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Monson v. Drug Enforcement Administration

December 22, 2009


Appeal from the United States District Court for the District of North Dakota.

The opinion of the court was delivered by: Bowman, Circuit Judge

Submitted: November 12, 2008

Before MELLOY, BOWMAN, and SMITH, Circuit Judges.

David Monson and Wayne Hauge appeal from an order of the District Court*fn1 dismissing their action for a declaration that the Controlled Substances Act (CSA or Act), 21 U.S.C. §§ 801--971, does not apply to their planned cultivation of Cannabis sativa L. (cannabis) pursuant to licenses they obtained from the State of North Dakota. Monson and Hauge argue that the District Court erred by failing to accept as true the factual allegations in their complaint, by finding that cannabis cultivated for industrial use under state law is subject to regulation under the CSA, and by determining that Congress has authority under the Commerce Clause to regulate their cultivation of cannabis. The Drug Enforcement Administration (DEA) and the Department of Justice (DOJ) argue that although the District Court properly dismissed the complaint, the court should have dismissed on jurisdictional grounds. We affirm the judgment of the District Court in all respects.

Monson and Hauge are North Dakota farmers who wish to grow cannabis pursuant to state law legalizing and regulating the cultivation of "industrial hemp." N.D. Cent. Code § 4-41-01. They intend to sell parts of the harvested cannabis for industrial use. Both industrial hemp and the drug commonly known as marijuana derive from the plant designated Cannabis sativa L. In general, drug-use cannabis is produced from the flowers and leaves of certain strains of the plant, while industrial-use cannabis is typically produced from the stalks and seeds of other strains of the plant. All cannabis plants contain tetrahydrocannabinol (THC), the substance that gives marijuana its psychoactive properties, but strains of the plant grown for drug use contain a higher THC concentration than those typically grown for industrial use. Monson and Hauge acknowledge that the plants they seek to grow are of the species Cannabis sativa L. They contend, however, that cannabis grown for industrial purposes, i.e., industrial hemp as defined by the North Dakota statute, is not marijuana within the meaning of the CSA and thus is not subject to federal regulation. Monson and Hauge filed this lawsuit in the District Court seeking a declaration that their "cultivation of industrial hemp pursuant to and in accordance with the licenses issued . . . by the North Dakota Agriculture Commissioner does not and will not violate the" CSA. Compl. at 21. They assert that the CSA could not be applied to their cultivation of industrial hemp under state law without violating the Commerce Clause. The DEA and the DOJ filed a motion to dismiss for lack of jurisdiction or, in the alternative, for failure to state a claim upon which relief could be granted.

The District Court granted the DEA and DOJ's motion to dismiss. The court declined to dismiss on jurisdictional grounds and, proceeding to the merits, held that the cannabis plants Monson and Hauge proposed to cultivate fell within the CSA's definition of marijuana and thus that their planned cultivation of industrial hemp under state law was subject to regulation under the CSA. The court also concluded that Congress has authority under the Commerce Clause to regulate the manufacture of all cannabis plants, regardless of the THC concentration or ultimate use of those plants. Monson and Hauge appeal the dismissal of their complaint, and the DEA and the DOJ appeal the District Court's jurisdictional rulings. We first discuss the federal and state statutes before turning to the specific issues raised on appeal.

The CSA establishes a comprehensive federal system to regulate the manufacture and distribution of controlled substances, making it unlawful to "manufacture, distribute, or dispense" any controlled substance "[e]xcept as authorized by" the Act. 21 U.S.C. § 841(a)(1). The CSA defines "manufacture" to include "production," id. § 802(15), and it in turn defines "production" to include the "planting, cultivation, growing, or harvesting of a controlled substance," id. § 802(22).

The CSA categorizes controlled substances into five separate schedules, depending on the characteristics of a particular substance. Id. §§ 811, 812. Marijuana*fn2 is listed in Schedule I, the most restrictive schedule, because, like the other substances listed, it "has a high potential for abuse," "no currently accepted medical use in treatment in the United States," and "a lack of accepted safety for use . . . under medical supervision." Id. § 812(b)(1)(A)--(C). Marijuana*fn3 is defined in the CSA to include "all parts of the plant Cannabis sativa L." and anything made therefrom except, in general, mature stalks, fiber produced from those stalks, sterilized seeds, and oil from the seeds. Id. § 802(16). Under the CSA, any person seeking to manufacture a Schedule I controlled substance must obtain a registration from the DEA. Id. §§ 822, 823. Before issuing a registration, the DEA considers several factors, including the applicant's "maintenance of effective controls against diversion," "compliance with applicable State and local law," "prior conviction record," and "past experience in the manufacture of controlled substances." Id. § 823(a).

