good morning we are here in court to hear today's cases the panel is judge easterbrook who is here in the courtroom judge caney who i trust is on the telephone and i am good and myself  discussion of the merits i have some concern about what is before us did the district court ever enter an injunction two things that are easily fixable one is there's been no compliance with rule sixty five and the other is that the language at the end of the opinion appears to be totally unrelated to the district court's legal analysis those are easily fixable but they're fixable by a district judge not by us because this judge would maybe i might recommend to you that we just pause minute after each person speaks because of the lack of visual cues and i had a similar concern in that it seemed to me that there could be an injunction here i understand part of the district court's rationale to be that it's impossible to be transporting an item here the smokable him across the state without simultaneously possessing it but that's a much narrower concern than the language of this final part six conclusion which i realize is what the parties are treating as the injunction and i just for good measure while i have the floor will add that i'm not sure that this new statute cures all problems because it's qualified to but there is this preliminary problem about why the district court wasn't alerted by the state about potential over grids of the injunction or some of the other things you're now raising so two things that i'd like to say to that your honor st the state's briefing on the missing step here though is addressing the district courts particular attention to the language to the scope of the actual prohibition i won't use the word injunction  seems to have described here and had that focus been accomplished at the district court level for all i know the district court either would have explained  why the definitional issue drove such a broad injunction or why manufacture and financing are also part of interstate transportation there are a lot of questions about this you know again i can certainly recall many many cases under the controlled substances act where somebody is driving a truck full of some prohibited thing cocaine or or whatever across the state of indiana and they're arrested and one of the offenses they're charged with usually is possessing it they're transporting it also and maybe they're possessing it with intent to distribute and they're doing other things but there are aspects of the state's analysis that i think are  quite weak there are other aspects of the state's analysis that seem to make a valid point about the possibility of preserving transportation across the state without such a broad injunction form i'm sure that's true the opportunity to point out problems to the district court is an opportunity rather than a duty but we do have plenty of cases saying that if the litigants don't do that and we are left without a proper rule sixty five dollars injunction we will remain and so that the district court can do the job right miller coors only the most expensive why isn't that the right thing to do here and i would add here particularly because you did give us the supplemental authority i realize the state is going to argue that effective july st of this year at a minimum we have a different case  whether the restriction to licensed producers and licensed other people is compatible with the federal law i don't know what continuous transport means i don't know either if somebody were to stop and you know spend the night in indianapolis on their way across states that continuous there are issues that the district court would be in a good position to consider them not something that judges can just say oh well we don't care about that today there are many non jurisdictional rules that are normal less mandatory and the briefs seem to be of the view th jurisdictional and mandatory are the same thing hudson i just want to make clear though we have some cases in which the failure to comply with rule sixty five dollars d really honestly could be said not to have made any difference but i thought we'd all agree that paragraph or part six isn't one of those cases that there are ambiguity cers potential over breadth there are a lot of things that make it problematic now if this had been a rule sixty five g injunction i quite agree with you the state doesn't have to keep going back and pestering the district court to change it you could take your one thousand two hundred and ninety to a one appeal and here we'd be but it isn't and so what that that and the question and the two of them are not consistent would certainly agree i'm sorry your honor let me let me let me move to a different topic and that's the new legislation that's effective as of july one i'm concerned and i assume my colleagues are concerned about the fact that the new legislation allows transport through the state from one licensed dealer to another licensed dealer what is the state's view about what happens when the dealers aren't licensed i gather that states that the federal system does not require states to license dealers and indeed in your  in the federal statute just says no state or indian tribes shall prohibit the transportation or shipment of hemp or hemp products and so on through the state so i don't see anything about licensed people there don't have a regulatory system then the federal government will license producers as a matter of a law why suppose the state of iowa says we're allowing the production of we'll call it try one more time i see the option to get a license under federal law i don't see the requirement to get one if the state says we are regulating this subject and we don't need a license be most stringent than federal law it doesn't need to get the approval of the federal government but in the situation you're envisioning where it's stated and isn't regulating at all it's of course being less stringent than federal law things all the time without requiring licenses that's true your honor and i think i think i certainly can imagine a circumstance that i think the state will be stable of knowledge but you can imagine a circumstance where i aware of designs a regulatory scheme for the production of ham that let stringent than federal law they submit the plan to the u s d a the u s d a approves that plan and in that hypothetical circumstance of which the state is not aware of any but it's at least conceivable that something like that could happen and that sort of stance a producer producing hemp under that kind of regime in the states view would qualify as a quote license producer for the purpose of the whiteman's producer it would just be a producer that doesn't need a license and underst minutes judge easterbrook i believe has one more question putting putting this question whether every state requires a license to one side i have a question about whether there has been any or is impending any efforts to ask the state to interpret