United States Court of International Trade

Slip Op. 22-111

Before the Court in Eteros Technologies USA, Inc. v. United States, Court No. 21-00287, Slip Op. 22-111 (September 21, 2022) were cross motions for judgment on the pleadings by the parties concerning U.S. Customs and Border Protection’s (“CBP”) denial of Plaintiff’s protest against the exclusion from entry of certain imported “motor frame assemblies”, which were designed to be used as cannabis harvesting equipment. CBP excluded the motor frame assemblies from entry. CBP asserted the assemblies were “drug paraphernalia”, whose importation was barred by the Controlled Substances Act (“CSA”), specifically 21 U.S.C. §863(a)(1). The importer contended that, because Washington State had legalized the production, possession and use of marijuana, and excluded marijuana equipment from its definition of prohibited “drug paraphernalia”, the importation of the equipment was allowed by 21 U.S.C. §863(f)(1), which says that the Federal drug paraphernalia ban does not apply to “any person authorized by local, State or Federal law to manufacture, possess or distribute such items”. The importer stipulated that its harvesting equipment fell within the Federal definition of “drug paraphernalia”. For the following reasons the Court granted plaintiff’s motion for judgment on the pleadings and ordered CBP to release the goods.

The dispute centered on whether plaintiff, was “authorized by . . . State . . . law to manufacture, possess or distribute” such items. Eteros argued that the lifting of Washington State’s prohibition against cannabis-related “drug paraphernalia” authorized it to import and possess the harvesting equipment. The Federal Government, however, argued that the concept of “authorized” required the importer to have a specific permit or license from the State to possess the goods. Deeming the issue of what it means to be “authorized” to possess drug paraphernalia to be an issue of first impression, the Court concluded that a user-specific permit or license was not required. The Court relied on the U.S. Supreme Court’s decision in Murphy v. NCAA, 138 S. Ct. 1461 (2018), where the high court concluded that, by removing a ban on sports gambling schemes, the State of New Jersey had “authorized” its citizens to engage in sports betting. In particular, the Court noted Justice Alito’s comment that “[t]he repeal of a state law banning sports gambling . . . gives those now free to conduct a sports betting operation the ‘right or authority to act’”. The Supreme Court determined that “[w]hen a State completely or partially repeals old laws banning sports gambling, it ‘authorize[s] that activity’”. The Court also noted that the Supreme Court made note of Vermont’s legalization of marijuana as now “authorized” in the Murphy case. In like fashion, the Eteros court concluded that the Washington State legislature’s decision to lift the ban on marijuana paraphernalia “authorized” persons to possess such merchandise, and triggered the exception found at 21 U.S.C. §863(f)(1). As such, judgement was entered for the plaintiff.

Neville Peterson LLP represented the plaintiff in this action. The case is significant because it resolves an open question regarding whether it is lawful to import marijuana-related drug paraphernalia in States that have legalized marijuana and related paraphernalia. The Eteros decision will likely open up sourcing choices for entities involved in the various States’ legal marijuana-related industries. However, the particular legalization scheme each State has adopted needs to be carefully evaluated against the Federal prohibitions and exceptions in the Controlled Substances Act.