United States District Court, E.D. North Carolina, Eastern Division
TERRENCE W. BOYLE UNITED STATES DISTRICT JUDGE
cause comes before the Court on plaintiffs motion to amend
complaint to correct the spelling of the defendants'
names in the caption and defendants' motion to dismiss.
The appropriate responses and replies have been filed, and
hearing was held before the undersigned on May 9, 2018, at
Raleigh, North Carolina. For the reasons that follow, the
motion to amend is granted and the motion to dismiss is
is a North Carolina limited liability company that on
December 30, 2016, applied to the Drug Enforcement
Administration for registration as an importer of cannabis
seeds for use in the manufacture of industrial hemp. The use
of cannabis seeds for industrial hemp is governed, in
pertinent part, by Section 7606 of Agricultural Act of 2014
(the Farm Bill), which granted a limited exception to the
regulation of cannabis seeds as Schedule I controlled
substances under the Controlled Substance Act. See 7
U.S.C. § 5940; 21 U.S.C § 952. The limited
exception under Section 7606 allows an institution of higher
learning or a state department of agriculture to grow or
cultivate industrial hemp notwithstanding the Controlled
Substances Act or other federal law if (1) the industrial
hemp is grown or cultivated for research purposes under an
agricultural pilot program or other research program and (2)
the growing or cultivating of industrial hemp is allowed
under the laws of the state in which the institute of higher
education or state agriculture department is located. 7
U.S.C. § 5940(a). Under the relevant governing
regulations, any person or entity seeking a permit to import
cannabis seeds must be properly registered and be issued a
registration number by the Drug Enforcement Administration
(DEA), in addition to acquiring a separate permit for each
individual shipment of cannabis seed to be imported. See
21 C.F.R. §§ 1312.11; 1312.13.
Section 7606 specifically authorized certain entities to
"grow or cultivate" industrial hemp but did not
eliminate the requirement under the Controlled Substances
Import and Export Act that the importation of viable cannabis
seeds must be carried out by persons registered with the DEA
to do so.
81 Fed Reg. 53395-96 (August 12, 2016) [DE 1-3].
alleges it became a member of the North Carolina Industrial
Hemp Commission Industrial Hemp Pilot Program as a seed
dealer/distributor/processor in April 2017. Cmpl. Ex. 1¶
8. On April 21, 2017, the DEA on plaintiffs application
issued to plaintiff an importer registration number which was
set to expire March 31, 2018. Cmpl. Ex. 5. In reliance on
various permits issued to it by the North Carolina Department
of Agriculture & Consumer Services and . the DEA's
registration number, plaintiff in May 2017 purchased
fifty-six bags of cannabis seed for use in industrial hemp
cultivation for shipment to the United States. On June 5,
2017, plaintiff applied to the DEA for a permit to import
controlled substances for domestic and/or scientific purposes
using DEA Form 35 and on June 6, 2017, filed an application
to export controlled substances. Compl. Ex. 1 ¶¶12,
16. Plaintiffs cannabis seeds arrived at Raleigh-Durham
International Airport on June 12, 2017, and the U.S. Customs
and Border Protection refused to release the seeds to
plaintiff. Id. ¶ 17, 18.
representatives later informed plaintiff that DEA's
issuance of an importer registration number to plaintiff had
been a mistake, and plaintiff was presented with a form
entitled "Voluntary Surrender of Controlled Substances
Privileges" to sign. Plaintiff was informed that, if it
executed the surrender of privileges document, the cannabis
seeds that were in Customs and Border Protection custody
would be released to the North Carolina Department of
Agriculture and Consumer Services for distribution.
Id. ¶¶ 21-25. Plaintiff refused to sign
the voluntary surrender form. Id. ¶ 27.
November 16, 2017, the Acting Administrator of the DEA's
Diversion Control Division sent plaintiff a letter stating
that, in relation to plaintiffs application made to the DEA
on December 30, 2016, for registration as an importer of
cannabis seeds, the DEA had, due to administrative error,
inadvertently assigned plaintiff a DEA importer registration
number. [DE 1-10]. The DEA therefore considered the
registration to be invalid and stated that it would treat the
matter as a pending application. Id. The letter
informed plaintiff that "[i]n furtherance of Section
7606, DEA has established the policy of registering state
departments of agriculture and institutions of higher
education as opposed to registering discrete individuals or
private entities who may grow on behalf of the departments of
agriculture and institutions of higher education."
Id. The letter further informed plaintiff that the
DEA would not grant plaintiffs Form 35 application for a
permit to import controlled substances filed on June 5, 2017.
filed this action on December 6, 2017, seeking injunctive and
declaratory relief as well as relief pursuant to Fed.R.Civ.P.
81 and a claim for equitable estoppel. Specifically,
plaintiff seeks an injunction because its rights under the
Farm Bill and the North Carolina Industrial Hemp laws are
being and will continue to be violated by the actions of the
defendants in arbitrarily and capriciously blocking delivery
of certified industrial hemp seed and in continuing to
decline to recognize the validity of plaintiffs import
permit. Plaintiff seeks a declaration that it is entitled to
take delivery of the certified hemp seeds in question and
that defendants are not authorized to stop delivery of the
certified hemp seeds in question or to impose additional
requirements on plaintiff as a condition of delivery.
Plaintiff further seeks relief in the nature of mandamus
and/or prohibition requiring that defendants transfer custody
of the certified industrial hemp seed and withdraw their
insistence on unauthorized additional requirements that
defendants are imposing on plaintiff, including requiring
that plaintiff be a department of agriculture and/or
institution of higher education in order to obtain an
importer registration number. Finally, plaintiffs claim for
equitable estoppel alleges that plaintiff relied on
assurances and representations of the United States
government made through the Farm Bill to its detriment.
have moved to dismiss the complaint in its entirety, arguing
that this Court lacks subject matter jurisdiction to consider
plaintiffs claims and that plaintiff has failed to state a
claim upon which relief can be granted.
outset, the Court grant's plaintiffs unopposed motion to
amend the complaint to correct the caption.
concerns the Court's subject matter jurisdiction, the
Court considers first defendants' motion to dismiss
pursuant to Fed.R.Civ.P. 12(b)(1). Federal Rule of Civil
Procedure 12(b)(1) authorizes dismissal of a claim for lack
of subject matter jurisdiction. When subject matter
jurisdiction is challenged, the plaintiff has the burden of
proving jurisdiction to survive the motion. Evans v. B.F.
Perkins Co.,166 F.3d 642, 647-50 (4th Cir. 1999).
"In determining whether jurisdiction exists, the
district court is to regard the pleadings' allegations as
mere evidence on the issue, and may consider evidence outside
the pleadings without converting the proceeding to one for
summary judgment." Richmond, Fredericksburg &
Potomac R.R. Co. v. United States,945 F.2d 765, 768
(4th Cir. 1991). To this end, "the nonmoving party must
set forth specific facts beyond the pleadings to show that a
genuine issue of material fact exists." Id.
(citing Trentacostav. Frontier Pacific ...