In 1999, the North Dakota Legislative Assembly legalized the growth, possession, and sale of "industrial hemp." N.D. Cent. Code § 4-41-01. The state statute defines industrial hemp as "(cannabis sativa l.), having no more than three-tenths of one percent" THC. Id. Unlike the CSA, the North Dakota statute distinguishes among cannabis plants based on THC concentration. The state requires licensing for persons wishing to cultivate industrial hemp, imposes strict THC limits in an effort to prevent the cultivation of cannabis plants for drug use, and attempts to ensure that only those parts of the industrial hemp plant that are excluded from the CSA's definition of marijuana will leave a farmer's property and enter interstate commerce. Id. § 4-41-02. Recognizing that industrial hemp as defined by the state is regulated under the CSA as marijuana, the state statute originally provided that any person seeking to grow industrial hemp in North Dakota was required to comply not only with the state's licensing requirements but also with the CSA's registration requirements.

Shortly after the state statute was enacted, the North Dakota Commissioner of Agriculture (Commissioner) requested that the DEA waive the CSA's registration requirement for all North Dakota farmers seeking to grow industrial hemp as defined and regulated by state law. In February 2007, the DEA denied the Commissioner's request, noting that "Congress expressly commanded the [DOJ] to take the lead in controlling licit and illicit drug activity through enforcement of the CSA. . . . [F]or [the] DEA to simply turn over to any state the agency's authority and responsibility to enforce the CSA . . . would be directly at odds with the Act." Letter from DEA to Comm'r at 2--3 (Feb. 1, 2007). The DEA also cautioned that registration pursuant to the CSA was necessary for the cultivation of industrial hemp because, unlike the North Dakota statute, the CSA includes all Cannabis sativa L. plants in its definition of marijuana, regardless of THC concentration.

Thereafter, the Commissioner submitted to the DEA applications for registration on behalf of Monson and Hauge for their proposed industrial hemp cultivation. In March 2007, less than one month after submitting those applications, the Commissioner sent the DEA a letter demanding action on the applications by April 1, 2007. The DEA responded that the Commissioner's proposed deadline was unrealistic given the agency's obligations to comply with notice and comment requirements, conduct background investigations, and complete onsite inspections of Monson and Hauge's manufacturing facilities. The North Dakota Legislative Assembly then amended the state statute by eliminating the DEA-registration requirement. In light of the DEA's pronouncements, however, Monson and Hauge did not immediately begin cultivating industrial hemp under their state licenses. Instead, they filed a lawsuit in the District Court seeking a declaration that the CSA does not apply to persons seeking to cultivate industrial hemp pursuant to North Dakota law.

Before we address the claims raised on appeal by Monson and Hauge, we first address the DEA's various complaints of jurisdictional error. The agency argues that the District Court erred in exercising jurisdiction over the complaint because Monson and Hauge lacked standing to pursue their claims; their claims were unripe; and even if their claims were justiciable, the CSA confers exclusive jurisdiction over the matter to the federal courts of appeals. We review the District Court's determination regarding subject matter jurisdiction de novo. See Keene Corp. v. Cass, 908 F.2d 293, 296 (8th Cir. 1990).

"Article III standing requires a party to show actual injury, a causal relation between that injury and the challenged conduct, and the likelihood that a favorable decision by the court will redress the alleged injury." Minn. Citizens Concerned for Life v. Fed. Election Comm'n, 113 F.3d 129, 131 (8th Cir. 1997). The DEA argues that Monson and Hauge have not suffered an actual injury because they have not been subjected to or threatened with federal criminal prosecution for a violation of the CSA. But a party need not expose himself "to arrest or prosecution under a criminal statute in order to challenge [that] statute in federal court." Ark. Right to Life State Political Action Comm. v. Butler, 146 F.3d 558, 560 (8th Cir. 1998). Instead, "[w]hen government action . . . is challenged by a party who is a target or object of that action, . . . 'there is ordinarily little question that the action . . . has caused him injury, and that a judgment preventing . . . the action will redress it.'" Minn. Citizens Concerned for Life, 113 F.3d at 131 (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561--62 (1992) (alterations by this Court)).

We agree with the District Court that Monson and Hauge have adequately established that they are targets of DEA action and thus have shown actual injury sufficient to confer standing. Monson and Hauge, experienced farmers with the skills necessary to cultivate industrial hemp, applied for and obtained state licenses to engage in that activity. They have unequivocally declared their intent to cultivate industrial hemp and have clearly described the specifics of their proposed farming operations, including the location and number of plants to be grown and the harvesting and processing procedures to be utilized. The DEA's letter to the Commissioner plainly states that the agency considers Monson and Hauge's proposed cultivation of industrial hemp pursuant to their state licenses to be the manufacture of a Schedule I controlled substance that, under the CSA, is unlawful without a registration from the agency. As noted by the District Court, Monson and Hauge "arguably stand ready, willing, and able to cultivate industrial hemp under their state licenses and they face an imminent threat of federal criminal prosecution if they do so." Order of Nov. 28, 2007, at 11. When a plaintiff "alleges a threat of prosecution that 'is not imaginary or wholly speculative,'" he has standing to challenge a statute. St. Paul Area Chamber of Commerce v. Gaertner, 439 F.3d 481, 485 (8th Cir. 2006) (quoting Babbitt v. United Farm Workers Nat'l Union, 442 U.S. 289, 302 (1979)). In these circumstances, Monson and Hauge do not allege merely a conjectural or hypothetical injury. See N.H. Hemp Council, Inc. v. ...

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