In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 19-3034

C.Y. WHOLESALE, INC., et al.,

Plaintiffs-Appellees,

v.

ERIC HOLCOMB, et al.,

Defendants-Appellants.

____________________

Appeal from the United States District Court for the

Southern District of Indiana, Indianapolis Division.

No. 1:19-cv-02659 — Sarah Evans Barker, Judge.

____________________

ARGUED APRIL 14, 2020 — DECIDED JULY 8, 2020

____________________

Before EASTERBROOK, KANNE, and WOOD, Circuit Judges.

WOOD, Circuit Judge. A group of Indiana-based hemp 

sellers and wholesalers sued the State of Indiana and its governor, seeking to enjoin the enforcement of the state’s criminal 

prohibition on the manufacture, delivery, or possession of 

smokable hemp. Ind. Code § 35-48-3-10.1. The plaintiffs (collectively “C.Y. Wholesale”) argue that Indiana’s law is 

preempted by the Agriculture Improvement Act of 2018 and 

barred by the Commerce Clause of the Constitution. The 
2 No. 19-3034

district court issued the requested injunction, and Indiana has 

appealed.

We conclude that although C.Y. Wholesale may have been 

entitled to block certain aspects of Indiana’s law, the injunction before us sweeps too broadly. We therefore vacate it and 

remand to the district court for further proceedings.

I

As part of the 2014 Farm Law, Congress permitted states 

and research institutions to cultivate industrial hemp for research purposes without needing first to obtain approval 

from the Drug Enforcement Administration (DEA). Industrial 

hemp is a product derived from the cannabis plant, but it is 

distinguishable from conventional marijuana in one crucial 

respect: it has a much lower concentration of tetrahydrocannabinol (THC), the principal psychoactive constituent of cannabis. The law defines industrial hemp as “the plant Cannabis 

sativa L. and any part of such plant, whether growing or not,” 

with a delta-9 THC concentration of 0.3% or less. Pub L. No. 

113-79, § 7606. The 2014 Law allowed states to continue to 

prohibit the production of industrial hemp, and it permitted 

cultivation only where it was “allowed under the laws of the 

State.” Id. Under the 2014 Law, industrial hemp plants and 

seeds (as before) could “not be transported across State lines.” 

81 Fed. Reg. 53,395 (Aug. 12, 2016).

In 2018, Congress passed another Farm Law. This one expands the definition of industrial hemp to include not only all 

parts of the cannabis plant with a low THC concentration but 

also all low-THC cannabis derivatives. The 2018 Law excludes

industrial hemp from the federal definition of marijuana, thus 

removing it from the DEA’s schedule of controlled 
No. 19-3034 3

substances. Pub. L. No. 115-334, § 12619 (codified at 21 U.S.C. 

§§ 802(16)(B)(i), 812). Nonetheless, the 2018 Law expressly 

provides that the states retain the authority to regulate the 

production of hemp. 7 U.S.C. § 1639p (“Nothing in this subsection preempts or limits any law of a State ... that regulates the 

production of hemp and is more stringent than this subchapter.”). Of interest here, the 2018 Law forbids the states from 

“prohibit[ing] the transportation or shipment of hemp or 

hemp products ... through the State.” Id. § 1639o note.

In 2019, Indiana passed Senate Enrolled Act 516 (Act 516), 

which brings Indiana’s definition of industrial hemp into line 

with the 2018 federal definition and legalizes the commercial 

production of hemp in the state. The Act sets up a regulatory 

framework for the Indiana hemp industry, including the establishment of an advisory committee to create rules and regulations for hemp production. It criminalizes the possession 

of “smokable hemp,” which it defines as any industrial hemp 

product “in a form that allows THC to be introduced into the 

human body by inhalation of smoke.” Ind. Code § 35-48-1-

26.6. The law stipulates that “[a] person who knowingly or 

intentionally manufactures, finances the manufacture of, delivers, finances the delivery of, or possesses smokable hemp 

... commits dealing in smokable hemp, a Class A misdemeanor.” Ind. Code § 35-48-4-10.1. In this litigation, Indiana 

has represented to the court that one reason for these provisions in the Act is that its law enforcement officers find it 

nearly impossible to distinguish between low-THC smokable 

hemp and marijuana in the field.