this language i could imagine saying that the new bill means license if one is required a permissible interpretation of the new legislation efforts to obtain clarification from the state courts no they did not aware of any and the state's not aware of whether the plaintiffs in this litigation would be in a position to seek such clarification or whether they would need such clarification in the st place whether there and in other words whether they are in fact when it comes to states not aware of that all right why don't you reserve what remains for your rebuttal and we will move on to the argument from  with the new legislation if i may as as the court's aware based on the april three filing in response to the state's supplemental authority our position is ap elisa's that the new legislation does not cure the interstate transportation problem with the old legislation and by all legislation i mean senate roll back five hundred and sixteen which is actually what's before the  court i would point out just for the sake of the record that the new legislation is not even effective yet and so we are in a regime right now anyway that is absent any of the new provisions in section  and thirty five but be that as it may i think the bigger issue and what we point out in our submission and what your honor is have asked about this morning is that the new legislation is a best incomplete and at worst extremely vague as to what it purports to allow there are all kinds of scenarios and your honour's have asked questions this morning of my opposing counsel that indicate you're here you're understanding very well some of our concerns that the you know what is a license to produce their what is a licensed handler there is no definition that applies certainly across all states and fundamentally what congress said very very clearly in the two thousand and eighteen farm bill is that states are not allowed to him flower which indiana has defined as notable help so that the fact of the matter is this new legislation doesn't cure the violation of the express preemption provision it still imposes restrictions on the transport of him but i can i ask you mr mr fink this is judge wood i'm going to move from the the new bill back to the case actually in front of us and maybe we'll invite you to address two things one the st topic that we discussed with mr hudson the lack of a formal rule sixty five the injunction but but secondly and i'm i'm interested in digging into the content of that final paragraph of the district court's opinion and your view on how congress is concerned to preserve transportation and markets in that sense goes all the way to manufacturer financing this this language it's a it's a stretch to call manufacture and financing transportation you can finance something that's happening in india you know you don't have to be transparent transporting anything across the state of indiana to finance it and equally with manufacturers seems that it's much closer to the production end of things which the state is allowed to regulate than it is to the transportation end of things yes yes yes your honor and i certainly agree with that let me i think the main area of disconnect that i have with the state on this issue is that the court that the district court in this case was not solely concerned with expressed preemption based on this transportation issue yes it was a big part of her order we've all read the order we all understand that that it was a featured piece in her order but she also excepted our conflict preemption argument and our conflict preemption argument is based on the fact that the federal government in the two thousand and eighteen farm bill defined him to include all extracts and derivatives that encompasses specifically your honour's to pages ten and eleven actually the conflict preemption section starts i believe on page nine of the court's order but the court discusses in quite some detail her concern federal statute yes your honor that is absolutely at billy's position and that's based on the definition of how that congress selected again that includes all extracts in authorized to alter the definition of hamp or put in place policies that are less restrictive so i mean or i believe separates those two phrases and gives you a case a congressional intent council not to have a patchwork  big says about as plainly as one can imagine that states can be more restrictive so what is the source of the rule that states can't be more restrictive yes your honor thank you for that and what you have referenced is commonly known as kind of the anti preemption provision that's kind of colloquial what it's called but that language your honor relates only to the production of h says very clearly and you're exactly right it's very unambiguous that states can regulate the production of him in ways that are more restrictive than the federal government so the state of indiana can say how many to production flat out prohibit production of him i believe it could your honor yes i believe the state could say we will not allow farmers in this state to take advantage of the two thousand and eighteen farm bill and grow i think that's that's the only fair way to read the congressional mandate and that and preemption provision but i have to emphasize the word production and this is according to the united states department of agriculture and we've cited this in our brief that that relates to the growing  in the federal definition ok so so you see it in this conflict preemption section beyond just express preemption the transportation that although indiana can say we're not going to be in the hemp growing business people throughout indiana who want to the low t h c product made from this plant are protected under federal law and just a can't reclassify low t h c have as a controlled substance subject to criminal probe ish and that's that's discuss the intent here was to give farmers another product that they can utilize to bring value to their farming operations and they did not want they being congress did not want states to have the ability to say you can't ship any hemp through our jurisdiction and you can't produce this kind of produce that they can do that that you're not they don't want states to permit or to prohibit certain types of hemp products that's within the definition and congress itself in the conference report said states you have to leave the definition of council we i hope we understand a conference report is not more yes absolutely will absolutely zero the meaning of the statue and with that thought in mind i was about to ask you something quite related to that which is if we put to one side the various conference reports and other legislative background materials you've cited why isn't it reasonable to think that manufacture is actually just part of the production  process you seem to have a very literal view of what production means which is planting a seed and growing in the field and then everything else is something else but