DOJ Wants Marijuana Accessories Seizure Challenge Tossed From District Court

A complaint in the U.S. District Court for the Eastern District of Michigan challenging the seizure of CBD and hemp accessories as "drug paraphernalia" should be scrapped since the importer did not exhaust administrative remedies before challenging the seizure, the Department of Justice argued in an Aug. 2 motion to dismiss. The case, brought by Michigan-based vaporizer, rolling paper and pipe importer ASHH, pushed for the return of the CBD and hemp goods under Rule 41(g) -- a legal authority CBP said the district court didn't have, per U.S. Court of Appeals for the 6th Circuit precedent (ASHH, Inc. v. United States, E.D. Mich. #21-11210).

Between November 2019 and May 2021, ASHH had multiple shipments of its goods seized by CBP. The customs agency classified the shipments as drug paraphernalia, prompting a challenge to this label by the company (see 2105260065). ASHH challenged the characterization of its goods as paraphernalia, arguing that Michigan's marijuana legalization laws precluded this label. The importer raised claims under three different statutes: Rule 41(g) of the Federal Rule of Criminal Procedure, the Administrative Procedure Act and the U.S. Constitution's Takings Clause.

A 1989 6th Circuit case, Shaw v. United States, precludes jurisdiction in the district court for the Rule 41(g) claims since an "adequate remedy at law" exists, the government argued. In fact, there are multiple legal remedies for challenging CBP's seizure of merchandise, the defense said, including filing a petition for remission of forfeiture -- a step ASHH actually took. "Alternatively, ASHH could have elected to pursue legal remedies available under 19 U.S.C. § 1608 by filing a claim and posting a bond, leading to a judicial forfeiture action by the United States," the U.S. said. "What ASHH plainly cannot do is 'bypass the statutory procedure provided for' and seek immediate return of the goods through Rule 41.'"

The U.S. also tapped a common defense of seizure challenges (see 2106300034), claiming that the seizure does not constitute final agency action and cannot be challenged under the APA. "Meaningful differences" exist between seizures and forfeits, the government said. "A seizure thus begins a process -- strictly defined by statute and regulation -- that leads towards settlement, administrative or judicial forfeiture, or a return of the property," the motion said. "Only those final outcomes represent the 'consummation' of CBP’s decision on how to dispose of the property, and only those final outcomes determine legal 'rights or obligations.' Indeed, the very purpose of the petition process that ASHH is already pursuing is to persuade the agency to take a certain course in making its final decision."

Congress explicitly laid out avenues for seizure challenges to take place which first include in rem action kicked off by the U.S. against the forfeited property, CBP said. An interested party may seek to contest the forfeiture in this instance. "Congress has thus set up a specific scheme for reviewing a claimant’s rights to seized property, including distinct and detailed procedural rules to govern any resulting judicial proceedings," the government argued. "It would frustrate Congress’s purpose to permit an end-run around this statutory scheme and would short-circuit the administrative process established specifically to allow the agency room to respond to a claimant’s arguments in the first instance. Judicial review under the APA is thus precluded."