December 6, 2018

Appeal of the Determination on Nonmailability

RNF, LLC, v. UNITED STATES POSTAL SERVICE

P.S. Docket No. MLB 18-113

APPEARANCE FOR PETITIONER:
Courtney Moran, Esq.
EARTH Law, LLC

APPEARANCE FOR RESPONDENT:
Julie Hanlon, Esq.
Acting Inspector Attorney

INITIAL DECISION
On June 5, 2018, Appellant RNF, LLC, timely appealed from a determination of nonmailability by the United States Postal Inspection Service (USPIS) of a package shipped by Appellant to an intended recipient in South Carolina.¹  39 U.S.C. § 3001; 18 U.S.C. § 1716; 39 C.F.R. Part 953.  In a telephone conference on July 19, 2018, the parties agreed that the matter could be addressed by cross motions for summary judgment and were ordered to file a Joint Stipulation of Facts and their respective cross motions not later than August 3, 2018.  Order and Memorandum of Telephone Conference (July 19, 2018).  Both parties timely filed their respective motions for summary judgment along with a jointly filed Stipulation of Facts.
RELEVANT FACTS NOT IN DISPUTE

1. On May 17, 2018, Priority Express Mailpiece bearing tracking number EL596073663US was determined to be nonmailable and was detained by USPIS in Portland, Oregon (Respondent’s Motion for Summary Judgment at 1).²
2. On May 18, 2018, notices were sent to the sender and recipient advising them of the detention.  Id.
3. The parties stipulate that RNF, LLC holds an Industrial Hemp Registration (2018 #AG­R1041668IHG) with the Oregon Department of Agriculture, compliant with the Oregon Industrial Hemp Agricultural Pilot Program and Research Act (ORS 571.300 et. seq.) and Section 7606 of the Agricultural Act of 2014, codified at 7 U.S.C. § 5940 (Agriculture Act of 2014).  Stipulation of Facts, ¶1 (August 3, 2018).
4. The parties stipulate that Joseph Watson holds Permit Number 1819 as part of the South Carolina Department of Agriculture 2018 Industrial Hemp Research Pilot Program, compliant with the Agricultural Act of 2014.  Id. at ¶2.
5. The parties stipulate that The South Carolina Department of Agriculture holds an Importer Registration (RS0528971) with the Drug Enforcement Administration (DEA).  Id. at ¶3.
6. The seized package contained seeds.  The seeds at issue here are produced from industrial hemp crop that contains a delta-9 THC concentration of not more than 0.3 percent on a dry weight basis.  Appellant’s Motion for Summary Judgment at 1.
7. The industrial hemp crop from which the seeds were produced was grown or cultivated in Oregon, a state that permits the cultivation of industrial hemp.  Id.

