United States v. Mallory, 372 F. Supp. 3d 377

Background

The United States sued CAMO defendants (Matthew Mallory/CAMO Hemp WV LLC) and Grassy Run defendants (Gary Kale/Grassy Run Farms, LLC) after CAMO obtained Cannabis sativa L. seeds from Kentucky and cultivated hemp under West Virginia’s pilot program; DOJ sought injunctive and other relief under the Controlled Substances Act (CSA).
Court initially issued a TRO then a preliminary injunction limiting transport/sale; later dissolved the injunction and allowed interstate transport for time‑sensitive processing after a stay was lifted.
Key factual points are undisputed: seeds were purchased from a Kentucky supplier, planted in Mason County, WV under a WVDA license; WVDA reviewed and did not revoke the license after learning seeds came from an out‑of‑state (non‑international) source.
The United States alleged defendants violated the CSA by obtaining/importing seeds without DEA registration and argued state licensees must be constrained by DEA registration/import rules.
Defendants argued (and the Court found) that the 2014 Farm Bill carved out an exception for industrial hemp (THC ≤ 0.3%), subsequent appropriations riders (2016–2018) limited federal enforcement against interstate transportation/processing/sale (including seeds), and the States/State agriculture agencies have authority to regulate/enforce pilot programs.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether obtaining seeds across state lines without DEA importer registration violated the CSA	Seeds shipped from KY to WV were unlawfully obtained because importation/transport of viable cannabis seeds requires DEA registration	2014 Farm Bill carve‑out for industrial hemp plus appropriations riders allowed interstate movement/processing of hemp and seeds when grown under state pilot programs	Court held defendants did not violate CSA under applicable statutes and riders; industrial hemp/seeds compliant with statute are not subject to CSA prohibition
Whether the 2014 Farm Bill and later appropriations riders were preempted by or conflicted with the CSA	DOJ: CSA still governs and its broad definition of "marihuana" covers whole plant/extracts, so DEA import/transport rules control	Defendants: 2014 Farm Bill’s "notwithstanding" clause and subsequent appropriations riders limit enforcement; Congress intended an exception for hemp with THC ≤ 0.3%	Court held Congress carved out an exception; appropriations language indicated Congress did not want agencies to prohibit transportation/processing/sale of compliant hemp/seeds
Whether the United States may enforce alleged violations of state pilot program requirements (e.g., purchasing seeds via WVDA) as federal CSA violations	DOJ: Noncompliance with WVDA procedures (and statements on application/handouts) shows unlawful procurement requiring federal enforcement	Defendants: Enforcement of state licensing/administrative compliance is a matter for the WVDA; DOJ cannot convert state program violations into federal CSA crimes where Congress limited federal reach	Court held WVDA—not DOJ—was the appropriate enforcer of state program compliance; WVDA declined revocation and allowed corrections, undermining DOJ’s position
Whether the United States should be allowed to amend its complaint	DOJ sought to add allegations (including testing speculation)	Defendants opposed amendment as futile	Court denied leave to amend as proposed changes were futile and would not cure legal deficiencies

Key Cases Cited

Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (establishes plausibility pleading standard)
Ashcroft v. Iqbal, 556 U.S. 662 (clarifies that legal conclusions need not be accepted as true on a motion to dismiss)
Cisneros v. Alpine Ridge Group, 508 U.S. 10 ("notwithstanding" clause can indicate legislative intent to override conflicting statutes)
Cockrel v. Shelby County Sch. Dist., 270 F.3d 1036 (discussion regarding THC levels and narcotic effect)
Hemp Indus. Ass'n v. Drug Enforcement Admin., 333 F.3d 1082 (context on pre‑2014 necessity of importing hemp seed/products)
Save Our Sound OBX, Inc. v. N. Carolina Dep't of Transp., 914 F.3d 213 (courts may deny leave to amend as futile)