Georgia hemp businesses sue state over new regulations

The Georgia Department of Agriculture has said the regulations were put in place to protect the public. The law also mandates THC warning labels and new licensing requirements for hemp businesses.

But in its complaint, the plaintiffs claim SB 494 imposes “severe restrictions” that “cause immediate and irreparable harm” to their businesses. The lawsuit alleges the Georgia law conflicts with the 2018 Farm Bill, the federal law that permitted the production and sale of hemp products with less than 0.3% Delta-9 THC.

“We are arguing that it’s unconstitutional because it basically is trying to usurp federal law,” said Zakiya Watson-Caffe, the attorney for the plaintiffs, which include hemp retailers, a product maker and an advocacy group.

“What it really did is put a bunch of people out of business,” said David Raudabaugh, founder of the nonprofit Grassroots Association and one of the plaintiffs.

The plaintiffs are seeking an injunction, which would pause enforcement of SB 494 until a court case is heard.

A spokesperson for Gov. Brian Kemp said his office could not comment on pending or active litigation.

A spokesperson for Georgia Attorney General Chris Carr said, “We’re reviewing the complaint, and we will continue to defend the laws passed by the General Assembly and signed by the governor.”

The lawsuit comes amid growing uncertainty for Georgia’s hemp industry.

The state now has approximately 7,000 licensed hemp businesses, according to information the Department of Agriculture shared last week at a legislative study committee. Most are retailers, but that number also includes farmers, wholesalers, manufacturers and processors.

Federal law has permitted the harvest of hemp, which is the same plant species as marijuana, since 2018. Recreational marijuana remains illegal under federal and Georgia law.

But states across the U.S. are pushing for increased oversight of the hemp industry. Earlier this year, Georgia lawmakers tried unsuccessfully to ban THC drinks. And now, state legislators are studying cannabis laws in a series of meetings scheduled through the fall.

Plaintiffs contend they have lost sales, abandoned expansion plans or moved their businesses out of state because of SB 494.

“It’s just completely ruined my livelihood,” said Wesley Grantham, founder of Mellow Bear Honey, a company that makes Delta-9 THC-infused honey.

Grantham moved its operations from Georgia to North Carolina. As a small-business owner, he said he couldn’t afford a hemp license now required under the law.

Another plaintiff, Scott Ellison, owner of e-commerce hemp company THC Atlanta, said he was about to expand with a brick-and-mortar location. But he dropped those plans when the law took effect. It banned smokable hemp flower, one of his top-selling products.

“When they did that, 65% to 75% of our sales got slashed here in the state,” Ellison said.

Eddie Askeldsen, the new owner of Alpine Dispensary in Helen, said the business lost sales when it had to stop selling certain products.

“Georgia has definitely made it extremely difficult for the hemp industry to succeed,” he said. The company decided to open another location in Bryson City, North Carolina, a few weeks ago, he said.

The Georgia Hemp Co., a retailer that sells hemp products such as gummies and drinks, was also a plaintiff in the lawsuit. But the company withdrew its participation because of personal reasons, co-founder Joe Salome said.

“I’m wholeheartedly behind them and support their efforts,” Salome said. “At the end of the day, these efforts put products back on our shelves, help us run a business and help consumers get what they need.”