The Hazards of Hauling Hemp

It was the ultimate bad day for Oregon truck driver Denis Palamarchuk.

A driver for VIP Transporters based in Portland, Oregon, Palamarchuk pulled into a weigh station in Idaho, en route to Colorado, when he was tapped for a random vehicle inspection as his tractor-trailer rolled over the scales. In the inspection area, Palamarchuk produced the bill of lading for his cargo – 7,000 pounds of industrial-grade hemp contracted by, and headed to, Big Sky Scientific, a hemp-products producer based in Aurora, Colorado.

As required, Palamarchuk handed over all pertinent documents, including his bill of lading, to the Idaho state trooper conducting the inspection. Noting the cargo, the trooper opened Palamarchuk's trailer and tested the hemp to determine if it contained THC – the chemical compound that gives marijuana users a “high.” When the hemp tested positive, Palamarchuk was arrested on charges of trafficking marijuana. Within hours, the Idaho State Troopers issued a press release hailing the bust as the largest seizure of marijuana in the state’s history.

But there was one problem, hemp industry advocates and legal experts say: Palamarchuk wasn’t hauling marijuana in his truck. He was hauling industrial-grade hemp, a commercial product that does not contain enough THC to get anyone high. It's a new cargo in terms of interstate commerce, wtih enough value as a raw material that the 2018 Farm Bill passed by Congress last year contains specific language allowing the transportation of the crop across state lines.

“Industrial hemp has tremendous potential in so many sectors of our economy,” said Erica McBride Stark, executive director of the National Hemp Association. “It’s used in everything from the manufacture of highly popular CDB oils, to construction materials and textiles," she told HDT. "And more uses are coming. There is exciting research being done using hemp to create bioplastics that may one day replace single-use petroleum-based plastics commonly used today.”

But, unfortunately, McBride Stark added, hemp has been essentially illegal in the United States since the passage of the Marihuana Tax Act in 1937. According to U.S. Customs and Border Protection, in principle, the act stopped only the use of the plant as a recreational drug. In practice, though, industrial hemp was caught up in anti-dope legislation, making hemp importation and commercial production in the U.S. less economical because of the taxes and regulatory requirements.

The federal government doubled down on hemp’s illegal status in 1970 when it classified it as a Schedule 1 drug under the Controlled Substances Act – a law that banned any cannabis of any kind in the U.S.

However, those laws didn’t account for some significant distinctions between hemp and marijuana, said Eric Alvarez, an attorney with the Norris McLaughlin law firm based in Bridgewater, New Jersey. “Cannabis” is a general term used for both hemp and marijuana plants, he explained. One has numerous uses as an industrial raw material, while the other is popular as a recreational drug that is also used for medicinial purposes in many states."

“Hemp is legally defined as a cannabis plant containing less than 0.3% THC,” Alvarez told HDT. “So hemp doesn’t contain enough THC to get people high. It’s really just an agricultural crop that has been historically used to make many products, including rope and textiles. Lately, though, it’s being used to create many new consumer products. CBD is a compound that is a very popular distillation from the hemp plant that many people find to be useful for all sorts of ailments, including reducing inflammation and anxiety. So we’re in a time where there are changing public and societal views surrounding both hemp and marijuana that our laws on both the state and federal levels are having a hard time keeping up with.”

New Law Versus Old Laws

Congress moved to address the rise of hemp production and products produced from it as an emerging business opportunity in the Agriculture Improvement Act of 2018 farmbill that Farm Bill it passed in December. Under that legislation, McBride Stark said, the federal government now recognizes industrial hemp as a commodity crop that can be freely transported across state lines as an industrial product.

The problem is that some states, such as Idaho, have laws on their books that still treat industrial hemp as an illegal drug in line with the 1937 Marihuana Laws and 1970 Controlled Substances Act.

“In essence, the Farm Bill removed hemp from the Federal Controlled Substance Act,” McBride Stark said. “It is no longer a Schedule 1 controlled substance. I had the opportunity to speak with the owner of the crop [Big Sky Scientific], and it appears the carrier and the driver had all the proper documentation in hand when he entered the weigh station and everything was within the current federal legal guidelines. Unfortunately, Idaho has elected to not recognized hemp as a legal crop, despite specific language in the Farm Bill designed specifically to keep states like Idaho from prohibiting transport of the product through their states.”

Alvarez agrees with that assessment, noting that Section 10114(a) of the 2018 Farm Bill reads that, “Nothing in this title or an amendment made by this title prohibits the interstate commerce of hemp (as defined in section 297A of the Agricultural Marketing Act of 1946 (as added by section 10113)) or hemp products.”

