On January 7, the U.S. Court of Appeals for the Fourth Circuit found that Virginia’s hemp product restrictions do not violate federal law. The ruling is the latest defeat for the Virginia hemp industry’s efforts to overturn Virginia S.B. 903, a law intended to prohibit the sale of intoxicating hemp products like delta-8 and delta-10 tetrahydrocannabinol (THC) gummies and beverages in the Commonwealth.
As we previously discussed, Virginia adopted S.B. 903 to address the growth of an intoxicating hemp market in the wake of a change made to federal law by the 2018 Farm Bill. Under federal law, “marijuana” is a Schedule I substance under the Controlled Substances Act (CSA) and cannot be lawfully manufactured, distributed, or sold. In the 2018 Farm Bill, however, Congress carved out “hemp” and “[THC] in hemp” from the CSA’s definition of “marijuana.” Specifically, the 2018 Farm Bill defined “hemp” as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 [THC] concentration of not more than 0.3% on a dry weight basis.” Congress capped delta-9 THC at 0.3% in hemp because delta-9 THC has long been recognized as the primary cannabinoid produces psychoactive effects and causes users to feel “high.”
Nevertheless, manufacturers have found ways to develop products that produce psychoactive effects from “hemp” even with a delta-9 THC capped at 0.3%, including by chemically converting hemp-derived cannabidiol (CBD) into delta-8 and delta-10 THC. As a result, psychoactive hemp products have flooded the market in Virginia and elsewhere in recent years with little to no regulatory oversight.
Enter the Virginia legislature. In 2023, the Commonwealth passed S.B. 903, which requires that hemp products, industrial hemp extracts, and other consumable substances contain no more than 0.3% total THC, plus places limits on the total THC per package. As a result, many hemp-derived products that were previously sold at a variety of retailers may now only be sold in licensed medical marijuana dispensaries—which has threatened to put many of the Commonwealth’s hemp manufacturers and retailers out of business.
Now it is very likely that S.B. 903 is here to stay. As we previously reported, the U.S. District Court for the Eastern District of Virginia rejected arguments from three plaintiffs—a hemp product manufacturer, a hemp product retailer, and a Virginia resident who uses hemp products to alleviate her arthritis symptoms— that SB 903 is either expressly or impliedly preempted by the 2018 Farm Bill and violates the Commerce Clause and the Dormant Commerce Clause of the U.S. Constitution. (See N. Va. Hemp & Agriculture, LLC v. Virginia, No. 1:23cv1177 (E.D.Va. Oct. 30, 2023)).
The Fourth Circuit has now weighed in and concluded the same. (See N. Va. Hemp & Agriculture, LLC v. Virginia, No. 23-2192 (4th Cir. Jan. 7, 2025)). In affirming the decision of the district court on the merits of the plaintiffs’ challenge to Virginia’s total THC standard, the court reached the following key conclusions:
- No Federal Preemption: Under federalism principles, the court observed, as a preliminary matter, that states retain the power to regulate “matters of health and safety,” and “[t]hat power permits Virginia, as a separate sovereign, to enact legislation addressing psychoactive products affecting its citizens, including children.” Although the U.S. Constitution’s Supremacy Clause limits what states can do, the court found that the plaintiffs did not show that federal law preempts Virginia’s total THC standard, either expressly or implicitly. Specifically, the court found that the 2018 Farm Bill did not preempt Virginia’s hemp regulations because: (1) nothing in the 2018 Farm Bill says that a state may prohibit the possession or sale of industrial hemp; (2) the 2018 Farm Bill instead gave states authority to regulate hemp production more stringently than federal law, if desired; and (3) there was no conflict between the 2018 Farm Bill and S.B. 903.
- No Dormant Commerce Clause Issue: S.B. 903 did not violate the “Dormant Commerce Clause” of the U.S. Constitution because the law treated in-state and out-of-state actors equally and the plaintiffs did not show there would be an undue burden on out-of-state actors. For example, the court found that the plaintiffs did not offer evidence “that Virginia hemp, like fine wine coming from premier vineyards, contains benefits not found in hemp from other states,” and, even if it did, the inability to obtain Virginia hemp for use in products with more than 0.3% total THC applies equally to in-state and out-of-state sellers.
Notably, the Fourth Circuit decision does not end the case. The district court order and appeal considered by the Fourth Circuit only dealt with a motion for a preliminary injunction. Nevertheless, the courts’ findings that plaintiffs are unlikely to succeed on the merits of their arguments does not bode well for the challengers’ ultimate chance of success. Moreover, the Fourth Circuit directed the district court to dismiss the plaintiffs’ separate claim related to S.B. 903’s prohibition on sales of hemp made by a Virginia processor to someone the processor knows or has reason to know will sell it in violation of Virginia’s total THC standard because none of the plaintiffs alleged they were engaged or planned to engage in such conduct and, therefore, lacked standing.
The Fourth Circuit opinion continues a recent trend. Previously, the Seventh Circuit and a handful of district courts in Alaska, California, Hawaii, Iowa, South Dakota, and Wyoming, found that states have authority to impose stricter standards on hemp products than those provided in the 2018 Farm Bill. The Fourth Circuit decision adds to this body of case law and is likely to influence ongoing and future legal battles over state hemp regulations across the country moving forward. Indeed, on January 8, Arkansas cited the Fourth Circuit opinion for support in a letter to the Eighth Circuit regarding a similar challenge to Arkansas’ hemp regulations.
The hemp industry’s efforts to stay afloat via litigation, however, may soon be moot. Although the relevant provisions in the 2018 Farm Bill have been extended through September 30, 2025, lawmakers in the House and Senate have proposed amendments to the next farm bill that would change the definition of “hemp” to eliminate intoxicating hemp products. Until Congress addresses the sale of psychoactive hemp products at the federal level, however, we expect that states will continue to implement hemp regulations that are more restrictive than the 2018 Farm Bill and decisions like those from the Fourth Circuit give them legal support to do so.
Our Cannabis Practice provides advice on issues related to applicable federal and state law. Marijuana remains an illegal controlled substance under federal law.