What Hemp Businesses Can Actually Do: Legal and Political Strategies

The 3rd in a series of 4 articles by RN Collins about legal issues, concepts and hemp

What Hemp Businesses Can Actually Do: Legal and Political Strategies

Takings claims will fail. Here’s what might actually work.

Part 3 of 4: Strategic Playbook

The first two articles in this series delivered unwelcome news: Prohibition-era brewers received zero compensation when their businesses were banned, and Congress can eliminate the hemp industry through ordinary legislation without a constitutional amendment.

For hemp businesses and their counsel, this raises an urgent question: If takings claims won’t work and no constitutional amendment is required, what legal and political strategies remain?

This article provides a realistic strategic playbook based on current law, pending legislation, and lessons from Prohibition history.

First, Understand Why You Bought Into Regulatory Uncertainty

Before discussing strategy, hemp businesses must confront an uncomfortable truth about their legal position: Under current Supreme Court doctrine, investing in intoxicating hemp products after 2018 means you assumed regulatory risk, not that you acquired constitutional protection.

The Palazzolo Problem: Post-Legalization Investors

Palazzolo v. Rhode Island (2001) addressed whether property owners who acquire property after regulations are enacted can bring takings claims.[1] The case directly impacts hemp businesses that entered the market after the 2018 Farm Bill.

Facts: Anthony Palazzolo acquired coastal wetland property in 1978 through operation of law (corporate dissolution). Rhode Island had enacted wetlands regulations in 1971 that severely restricted development. Palazzolo applied to fill the wetlands for development; regulators denied the application. He sued, claiming a taking.[2]

Rhode Island argued the claim should be dismissed: Palazzolo acquired title after the restrictions were in place, so he had no reasonable expectation he could ever develop the wetlands.[3]

The Supreme Court’s nuanced holding:

The Court rejected Rhode Island’s absolute rule that would automatically bar all post-regulation purchasers. “Were we to accept the State’s rule, the postenactment transfer of title would absolve the State of its obligation to defend any action restricting land use, no matter how extreme or unreasonable.”[4]

However—and this is critical—the Court emphasized that timing is highly relevant to the “investment-backed expectations” analysis:

“The State may not by [adopting regulations] secure a windfall for itself. But [the] regulatory regime in place at the time the claimant acquires the property at issue helps to shape the reasonableness of those expectations.”[5]

Justice O’Connor’s concurrence, representing the crucial fifth vote, explained:

“Investment-backed expectations, though important, are not talismanic under Penn Central. Evaluation of the degree of interference with investment-backed expectations instead is one factor that points toward the answer to the question whether the application of a particular regulation to particular property ‘goes too far.'”[6]

Application to Post-2018 Hemp Investors

Here’s the problem: Anyone who invested in intoxicating hemp products after the 2018 Farm Bill didn’t buy into an unregulated market. They bought into a regulated industry that explicitly reserved governmental authority to change the rules.

The 2018 Farm Bill states: “Nothing in this subchapter precludes or limits the authority of the Secretary … to issue regulations.”[7]

That’s not ambiguous. Congress wrote down that it retained regulatory power.

What post-2018 investors knew or should have known:

State-level restrictions were proliferating – By 2020-2021, multiple states were banning or restricting intoxicating hemp products
Federal agencies were expressing concerns – FDA repeatedly stated it had not approved hemp-derived intoxicating products
Legal status was contested – DEA, state attorneys general, and legislators were questioning whether intoxicating hemp products violated the Controlled Substances Act
The Farm Bill reserved regulatory authority – Express statutory language preserved federal power to regulate
Volatility was obvious – Anyone paying attention knew the regulatory environment was uncertain

Under Palazzolo‘s framework, these factors “shape the reasonableness” of investment expectations.[8] Courts would likely conclude that investors in intoxicating hemp products assumed regulatory risk, not that they acquired constitutionally protected property rights.

The Investor’s Dilemma

This creates a perverse dynamic: The earlier you invested, the weaker your constitutional claim.

2019 investors: Entered when uncertainty was highest; least “reasonable” expectations
2020-2021 investors: Invested amid state restrictions and federal warnings; limited expectations
2023-2024 investors: Entered with full knowledge of regulatory battles; minimal expectations

Even pre-2018 investors (those who held hemp cultivation operations before legalization) face obstacles: They were cultivating for fiber, grain, and CBD—not intoxicating products. The shift to intoxicating products occurred in the post-2018 regulatory environment.