Additionally, the bill states that, “No state or Indian tribe shall prohibit the transportation or shipment of hemp or hemp products produced in accordance with subtitle G of the Agricultural Marketing Act of 1946 (as added by section 10113) through the state or the territory of the Indian tribe.”

And for Elijah Watkins, a partner at Stoel Rives, the Boise, Idaho law firm that is representing Big Sky Scientific in this case, that language is proof that neither his client, nor VIP Transporters and Denis Palamarchuk, have broken any laws.

“VIP Transporters were hired just like any other trucking company to ship freight,” he said “And all the associated documentation for that shipment was correct and in place. The bill of lading clearly listed hemp as the truck’s cargo. But when the law enforcement officer saw 'hemp' on that document and opened the back of the truck and saw 7,000 pounds of hemp in the trailer, he decided it was marijuana. But it clearly is not.”

Watkins said his client, Big Sky Scientific, is not a “marijuana company” and has no interest in becoming one. Moreover, he says, the shipment of hemp in question contains less than the federally specified 0.3% of THC. “So our client, and VIP Transporters, are 100% in compliance with federal law,” he said. “But Idaho has chosen not to comply with federal law and is making the case that its own state drug laws trump federal laws.”

Watkins said Idaho’s position is clearly at odds with the Supremacy Clause of the U.S. Constitution, which gives federal laws such as the Interstate Commerce Act (which protects the shipment of goods and merchandise across state lines) supremacy over state laws. “Look at it this way,” he said. “What if Idaho decided to bring Prohibition back? Even though it would then be illegal to make or consume beer in the state, that law would have no bearing on the rights of other businesses to transport beer through the state.”

Idaho appears to be making attempts to address the legal gray areas surrounding hemp in the wake of Palamarchuk’s arrest. McBride Stark said some state politicians are now pushing legislation to require trucking companies to purchase permits to haul industrial hemp through the state – a move she calls “ridiculous.”

More promising is a bill that resoundingly passed in the Idaho Senate in early April that would legalize industrial hemp in the state and bring its laws in line with federal regulations. However, according to news outlets in the state, that bill faces an uncertain future in the Idaho House of Representatives, based on several members' concerns that its passage would make it tougher to enforce Idaho’s marijuana laws.

Meanwhile, Palamarchuk, VIP Transporters and Big Sky Scientific all remain in legal limbo as the case works its way through the court system. Watkins filed an emergency motion for a preliminary injunction to prompt swift action on the case. He appealed the case to the 9^th Circuit Court after a decision by the District Court upheld Idaho’s anti-hemp laws.

A Cautious Business Opportunity

As the industrial grade hemp business grows nationwide, McBride Stark said there are opportunities for U.S. truck fleets to attract new business hauling hemp. But she urges caution given the current patchwork of federal and state laws and widespread confusion between hemp and marijuana. “Hemp flour is a particularly problematic product at the moment,” she said, “because it has such a strong resemblance to marijuana in terms of how it looks and how it smells.”

Another problem, she noted, is that currently, most testing devices used by law enforcement can detect the presence of THC in a shipment of hemp – but they cannot determine the percentage of THC present in the substance. She said her association fields calls from law enforcement agencies  around the country looking for more accurate means of testing hemp, in order to keep from making wrongful arrests.

“Hemp is already a big business,” she said "And as we get more into the manufacturing side of hemp, the demand for transporting the product is going to increase dramatically. So it is in our national economic interest to get to a point where are laws are all in sync so there will be no danger for truckers, carriers, hemp manufacturers or producers as they transport and use this product.”

For his part, Alvarez urges fleets considering shipping industrial hemp to exercise extreme caution for the foreseeable future. “This is a tough situation for fleets,” he said. “And until Idaho either changes its laws or the 9^th Circuit Court overrules the District Court, I wouldn’t drive a shipment of hemp through that state or any other with similar laws on their books.”

To legally protect everyone involved in shipment of hemp, Alvarez said double-checking all the paper work, including the bill of lading, is vital, Moreover, he would recommend any fleet give copies of the cargo’s THC level test certification to the driver in case they are stopped and inspected by law enforcement officers.

Watkins urges fleets to be cautious until the legal situation surrounding hemp shipments has stabilized considerably.

“Telling fleets they have to drive hundreds, or even thousands of miles around a state like Idaho to be safe from wrongful arrest is exactly the kind of situation our Interstate Commerce Laws are designed to prevent,” he noted. “But until this issue is resolved in the courts, 'shipper beware' would be my advice.”