UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT. No HEMP INDUSTRIES ASSOCIATION, ET AL. DRUG ENFORCEMENT ADMINISTRATION, ET AL.
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1 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 1 of 44 (1 of 45 UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No HEMP INDUSTRIES ASSOCIATION, ET AL. v. DRUG ENFORCEMENT ADMINISTRATION, ET AL. PETITION FOR REVIEW OF RULE OF DRUG ENFORCEMENT ADMINISTRATION PETITIONERS FURTHER EXCERPTS OF RECORD Patrick D. Goggin, SBN # Hoban Law Group 870 Market Street, Suite 1148 San Francisco, CA Telephone: ( Of counsel: Robert Hoban (Admitted Garrett Graff (Admitted Hoban Law Group th St, Ste 420 Denver, CO Dated: July 28, 2017 Attorneys for Petitioners
2 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 2 of 44 (2 of 45 INDEX TO FURTHER EXCERPTS OF RECORD Item Page No. 1. Exhibit B Declaration of Chad Conner, dated July 28, Exhibit C Declaration of Lonna Brooks, dated July 27, Exhibit D Declaration of Thomas Hembree, dated July 28, Exhibit E Declaration of Colleen Keahey, dated July 28, Exhibit F Declaration of Michael Brubeck, dated July 28, Exhibit G Declaration of Peyton Palaio, dated July 28, Exhibit H Declaration of Jessica Kreider, dated July 28, Exhibit I Declaration of Michael Mona, Jr., dated July 28, Exhibit J Declaration of Gabriel Ettenson, dated July 28, Exhibit K Declaration of Joel Stanley, dated July 28, Exhibit L Declaration of Roger Gussiaas, dated February 24, 2017, 34 filed in Hemp Industries Association, et al. v. DEA, et al., Nos , (9th Cir. Feb. 24, Exhibit M - Press Release, Bismarck Police Department, Police 41 Contact Local Merchants Who May Be Selling Illegal Products (May 12, 2017
3 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 3 of 44 (3 of 45 EXHIBIT B 1
4 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 4 of 44 (4 of 45 2
5 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 5 of 44 (5 of 45 3
6 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 6 of 44 (6 of 45 EXHIBIT C 4
7 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 7 of 44 (7 of 45 UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No Hemp Industries Association; Centuria Natural Foods, Inc.; and R.M.H. Holdings, Inc. Petitioners v. Drug Enforcement Administration; Charles Rosenberg, as Acting Administrator, Drug Enforcement Administration Respondents DECLARATION OF LONNA BROOKS 1. I am the owner of Terry s Health Products, LLC (Terry s in Bismarck, North Dakota, a North Dakota corporation, and am therefore authorized to make the following statements. 2. Terry s is a health food and products store specializing in the sale of organic, natural, and chemical free products for the home, natural and organic foods, and a full assortment of dietary supplements. 3. Terry s is a business member of the Hemp Industries Association. 5
8 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 8 of 44 (8 of Until recently, Terry s sold products derived from industrial hemp that contain cannabidiol (CBD. 5. Any and all such products contained a concentration of tetrahydrocannabinols far less than three tenths of one percent (0.3%. 6. On or about May 11, 2017, narcotics investigators with the Bismarck Police Department (BPD entered Terry s and purchased some of our hemp-derived products to test the products for the presence of CBD. 7. On or about May 12, 2017, BPD laboratory test results showed the presence of CBD in one of our products resulting in the police s confiscation of those products. 8. During the BPD s confiscation of the industrial hemp-derived products, BPD provided me with documentation BPD relied upon in justifying the enforcement action. Included in the documentation provided was a copy of the publication of the Marihuana Extract rule in the Federal Register and its listing in the CFR. In fact, one of the BPD investigators drew an arrow next to the Marihuana Extract listing in the CFR. See attached as Exhibit A. 9. Terry s no longer sells hemp-derived products out of fear of further seizure and potential criminal prosecution. 10. Prior to the enforcement action herein, Terry s had sold hemp-derived products for about three years. Our monthly sales of these products averaged about $5,000. However, about a month before the police confiscation, our sales increased greatly to about $5,000 per week after a local news story highlighted the products. The 100% loss of these 6