The brutal reality: Palazzolo means your “investment-backed expectations” argument—the strongest under Penn Central‘s three factors—is probably your weakest.

Does Timing Ever Help?

The one category of hemp businesses with stronger (though still weak) investment-backed expectations claims: Those who made substantial capital investments in 2018-2019, immediately after the Farm Bill passed, before regulatory uncertainty crystallized.

Why their position is marginally better:

Invested in immediate temporal proximity to federal legalization
Less time for regulatory warnings to accumulate
Could argue Farm Bill “honeymoon period” created reasonable expectations
State restrictions had not yet proliferated

But even this is likely insufficient because the Farm Bill’s express reservation of regulatory authority undermines “reasonable” expectations of permanence.

Strategy 1: Focus on Politics, Not Courts (PRIMARY RECOMMENDATION)

Given that takings litigation faces near-certain failure, hemp businesses should direct resources toward political and legislative advocacy.

Current Opportunity Window (November 2025)

The situation right now:

Senate appropriations bill contains hemp ban language
Bill must pass to fund government and end shutdown
Sen. Rand Paul (R-KY) has filed amendment to strike hemp language
Vote timing uncertain but likely within weeks
Industry opposition is organized but divided
Presidential position: Trump “supports” ban but positions can shift[9]

This is a live political fight. Outcome is genuinely uncertain.

Immediate Actions (Next 7-14 Days)

1. Direct Senate Lobbying

Priority targets:

Senators from hemp-producing states (Kentucky, North Carolina, Tennessee, Oregon, Colorado)
Agriculture Committee members who supported 2018 Farm Bill
Libertarian-leaning Republicans who might support Rand Paul
Moderate Democrats concerned about small business impacts

Key messages:

Economic impact (jobs, tax revenue, small businesses)
Arbitrary enforcement (alcohol more dangerous but remains legal)
Regulatory alternative (regulate don’t prohibit)
Rural economic harm (hemp farming revenue)

2. Coalition Building

Build alliances with:

Hemp farmers (different interests than retailers but aligned on this)
Alcohol distributors (50+ already opposed ban; they profit from hemp)
Small business associations (arbitrary government action angle)
Consumer groups (access to desired products)
Libertarian organizations (regulatory overreach theme)

Avoid:

“Stoner” imagery or pro-intoxication messaging
Conflating hemp with marijuana legalization
Messages that alienate potential allies

3. Economic Impact Documentation

Rapid studies needed showing:

Job losses from ban (direct and indirect employment)
Tax revenue reduction (state and federal)
Small business closures (number of affected businesses)
Agricultural impact (farmer income from hemp)
Regional economic effects (concentrated in certain states/districts)

Use for:

Senator constituent impact briefings
Media talking points
Committee testimony if hearings occur

4. Media Strategy

Earned media:

Trade publication coverage (cannabis industry press)
Business press (small business destruction angle)
Regional newspapers (local economic impact)
Agricultural media (farmer harm)

Messaging focus:

Alcohol industry hypocrisy (pushing ban on competitors)
Arbitrary government action
Small business vs. big alcohol
Rural economic harm

Avoid:

Technical legal arguments (too complex for general media)
Industry infighting (presents divided front)
Defensive posture (take offensive on alcohol industry motives)

Medium-Term Political Strategy (If Ban Passes)

1. Immediate Repeal Efforts

If ban passes in appropriations bill:

Begin organizing for standalone repeal legislation
Identify sponsors in next Congress
Build on Rand Paul’s HEMP Act as vehicle
Document prohibition’s harms for repeal campaign

2. Appropriations Riders (Annual Opportunity)

Every annual appropriations cycle provides opportunity to:

Strip enforcement funding for hemp ban
Add riders preventing FDA/DEA enforcement
Attach hemp legalization language to must-pass bills

This is how marijuana reform has advanced: Rohrabacher-Farr amendment (now Blumenauer-McClintock-Norton) has protected state medical marijuana programs through annual appropriations riders since 2014.[10]

3. Farm Bill Reauthorization (2028-2029)

Next Farm Bill reauthorization provides major opportunity:

Restore hemp provisions
Create regulatory framework instead of prohibition
Build coalition with agricultural interests

Timeline: Farm Bills pass roughly every 5 years. Current bill expires 2028.

4. State-Level Resistance

If federal ban passes:

Some states may decline to enforce
State hemp programs may continue with intrastate-only commerce
Creates pressure for federal accommodation

Precedent: Marijuana remains federally illegal but 24 states have legalized it, creating pressure for federal reform.

