Blocked Equipment Imports: The Next Obstacle for the Cannabis and Hemp Industries?

U.S. Customs and Border Protection has seized processing equipment, prompting litigation.

Blocked Equipment Imports: The Next Obstacle for the Cannabis and Hemp Industries?

In early 2021, U.S. Customs and Border Protection (CBP) agents seized cannabis extraction equipment from Root Sciences LLC at a Los Angeles port.

Root Sciences repeatedly—and unsuccessfully—attempted to contact CBP, as reported by Law Street, and eventually assumed that CBP improperly excluded the import of the equipment. Root Sciences submitted a protest, which also received no response from CBP.

The company then filed a lawsuit in March after it assumed its protest of the merchandise exclusion was denied, according to Law Street.

Root Sciences argues in its lawsuit that cannabis and cannabis processing equipment is legal under California law, meaning that the seized merchandise is exempt from Section 863 of Title 21 of the United States Code, which prohibits the import of drug paraphernalia, Law Street reported.

The case was ultimately dismissed last month by the U.S. Court of International Trade, where the presiding judge said the federal body did not have the jurisdiction to hear the case.

Judge Gary Katzmann wrote in his opinion that the equipment was seized and forfeited, not excluded, which gives jurisdiction to the federal district court, Law Street reported. Only merchandise that is deemed excluded can be appealed in the Court of International Trade, Katzmann said.

“That case is really specific and addressed a really narrow issue about what is the correct court to sue in when you have a seizure that’s been affected, arguably within 30 days of detention,” Nicole Phillis, counsel with Davis Wright Tremaine LLP, told Cannabis Business Times and Hemp Grower. “That particular case was about whether you could file in the district court in which the seizure occurred or within the Court of International Trade. … Where can you get the relief that you’re seeking?”

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Root Sciences is not the only company that has had cannabis-related merchandise seized by CBP, Phillis added. In September, for example, tens of thousands of atomizers were seized when en route from China to Virginia.

“It’s definitely happening more frequently,” Phillis said.

This begs the question: Could blocked equipment imports be the next obstacle that the federally illegal cannabis industry must overcome?

And are companies correct to assume that the import of cannabis- and hemp-related merchandise is legal under the Farm Bill or state law?

“I would assume nothing,” Phillis said. “And I would be very aware of the fact that CBP in various areas have been increasingly stopping and, in some cases, seizing not just controlled substances that are coming in, but they’re really looking at equipment, in particular.”

Businesses should be cautious when importing equipment into the U.S. that must pass through CBP, she added, and know that there is a risk that it could be seized.

“That doesn’t necessarily mean that operators wouldn’t be able to get it back, … but it does have to go through this process if it is seized,” Phillis said.

The key, she said, will be to demonstrate that the equipment coming in is not drug paraphernalia under Section 863 of Title 21 of the United States Code, as Root Sciences attempted to do in its lawsuit—and will presumably now attempt to do in a district court following Katzmann’s opinion.

And the increased risk associated with imports could encourage cannabis businesses to acquire equipment domestically to avoid CBP seizures, Phillis said.

“I think you need to be sure you really have your ducks lined up and your house in order if you’re considering importing material or equipment, which could be seized and then it could further delay your ability [to operate],” she said. “If there’s an ability to acquire it within the United States where you don’t have these restrictions, I suspect we’ll start to see more people trying to do that just to avoid the risks due to increased seizure enforcement."