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Hemp Production Licenses and Constitutional Rights

On May 30, 2019, a southern Minnesota farmer filed a lawsuit against the Minnesota Department of Agriculture after the Department revoked his license to grow hemp. In the complaint, the farmer, Luis Miguel Hummel of 5th Sun Gardens, claimed that the Department violated his constitutional due process rights by revoking his license without a hearing after some of his products tested above the legal limit of THC. The Department ordered Hummel to destroy his crops, worth over $1 million, without disclosing the test results or allowing Hummel the opportunity to address the findings. The Department filed a motion to dismiss Hummel’s civil case on July 19. Hummel also faces criminal charges with respect to his products’ THC content.

Hummel initially received a license to grow hemp in March 2018, according to the complaint. The Department tested the THC content of Hummel’s crops on two occasions in 2018, and the crops passed both inspections. When Hummel renewed his license in January 2019, the Department required that he sign a “Memorandum of Understanding” that provided, among other things, that failing to follow Department of Agriculture guidelines “may result in loss of license and/or enforcement proceedings” and that “the [Department] has ultimate discretion with respect to which pilot participants are included in the MDA industrial hemp pilot program[.]”

On March 15, 2019, a Fillmore County police officer stopped a man who was carrying products produced by Hummel, according to a probable cause statement filed in the criminal case against Hummel. The officer seized the products, which the man described as being CBD hemp products that he was planning on selling in the Twin Cities area. The products were later tested, and allegedly found to contain between 3.11% to 3.6% THC, which exceeds the legal limit of 0.3% THC for hemp products. After receiving the test results from a police investigator, the Department sent Hummel a letter revoking his license and demanding that he destroy his crops within 10 days. Hummel’s attorney replied to the letter, asserting that it was improper to revoke Hummel’s license and demand he destroy the crops without sharing the test results, identifying the individual who had been stopped, or providing notice and opportunity for a hearing. The Department replied that its position was that it had unilateral and unfettered authority under the Memorandum of Understanding to revoke Hummel’s license at any time, and that Hummel could face additional legal action if he refused to destroy the crops.

Hummel then filed a lawsuit, asking the court to issue an injunction to prevent the destruction of his crops, declare that he had a constitutional right to a hearing before his license was revoked, and claiming that the department violated his procedural and substantive due process rights. In its motion to dismiss the complaint, the Department argued that Hummel did not have a right to a hearing and that his due process rights were not violated because he had no property interest in the license. The Department argued that by signing the Memorandum of Understanding, Hummel granted it it “ultimate discretion to determine Pilot Program participants and the ability to revoke a participant’s License[,]” waived his right to contest any revocation, and released the Department from any liability. It also claimed that the Eleventh Amendment prevented Hummel from suing the Department in federal court, and that the Department employees included in the lawsuit were protected from liability due to qualified and official immunity.

In his reply, Hummel asserted that he was granted a property interest as a license, by its very nature, “is permission to perform an act for a fixed period of time.” In addressing the Department’s contention that it has unfettered authority to revoke licenses because of the Memorandum, Hummel claimed that the Memorandum was an unenforceable contract of adhesion, or a contract that is unenforceable because the disparity of bargaining power between the two parties left Hummel no option but to sign the contract. Therefore, Hummel argued that it was improper for the Department to revoke the license without first providing him the opportunity to address the allegations. Hummel also claimed that the Department’s actions were so egregious as to support a claim that the Department violated his substantive due process rights. Finally, Hummel contended that he could not have waived any right to contest the Department’s decision by signing the Memorandum, as that would constitute waiving his constitutional rights, and the Memorandum was not sufficiently explicit to waive any such rights. Hummel also denies the contention that the Department and its employees are immune from suit.

In its reply, the Department again asserted that Hummel did not acquire a property right in the license. In the law authorizing the Department to grant licenses, there are two provisions at issue. The first, Minn. Stat. § 18K.04, notes that the Department “must” grant licenses if an applicant submits a sufficient application and pays a fee. The second provision, Minn. Stat. § 18K.09, authorizes the Department to establish and administer a “Pilot Program,” in which it may authorize farmers to cultivate and distribute hemp in order to research the crop’s potential commercial, agricultural, and industrial viability. The Department argued that the Pilot Program permits, which it claims it issued to Hummel, allowed it greater leeway in determining to issue, revoke, or decline to renew licenses. Therefore, it asserted, Hummel had no reasonable expectation to have acquired a property interest in the license, he was not entitled to a hearing, and his due process rights were not violated. The Department also claimed that Hummel’s substantive due process rights were not violated, as U.S. courts have not recognized a constitutionally protected “right to work.”

The United States District Court for the District of Minnesota will hear oral arguments in the case on Sept. 16, 2019. On June 18, the Star Tribune reported that if Hummel loses the case, he plans on selling his farm instead of destroying the crops.

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