Strategy 2: Administrative Law Challenges (If Ban Passes)

If statutory prohibition becomes law, don’t lead with takings claims. Instead, challenge the regulations as arbitrary and capricious under the Administrative Procedure Act.

The APA Framework

5 U.S.C. § 706 requires courts to “hold unlawful and set aside agency action” that is:

“arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law”[11]

This is a different legal framework than takings doctrine. You’re not arguing the government owes compensation—you’re arguing the regulation itself is unlawful.

Key advantage: Not bound by Mugler precedent. Police power deference applies to takings claims but arbitrary/capricious review has independent standards.

Arbitrary and Capricious Arguments

1. Insufficient Evidence of Public Health Threat

Argument: Agency must demonstrate reasoned decision-making based on evidence. Demand scientific support for claims that hemp-derived THC threatens public health.

Discovery focus:

FDA studies or lack thereof
Adverse event reports or lack thereof
Comparison to alcohol’s documented harms
Evidence of youth access problems vs. regulatory solutions

Precedent: Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (agency must “examine the relevant data and articulate a satisfactory explanation for its action”).[12]

2. Failure to Consider Alternatives

Argument: Agency must consider “important aspect[s] of the problem” including less restrictive alternatives.[13]

Alternatives to prohibition:

Age restrictions (21+ only, like alcohol)
Testing and labeling requirements
Potency limits (mg per serving)
Retail licensing frameworks
State-level regulatory models

If these weren’t considered or were dismissed without adequate explanation, the regulation may be arbitrary and capricious.

3. Inconsistent with Statutory Mandate

Argument: 2018 Farm Bill directed USDA to create regulatory framework for hemp, not to prohibit it.

7 U.S.C. § 1639p directs the Secretary to establish “a plan to monitor and regulate the production of hemp” and to “consult with the Attorney General and the Secretary of Health and Human Services” on ensuring hemp production is consistent with the law.[14]

Statutory interpretation: Does Congress’s directive to “monitor and regulate” encompass complete prohibition? Or does prohibition exceed statutory authority?

Precedent: FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 126 (2000) (agency action must be supported by statutory authority; courts apply traditional tools of statutory construction).[15]

4. Pretextual Public Health Justification

Argument (difficult but worth preserving): The ban is not actually about public health; it’s regulatory capture by the alcohol industry to eliminate competition.

Evidence:

Alcohol industry lobbying led the ban effort
Same industry profits from continued alcohol sales (far more harmful)
No corresponding restrictions on alcohol despite comparable intoxicating effects
Timing coincides with alcohol industry market share concerns

Legal standard: If the stated public health justification is pretextual and the actual purpose is economic protectionism, the regulation may exceed police power.[16]

Difficulty: Courts rarely find pretextual justifications; substantial deference to legislative purpose statements.

But preserve the argument: This is the best answer to why this situation differs from Mugler (where alcohol genuinely threatened public health).

Procedural Challenges

1. Inadequate Notice and Comment

If the ban is implemented through agency rulemaking rather than direct legislation:

APA requires notice and comment for substantive rules (5 U.S.C. § 553)
Agency must respond to significant comments
Cursory or inadequate responses can invalidate rules

2. Violation of Regulatory Flexibility Act

If ban affects small businesses, Regulatory Flexibility Act (5 U.S.C. § 601 et seq.) requires:

Analysis of impact on small entities
Consideration of alternatives minimizing small business burden
Inadequate analysis can be challenged

Ripeness Requirements (Don’t File Prematurely)

Critical: If you file takings or APA challenges too early, courts will dismiss on ripeness grounds. Must satisfy requirements from Williamson County Regional Planning Comm’n v. Hamilton Bank, 473 U.S. 172, 186 (1985).[17]

Before filing, must:

Apply for any available permits/exemptions under new regulations
Exhaust administrative appeals – pursue every variance or waiver procedure
Obtain final agency denial – ensure the restriction is definitive
Document the administrative record – preserve all applications, denials, correspondence

Only after completing these steps will claims be ripe for judicial review.

Time warning: Ripening claims can take 1-3 years. By the time you have a “ripe” claim, your business may already be closed.

Strategy 3: Preserve (But Don’t Rely On) Takings Claims

Despite unfavorable precedent, file takings claims for strategic reasons—but don’t make them your primary litigation theory.

