Elements Distribution v. State

894 S.E.2d 641

ELEMENTS DISTRIBUTION, LLC

v.STATE of Georgia.

A23A0842

Court of Appeals of Georgia.

November 2, 2023

Thomas Daniel Cedron Church, Atlanta, for Appellant.

Patsy A. Austin-Gatson, Brandon Mark Delfunt, for Appellee.

McFadden, Presiding Judge.

In February 2022, Gwinnett County law enforcement officers executed a search warrant upon a warehouse owned by Elements Distribution, LLC and seized business records, currency, and edible and nonedible products containing delta-8-tetrahydrocannibol ("delta-8-THC") and delta-10-tetrahydrocannibol ("delta-10-THC"). The warrant was issued upon the affidavit of a law enforcement officer that Elements had violated OCGA § 16-13-30 (b), which prohibits the possession of a controlled substance with the intent to distribute, by possessing and selling products containing delta-8-THC and delta-10-THC.

The state later conceded that the nonedible products containing delta-8-THC and delta-10-THC were not controlled substances, and it returned those products to Elements. But the state maintained that the edible products were controlled substances.

This case is Elements’ attempt to obtain the return of the business records, currency, and edible products that were seized. It argues, among other things, that it is entitled to the return of these items because delta-8-THC and delta-10-THC are not controlled substances and so the allegation that Elements was in possession of and sold items containing those substances did not provide probable cause for the warrant. Given the state’s concession that the nonedible products are not illegal despite containing delta-8-THC or delta-10-THC, we agree with Elements and reverse the trial court’s order denying Elements’ petition for the return, of the seized items. So we do not address Elements’ other arguments on appeal.

1. Procedural history.

The record shows that, on February 21, 2022, a police officer obtained a warrant to search Elements’ warehouse and to seize, among other things, "any and all items related to the sale and distribution of marijuana to include products labeled as Delta-8, Delta-9 or Delta-10." In support of the warrant application, the officer submitted an affidavit stating that, in the course of investigating another business, he learned that Elements had openly advertised the sale of and had sold products containing delta-8-THC and delta-10-THC. Based on that information, the officer asserted in his affidavit that "probable cause exists to believe Elements Distribution LLC is engaged in, and will continue to engage in, the sale and distribution of Delta- 8/10 products, which are a schedule I controlled substance in the state of Georgia." The magistrate court that issued the warrant found probable cause of a violation of OCGA § 16-13-30 (b).

The next day, Gwinnett County law enforcement officers executed the warrant and seized business records, currency, and both edible and nonedible items containing delta-8-THC and delta-10-THC.

At the time of these events, the Gwinnett County district attorney had taken the position that it was illegal to possess or sell products containing delta-8-THC and delta-10-THC. Other businesses challenged that position in a case brought against the Gwinnett County district attorney in Fulton County, and on March 18, 2022, the Fulton County court granted a temporary restraining order barring, for 30 days, the district attorney "from directing her office or agents to initiate or continue any criminal enforcement action or civil asset forfeiture proceeding against any individual or business based on their alleged possession, sale, or distribution of products containing hemp-derived cannabinoids, including but not limited to Delta-8-THC and Delta-10-THC." Before the temporary restraining order expired, the Fulton County court granted an interlocutory injunction with the same prohibition, to remain in effect while that case was pending.¹

On April 5, 2022, the Gwinnett County district attorney filed an affidavit in the Fulton County case in which she stated that she had "advised [her] staff that non-food products containing less than .3% delta-9-THC, regardless of whether they contain delta-8-THC, delta-10-THC, or another cannabinoid," were not controlled substances. (Emphasis in original.) She stated that Gwinnett County law enforcement officers had seized from Elements "6,130 packages of Delta-8 and Delta-10 edibles [and] $271,253.00 in U. S. currency" but denied directing that seizure.

On April 21, 2022, the Gwinnett County district attorney returned to Elements all nonedible seized products, which Elements’ counsel represented to the trial court were the "vast majority" of the seized products. But despite Elements’ requests, the district attorney did not return the other seized items.

