Federal Judge Rules Hawaii’s Stricter Hemp Product Restrictions Are Not Preempted by Federal Law

A federal judge has dismissed a lawsuit challenging Hawaii’s hemp product restrictions, ruling that the 2018 Farm Bill does not prevent states from imposing stricter rules on the sale and distribution of hemp products within their borders.

U.S. District Judge Jill A. Otake issued the 33-page ruling September 4 in Alyas et al. v. Lopez et al., granting Hawaii officials’ motion to dismiss and denying a request from two hemp businesses for a preliminary injunction. The court dismissed the businesses’ federal claims without leave to amend and ordered the case closed.

The lawsuit was brought by Lance Saher Alyas, who operates Oahu Dispensary and Provisions LLC, and Kyler Falces-Cachola, who operates Elevated Enterprises LLC. They sued Hawaii Attorney General Anne Lopez and Department of Health Director Kenneth Fink, arguing that state hemp laws and regulations conflict with federal law and violate several constitutional protections.

At the center of the case was whether the 2018 Farm Bill, which removed federally defined hemp from the Controlled Substances Act, prevents Hawaii from applying more restrictive standards to hemp products sold in the state.

Otake concluded that it does not.

The judge noted that federal law expressly prevents states from prohibiting the interstate transportation or shipment of federally compliant hemp through their territory. But Congress did not include a similar restriction governing a state’s regulation of the sale and distribution of hemp products within that state.

“The federal laws at issue do not preempt any of the State’s laws at issue in this case,” Otake wrote.

The ruling also points to language in the Farm Bill allowing states to impose hemp production requirements that are more stringent than federal standards. Otake said the federal framework’s silence on state regulation of hemp sales and distribution weighed against finding that Congress intended to displace Hawaii’s rules.

The businesses argued that Hawaii’s testing methodology and definition of compliant hemp effectively make illegal some products that qualify as hemp under current federal law. Hawaii’s rules account for tetrahydrocannabinolic acid (THCA) when calculating total THC, while the federal definition currently focuses on delta-9 THC concentration.

Otake found that the plaintiffs had not adequately shown that complying with both state and federal law was impossible or that Hawaii’s requirements obstructed Congress’ objectives.

The court also noted that federal hemp law is already scheduled to change in November. Under amendments enacted by Congress in 2025, the federal definition will use a total THC standard that includes THCA, bringing the federal approach closer to the methodology Hawaii currently uses.

Otake said the alleged conflict between the two definitions would therefore likely disappear once those changes take effect.

The ruling also rejected the businesses’ Dormant Commerce Clause challenge.

The plaintiffs argued that Hawaii’s unique product and testing requirements burden interstate commerce because businesses bringing hemp products into Hawaii must comply with standards that differ from those applied elsewhere.

But Otake found that the rules do not discriminate between Hawaii businesses and companies located outside the state.

The regulations “apply uniformly to both in-state and out-of-state businesses, burdening both equally,” the ruling states.

The judge said states generally retain authority to prohibit products they determine pose concerns within their borders, provided the restrictions do not improperly favor local economic interests over interstate competitors. Because Hawaii’s hemp restrictions apply regardless of where a product originates, the businesses failed to establish a Dormant Commerce Clause violation.

Hawaii currently prohibits several categories of hemp products from retail sale, including hemp flower and leaf material such as pre-rolls, cannabinoid vape products and certain concentrates. The state also imposes limits on the amount of total THC allowed in manufactured hemp products.

The businesses additionally argued that Hawaii’s enforcement system violates procedural due-process protections because regulators have authority to inspect businesses and potentially seize, embargo, forfeit or destroy noncompliant inventory without providing an adequate opportunity to be heard beforehand.

Otake dismissed that claim as premature.

Neither business had shown that Hawaii had prosecuted it or taken the challenged enforcement actions against it, the court found. Although both businesses said they changed operations because of the possibility of enforcement, Otake said they had not demonstrated a sufficiently immediate threat to make the constitutional claim ripe for review.

The plaintiffs also brought a state-law claim alleging that the Hawaii Department of Health exceeded its statutory rulemaking authority by adopting conversion formulas and categorical restrictions for hemp products.

Otake did not rule on whether the department exceeded its authority.

Instead, because all of the federal claims had been dismissed, the judge declined to exercise supplemental federal jurisdiction over the remaining state-law issue. That means the ruling should not be read as a determination that every aspect of the Department of Health’s rulemaking complied with Hawaii law.

The plaintiffs had sought an injunction preventing enforcement of the challenged provisions while the case proceeded. Because Otake dismissed the case in its entirety, she ruled that request moot.

The court also denied the plaintiffs permission to amend their complaint again, finding that further amendment would be futile.