Why File Despite Low Success Odds

1. Preserve all legal options

Creates maximum settlement leverage
Prevents arguments that claims were waived
Allows appeal of adverse rulings on multiple grounds

2. Build record for potential doctrinal evolution

Though unlikely, Supreme Court could revisit police power doctrine
Circuit split might develop on investment-backed expectations
Novel facts might lead to new precedent

3. Political signaling

Demonstrates industry will fight
Creates publicity around constitutional concerns
May influence political negotiations

4. Discovery opportunities

Takings litigation may force disclosure of:
- Government communications with alcohol industry
- Scientific evidence (or lack thereof) for ban
- Economic analysis of impacts
- Agency deliberations

How to Plead Takings Claims (If Filing)

1. Penn Central Regulatory Taking

Plead all three factors:

Economic Impact:

Quantify specific business losses
Document investment amounts with receipts
Show percentage of business value destroyed
Calculate job losses and multiplier effects

Investment-Backed Expectations (Despite Palazzolo problems):

Emphasize 2018 Farm Bill’s affirmative legalization
Document government assurances (state license approvals, USDA guidance)
Show regulatory compliance (testing, labeling, age verification)
Highlight absence of warnings that intoxicating products were problematic
Note the one-year rulemaking delay in Farm Bill (suggesting permanence)

Character of Government Action:

Argue alcohol industry capture (not genuine public health)
Emphasize arbitrary distinction (alcohol legal, hemp banned)
Show lack of scientific evidence supporting differential treatment
Document political rather than health-based motivation

2. Lucas Total Taking (If Applicable)

If business can demonstrate:

Complete prohibition of all economically viable uses
No alternative product lines possible
Business has zero residual value

Then plead Lucas categorical taking.

But anticipate government defense: Prohibition doesn’t eliminate property value, only prohibits specific use. Business can pivot to non-intoxicating products, sell assets, etc.

Counter-counter argument: If property was purpose-built for intoxicating products with no alternative market (Mugler situation), this defense fails.

Likely outcome: Still fails under Lucas‘s “background principles” exception—intoxicating products threaten public health, so prohibition requires no compensation.[18]

Fee Structures for Takings Litigation

Given low success probability, fee arrangements should reflect realistic odds:

Do NOT accept:

Pure contingency (you’ll lose and get nothing)
Fixed fee for “winning” (you won’t win)

Consider:

Hourly billing with realistic budget expectations
Hybrid (modest contingency + reduced hourly)
Partial contingency on settlement only (not judgment)

Client counseling obligation: Clearly explain that takings precedent is uniformly adverse and litigation is primarily defensive/strategic, not likely to result in compensation award.

Strategy 4: The Litigation Roadmap (If Proceeding)

For counsel actually pursuing litigation despite unfavorable precedent, here’s the phase-by-phase approach:

Phase 1: Pre-Litigation Preparation (Months 1-6)

Organizational:

Retain experienced administrative law counsel
Form industry litigation coalition (share costs)
Identify lead plaintiffs (diverse: farmers, processors, retailers)
Establish litigation funding mechanism

Factual Record Development:

Document all investments with contemporaneous records
Compile evidence of government assurances
Preserve regulatory compliance documentation
Obtain expert declarations on:
- Hemp THC safety profile
- Economic impact of ban
- Feasibility of alternative products
- Comparison to alcohol harms

Procedural Compliance:

Participate in notice and comment if rulemaking occurs
Submit detailed comments identifying arbitrary/capricious issues
Apply for any available exemptions
Exhaust administrative appeals

Phase 2: Filing and Initial Proceedings (Months 7-12)

Where to file:

Venue selection matters: Identify favorable circuits
Multi-district litigation possibility: If many plaintiffs, coordinate filings
State vs. federal court: Federal court required for federal constitutional claims

Claims to plead:

Primary Claims (Lead with these):

APA arbitrary and capricious (5 U.S.C. § 706(2)(A))
Exceeds statutory authority (5 U.S.C. § 706(2)(C))
Inadequate notice and comment (5 U.S.C. § 553)

Secondary Claims (Preserve but don’t emphasize): 4. Regulatory taking under Penn Central 5. Total taking under Lucas (if applicable) 6. Equal Protection (differential treatment of alcohol vs. hemp) 7. Substantive due process (if you must)

Preliminary injunction motion:

Seek to enjoin enforcement during litigation
Must show likelihood of success (difficult given precedent)
Irreparable harm (business closure)
Balance of equities
Public interest

Expect: Government will move to dismiss for lack of ripeness or failure to state claim

Phase 3: Discovery and Summary Judgment (Year 2)

