United States Western District of Virginia Judge Robert Ballou Friday ruled against a cohort of Virginia hemp businesses, denying their motions for a preliminary injunction and temporary restraining order to prevent new hemp restrictions from taking place.
The lawsuit came from several plaintiffs, including Warrenton-based Nova Hemp and Manassas-based District Hemp Botanicals. The suit argued the new law, namely a change in the definition of hemp that eliminated a previously-held 25:1 CBD to THC ratio that allowed products to exceed a 2 mg THC per package limit, would cripple their businesses and put them at risk of criminal prosecution.
Ballou, though, did not agree with the plaintiffs' claims. In his memorandum opinion, which was shared with FauquierNow by Barbara Biddle, the owner of District Hemp Botanicals, the judge said the suit did not demonstrate “either a likelihood of success on the merits or irreparable injury” if the bill becomes effective.
“We're still processing the decision and trying to assess what to do with our inventory to avoid criminal prosecution,” Biddle said in an email to FauquierNow.
One of the main arguments made by the plaintiffs was that the law equates to regulatory taking, which refers to a situation in which a government rule or law limits the use of private property in a manner tantamount to physical seizure. Ballou said the bill does not allow the state to a physical taking, and that it does not eliminate “all economically beneficial or productive use” of the product.
He added that “a regulatory action taken under the government’s police power is not generally considered a compensable taking.”
“Plaintiffs have sold portions of the affected inventory, and Plaintiffs’ claimed losses may be attributed at least in part to the changing federal regulatory landscape rather than HB 30,” Ballou wrote. “The second factor also does not clearly favor Plaintiffs. To establish a taking, a plaintiff must have more than a unilateral expectation that existing law will remain unchanged.”
Ballou also determined the plaintiffs were unlikely to succeed on the merits of their due process claim, “Because Virginia was not constitutionally required to give each hemp business an opportunity to contest HB 30 before its enactment.”
The hemp businesses involved in the suit also claimed the enactment of the new regulations would cause irreparable harm, both financially and with the possibility of criminal prosecution. On the first point, Ballou said he declined to find a “substantial reduction in sales” would progress to bankruptcy or business failure. On the second, he noted that the plaintiffs failed to establish that criminal prosecution is “imminent or likely to occur.”
While Ballou ruled against the defendants, he noted the rushed nature of the legislation, which was shoehorned in with the new cannabis agreement Gov. Abigail Spanberger reached with the General Assembly in June.
“It should be of little surprise that many of Plaintiffs’ claims relate to the attendant complications and unintended consequences that rushed legislation creates,” Ballou wrote.
He added, though, that altering the intent of the legislature is not the role of the court.
"But it is not the role of this Court to second-guess the Virginia legislature in setting an effective date for the new law,” Ballou wrote. “The Court is limited to determining whether the law violates Plaintiffs’ constitutional rights and whether Plaintiffs are entitled to the extraordinary remedy of enjoining its effective date.
“On the record before the Court,” he continued, “I conclude that Plaintiffs have not met their burden for the extraordinary relief they seek, and their requests for a [temporary restraining order] and a preliminary injunction are DENIED.”
‘We’re looking at bankruptcy’: Virginia hemp businesses sue to stop new rules from taking effect