9 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 9 of 44 (9 of 45 hemp-derived product sales has had a substantial, negative impact on our small local business. I hereby declare under penalty of perjury that the foregoing is true and correct. Executed this day of July 2017 at [place]. Lonna Brooks 7
10 '-itie 21 CFR- PART Section Schedule I Page 3 of 4 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 10 of 44 (10 of Ibo aine ,_ t 12 1 N i 9 : TAKEBAC, DAY (l Report Ill icit Pharmaceutical Activities,9,10 Tum in your unused or 1:1_ expired medication L RX AB USE i Q e - ONLINE _y for safe disposal unused --, :::. nhex...,,,!- - r :C-c.., - Meaning all parts of the plant presently classified bo lly as Lophophora williamsii Lemaire, whether growin ot, the seeds thereof, any extract from any part of such plant, and every compound, manufacture, salts, derivative, mixture, or preparation of such plant, its seeds or extracts (Interprets 21 USC 812(c, Schedule I(c (12 (27 N-ethyl-3-piperidyl benzilate 7482 (28 N-methyl-3-piperidyl benzilate 7484 (29 Psilocybin (30 Psilocyn (31 Tetrahydrocannabinols Meaning tetrahydrocannabinols naturally contained in a plant of the genus Cannabis (cannabis plant, as well as synthetic equivalents of the substances contained in the cannabis plant, or in the resinous extractives of such plant, and/or synthetic substances, derivatives, and their isomers with similar chemical structure and pharma ological activity to those substances contained in the plant, such as the following: l cis or trans tetrahydrocannabinol, and their optical isomers 6 cis or trans tetrahydrocannabinol, and their optical isomers 3,4 cis or trans tetrahydrocannabinol, and Its optical isomers (Since nomenclature of these substances is not internationally standardized, compounds of these structures, regardless of numerical designation of atomic positions covered. (3 2 Ethylamine analog of phencyclidine Some trade or other names: N-ethyl-1-phenylcyclohexylamine, (1-phenylcyclohexylethylamine, N-{l-phenylcyclohexylethylamine, cyclohexarnine, PCE (33 Pyrrolidine analog of ohencyclidine Some trade or other names: 1-(1-phenylcyclohexyl-pyrrolidine, PCPy, PHP (34 Thiophene analog of phencydidine Some trade or other names: l-[l-(2-thienyl-cyclohexyl]-piperidine, 2-thienylanalog of phencyclidine, TPCP, TCP (35 1-[l-(2-thienylcyclohexyl]pyrrolidine Some other names: TC Py (36 4-methylmethcathinone (Mephedrone (37 3,4-methylenedioxypyrovalerone (MDPV (38 2-(2,5-Dimethoxy-4-ethylphenyl ethanamine (2C-E (39 2-(2,5-Dimethoxy-4-methylphenylethanamine (2C-D ( 40 2-( 4-Chloro-2,5-dlmethoxyphenylethanamine (2C-C (41 2-(4-Iodo-2,5 dimethoxyphenylethanamine (2C-I ( 42 2-( 4-(Ethylthio-2,5-dimethoxyphenyl]ethanamlne (2C-T-2 ( 43 2-( 4-(Isopropylthio-2,5-dimethoxyphenylethanamine (2C-T-4 (44 2-(2,5-Dimethoxyphenylethanamine (2C-H ( 45 2-( 2,5-Dimethoxy-4-nitro-phenylethanamine (2C-N ( 46 2-(2, 5-Dimethoxy-4-(n-propylphenylethanamlne (2C-P (47 3,4-Methylenedioxy-N-methylcathinone (Methylene ( 48 ( 1-pentyl-lH-indol-3-yl( 2,2,3,3-tetramethylcyclopropylrnethanone (U R- 144 ( 49 [ 1-(5-fluoro-pentyl-lH-indol-3-yl] (2, 2, 3,3-tetramethylcyclopropyl methanone (5-fluoro-UR-144, XLR 1 1 1(50 N-(l-adamantvll-l-pentvl-lH-indazole-3-carboxamide (APINACA, AKB48 (51 quinolin-8-yl l-pentyl-lh-indole-3-carboxylate (PB-22; QUPIC (5 2 auinolin-8-yl 1-(5-fluoropentyl-lH-indole-3-carboxylate (5-fluoro-PB-22; 5F-PB-22 (53 N-( l-amino-3-methyl-l-oxobutan-2-yl-l-( 4-fluorobenzyl-lH-indazole-3-carboxamlde (AB-FUBINACA (54 N-( l-amino-3, 3-dlmethyl-1-oxobutan-2-yl -l -pentyl-lh-indazole-3-carboxamide (ADB-P!NACA ( 55 2-( 4-iodo-2,5-dimethoxyphenyl-N-( 2-methoxybenzyl ethanamine (25I-NBOMe, 2C-I-N BO Me (56 2-( 4-chloro-2, 5-dimethoxyphenyl-N-( 2-methoxybenzylethanamine (25C-NBOMe, 2C-C-N BO Me (57 2-(4-bromo-2,5-dimethoxyphenyl-N-(2-methoxybenzylethanamine (25B-NBOMe, 2C-B-NB0Me 7536 _. --y.._ (58 Marihuana Extract 7350 Meaning an extract containing one or more cannabinoids that has been derived from any plant of the genus cannabis, other