If you survive motion to dismiss:

Discovery priorities:

Government communications with alcohol industry lobbyists
Scientific evidence supporting public health claims
Economic analysis of impacts
Consideration of alternatives
Agency deliberations and decision-making process

Summary judgment battles:

Government will move for summary judgment on takings claims
Cite Mugler, Ruppert, Everard’s as controlling
Argue no genuine factual dispute on legal principles

Your response:

Distinguish facts (explicit statutory reliance vs. mere state tolerance)
Argue Palazzolo creates factual issues on investment-backed expectations
Present evidence of pretextual public health justification
Focus on APA claims, not takings

Phase 4: Trial and Appeals (Years 2-4)

If case reaches trial:

Focus on APA claims (better odds)
Present expert testimony on arbitrary distinctions
Emphasize political vs. health-based motivation
Create record for appellate review

Appellate strategy:

Preserve takings claims for potential Supreme Court review
Emphasize circuit split if one develops
Focus brief on strongest APA arguments

Realistic timeline: 3-5 years from filing to final appellate decision

Phase 5: Potential Supreme Court Review (Years 4-6)

Chances of certiorari: Very low (< 5%)

Supreme Court takes cases involving:

Circuit splits on federal law questions
Important constitutional issues needing resolution
Lower court decisions invalidating federal statutes

Unlikely to grant cert on:

Straightforward application of Mugler precedent
Factual disputes about investment-backed expectations
APA arbitrary/capricious determinations (fact-bound)

If cert granted:

Opportunity to distinguish Mugler in modern context
Argue Palazzolo creates different framework for explicit statutory reliance
Challenge alcohol/hemp arbitrary distinction

Realistic odds of winning: < 10%

Strategy 5: Business Adaptation and Pivoting

The most pragmatic strategy may be adapting to regulatory change rather than fighting it.

Identify Compliant Product Lines

Under proposed Senate language, products remain legal if:

Total THC ≤ 0.4 milligrams per container
Cannabinoids are “naturally occurring” (not synthesized)
Not marketed as intoxicating

Potential compliant products:

Micro-dose CBD products with trace THC
Hemp fiber for textiles, construction, paper
Hemp seed products (protein powder, oil, grain)
Non-intoxicating topicals and cosmetics
Industrial applications (bioplastics, biofuels)

Reformulation possibilities:

Lower concentration per serving
Larger package sizes (spreading THC across more volume)
Different delivery mechanisms

Market Transition Planning

Asset evaluation:

Which equipment can be repurposed for compliant products?
Which inventory can be reformulated?
Which customer relationships can be maintained?

Timeline (one year if ban passes):

Months 1-3:

Inventory assessment
Reformulation R&D
Compliance testing

Months 4-6:

Begin liquidating prohibited inventory (while still legal)
Retool manufacturing for compliant products
Renegotiate supplier contracts

Months 7-9:

Launch compliant product lines
Transition customer base
Update marketing and branding

Months 10-12:

Complete inventory liquidation
Full transition to compliant products
Ensure zero prohibited inventory at enforcement date

Alternative Business Models

1. Pivot to State-Legal Marijuana

In states with adult-use marijuana programs:

Obtain marijuana licenses (separate from hemp)
Continue selling intoxicating products under state law
Accept federal illegality (status quo for marijuana)

Challenges:

Marijuana licenses are expensive and limited
Federal prohibition still applies
Banking and tax issues (280E)

2. Vertical Integration Backward

Focus on cultivation and raw material supply:

Grow hemp for other processors
Sell biomass rather than finished products
Becomes ingredient supplier rather than product manufacturer

3. Ancillary Services

Consulting for compliant product development
Testing and certification services
Regulatory compliance assistance
Equipment sales/leasing

Strategy 6: The Long Game—Building for Future Battles

Even if the current fight is lost, infrastructure matters for future advocacy.

Create Institutional Capacity

Industry associations:

Pooled lobbying resources
Coordinated legal strategies
Unified messaging
Sustained advocacy capacity

Political infrastructure:

Identify and support legislative champions
Build relationships with committee staff
Develop expertise reputation
Create go-to sources for media

Research and documentation:

Fund economic studies on prohibition impacts
Compile safety data on hemp products
Document regulatory capture evidence
Build scholarly record

Model State Programs

Demonstrate regulatory success:

Work with friendly states to create model regulations
Show that regulation (not prohibition) works
Document absence of public health crises in regulated markets
Build evidence base for federal reform

Examples:

Minnesota’s regulatory framework
State testing and labeling requirements
Age restriction enforcement

Use to argue: “See? Regulation works. Prohibition is unnecessary.”

