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A Texas federal judge on Wednesday stayed enforcement of U.S. Drug Enforcement Administration subpoenas seeking financial and other records from a group of hemp and vape sellers, who had argued earlier this week that the subpoenas were overbroad and unlinked to any federal investigation.
In a one-page order, U.S. District Judge Amos L. Mazzant stayed the subpoenas until the court can give full consideration of the motion filed Monday by Allen Hemp Coalition and 10 vape sellers.
In that motion, the coalition wrote that they all only sell products that are legal under both Texas law and the 2018 Farm Bill that decriminalized hemp and hemp products with less than .3 percent delta-9 THC, and that the DEA has not pointed to any ongoing federal investigation related to the Controlled Substances Act that would justify the subpoenas.
According to the motion, the subpoenas request records including identifying information for the owners, including their addresses and phone numbers, the wages paid to the owners and all employees, a complete source of all inventory, and all financial accounts, including bank names and card numbers as well as apps like Venmo and Cash App.
These requests are overbroad, the coalition wrote, saying there are limits to the DEA's administrative subpoena power and there's no need for this type of subpoena when the DEA could have instead sought a warrant that would be reviewed by a magistrate judge.
The subpoenas also implicate the stores' privacy interests, as they have a significant Fifth Amendment privacy right related to the financial documents, the coalition told the court.
In addition, the DEA is seeking information beyond its mandate, specifically information on non-hemp related products sold by the companies, the coalition wrote, adding that the DEA has no statutory basis to request the wages and the financial account information, as to the best of the companies' knowledge, there is no complaint or investigation concerning them.
The subpoenas are also not sufficiently narrowed in scope to pass scrutiny under the Fourth Amendment's protection against searches and seizures, the coalition wrote.
The Fifth Amendment's protection against self-incrimination also implicates any records except those records that are "essentially regulatory," "customarily kept" and have "public aspects," so the subpoenas should only be able to get certificates of analysis, the origin of hemp seeds from the last five years, the suppliers of the hemp seed and documents certifying the hemp seed, according to the motion, as those records are required to be kept under Texas law.
David K. Sergi of Sergi & Associates PC, representing the companies, told Law360 on Wednesday that they're happy to get the stay.
"We think it's pretty clearly a fishing expedition because they are seeking information from every vape shop, smoke shop in Allen," Sergi said.
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