Jersey Hemp has won a watershed court battle against the UK Home Office, which has now admitted acting unlawfully in banning the CBD company from importing products to the UK.
The High Court has ruled in favour of Jersey Hemp in its bid to overturn the now notorious decision, which effectively threatened the legality of the entire UK CBD industry.
While the decision is a ‘very significant victory’ for the company and the wider CBD industry, it has had a ‘devastating’ and likely fatal impact on Jersey Hemp and its employees.
It serves as the latest and perhaps most pointed example of how the lack of clear regulation in the UK is not only preventing the industry from moving forward, but also actively dismantling British companies that have done their utmost to operate legally.
Jersey Hemp
Jersey Hemp was established on the island of Jersey in 2018, and had the ambition to become the UK’s first and only licensed company to produce CBD from seed to bottle.
The company’s commercial director, Craig Dempster, told Business of Cannabis that over the next few years, Jersey Hemp went through ‘quite a protracted process with the Jersey Government’, working with them to ensure they were fully licensed to grow hemp and manufacture CBD products.
“The concept behind it was that we’d become a fully traceable, organic, homegrown product, and could trace every ingredient in the CBD back to the field it was grown in.”
He added that his company adhered to near-pharmaceutical levels of production to meet the UK’s ‘very high bar’, spending millions on specialist equipment as the business grew over the next four and a half years.
The UK was ‘always the target market’ for Jersey Hemp, and the company was soon importing and selling its CBD oil into the market, ‘which (they had) worked very hard to get under 1mg of THC’.
As far as Jersey Hemp was concerned, its CBD product was on the Food Standards Agency’s (FSA) novel food register, met all the requirements to be exempt, and could therefore be legally imported and sold in the UK.
However, in 2023, the Drugs & Firearms Licensing Unit (DFLU) challenged this.
Exempt Product Criteria
Jersey Hemp’s case centres around what’s called the Exempt Product Criteria, a regulation relating to the Misuse of Drugs Regulations 2001.
While CBD itself is not a controlled substance, it is nearly impossible to avoid trace amounts of THC being found in full-spectrum CBD products. However, under these regulations, a product containing THC is considered ‘exempt’ if it meets three criteria.
It must contain less than 1 milligram of THC per product component, THC must not be easily extracted from the product ‘in a yield that poses a health risk’, and it must not be ‘designed for administration of the controlled drug to any human or animal’.
This final point is what was challenged by the DFLU in 2023, arguing that the preparation was designed to administer a controlled substance.
As Mr Dempster points out, given that all UK CBD products contain trace amounts of THC, and the majority are imported from abroad, this would have rendered the entire industry illegal.
After the Jersey Government decided to act on a recommendation from the DFLU and remove its licence, the company immediately appealed.
"After months of legal action in the UK court, the Home Office has finally admitted that it acted unlawfully in relation to Jersey Hemp."https://t.co/B7VQC7XteD
— End Cannabis Prohibition Jersey (@ecpj_campaign) March 13, 2024
Josh Normanton, a barrister from Trinity Chambers who advised Jersey Hemp’s legal team Field Fisher on the case, explained: “There’s been a lot of big debate over the years about whether the exempt product criteria applies to food stuffs or CBD products. I’ve certainly dealt with that a lot. I am sure it does apply.
“What needs to be taken into account is that a CBD product is designed for the administration of CBD to the human being or animal, it’s not designed for the administration of the THC which is sometimes left in products in traces due to the manufacturing process. This means that at least one of the limbs of the exempt product criteria is met.
“We appealed to the High Court and said the Home Office had got its interpretation of the exempt product criteria completely wrong with respect to Jersey Hemp’s CBD products. It was an unlawful decision. Their interpretation of the exempt product criteria was too restrictive and fell into error, and they also misinterpreted their own policy.”
In February, the Home Office conceded that it had made a mistake, and the company is now in the process of pursuing it for damages in the civil courts.
What this means for the industry
While this is a positive ‘step along the way’ for the industry, and ‘may prove to be a very costly error for the Home Office’, Mr Normanton explained that the question of whether the exempt product criteria applies to CBD is still not solved.
Because the Home Office conceded, it means that there was no written decision by a court to provide precedent.
“This is a very significant victory, but it would have been better for the industry to have some sort of written judgement.
“Then you can say this is the law. At the moment, in reality, that position hasn’t changed significantly because if anyone is wanting to work out what the law is, we have to look back at the exempt product criteria. What this doesn’t do, unfortunately, is define that.”
Mr Dempster added: “It’s good for the industry. But obviously, it is not great for us.”
After losing ‘95% of its income overnight’, the company has been forced to let staff go and sell off its equipment to pay creditors.
“It’s been pretty, pretty awful. You know, watching the business be disassembled and equipment that we paid a lot of money for sold for buttons because people smell blood.”
While the company is continuing to pursue the government for damages, Mr Dempster is doubtful the company will ever ‘recover what we’ve invested back from this business’.
The court decision also grants Jersey Hemp the ability to begin selling its products back into the UK market, but Mr Dempster says rebuilding the business would be unlikely unless they receive ‘an adequate settlement that would allow us to start again, which would need to be significant’.