Narrative Development

Build long-term messaging around:

Arbitrary government action
Alcohol industry hypocrisy
Small business destruction
Regulatory overreach
Federal vs. state authority

Cultivate:

Academic research on topic
Media relationships
Documentary evidence
Personal stories of affected businesses

Prepare for:

Next Farm Bill cycle
Congressional turnover (new members, new opportunities)
Public opinion shifts
Potential alcohol industry missteps

What NOT to Do: Common Mistakes

Mistake 1: Investing Heavily in Takings Litigation

Why it’s a mistake: Mugler, Ruppert, and Everard’s create near-insurmountable precedent. You’ll spend hundreds of thousands on litigation that has < 15% success probability.

Better allocation: Use those resources for political advocacy with 40-50% success probability.

Mistake 2: Ignoring Ripeness Requirements

Why it’s a mistake: Courts will dismiss prematurely filed claims, wasting time and money.

Do this instead: Carefully exhaust administrative procedures before filing. Consult experienced administrative law counsel on ripeness.

Mistake 3: Making Takings Claims the Primary Theory

Why it’s a mistake: Leads with your weakest argument; allows government to win on Mugler without reaching better claims.

Do this instead: Lead with APA arbitrary/capricious; plead takings as alternative theory.

Mistake 4: Going It Alone

Why it’s a mistake: Individual business litigation is expensive and creates inconsistent precedent.

Do this instead: Coordinate industry-wide legal strategy; consider class action or MDL; share costs and expertise.

Mistake 5: Treating This as Pure Legal Question

Why it’s a mistake: The legal analysis is clear (you lose). The political analysis is contested (you might win).

Do this instead: Integrated political/legal strategy where litigation supports political pressure rather than substituting for it.

Cost-Benefit Analysis: Where to Invest Resources

Political Advocacy

Cost: $50,000-$200,000 for coordinated campaign Timeline: Immediate impact possible (weeks to months) Success probability: 30-50% (genuinely contested) Return on investment: High if successful (preserves entire industry)

Allocate here first.

Administrative Law Litigation

Cost: $150,000-$500,000 through appeals Timeline: 2-4 years to resolution Success probability: 15-25% (difficult but possible) Return on investment: Moderate (may invalidate ban or force modification)

Allocate here second.

Takings Litigation

Cost: $200,000-$800,000 through appeals Timeline: 3-5 years to resolution
Success probability: 5-15% (adverse binding precedent) Return on investment: Low (most likely to fail)

Allocate here last, if at all.

Business Adaptation

Cost: Varies by business (reformulation, retooling) Timeline: Immediate action required Success probability: High (within business control) Return on investment: Ensures survival regardless of political/legal outcomes

Essential parallel track.

Practical Guidance for Counsel

Initial Client Consultation

What to tell hemp business clients:

✓ “Takings claims face very unfavorable precedent from Prohibition era” ✓ “Supreme Court has uniformly rejected compensation for prohibited businesses” ✓ “Your best odds are political advocacy and APA challenges” ✓ “We should file takings claims to preserve rights, but not rely on them” ✓ “Business adaptation planning should start now”

✗ Don’t say: “We have a strong takings claim” ✗ Don’t say: “They’d need a constitutional amendment to ban you” ✗ Don’t say: “Your investment-backed expectations are protected”

Ethical obligation: Provide realistic assessment of odds, not false hope.

Fee Arrangements

For political advocacy:

Monthly retainer for lobbying/advocacy work
Success bonuses if ban is defeated or modified
Reasonable given meaningful success probability

For litigation:

Hourly billing (not pure contingency)
Detailed budgets with phase-by-phase cost estimates
Clear communication that takings claims have low odds
If contingency: modest percentage (15-20%) and only on settlement, not judgment

Engagement Letter Provisions

Include:

Explanation of adverse precedent
Disclaimer about success probability
Authority to settle or dismiss if political solution emerges
Coordination with industry coalition
Right to withdraw if client engages in illegal activity during transition

Coordinating Coalition Strategy

Benefits of industry-wide coordination:

Share legal costs across multiple businesses
Avoid inconsistent positions in different courts
Pool expert witnesses and research
Present unified front
Improve odds of Supreme Court review if circuit split develops

Lead plaintiff selection:

Sympathetic facts (family business, rural farmer, long-time operator)
Clean regulatory compliance record
Substantial documented investment
Willingness to be public face

