Oregon Cannabis: Federal Court Dismisses Claims by Oregon Hemp Company Against Police for Hemp Seizure and Destruction

Hemp farming is big business in southern Oregon. The investment needed to successfully plant, grow, harvest, and sell a hemp crop is substantial—in terms of both time money. Risks like drought, fire, pests, theft, and depressed prices add up to a business environment not for the faint of heart. Compounding these stressors are the risks that a hemp crop may not pass testing and that law enforcement seizes and destroys your hemp.

What recourse does a hemp business have if law enforcement wrongfully seizes and destroys its hemp because law enforcement (wrongly) believes hemp is marijuana?

The answer, unfortunately, is that suing the government and its officials to recover the value of hemp wrongfully seized and destroyed is no easy task.  At the end of last year, we wrote about a case pending in a California federal court in which a hemp company sued the DEA, San Diego County, individual law enforcement personnel, and others for the wrongful seizure and destruction of a legal $3 million hemp grow. Several of the defendants moved to dismiss the lawsuit against them on the ground of qualified immunity; the court has yet to rule.

Meanwhile, just last week here in Oregon, the federal court dismissed claims brought by Oregonized Hemp Co. against Josephine County, various police officers, and others that arose from the seizure and destruction of hemp. (The case is Oregonized Hemp Co, LLC et al. v. Josephine County, et al., No. 1:20-cv-00720-CL, D. Or.). Procedurally, the district court judge adopted the findings and recommendations of the magistrate judge in full without adding any additional gloss or commentary. So the discussion that follows is the ruling of the magistrate as adopted by the district court. (Email me if you’d like a copy of the magistrate’s ruling.)

The opening lines of the ruling encapsulate the risks to hemp growers and the breadth of the doctrine of qualified immunity: “Plaintiffs are understandably frustrated with the actions of law enforcement in this case. If the allegations are true, Plaintiffs have suffered a large economic loss due to the destruction of their industrial hemp, which law enforcement misidentified as marijuana. However, the Court struggles to ascertain a constitutional violation in this case.”

The publicly available facts are sparse. Oregonized Hemp leased a facility on Panther Gulch Road in Williams, Oregon as party of the business of cultivating hemp. Some months later, law enforcement seized, pursuant to a warrant, and later destroyed, approximately five thousand pounds of industrial hemp from the Panther Gulch facility. The search warrant allowed the seizure of marijuana, not hemp. Oregonized Hemp alleges that no illegal marijuana was present and that law enforcement exceeded the scope of the warrant when they seized the plant material because (in a nutshell) hemp is legally distinguishable from marijuana. The company seeks to recover the value of the hemp from Josephine County, Jackson County, the City of Medford and against certain named and unnamed police officers. Oregonized Hemp alleged the defendants violated various constitutional rights (search & seizure, due process, equal protection, unconstitutional taking) along with alleging tort claims.

Despite expressing sympathy for Oregonized Hemp, the court found two significant roadblocks to Oregonized Hemp recovering any damages. (Recall that qualified immunity works to prevent lawsuits against government officials unless officials violate a “clearly established right.” That question turns on whether a hypothetical reasonable official would have known that their conduct violated the plaintiff’s rights.)

The first problem was that the warrants were “facially valid” under Oregon and federal law. This meant, from the court’s perspective, that the persons executing the warrants presumptively acted reasonably because the warrants, on their face, were lawful and valid. So no liability should attach to a government official who acted on the basis of what appeared for all intents and purposes to be a lawful warrant. (Even if the warrants were wrongly premised on there being marijuana at the Panther Gulch Facility. Note the answer may differ for the officers who procured the warrant). Although law enforcement was told when executing the warrant that the material was hemp, not marijuana, the court found no precedent requiring police officers to heed claims of innocence given by suspects at the scene of a warrant’s execution. The second hurdle is that Oregonized Hemp did not allege “specific unreasonable conduct” against the defendants who were not involved in the application for the warrants. In other words, there is no constitutional violation if all the Josephine County Defendants was limited to  executing what appeared to be lawful warrants.

The only light in the tunnel for Oregonized Hemp is that the court gave it the opportunity to file an amended complaint.  Whether Oregonized Hemp can muster enough factual allegations to survive another motion to dismiss remains to be seen. Right now the odds don’t look good.

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Hemp/CBD, Litigation, Oregon