DISCUSSION
Before me is the question of whether unsterilized seeds derived from industrial hemp grown or cultivated pursuant to a pilot program established by Congress under the Agriculture Act of 2014 are nonmailable as a Schedule I controlled substance.  39 U.S.C. § 3001; 7 U.S.C. § 5940.  The facts of this case largely mirror those in KaB, LLC v. United States Postal Service, MLB 18-39, 2018 WL 4913891 (I.D. September 21, 2018).  In the KaB, LLC case, I found that Cannabidiol (CBD) derived from industrial hemp grown or cultivated under the Agriculture Act of 2014 was mailable.  On November 8, 2018, the Judicial Officer affirmed my decision.  See KaB, LLC v. United States Postal Service, MLB 18-39, 2018 WL 5877235 (P.S.D. November 8, 2018).  Therefore, having determined that CBD is mailable when derived from exempt industrial hemp, the question here is whether unsterilized seeds of the same exempt industrial hemp are also mailable.  Logic and current law dictate that the answer to that question is yes.
As I did in the KaB, LLC case, I begin by discussing the relevant provisions of the Controlled Substances Act and the Agriculture Act of 2014.  21 U.S.C. §§ 801-971; 7 U.S.C. § 5940.  Congress enacted the Controlled Substances Act (CSA), as a comprehensive regime to combat drug abuse and control drug traffic.  See Gonzales v. Oregon, 546 U.S. 243, 250 (2006).  The CSA divides all controlled substances into five schedules.  21 U.S.C. § 812(a).  Schedule I substances are subject to the most stringent controls.  Id. at § 812(b)(1).  It is a violation of federal law to manufacture, distribute, or dispense a Schedule I controlled substance without a DEA registration.  Id. at §§ 822, 823, 841(a).
The CSA defines “marijuana” to include “all parts of the plant Cannabis sativa L., whether growing or not; the seeds thereof; the resin extracted from any part of such plant; and every compound, manufacture, salt, derivative, mixture, or preparation of such plant, its seeds or resin.”  21 U.S.C. § 802(16)(emphasis added).  Marijuana is a Schedule I controlled substance.  Id. at § 812.
In 2014, Congress passed section 7606 as part of the Agriculture Act of 2014, which was entitled “Legitimacy of Industrial Hemp Research.”  Agriculture Act of 2014, Pub. L. No. 113-79, § 7606, 128 Stat. 649, 912 (2014)(codified at 7 U.S.C. § 5940).
(a)In general Notwithstanding the Controlled Substances Act (21 U.S.C. 801 et seq.), chapter 81 of title 41, or any other Federal law, an institution of higher education (as defined in section 1001 of title 20) or a State department of agriculture may grow or cultivate industrial hemp if--
(1) the industrial hemp is grown or cultivated for purposes of research conducted under an agricultural pilot program or other agricultural or academic research; and
(2) the growing or cultivating of industrial hemp is allowed under the laws of the State in which such institution of higher education or State department of agriculture is located and such research occurs.
(b) Definitions In this section:
(1) Agricultural pilot program The term “agricultural pilot program” means a pilot program to study the growth, cultivation, or marketing of industrial hemp--
(A) in States that permit the growth or cultivation of industrial hemp under the laws of the State; and
(B) in a manner that--
(i) ensures that only institutions of higher education and State departments of agriculture are used to grow or cultivate industrial hemp;
(ii) requires that sites used for growing or cultivating industrial hemp in a State be certified by, and registered with, the State department of agriculture; and
(iii) authorizes State departments of agriculture to promulgate regulations to carry out the pilot program in the States in accordance with the purposes of this section.
(2) Industrial hemp The term “industrial hemp” means the plant Cannabis sativa L. and any part of such plant, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.
(3) State department of agriculture The term “State department of agriculture” means the agency, commission, or department of a State government responsible for agriculture within the State.
7 U.S.C. § 5940.
This matter is before me on cross motions for summary judgment as the facts at issue are not in dispute.  I start by reiterating that the seeds at issue were produced from industrial hemp grown and cultivated under 7 U.S.C. § 5940.  See Relevant Facts Not in Dispute, supra ¶¶6-7.  The industrial hemp from which the seeds were harvested meets the definition of industrial hemp in section 5940.  7 U.S.C. § 5940(b)(2).