The Timeline: What Happens When

Understanding likely timeline helps businesses plan:

Now – Next 30 Days: Active Political Fight

Senate bill pending
Rand Paul amendment being negotiated
Lobbying at peak intensity
Outcome uncertain
Action: Maximum political advocacy

If Ban Passes – Months 1-3: Regulatory Implementation

Agencies issue implementation guidance
Notice and comment period (if rulemaking required)
Industry submits comments
Action: Participate fully; build administrative record

Months 3-6: Legal Challenges Filed

Industry coalition files suit
Preliminary injunction sought
Government moves to dismiss
Initial court rulings
Action: Coordinate filings; avoid duplicative litigation

Months 6-12: Compliance Deadline Approaches

One-year transition period ending
Inventory must be liquidated
Reformulation complete
Business model adjusted
Action: Full compliance regardless of pending litigation

Critical: Continuing prohibited operations after effective date = criminal liability. Pending litigation doesn’t suspend enforcement.

Years 2-4: Litigation Proceeds

Discovery if motion to dismiss denied
Summary judgment battles
Trial if necessary
Appellate review
Action: Maintain adapted business; await decision

Years 4-6: Potential Supreme Court

Petition for certiorari if circuit court rules
< 5% chance of cert grant
If granted, briefing and argument
Final resolution
Action: Plan as if cert will be denied

Conclusion: Realistic Hope, Strategic Action

The constitutional analysis from Articles 1 and 2 was bleak: Takings claims will likely fail, and no constitutional amendment is required for Congress to ban hemp.

But the political situation is genuinely contested. The Senate bill hasn’t passed. Industry opposition is organized. The fight is ongoing.

Resource allocation recommendation:

70% to political advocacy – Highest probability of success
20% to business adaptation – Ensures survival regardless of outcome
10% to legal strategy – Defensive positioning and long-term options

For attorneys: Set realistic client expectations. Don’t oversell takings claims. Focus on APA challenges if ban passes. Coordinate industry-wide strategy.

For business owners: Engage politically now. Plan business adaptation in parallel. Don’t count on courts to save you.

The hemp industry’s fate will be decided in the Senate chamber and in strategic business decisions, not in constitutional litigation.

Next in series: Article 4 examines who is driving the hemp ban and why—and the answer reveals regulatory capture in real time.

REFERENCES

[1] Jacob Ruppert v. Caffey, 251 U.S. 264, 296-300 (1920), https://supreme.justia.com/cases/federal/us/251/264/.

[2] War-Time Prohibition Act, ch. 212, 40 Stat. 1046 (1918).

[3] U.S. CONST. amend. XVIII (ratified Jan. 16, 1920; repealed Dec. 5, 1933).

[4] Ruppert, 251 U.S. at 288-93.

[5] Id. at 304-10 (McReynolds, J., dissenting).

[6] Id. at 264.

[7] U.S. CONST. art. I, § 8, cl. 18.

[8] Ruppert, 251 U.S. at 296.

[9] See McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316, 421 (1819), https://supreme.justia.com/cases/federal/us/17/316/.

[10] Ruppert, 251 U.S. at 296-97.

[11] See id. at 297-99.

[12] Id. at 296.

[13] Id. at 295-96.

[14] Id. at 299.

[15] U.S. CONST. art. I, § 8, cl. 3.

[16] See Champion v. Ames (The Lottery Case), 188 U.S. 321, 357 (1903), https://supreme.justia.com/cases/federal/us/188/321/.

[17] See Gonzales v. Raich, 545 U.S. 1 (2005), https://supreme.justia.com/cases/federal/us/545/1/.

[18] See South Dakota v. Dole, 483 U.S. 203 (1987), https://supreme.justia.com/cases/federal/us/483/203/.

[19] See Sonzinsky v. United States, 300 U.S. 506 (1937), https://supreme.justia.com/cases/federal/us/300/506/.

[20] U.S. CONST. amend. XVIII, § 2.

[21] Ruppert, 251 U.S. at 304.

[22] Mugler v. Kansas, 123 U.S. 623 (1887), https://supreme.justia.com/cases/federal/us/123/623/.

[23] Ruppert, 251 U.S. 264.

[24] McCulloch, 17 U.S. (4 Wheat.) at 421.

[25] James Everard’s Breweries v. Day, 265 U.S. 545, 560 (1924), https://supreme.justia.com/cases/federal/us/265/545/.

[26] Ruppert, 251 U.S. at 278-80.