than the separated resin (whether crude or purified obtained from the plant. (59 4-methvl-N-ethylcathinone (4-MEC (60 4-methyl-a/pha-pyrrolidinopropiophenone ( 4-MePPP (61 a/pha-pyrrolidinopentiophenone (o-pvp ( 62 1-( l, 3-benzodioxol-5-vl-2-(methylamino butan-1-one ( butylone, bk-m BDB (63 2-(methylamino-1-phenylpentan-l-one (pentedrone (64 l-{l,3-benzodioxol-5-yl-2-(methylaminopentan-1- one (pentylone, bk-mbdp 1(65 4-fluoro-N-methylcathinone /4-FMC; flephedrone (66 3-fluoro-N-methylcathinone (3-FMC (6 7 1-( naphthalen-2-yl-2-( pyrrolidin-l-ylpentan-1-one (naphyrone (68 a/pha-pyrrolidinobutlophenone (o-pbp (e Depressants. Unless specifically excepted or unless listed in another schedule, any material, compound, mixture, or preparation which contains any quantity of the following substances having a depressant effect on the central nervous system, including its salts, isomers, and salts of isomers whenever the existence of such salts, isomers, and salts of isomers is possible within the specific chemical designation: (l gamma-hydroxybutyric acid (some other names include GHB; gamma-hydroxybutyrate; 4-hydroxybutyrate; 4-hydroxybutanoic acid; sodium oxybate; sodium 2010 oxybutyrate (2 Mecloqualone 2572 {3 Methaqualone 2565 (f Stimulants. Unless specifically excepted or unless listed In another schedule, any material, compound, mixture, or preparation which contains any quantity of the following substances having a stimulant effect on the central nervous system, including its salts, isomers, and salts of isomers: 5/12/ Exhibit A (1249 (7498 (7545 (7541 (1246 (7542 (1238 (1233 (1258 (7546
11 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 11 of 44 (11 of 45 EXHIBIT D 9
12 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 12 of 44 (12 of 45 10
13 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 13 of 44 (13 of 45 11
14 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 14 of 44 (14 of 45 EXHIBIT E 12
15 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 15 of 44 (15 of 45 UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No Hemp Industries Association; Centuria Natural Foods, Inc.; and R.M.H. Holdings, Inc. Petitioners v. Drug Enforcement Administration; Charles Rosenberg, as Acting Administrator, Drug Enforcement Administration Respondents DECLARATION OF COLLEEN KEAHEY 1. I am the Executive Director of the Hemp Industries Association (HIA, a non-profit trade association representing businesses, farmers, researchers and investors working with industrial hemp and a Petitioner hereto, and am authorized by HIA to make the following statements. 2. The HIA has 550 total business and individual members of which approximately 195 are business members engaged in commerce concerning cannabinoid-rich hemp-derived products. 13
16 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 16 of 44 (16 of Recently, we sent a survey to these 195 members seeking information regarding the size of their businesses and the impact of the Marihuana Extract final rule on the businesses. Non-HIA member businesses engaged in hempderived product commerce also participated in the survey. 4. We received survey responses from 56 businesses, of which 37 are HIA members. 5. Fifty survey respondent businesses employ approximately 476 individuals. 6. Forty-six survey respondent businesses have approximately $52,000,000 cumulatively invested in their businesses. 7. Thirty survey respondent businesses estimate their 2016 revenues cumulatively totaled approximately $69,000,000 of which approximately $20,000,000 was from hemp-derived products. 8. Forty-three survey respondent businesses project their 2017 revenues to be approximately $115,000,000 of which approximately $50,000,000 is projected from the sale of hemp-derived products. However, based on the responses from thirteen of these businesses regarding lost revenues resulting from the Marihuana Extract final rule, HIA estimates that the projected 2017 revenues of the survey respondent businesses and the entire U.S. industry would have been tens, if not hundreds, of million dollars higher but for the publication of the final rule. 14