It is unnecessary to quote the legal analysis of my interpretation of the Agriculture Act of 2014, as it is fully laid out in the KaB, LLC case, and I incorporate that analysis here by reference.  Additionally, I adopt my analysis of the relevant Appropriations Acts, which clearly permit the transportation of exempt industrial hemp, and its by-products, through the United States mail.  See also KaB, LLC v. United States Postal Service, MLB 18-39, 2018 WL 5877235 (P.S.D. November 8, 2018).  The only factual deviation of any substance in this case from KaB, LLC is that the product to be shipped is the seed of exempt industrial hemp.  Both the sender and recipient are licensed entities under their respective state pilot programs, and act under the authority of their states, as delegated by Congress to the states in the Agriculture Act of 2014.  Therefore, unlike the factual situation in KaB, LLC, this case involves the exchange of materials and products between licensed participants in the pilot program, and among states that participate in the pilot program, arguably a more compliant transaction than the one contemplated in KaB, LLC.
The Postal Service contends that the seeds of the plant Cannabis sativa L are a Schedule I controlled substance under the CSA.  It posits that they are expressly included within the definition of marijuana.  21 U.S.C. § 802(16).  The Postal Service is correct so far as that goes.  Seeds of the marijuana plant are listed as part of the prohibited substances on Schedule I.  However, the seeds at issue here are not marijuana seeds, but the seeds of exempt industrial hemp.
While the language of the Agriculture Act of 2014 does not expressly deal with the issue of the exchange of seeds, it does state that any part of the plant, whether growing or not, is industrial hemp.  As I noted, I have earlier determined that CBD derived from industrial hemp is included under the definition of industrial hemp in the Agriculture Act of 2014.  For largely the same reasons, I find that the seeds derived from exempt industrial hemp are also lawful.  “Likewise, the CBD that is derived from exempt industrial hemp remains exempt for the same reason, it is a derivative of an otherwise lawful plant.  If the plant is lawful, the derivatives of that plant are also lawful.” KaB, LLC, 2018 WL 4913891, at *9.  In sum, the seeds of exempt industrial hemp are not a Schedule I controlled substance.
The Postal Service also raises the fact that neither the shipper nor recipient hold a DEA registration.  For Postal Service purposes, a DEA registration is necessary for shipping controlled substances.  Publication 52, Hazardous, Restricted and Perishable Mail, § 453.31(a)(1).  However, as I have previously found, the product being mailed is not a Schedule I controlled substance.  Accordingly, no DEA registration is necessary to send or receive shipments of exempt industrial hemp under the Agriculture Act of 2014.  Kab, LLC, 2018 WL 4913891 at *5.³   Likewise, as the exempt industrial hemp at issue here is not a controlled substance, it does not fall within the definition of controlled substance in Publication 52, Hazardous, Restricted and Perishable Mail.  To the extent that there remains an argument that the transportation of such seeds is not permitted expressly by the Agriculture Act of 2014, that argument is mooted by the passage of Section 729 in the Appropriations Act of 2018.⁴   In that section, Congress expressly permits the transportation of exempt industrial hemp, including the seeds thereof.  Id.  As I found in KaB, LLC, such transportation includes the United States mail.
Finally, the Postal Service argument that it receives no appropriation thus is not subject to laws passed through appropriations acts is raised to highlight the Postal Service’s unique relationship with the federal government as “an independent establishment of the executive branch of the Government of the United States.”  39 U.S.C. § 201.  However, this legal position strikes me as inconsistent with the fact that since at least 1987, by virtue of legislation passed in each of the annual appropriations acts, Congress has directed the Postal Service not to reduce mail delivery from six days per week to five days per week.  See U.S. Gov’t Accountability Office, B-324481, U.S. Postal Service: Applicability of Appropriations Act Provision Under Continuing Resolution at 4 (2012).  In other words, Congress has consistently used the annual appropriations process to limit Postal Service authority in the past, and the Postal Service cites no case law where such Congressional authority has been challenged or denied by any court.  In the end, whether by an appropriations act, or through other legislation, the Postal Service has failed to persuade me that they enjoy a special exemption from otherwise applicable federal law by virtue of their unique legal status.⁵
Accordingly, having found that seeds derived from exempt industrial hemp are mailable under Postal Service regulations, Appellant is entitled to judgment in its favor.
Appellant's Motion for Summary Judgment is GRANTED.  Respondent's Motion for Summary Judgment is DENIED.⁶
ORDER
The appeal is GRANTED.  The contents of the mailpiece seized by the USPIS are mailable.
The USPIS shall deliver Priority Express Mailpiece bearing tracking number EL596073663US to the addressee not later than 15 days from the date of this Order. If a timely appeal is taken under 39 C.F.R. § 953.13 prior to that time, the seized package shall remain in the possession of the USPIS pending appeal or future order of disposition by the Judicial Officer.