Many thanks for all who attended our December 1 webinar on “Cannabis and International Trade Issues 2022.” The event was hosted by the National Customs Broker and Freight Forwarders Association of America Educational Institute (NEI).
We received many questions from the audience that we were not able to get to. We plan to cover some of those question here on the blog. Today, I’ll cover considerations around “drug paraphernalia” after the Eteros decision.
Does the panel have any thoughts on the recent Eteros and Keirton decisions at the CIT and the impact of these decisions on the import of drug paraphernalia nationally?
Several attendees raised questions on how treatment by Customs and Border Protection (CBP) of imported products deemed to be inadmissible “drug paraphernalia” would change in light of two recent decisions issued by the Court of International Trade (CIT). The CIT’s decisions (Eteros and Keirton) are significant not just because these decisions are the first time a federal court has rejected CBP’s ruling that certain products were drug paraphernalia, but also because the legal basis for the court’s rejection of CBP offers a clear path for other products to not be deemed drug paraphernalia.
The Controlled Substances Act specifically makes it unlawful to import and export drug paraphernalia. 21 U.S.C. 863(a). The federal law defines drug paraphernalia as:
cualquier equipo, producto o material de cualquier tipo destinado o diseñado principalmente para su uso en la fabricación, composición, conversión, ocultación, producción, procesamiento, preparación, inyección, ingestión, inhalación o cualquier otra forma de introducción en el cuerpo humano de una sustancia controlada.
However, the federal law also 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.” Most states have now passed legislation to legalize the use or sale of marijuana in some form. Some states have also specifically legalized marijuana accessories (e.g., Colorado’s Amendment 64, Washington Initiative Measure 502).
Although this exception for state “authorized” drug paraphernalia has been on the books since 1970, CBP has consistently ignored any arguments that state legalization of marijuana and marijuana accessories should be relevant to allowing importation of certain products banned as drug paraphernalia. Instead, CBP in its drug paraphernalia rulings tended to rely on a fact-based analysis in which it pointed to some evidence (e.g., website marketing, product reviews, Youtube videos) showing that the product was used to assist in the ingestion and consumption of marijuana. CBP justified its determination that the product was in fact “drug paraphernalia.” Challenging CBP’s seizures of imported “drug paraphernalia” has been pretty difficult because it was hard to rebut CBP’s factual evidence showing the product being used in the consumption of marijuana.
The CIT’s rulings in Eteros and Keirton are important because CBP has been directed by the court to recognize and respect those state laws that specifically authorize the manufacture, possession, or distribution of certain drug paraphernalia in those states. In these two cases, CBP had seized certain machinery/equipment used to trim and process harvested marijuana plants on the grounds that they were prohibited drug paraphernalia. The CIT found CBP’s seizure to be illegal because the use of such marijuana processing equipment had been specifically authorized under Washington state law. Because Washington state law had specifically authorized the use of such marijuana equipment in Washington, the federal prohibition on importing drug paraphernalia could no longer apply to such state-authorized equipment.
These CIT rulings are significant because importers now have a strong legal argument with potentially broad applications to challenge CBP’s seizures. Even if the products are in fact marijuana accessories, importation may now be allowed if there is an applicable state law that repealed a prior prohibition for such products. This could be enough of an “authorization” by the state law to block the federal prohibition on importing drug paraphernalia.
This legal reasoning of state “authorization” has potentially broad applications. Certain states’ marijuana laws could be interpreted as authorizing a broad range of marijuana accessories that may have been at risk of being deemed “drug paraphernalia.” For example, marijuana packaging (boxes, jars, labels) arguably had some risk of being considered drug paraphernalia because CBP could say it was primarily intended for use to assist the consumption of marijuana. But with states specifically authorizing sale and distribution of marijuana in state licensed dispensaries, such marijuana packaging would now seem to be the type of state “authorized” products that would be exempt from the federal drug paraphernalia import ban.
It looks like the U.S. government has chosen not to appeal the CIT’s decision in Eteros. The government still has until December 19 to file an appeal of the CIT’s decision in Keirton. But if no further appeals are filed, the next step will be to see to what extent CBP changes their policy towards drug paraphernalia seizures. And there are still plenty of questions as to what CBP will do with these CIT decisions. For example, does CBP have to separately consider the laws of each state and what do they do with any inconsistencies between state laws? What should CBP do with products imported into any states that do not have any specific state “authorization” laws for marijuana accessories?
Even if these CIT decisions do get limited by CBP down the road, these CIT decisions are still very encouraging for those in the cannabis industry who now have a better chance to potentially access a broader range of imported equipment and accessories that would facilitate the production and sale of cannabis products.
We’ll be back with more answers to questions in the coming weeks. In the meantime, for more on federal law and drug paraphernalia, please see the following posts by my co-presenter and colleague Fred Rocafort.