Texas is quickly becoming a battleground over legal hemp. The latest shot was fired by the Hemp Industry Leaders of Texas and Sabihe Kahn who filed a lawsuit against the city of Allen, Texas, the Allen Police Department, and others for raiding Kahn’s smoke shop.
Trouble was brewing
The smoke shops knew trouble was brewing when in May various smoke shops received a letter from the Allen Police Department warning them that they were selling illegal products and were operating in violation of the Texas Controlled Substances Act and Section 443. In June, they received administrative subpoenas from the DEA demanding information about the businesses. These subpoenas were subsequently stayed by Judge Mazzant of the Eastern District in July.
The complaint says that in June the city also began looking into rezoning certain areas to prohibit selling hemp-related products. However, the rezoning issue was pushed to September.
Hemp raids
Not wanting to wait for court decisions, on August 27, 2024, the Allen Police Department raided the 70-year-old’s business, Allen Smoke and Vamp. They claim that the search warrants used were based on questionable laboratory testing methods and standards. They say that the search warrants were executed in coordination with the DEA and in direct violation of Federal Judge Amos Mazzant’s order, staying enforcement of the DEA’s subpoenas.
Khan began operating a retail business in the hemp industry along with his wife and son. Khan said that he and his colleagues took great care to ensure compliance with all applicable laws and regulations, including requiring Certificates of Analysis (COA) for all products they sold.
“In August, Mr. Khan sat in shackles in a jail cell without bond for two days,” said David Sergi, the lead lawyer for the Hemp Industry Leaders of Texas. “This man was arrested for selling products that are legal in the State of Texas; in fact, legal across the country.”
The complaint noted that the search warrants were overbroad using the generic term THC, but not further defining whether it was hemp-based THC or regulated cannabis THC. They also allege that the company used to test the products, Armstrong Labs, did not use appropriate, up-to-date hemp testing methodologies to protect the THCA during the processes.
The DEA used the Allen Police Department to do what it could not. Not only did the DEA fail to respond but it went to great lengths to do an end run around a federal judge’s order.
The City of Allen, Texas; Allen Police Department; Allen Police Chief Steve Dye; Collin County Sheriff Jim Skinner; and the US Drug Enforcement Agency are accused in the lawsuit of violating HILT’s and Sabhie Kahn’s Fourth, Fifth, Eighth, and Fourteenth Amendment rights, before, during, and after the defendants raided his legal hemp business.
Since the raid, the complaint stated that the city was able to pass a Zoning Ordinance limiting locations of new smoke shops (more than 50% of sales related to the sale of cigarettes, electronic cigarettes, vapes, cigars, tobacco, pipes, and other smoking supplies), which effectively accomplished what Section 443.003 attempted to prevent. Though existing shops could continue, they would not be able to expand and any new shops would be restricted to certain locations.
Delta 8 is A-OK
The complaint states that according to Texas Agriculture Code, Chapter 113, Sec.A112.003, Delta 8 products are not specifically called out, only Delta 9 products are said to be illegal. The case notes that all of the seized products were Delta 8 products.
They also claim that Armstrong Labs was creating Delta-9 from the THCA with its testing. The complaint stated, “While Liquid Chromatography is a readily available process at labs in Texas, Defendants were willing to spend exorbitant amounts to get the result they want with Gas Chromatography testing that necessarily heats the product to high temperatures (turning legal THCA into illegal total Delta-9 per Armstrong’s calculations).”
The complaint also states that according to Texas law, businesses can legally sell hemp products with documented Certificate of Analysis tests, which they claim Kahn adhered to.
The complaint also claims that Kahn is being labeled a drug dealer when he is a businessman selling legal products. The Hemp Industry said its members are scared and business is down. They also said that the raid has affected its membership growth.
Stakes are high
Hemp is already big business in the state and so the stakes are rising. A Whitney Economics report, titled, “Hemp Derived Cannabinoids in the Lone Star State: An Economic Impact Analysis of Cannabinoid Retail in Texas,” estimated that these businesses generated more than $8 billion in revenue and employed more than 50,000 workers in 2022. The report also added that hemp-derived cannabinoid product manufacturers and extractors have invested more than $1 billion in infrastructure to establish and expand operations throughout Texas. It’s worth noting that the study was commissioned by Hometown Hero CBD.
2073000-2073127-https-ecf-txed-uscourts-gov-doc1-175114187928
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