition is “influencing the mind or mental processes.”
“We think a reasonable reader of the Wyoming statute would take the hint and conclude that psychoactive substances are those that affect the mind in ways similar to marijuana and other controlled substances,” says the order.
If every term that can invite conflicting interpretations were declared constitutionally vague, “very few would pass constitutional muster,” the order says. But, it adds, conflicting interpretations don’t make a word constitutionally vague.
Clair McFarland can be reached at clair@cowboystatedaily.com.
