As we’ve written about several times, the 2018 Farm Bill legalized hemp but specified that it must be done pursuant to a state or tribal plan, known as a 279B plan. Such a plan is not effective until approved by the Secretary of Agriculture. The USDA has not yet issued its own hemp plan, and has stated that it will not approve any state or Indian tribe’s plan until after it issues its own. This conundrum places states and Indian tribes who currently wish to allow the production of hemp (but who have not established a plan per the 2014 Farm Bill) in a precarious position.

The tension between participating in the rapidly-growing hemp marketplace and the slow pace of the administrative rulemaking process was brought to the fore in a recent case filed by the Flandreau Santee Sioux Tribe (the “Tribe”) in United States District Court in South Dakota, Flandreau Santee Sioux Tribe v. United States Dep’t of Agric., Case No. 19-cv-04094. In that case, the Tribe argued that the USDA was preventing the lawful production of hemp on the Tribe’s lands. The Tribe had submitted a plan for approval to the USDA on February 29, 2019. In response, on March 19 USDA Secretary Purdue wrote that he would neither approve or deny the plan until after the USDA issued its own hemp regulations – which could be a matter of months, or even years. The Tribe sued, arguing that the USDA should be enjoined from preventing it from lawfully producing hemp. The Tribe requested that the Court issue a preliminary injunction, forcing Secretary Purdue to accept or deny the Tribe’s hemp plan.

On June 6, 2019, the Federal District Court denied the Tribe’s request. In doing so, the Court concluded that the Farm Bill…

“provides exclusive authority to the Secretary to issue rules and regulations that relate to the implementation of 7 U.S.C. § 1639p, the same section under which the Tribe seeks to produce hemp. A harmonious reading of the statute lends to the likelihood that the 60 day window to approve or deny a plan does not begin until regulations are promulgated by the USDA.”

While the Court also found that the Tribe would suffer irreparable harm if it were not allowed to produce hemp under its own plan, the Court concluded that this result was outweighed by the fact that – in the Court’s opinion – the Tribe would not likely succeed on the merits.

Why does this matter? The USDA’s decision not to approve or deny the Tribe’s plan and the Court’s denial of the request for preliminary injunction underscores the uncertainty prevalent relative to the practical application of the 2018 Farm Bill. It also amplifies questions about the degree to which other states or tribes seeking to harmonize their laws with federal policy may face obstacles that limit their participation in this rapidly-expanding marketplace, at least in the short term.

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