Fed Court Rules That State-Level Marijuana Legalization Creates Exemption To Ban On Paraphernalia

By Kyle Jaeger October 11, 2022

A federal court has issued a significant ruling that could set a precedent allowing marijuana paraphernalia to be legally imported from other countries into states that have enacted legalization.

While the federal Controlled Substances Act (CSA) prohibits the import or export of drug paraphernalia, the U.S. Court of International Trade (CIT) determined in a ruling late last month that state-level legalization provides an exception to the ban.

The case was raised after the U.S. Customs and Border Protection (CBP) blocked the import of cannabis trimming equipment from Canada to Washington State in 2021, denying entry on the basis of its interpretation of the paraphernalia statute of the CSA.

The company, Eteros Technologies USA, filed suit, arguing both that the paraphernalia rule doesn’t apply to them because the device is primarily intended to be used to trim federally legal hemp, and that even if it were for marijuana, a provision of federal law protects the importation of paraphernalia that’s “authorized” by localities or states.

Federal law defines drug paraphernalia as “any equipment, product, or material of any kind which is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance.”

But it carves out an exception to the import and export ban for any person “authorized by local, State, or Federal law to manufacture, possess, or distribute such items.”

That statute creates an exemption to the broader CSA prohibition, the court determined in a ruling that could have major implications for ancillary marijuana companies that have struggled to navigate the state-federal cannabis policy conflict.

While the Justice Department tried to argue that the intent of Congress in enacting the ban was to create uniformity in the policy, the court disagreed, saying that the statutory exemption shows lawmakers “clearly contemplated nonuniform applications.”

It further dismissed the government’s argument that the exception was only meant to prevent individual people from being prosecuted, ruling that a plain reading of statute shows that it also covers the paraphernalia items themselves.

“In sum, upon consideration of the ordinary meaning of the statutory terms, relevant case law, and Congress’s purpose, the court determines that Eteros is ‘authorized’ under 21 U.S.C. § 863(f)(1) such that § 863(a)(3)’s federal prohibition on importing drug paraphernalia does not apply to Eteros’ Subject Merchandise at the Port of Blaine, Washington,” the opinion, reported earlier by Above The Law, says.

“The court reiterates that it is not within its province to weigh policy arguments regarding the merits of legislation or to entertain invitations to rewrite legislation; its charge is to interpret and apply the statute as enacted by Congress,” it continues.

“Insofar as the Government seeks a different statute, that argument can be addressed to Congress.”

The case is expected to be appealed by the feds, but stakeholders are cheering the decision. Attorney Richard O’Neill, who represented Eteros, said in a press release that the court’s ruling “is a huge win for the cannabis industry.”

“States’ authorization of persons to manufacture, possess, and/or distribute marijuana-related drug paraphernalia serves to trigger the federal authorization exemption, therefore exempting cannabis-related paraphernalia from the import prohibitions which prevent the importation of all other forms of drug paraphernalia,” he said.

Aaron Smith, CEO of the National Cannabis Industry Association (NCIA), said that the organization “commends” Eteros “on this important issue and bringing about this win for the legal cannabis industry.”

“Legitimate businesses all over the world are serving the legal cannabis industry, which generates hundreds of thousands of U.S. jobs,” he said. “Hopefully, this decision will ensure that these law-abiding businesses will no longer face unfair impediments to importation or exportation of legal products across our borders.”

Meanwhile, CIT separately dismissed a different case brought by a cannabis company that challenged CBP for seizing an import of its extraction products that the agency determined to be drug paraphernalia.

But the company’s lawsuit focused on technical disputes related to the agency’s notification of the seizure, rather than the overarching importation authorization. CIT said that the matter needed to be settled in a different federal judicial jurisdiction.

Both of these cases concern paraphernalia imported into states from other countries, but there’s also a growing conversation in the U.S. around a different kind of cross-border cannabis commerce, with certain states taking steps to prepare for interstate trade across the country once federal prohibition is lifted.

California Gov. Gavin Newsom (D) signed a bill last month that will allow for such commerce after the federal government enacts a policy change or when guidance is issued to protect the commerce activity.

New Jersey Senate President Nicholas Scutari (D) filed a bill in August that would authorize the governor to enter into enter into agreements with other legal states to import and export cannabis.