17 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 17 of 44 (17 of Since DEA published the final rule, numerous HIA members have had hemp product shipments seized by Customs and Border Patrol because of the mere presence of any cannabinoids in the products. I hereby declare under penalty of perjury that the foregoing is true and correct. Executed this 28 day of July 2017 at Phoenix, Arizona. Colleen Keahey 15
18 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 18 of 44 (18 of 45 EXHIBIT F 16
19 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 19 of 44 (19 of 45 UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No Hemp Industries Association; Centuria Natural Foods, Inc.; and R.M.H. Holdings, Inc. Petitioners v. Drug Enforcement Administration; Charles Rosenberg, as Acting Administrator, Drug Enforcement Administration Respondents DECLARATION OF MICHAEL BRUBECK 1. I am the President of Centuria Natural Foods, Inc. ( Centuria, a Nevada corporation, and I am authorized by Centuria to make the following statements. 2. Centuria registered its formation with the Nevada Secretary of State on October 9, Centuria is in the business of producing and manufacturing products containing materials derived from certain parts of the industrial hemp plant. 17
20 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 20 of 44 (20 of Centuria has experienced substantial disruption and harm as a result of DEA s Final Rule. 5. Prior to the Final Rule, Centuria had negotiated a particular contract which exceeded $14 million in annual value which the other party cancelled on December 15, 2016, citing the issuance of the Final Rule. 6. Centuria also lost other existing and/or prospective business or contracts with other national manufacturers exceeding $11 million. 7. To my knowledge, one of Centuria s manufacturing and distribution partners had all of their approximately 400 products which all but 3 do not contain any hemp-derived materials pulled from United Natural Foods, Inc., a national distributor, due to the Final Rule. 8. Immediately subsequent to the Final Rule s publication in December 2016, Centuria s sales and growth plummeted. 9. All of these disruptions have resulted in significant economic losses to Centuria. I hereby declare under penalty of perjury that the foregoing is true and correct. Executed this day of July 2017 at [place]. Michael Brubeck 18
21 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 21 of 44 (21 of 45 EXHIBIT G 19
22 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 22 of 44 (22 of 45 UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No Hemp Industries Association; Centuria Natural Foods, Inc.; and R.M.H. Holdings, Inc. Petitioners v. Drug Enforcement Administration; Charles Rosenberg, as Acting Administrator, Drug Enforcement Administration Respondents DECLARATION OF PEYTON PALAIO 1. I am the President of R.M.H. Holdings, Inc. ( RMH, a Wyoming corporation, and I am authorized by RMH to make the following statements. 2. RMH registered its formation with the Wyoming Secretary of State on November 27, RMH is in the business of cultivating industrial hemp. 4. RMH has experienced a substantial amount of disruption within its business due to the Final Rule. 20
23 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 23 of 44 (23 of 45 21
24 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 24 of 44 (24 of 45 EXHIBIT H 22
25 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 25 of 44 (25 of 45 UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No Hemp Industries Association; Centuria Natural Foods, Inc.; and R.M.H. Holdings, Inc. Petitioners v. Drug Enforcement Administration; Charles Rosenberg, as Acting Administrator, Drug Enforcement Administration Respondents DECLARATION OF JESSICA KREIDER 1. I am the Vice President of Capital Insurance & Bonding Services Co. (CIBS in Roanoke, Virginia, a Virginia corporation, and am authorized by CIB to make the following statements. 2. As part of my work as an insurance agent, I assist businesses in obtaining various forms of insurance policy coverage. 3. CIBS is a business member of the Hemp Industries Association. 23
