Delta 8, other hemp products pulled from Evansville shelves amid statewide crackdown

EVANSVILLE — The sale of popular hemp-extract products in Evansville, including Delta 8, could potentially burn out after the county’s top prosecutor and city police warned shop owners they may face narcotics dealing charges under a new legal framework.

The shakeup came Friday when the Evansville Police Department dispatched officers to smoke shops, gas stations and specialty hemp stores across the city bearing a letter signed by Vanderburgh County Prosecutor Diana Moers. It said Delta 8-THC and certain other substances were illegal Schedule I narcotics, even though some shop owners had been selling them for years.

According to the letter, which the Courier & Press obtained, those selling the product could face penalties as harsh as a Level 2 felony.

Delta 8-THC skyrocketed in popularity both nationally and in Evansville after the 2018 Farm Bill legalized broad swaths of the hemp market. The compound is similar to the psychoactive drug in marijuana, Delta 9-THC, though researchers consider Delta 8 to be less potent.

Moers’ letter cites Indiana Attorney General Todd Rokita’s official opinion declaring certain hemp products, such as Delta 8, controlled drugs under existing state statute — despite a state law that specifically excluded certain hemp products from narcotics scheduling.

The opinion came after Indiana State Police Superintendent Doug Carter asked for clarification of state law. The Indiana Prosecuting Attorneys Council then drafted a formal letter for all county prosecutors to distribute, Moers told the Courier & Press. Pursuing this was not, she said, "an independent decision" by her.

Business owners and customers alike were blindsided.

Ashley Bennett, co-owner of the Evansville-based Remedy Center, said their branch in Jasper was hit with a search warrant back in June, a month before receiving the letter in Vanderburgh County.

They've since removed all smokable hemp from their shelves, but they've obtained a lawyer with cannabis-industry experience to see how far they actually have to go.

"We’ve communicated with all the other local smoke shops, and we’re trying to come together as a unit to fight this," she said.

They're not the only ones. Indiana is home to some of the largest hemp extract producers and manufacturers in the world, and industry groups are already seeking an injunction in federal court that could temporarily or permanently block Rokita’s classification of Delta 8-THC and other products as scheduled drugs.

Indianpolis-based 3Chi LLC, a Delta 8-THC manufacturer, and Midwest Hemp Council Inc., a non-profit industry trade group, argued in a complaint that federal law supersedes state law - and Rokita's opinion - when it comes to hemp products.

They also argue that existing Indiana law provides a sound legal framework to manufacture, sell and possess Delta 8. Regardless, 3Chi has already moved its banking out of state to avoid potential legal liability.

Rokita's office has agreed to respond in court by Thursday, and a judge could issue a ruling as soon as Aug. 14.

Some store owners empty shelves of Delta 8 even as Rokita’s decision challenged in court

Mike Renschler, who owns Cloud City Vapor on Evansville’s West Side, got an unexpected visit from an EPD K-9 officer on Friday.

The officer provided Mike with Moers’ letter and a copy of Rokita’s opinion classifying Delta 8-THC products as controlled substances.

Renschler was stunned — and so were his customers. He had just received a shipment of Delta 8 products worth thousands of dollars. He pulled all of the products from his shelves out of fear that he could face prosecution.

“Whether you’re talking my cost or retail value, both are astonishing figures,” Renschler said, referring to the financial losses he could face if Delta 8 remains illegal to sell. “Without any warning? It’s a huge kick.”

Other local businesses recounted a similar story. At least one business owner said tens of thousands of dollars worth of inventory were affected by the change.

Sellers and customers alike are holding out hope for a successful legal challenge to the Delta 8 ban.

In January, the state attorney general’s office responded to a request from the Indiana State Police and the Indiana Prosecuting Attorneys Council to clarify whether existing state law classified Delta 8-THC and other “designer cannabinoid products” as controlled substances.

Rokita’s office issued a lengthy opinion that ultimately concluded the answer was yes: These products were illegal in Indiana under existing statutes. His finding classified Delta 8-THC and other hemp extracts – including Delta 9 and 10 – in the same category as heroin, cocaine and actual marijuana.

