Maryland Hemp Industry Scores Big Victory Over Monopolistic Cannabis Law

The Maryland hemp industry obtained an injunction today prohibiting the enforcement of Maryland Code Ann. Alc. Bev. §36-1102, known as the Cannabis Reform Act (CRA), “against any person who was already lawfully in the business of selling hemp derived products prior to July 1, 2023.” In an expansive ruling, Washington County Circuit Court judge, Brett R. Wilson, found that “the interests of [the hemp industry] Plaintiffs are not ‘merely academic, hypothetical, or colorable’ but rather, they are interests of survival, prosperity and, indeed, of life, liberty, and property.” As with the recent injunction ruling in Arkansas, this is another unqualified victory for the hemp industry and for anyone advocating for real cannabis reform. In this article I discuss the court’s primary findings and key points. You can read the ruling below.

Congratulations and thanks to the plaintiffs, Maryland Hemp Coalition, Inc., Derek Spruill, Four to Six LLC d/b/a Cherry Blossom Hemp, South Mountain Microfarm, LLC, J. Wyand, Inc. d/b/a Simple Pleasures, A Healing Leaf, LLC, Vicky Orem, Christopher Guy Cannon, Cannon Apothecary LLC d/b/a Cannon Ball Dispensary, Georgetown Hemp, LLC a/k/a Punshui Consulting, LLC, CBD Supply MD MNP, LLC, Embrace CBD Wellness Centers, LLC, Ira C. Cooke, and to attorney Nevin Young for their hard work and vision. Additionally, congratulations and thanks to JD McCormick of the American Healthy Alternatives Association and Nick Patrick of its Maryland chapter for their support and guidance. Finally, special thanks and congratulations to attorney Philip Snow of Kight Law for the insights and assistance he provided to the plaintiffs in this crucial battle against the corporate interests that seek a monopoly on the cannabis and cannabinoid market in Maryland and throughout the US.   

In its ruling, the court addressed the issue of “whether the strict and exclusive licensing scheme under the CRA and as applied to the hemp industry is a valid exercise of legislative prerogative.” In finding that it is not, and thus prohibiting enforcement of the CRA against the state’s hemp industry, Judge Wilson ruled that the CRA “creates a monopoly that unfairly excludes many from their right to continue, or enter, a profession of their choosing, all to the detriment of the public.” He went on to state that, “[b]ased on the evidence and argument offered thus far the court cannot find a rational basis to support the exclusive and exclusionary licensing scheme that has put Plaintiffs out of their legitimate businesses.” In short, the court found that the CRA creates an illegal monopoly, that it unlawfully puts legitimate hemp companies out of business, and that it is a “severe” and “draconian” licensing scheme that fails to “actually benefit the communities found to have been impacted.” It also noted that the plaintiffs were not challenging the health and safety portions of the CRA.

The CRA Creates an Illegal Monopoly

First, the CRA was enjoined because it creates a monopoly. “[I]t is clear that the CRA creates an Article 41 monopoly that unfairly excludes many from their right to continue, or enter, a profession of their choosing, all to the detriment of the public… As a further restriction, the overall total number of licenses that may be obtained is capped for the purpose of manipulating, supply, price, and license value. In doing so, the CRA licensing scheme confers a significant benefit on those few who obtain a license while barring many, such as Plaintiffs, from engaging in their chosen field of occupation. The public does not benefit when government intentionally constrains power and wealth in the hands of a few.” Given that Maryland is not the only state to create a monopoly on cannabis, this finding is important and may result in future injunctions, and even the eventual toppling, of state laws that favor a small handful of corporate interests over the rights of individuals and small businesses to participate in the cannabis trade. This is especially the case when those laws also include provisions that prohibit or severely restrict hemp products.

The CRA Violates the Right to Equal Protection

Second, the CRA was enjoined because it violates the Maryland Declaration of Rights, which embodies similar protections as those found in the Equal Protection Clause of the Fourteenth Amendment in the US Constitution. This is because the CRA “barred many of the plaintiffs from continuing in a legitimate business which continues to be legitimate, albeit with additional regulations for health and safety….The court cannot find a rational basis to support the exclusive, and exclusionary, licensing scheme that has put Plaintiffs out of their legitimate businesses.” The court took pains to clarify that hemp industry participants were acting lawfully under both federal and Maryland state law prior to enactment of the CRA, which suddenly and unfairly made their operations illegal: “Although their products were still legal under state and federal law, Plaintiffs lost the right and opportunity to sell them solely due to the CRA licensing scheme… Plaintiffs were instantly frozen out of the market, because, as discussed above, they did not need licenses to sell their products.” 

The CRA Fails to Achieve Social Justice

Third, the court found that the purported social equity provisions of the CRA fail to rectify the harm done by the war on drugs. “The CRA licensing scheme is based on an assumption that everyone residing in a community that had a history of a disproportionately high rate of marijuana charges was disproportionately affected and, therefore, entitled to be eligible to apply for a license to the exclusion of all persons not from such a community…. the Defendants did not offer any evidence that this severe scheme would actually benefit the communities found to have been impacted.”

The Hemp Industry Supports Reasonable Regulations

Finally, it is important to note that the court addressed the often repeated, though false, notion that the hemp industry opposes reasonable regulations: “[I]t is also important to repeat that Plaintiffs are not seeking relief from the reasonable health and safety regulations requiring testing, labeling, and packaging of intoxicating products. They seek relief from the onerous and questionable licensing scheme that halted their businesses.” As evidenced in this case and in hemp industry sponsored legislation throughout the country, the hemp industry supports reasonable regulations.

In summary, this ruling further confirms the premise that hemp is cannabis and that draconian laws and regulations that create a monopoly on it are unconstitutional and wrong. This is especially true when those same laws and regulations prohibit individuals in the hemp industry from engaging in their chosen lawful trade.

Here is the ruling:

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October 12, 2023

Rod Kight is an international cannabis lawyer. He represents businesses throughout the cannabis industry. Additionally, Rod speaks at cannabis conferences, drafts and presents legislation to foreign governments, is regularly quoted on cannabis matters in the media, and is the editor of the Kight on Cannabis legal blog, which discusses legal issues affecting the cannabis industry. You can contact him by clicking here.