26 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 26 of 44 (26 of I assist businesses selling hemp-derived products in obtaining commercial insurance policies. 5. On or about June 26, 2017, an underwriter informed me that it would not insure any businesses shipping these hemp-derived products across state lines citing the Marihuana Extract rule to support its conclusion that they are on the Controlled Substances Act (CSA list. 6. To date, all other underwriters that I have reached out to for coverage of these hemp-derived products have declined coverage citing the Marihuana Extract final rule. 7. This policy by insurance underwriters extends to numerous HIA member businesses engaged in hemp-derived product commerce. 8. The impact of this policy on CIB s revenues has been substantial. As a result of the final rule, CIB has lost an estimated 150 prospective customers and projects lost revenues in 2017 to be approximately $115,000. I hereby declare under penalty of perjury that the foregoing is true and correct. Executed this day of July 2017 at Roanoke, VA. Jessica Kreider 24
27 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 27 of 44 (27 of 45 EXHIBIT I 25
28 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 28 of 44 (28 of 45 26
29 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 29 of 44 (29 of 45 27
30 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 30 of 44 (30 of 45 EXHIBIT J 28
31 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 31 of 44 (31 of 45 UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No Hemp Industries Association; Centuria Natural Foods, Inc.; and R.M.H. Holdings, Inc. Petitioners v. Drug Enforcement Administration; Charles Rosenberg, as Acting Administrator, Drug Enforcement Administration Respondents DECLARATION OF GABRIEL ETTENSON 1. I am the General Manager of Elixinol, a Colorado corporation, and I am authorized by Elixinol to make the following statements. 2. Elixinol is in the business of producing and manufacturing products containing materials derived from certain parts of the industrial hemp plant. 3. Elixinol is a business member of the Hemp Industries Association. 4. Elixinol s 2016 revenues were approximately $5,000,000 and its projected 2017 revenues are $10,000,000. This represents a projected loss of $1,000,000 or a 29
32 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 32 of 44 (32 of 45 projected lack of growth of 10% that Elixinol attributes to DEA s December 2016 Marihuana Extract final rule. To date, Elixinol estimates its lost revenues as a result of the final rule to be $1,000, We have also lost additional business related to CPB import delays as a result of Marihuana Extract code confusion and Medical & Health professionals refusing to assist in consumer education because of concerns about DEA enforcement actions. Executed this 28 day of July 2017 at Broomfield CO. Gabriel Ettenson 30
33 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 33 of 44 (33 of 45 EXHIBIT K 31
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36 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 36 of 44 (36 of 45 EXHIBIT L 34
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40 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 40 of 44 (40 of 45 EXHIBIT A To Declaration of Roger Gussiaas 38
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43 Case: , 07/28/2017, ID: , DktEntry: 35-1, Page 43 of 44 (43 of 45 EXHIBIT M 41
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45 Case: , 07/28/2017, ID: , DktEntry: 35-2, Page 1 of 1 (45 of 45 CERTIFICATE OF SERVICE I certify that on July 28, 2017, I served a true and correct copy of the foregoing Further Excerpts of Record: Via PACER, e-filed upon: Brian Stretch John J. Martin United States Attorney Special Agent in Charge Office of the United States Attorney Drug Enforcement Administration 450 Golden Gate Ave, 11 th Floor 450 Golden Gate Ave, 14 th Floor San Francisco, CA San Francisco, CA The Honorable Loretta Lynch The Honorable Chuck Rosenberg Attorney General of the United States Drug Enforcement Administration U.S. Department of Justice 7000 Army-Navy Dr. 950 Pennsylvania, NW Arlington, VA Washington, DC Wendy H. Goggin Chief Counsel Office of General Counsel Drug Enforcement Administration 8701 Morrissette Dr. Springfield, VA Dated: July 28, 2017 /s/ Patrick D. Goggin Patrick D. Goggin
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