why isn't manufacture at least reasonably understood be within the scope of production yes fair question i mean you're quite right your honor that we do read production somewhat narrowly that's consistent with the united states department of a culture's interpretation that production refers to the growing of hemp and wouldn't extend to financing or manufacture and certainly not possession so that you know our our  interpretation takes the word production in an agricultural sense at face value and is consistent with the united states department of agriculture just to respond briefly to to judge easter books comment i absolutely agree your honor that the conference report is not binding law it's not the statute but what has your honour's know very well in a conflict preemption setting what the court tries to do st and foremost is understand what was congress attempting to do and there's two sources of that obviously you look at the language that's where you start and we've made the argument that the language itself includes the definition in the definition includes extracts and derivatives so we say that that's evidence of congressional intent but in addition to that we look at other materials congressional statements and things of that nature to try to derive intent i'm not arguing that the congressional report is a source of express preemption based on what it says i'm simply saying it's the best indicator that we have congressional intent in addition to the language and it's consistent with the very broad definition of him that is that in the farm bill mr being with  removal of him from the schedule of controlled substances is there anything in federal law that regulates the possession and use of him one way or the other no your understand where this question is coming from you are treating the word reduction in the preemption clause as meaning that states are preempted from regulating possession and use bu federal law just doesn't cover those subjects what is it that would preempt it federal law does not impose a speed limit but states have speed limits on one road all use frequently the speed limit is ten miles per hour and no one would say that's preempted by federal law isn't that the sort of argument that says that you're making here i and in a way yes your honor but it's a little bit broader than that our our point is simply that the federal government did preempt any state from interfering in transportation and that on a minute counsel and we can we go back now to transportation through the state the one thing on which there is a clear federal preemption as as you heard in the earlier questioning and i certainly want to get to this before our time runs out we're worried about the word licensed in the amended state statute book question for you is do any of your clients do any of the plaintiffs here claim to be people who lack licenses and as a matter of state law don't need them just to be clear i'm worried about standing to contest the word licensing in that new statute so you're out of it the answer is no my clients do not need a license or have a license the only folks in indiana who need a license under the current statutory regime mark people who are growing it and who are producing it count counsel maybe maybe this was a problem with my question the way the statute is worded it says it as of july one you can transport through indiana smokable hemp from a licensed dealer in the origin state to a licensed dealer in the receiving state do we have in this case any plaintiffs or shippers or receivers who assert that they are not licensed and don't need them you know that is not an issue in this case as well ironically going on a minute i thought that you just said that your clients did not have lice and maybe one of the awkward things about this whole case is that the laws on the of changing and so the parties have not really had a chance to focus to focus on those to explore this in briefs but if your clients do not hold licenses then perhaps they are potentially people who would be excluded from the permission granted in the new law that's exactly right your honor and if i'm not being clear i apologize that to be as clear as i can my clients do not hold licenses under indiana law because that only applies to growers or producers which my clients are not so they are unlicensed and i think arguably would be subject to you know whatever license producer license handler means although i think in the reading again i think fraught with peril given that those aren't defined terms and other jurisdictions may or may not have any sort of licensing requirements but again i you know that is that is why we believe that this new statute doesn't actually cure any of the transportation preemption arguments but i do want to just remind the court that setting that all aside and even if there is a standing issue not conceding there is but even if there was from a licensing standpoint we still have the same conflict preemption problem that exists under the new statute as we did under the old there's still an attempt to carve out part of the federal certainly true that the new legislation that was literally signed into law a couple of weeks ago was not before the court it is certainly possible that the judge would view that legislation and consider the underlying issues and come to a different conclusion i don't think she should for the reasons we've discussed but i mean i believe that what's before the court now is section five hundred and sixteen that's what we appealed that's what the court had an opportunity to weigh in on and based on the expressed preemption and conflict preemption order while it should have set out a separate injunction order i acknowledge that and concede that our order is clear that is quite broad and at least to me quite clear understanding there's some view that differs from that or that it's that it's inconsistent with the order i don't think it is i think what the judge was  to say look the express preemption provision strikes down this statute but in addition to that we have a conflict preemption problem with the states changing the definition it can't do that and because of that anything court and ultimately i think your order reflects that all right i think we need to wrap this up now since for two minutes over so thank you for your argument mr zink and mr hudson you had about a minute left i think your honor just a couple quick points on the conflict preemption issue number one it's worth noting that the u s department of agriculture's implementing regulations specifically recognize that states may prohibit any case in which a federal court has preempted state law because of a definitional provision in a federal statute the plaintiff's argument amounts to the idea that because congress has legalized happens a matter of federal law states are required to as well and that's simply not the way preemption works all right well thank you very much thanks mr hudson serving the court will take this case