On June 23, 2022, Elements filed this action in Gwinnett County, petitioning for the return of those items under either OCGA § 17-5-30 (a), which permits one "aggrieved by an unlawful search and seizure [to] move the court for the return of property," or OCGA § 9-16-7 (c), which permits one with an interest in seized property to request its release if certain procedural requirements for civil asset forfeiture have not been met. After an evidentiary hearing, the trial court entered an order denying Elements’ petition. The trial court found that the items still held by the state were controlled substances, and thus illegal, because they did not fall within an exclusion for "hemp products" within Schedule I of the Georgia Controlled Substances Act. See OCGA § 16-13-25 (3) (P). The trial court also found that the statute governing civil asset forfeitures did not require the return of the items because, even though the state had not filed a complaint for forfeiture within the time period required by that statute, see OCGA § 9-16-7 (b) (2), this was due to the injunction in the Fulton County case.

As detailed below, we agree with Elements that it is entitled to the return of the seized items and currency because the warrant that authorized the seizure was not supported by probable cause. So we do not address Elements’ argument relating to the civil asset forfeiture procedures.

2. The warrant authorizing the seizure of the items was not supported by probable cause.

[1] In this particular case, whether or not there was probable cause to support the warrant is a matter of statutory construction, so we have reviewed the trial court’s ruling de novo. See La Fontaine v. Signature Research, 305 Ga. 107, 108, 823 S.E.2d 791 (2019) (matters of statutory construction are questions of law subject to de novo review). We conclude that the trial court erred in denying Elements’ petition for the return of the seized items because the warrant authorizing the search of its warehouse and seizure of items therefrom was not supported by probable cause. See OCGA § 17-5-30 (a) (2) (permitting a party aggrieved by an unlawful search and seizure to move for the return of its property if there was not probable cause for the issuance of the warrant).

[2] The warrant was based on a finding of probable cause for a violation of OCGA § 16-13-30 (b), which prohibits the possession of a controlled substance with the intent to distribute it. The officer seeking the warrant averred in his warrant affidavit that Elements had violated that Code section by possessing and advertising for sale products that contained delta-8-THC and delta-10-THC.

The term "controlled substance" means "a drug, substance, or immediate precursor in Schedules I through V of [OCGA §§] 16-13-25 through 16-13-29 and Schedules 1 through V of 21 CFR Part 1308." OCGA § 16-13-21 (4). Schedule I expressly excludes tetrahydrocannabinol, or THC, "when found in hemp or hemp products as such terms are defined in [OCGA §] 2-23-3 [of the Georgia Hemp Farming Act]." OCGA § 16-13-25 (3) (P). OCGA § 2-23-3 defines "hemp" as "the Cannabis sativa L. plant and any part of such plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with the federally defined THC level for hemp or a lower level." OCGA § 2-23-3 (5). The " ‘[f]ederally defined THC level for hemp’ means a delta-9-THC concentration of not more than 0.3 percent on a dry weight basis, or as defined in 7 U. S. C. Section 1639o, whichever is greater." OCGA § 2-23-3 (3). These statutes provide that a derivative of the Cannabis sativa L. plant is "hemp" and, therefore, not a controlled substance, unless it has more than a 0.3 percent concentration of delta-9-THC.

Delta-8-THC, delta-9-THC, and delta-10-THC are derivatives of the cannabis plant. See Lisa Moran McMurdo, Judicial and Legislative Updates: Cannabis Law, 57 U. Rich. L. Rev. 9, 34 (IV) (E) (2022). They have different chemical structures, based on the location of a carbon-carbon double bond. See, e. g., AK Futures LLC v. Boyd St. Bistro, LLC, 35 F.4th 682, 686 (I) (A) (9th Cir. 2022); W. Michael Schuster, Cannabis Derivatives and Trademark Legislation: The Case of Delta-8-THC, 98 Ind. L. J. 177, 186 (I) (C) (2022).

The state does not argue in this case that the statutory definition of "hemp" excludes delta-8-THC or delta-10-THC. Instead, the state takes the position that delta-8-THC and delta-10-THC are not themselves controlled substances. It asserts in its appellate brief that, at the trial court hearing on Elements’ petition, it "conceded that non-food substances containing Delta-8 and Delta-10 were legal[.]"

So for the purpose of our analysis we will assume that the derivatives delta-8-THC and delta-10-THC fall within the statutory definition of "hemp" unless they also have more than a 0.3 percent concentration of delta-9-THC.² The state has neither argued nor shown that any of the edible products in this case containing delta-8-THC or delta-10-THC also had more than a 0.3 percent concentration of delta-9-THC.

Instead, the state argues that, even though delta-8-THC and delta-10-THC...