Court again denies injunction of Iowa THC law, says new rules clarify serving limits

A federal judge for the second time has refused to block a new Iowa law that controls consumable hemp products, finding that subsequent state administrative rules have resolved concerns the law might be unconstitutionally vague.

Ten companies sued the state in two separate lawsuits in federal court in June, claiming the law is unconstitutional and being applied in a discriminatory fashion. The law, known as the Hemp Amendments, was approved by the Iowa Legislature during this year's session and took effect July 1.

In addition to forbidding the sale of the products to people under age 21, it requires manufacturers to comply with new regulations limiting the amount of tetrahydrocannabinol products contain in a serving and requiring certain labeling.

But the law left it to the Iowa Department of Health and Human Services to define serving sizes and the wording of the labels. The department initially said it might be August before it promulgates the rules.

On July 17, though — less than a week after a hearing over a potential injunction before Chief Judge Stephanie Rose — the Iowa Department of Health and Human Services issued rules to implement the law under an emergency authority. On Thursday, Judge Rose denied the companies' request for an injunction, writing that "the statutory gaps that were identified previously are no longer extant."

The Register has reached out to attorneys for the plaintiff companies for comment.

Products pulled, staff let go since law took effect

Businesses across Iowa have pulled popular THC-infused items from their shelves since July 1, even though the sale of food and drink containing hemp-derived THC has been legal under federal law since 2018.

Some of plaintiff companies have complained of having to lay off employees, cut hours and, in one case, close a location.

Rose already turned down an injunction request by two of them: Field Day, a Johnson County maker of THC sparkling water, and Climbing Kites, a Des Moines-based joint venture of the Lua and Big Grove breweries, maker of a THC-containing seltzer. She rejected their argument that the law was preempted by federal food safety laws, but said at the time she had "serious concerns" about whether the law was unconstitutionally vague when it came to how to define a serving.

Climbing Kites and Field Day renewed their request for an injunction on that basis before the July 11 hearing, where they joined eight other companies that had filed their own suit: HW Premium CBD of Urbandale; American Shaman of Altoona, West Des Moines and Indianola; Green Goods Market & Greenhouses of Jefferson; Your CBD Store, a national franchise with a West Des Moines store; Beyond CBD of Des Moines; Campbell’s Nutrition Centers of Des Moines; Sky High of Cedar Falls; and ICanna CBD of Ames.

What do the new rules say?

In June, the DHHS released preliminary rules that would require the THC drinks to be served in a container no smaller than 12 ounces. The law allows up to 10 milligrams of THC in a container, as long as no serving size contains more than 4 milligrams of THC.

The final rule, issued last week, echoes that language and refers to federal regulations to set appropriate serving sizes. The standard federal serving size for carbonated and noncarbonated beverages is 12 ounces — although attorneys for the companies argued before Rose that in the past, state regulators have approved products labelled to have as many as 10 servings in one 12-ounce can .

Using the federal serving size, Climbing Kites, which was selling 12-ounce cans of a version of its drink containing 10 milligrams of THC, would have to modify its recipe to lower potency to comply with the new law's limits.

Judge: Rocky rollout doesn't make law unconstitutional

In fact, Climbing Kites already has sold lower-potency 4-milligram and 2.5-milligram 12-ounce drinks. But Lua co-founder and lawyer Scott Selix, in documents filed with the court, said all of its hemp-derived products had been removed from the state's list of saleable hemp products July 1.

"As of today, Climbing Kites has no approved products on its Approved Products List," Selix wrote before the hearing. "Climbing Kites was provided no notice or explanation of DHHS’s decision."

Ryann Glenn, an attorney for HW Premium CBD and the seven other companies in that case, argued during the hearing that the Hemp Amendments will lead to "arbitrary and discriminatory enforcement" and leave the companies in a regulatory limbo. She said Congress allowed states to place prohibitions on growing and producing hemp, but not its sale.

Defending the state, Patrick Valencia, an attorney for the Iowa Attorney General's Office, argued that the FDA allows states to set packaging requirements like ones created by the Hemp Amendments.

Rose, in her order, notes that the state now says it has processed all products submitted for approval between July 1 and July 17, and said that even if the new limits have been implemented in a confusing and uneven way, that doesn't make the underlying law constitutional.

"Notwithstanding plaintiffs’ complaints about the rollout and administration of the law — issues which the court echoed in multiple hearings — there is nothing to establish that the Hemp Amendments violate plaintiffs’ due process rights under the United States Constitution," Rose wrote.

Philip Joens covers retail and real estate for the Des Moines Register. He can be reached at 515-284-8184, pjoens@registermedia.com or on Twitter @Philip_Joens.

William Morris covers courts for the Des Moines Register. He can be contacted at wrmorris2@registermedia.com or 715-573-8166 .

This article originally appeared on Des Moines Register: Court again denies injunction of Iowa THC law, says new rules clarify serving limits