[27] U.S. CONST. amend. XVIII, § 2.

[28] 21 U.S.C. § 801 et seq., https://www.law.cornell.edu/uscode/text/21/chapter-13.

[29] 7 U.S.C. § 1639p(a)(3)(A), https://www.law.cornell.edu/uscode/text/7/1639p.

[30] U.S. CONST. amend. XVIII, § 1.

[31] Id. § 2.

[32] Ruppert, 251 U.S. at 304.

[33] Id. at 301-02.

[34] 7 U.S.C. § 1639o, https://www.law.cornell.edu/uscode/text/7/1639o.

[35] 7 U.S.C. § 1639p, https://www.law.cornell.edu/uscode/text/7/1639p.

[36] See Mugler, 123 U.S. at 668-69.

[37] See Ruppert, 251 U.S. at 296-300; see also Everard’s, 265 U.S. at 560.

[38] Penn Central Transp. Co. v. City of New York, 438 U.S. 104, 124 (1978), https://supreme.justia.com/cases/federal/us/438/104/.

[39] Id. at 125.

[40] Id. at 125-26 & n.30.

[41] Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1015 (1992), https://supreme.justia.com/cases/federal/us/505/1003/.

[42] Id. at 1027.

[43] Id. at 1027, 1029.

[44] See id. at 1030; see also Miller v. Schoene, 276 U.S. 272, 280 (1928), https://supreme.justia.com/cases/federal/us/276/272/.

[45] Palazzolo v. Rhode Island, 533 U.S. 606 (2001), https://supreme.justia.com/cases/federal/us/533/606/.

[46] Id. at 633 (O’Connor, J., concurring).

[47] Id. at 627.

[48] Id. at 633 (O’Connor, J., concurring).

[49] Julie Tsirkin, Trump ‘Supports’ Hemp THC Ban That’s Advancing In Senate, White House Says, MARIJUANA MOMENT (Nov. 10, 2025), https://www.marijuanamoment.net/trump-supports-hemp-thc-ban.

[50] See Consolidated Appropriations Act (proposed 2026) (hemp ban provisions).

[51] 5 U.S.C. § 706(2)(A), https://www.law.cornell.edu/uscode/text/5/706.

[52] Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983), https://supreme.justia.com/cases/federal/us/463/29/.

[53] Id.

[54] 7 U.S.C. § 1639p, https://www.law.cornell.edu/uscode/text/7/1639p.

[55] FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 126 (2000), https://supreme.justia.com/cases/federal/us/529/120/.

[56] Cf. Village of Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S. 252, 266 (1977) (discriminatory purpose claims), https://supreme.justia.com/cases/federal/us/429/252/.

[57] Williamson County Reg’l Planning Comm’n v. Hamilton Bank, 473 U.S. 172, 186 (1985), https://supreme.justia.com/cases/federal/us/473/172/.

[58] Lucas, 505 U.S. at 1029-30.

[59] Palazzolo, 533 U.S. at 627.

[60] Id. at 633 (O’Connor, J., concurring).

[61] 7 U.S.C. § 1639p(a)(3)(A).

[62] Palazzolo, 533 U.S. at 633 (O’Connor, J., concurring).

[63] Tsirkin, supra note 49.

[64] See 21 U.S.C. § 812, https://www.law.cornell.edu/uscode/text/21/812.

[65] 5 U.S.C. § 706(2)(A), https://www.law.cornell.edu/uscode/text/5/706.

[66] 5 U.S.C. § 706(2)(C), https://www.law.cornell.edu/uscode/text/5/706.

[67] 5 U.S.C. § 553, https://www.law.cornell.edu/uscode/text/5/553.

[68] Williamson County, 473 U.S. at 186.

[69] Consolidated and Further Continuing Appropriations Act, 2015, Pub. L. No. 113-235, § 538, 128 Stat. 2130, 2217 (2014).

[70] 5 U.S.C. § 706, https://www.law.cornell.edu/uscode/text/5/706.

[71] Motor Vehicle Mfrs. Ass’n, 463 U.S. at 43.

[72] Id.

[73] 7 U.S.C. § 1639p, https://www.law.cornell.edu/uscode/text/7/1639p.

[74] FDA v. Brown & Williamson Tobacco Corp., 529 U.S. at 126.

[75] Cf. Village of Arlington Heights, 429 U.S. at 266.

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Article 1: The Brewers Who Lost Everything
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Article 3: What Hemp Businesses Can Actually Do ← You are here
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