“Delta 8-THC and other THC variants, as well as designer cannabinoids, are Schedule 1 controlled substances pursuant to Ind. Code 35-48-2-4(d)(31),” Rokita’s opinion states. “The OAG cannot opine on the charging or prosecution of individual cases and defers to the prosecuting attorneys and law enforcement officers for those decisions.”

Locally, those decisions have apparently already been made. Moers told the Courier & Press she will "enforce all the laws as I am sworn to do."

The penalties for anyone charged could vary wildly, from low-level misdemeanors to upper-tier felonies. Just like other possession or dealing charges, the punishment would depend on how much product the accused was handling, Moers said.

And while Evansville Police Department spokeswoman Sgt. Anna Gray said no local residents have been arrested yet, police "plan to enforce this as needed."

Indiana's hemp industry fights back

Rokita's official opinion quickly drew the ire of Indiana’s multi-million dollar hemp industry, which has blossomed since 2018, when Gov. Eric Holcomb signed Senate-Enrolled Act 52 into law.

The act exempted “low-THC hemp extract” from Indiana’s definitions for “marijuana,” “hashish,” “controlled substance,” and “controlled substance analog," among other terms.

Under the law, low-THC hemp extracts are classified as substances that derive from, or contain any part of, hemp plants and which also do not contain more than 0.3% of Delta 9-THC, which remains illegal both federally and in Indiana.

Attorneys representing 3Chi and the Midwest Hemp Council, citing SEA 52 and the 2018 Farm Bill, argued in a complaint that Rokita had overstepped his authority. Existing state law exempts Delta 8 from narcotics scheduling, they wrote.

“After five years of well-established law, AG Rokita’s official opinion seeks to unilaterally declare popular low-THC hemp extracts Schedule 1 controlled substances, which deviates from established state and federal law; would lead to thousands of lost jobs around the state; and abruptly turns farmers, business owners and consumers into criminals overnight despite no change in state or federal law,” the complaint reads.

Rokita acknowledged in his opinion that Indiana law does exempt some low-THC hemp products from classification as controlled substances, but he argued that Delta 8-THC “does not appear to fall into any of these named exceptions.”

But 3Chi and the state's hemp industry as a whole argue that Rokita's opinion has multiple legal shortcomings. For example, existing federal law prohibits states from banning the interstate transport of hemp extract products that are regulated by the U.S. Department of Agriculture.

3Chi and others contend that if Indiana declares such products illegal, the state would effectively be regulating interstate commerce in violation of federal law.

According to court records, Rokita’s office has agreed to formally respond to the complaint this week. Attorneys representing the 3Chi wrote that they were “likely to succeed” in their challenge to Rokita’s opinion.

They have asked a federal judge to impose a preliminary injunction that would later be made permanent and have asked the court to declare “all low THC hemp extracts as agricultural products under state and federal law.”

It remains unclear what legal recourse affected businesses could take if Rokita's official opinion is enjoined.

Indiana is one of the few states that hasn't legalized cannabis

Compared to other states, this crackdown sends Indiana marching in the opposite direction.

Indiana is one of the few that hasn't legalized cannabis in some form, leaving millions of dollars in revenue on the table. In April alone, Illinois – which legalized recreational marijuana in 2019 – raked in almost $132 million in adult-use sales. About $32 million of that came from out-of-state residents.

When the recreational dispensary Terrabis opened this June in Grayville, Illinois about 45 minutes away from Evansville, customers lined around the building for hours on end.

That zeal extended to the Delta 8 shops in Evansville. And that's part of the reason for the crackdown, Moers said.

More and more signs were "popping up around the community" advertising Delta 8, even after Rokita issued his opinion in January.

But the opinion itself didn't change anything. The products being pulled from the shelves, she said, have always been illegal in Indiana.

"The OAG opinion offers clarification," she said. "The statutes make it illegal."

It will likely be up to a federal judge to decide whether that is really the case, given the fact Indiana law explicitly permits the sale of at least some hemp extracts.

Renschler hopes he can keep his Evansville storefront open —and he hopes otherwise law-abiding consumers avoid potential legal penalties.

"They were astounded that they're actually going to focus on this," Renschler said, referring to customers. "People get so used to things, and then all of a sudden it's swept out from under them; they're going to look for a way to find it elsewhere."

This article originally appeared on Evansville Courier & Press: Delta 8 products pulled from Evansville shelves amid Indiana crackdown