Days before Act 516 was to go into effect, C.Y. Wholesale

filed this suit, seeking a preliminary injunction against the 

provisions of the law that criminalized the manufacture, 
4 No. 19-3034

financing, delivery, and possession of smokable hemp. C.Y. 

Wholesale argued that Act 516’s prohibition on the possession 

and delivery of smokable hemp was preempted by the Farm 

Law’s mandate that states allow all forms of industrial hemp 

to be transported through their territories. It additionally argued that Act 516 violated the federal Constitution’s Commerce Clause. The district court found that the hemp sellers 

had shown a strong likelihood of success on the merits of their 

express preemption theory, and some likelihood of success on 

their conflict-preemption theory. It therefore issued an injunction blocking “the portions of [Act] 516 that criminalize the 

manufacture, financing, delivery, or possession of smokable 

hemp.” The court did not address the plaintiffs’ arguments 

under the Commerce Clause, but it did comment that it found 

this point “less convincing.” Indiana has appealed from the 

issuance of the injunction. See 28 U.S.C. § 1292(a)(1).

After briefing in this appeal but before oral argument, Indiana passed Senate Enrolled Act 335 (Act 335), which limits

the scope of Act 516. Act 335 clarifies that Indiana’s prohibition on the delivery and possession of smokable hemp does 

“not apply to the shipment of smokable hemp from a licensed 

producer in another state in continuous transit through Indiana to a licensed handler in any state.” Ind. Code § 35-48-4-

10.1(c). Indiana asserts that this new language resolves any 

ambiguity in the statute that might have given rise to a problem with the express preemption clause of the Farm Law. At 

the time of oral argument before this court, Act 335 had been 

signed into law, but had not yet gone into effect. Both for that 

reason, and because many of the arguments are unaffected by 

Act 335, we focus primarily on Act 516.
No. 19-3034 5

II

As a preliminary matter, we note that the district court 

failed to enter a standalone document containing the injunction, as required by Federal Rules of Civil Procedure 

65(d)(1)(C) and 58(a). We asked the parties to address the significance of this omission in their briefs. Both parties took the 

position that it was not a jurisdictional flaw. See Bankers Trust 

Co. v. Mallis, 435 U.S. 381, 387 (1978) (“[P]arties to an appeal 

may waive the separate judgment requirement of Rule 58.”); 

Metzl v. Leininger, 57 F.3d 618, 619 (7th Cir. 1995) (“[V]iolations 

of Rule 58 are not jurisdictional.”). We agree with that conclusion.

Nonetheless, the district court’s failure to abide by the separate-document command is not, at least in this case, a technical nit that we can disregard. Instead, it has an effect on the 

clarity of the injunction. The court reasoned that Act 516 

would put market participants who transport industrial 

hemp through Indiana at risk of criminal prosecution, in violation of the express preemption clause of the 2018 Farm Law. 

Yet it broadly enjoined the portions of Act 516 that criminalize 

much more than transportation, including the manufacture, 

financing, delivery, or possession of smokable hemp. It did so 

without any explanation of why that breadth was necessary. 

It seems to us that there is a missing step in the district court’s 

reasoning. The failure to enter an independent injunction requires one to infer the scope of the injunction from the opinion, and regrettably, the opinion’s conclusion is not fully supported by its analysis. The discipline of the separate-order 

rule would likely have averted this problem, and so we once 

again remind district judges not to overlook it.
6 No. 19-3034

III

We now move to the injunction itself. A preliminary injunction is appropriate where the party seeking it: (1) is likely 

to succeed on the merits; (2) is likely to suffer irreparable 

harm in the absence of preliminary relief; (3) has shown that 

the balance of equities tips in her favor; and (4) has shown that 

an injunction is in the public interest. Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 20 (2008). 

When reviewing the issuance of a preliminary injunction, 

this court “review[s] the district court’s findings of fact for 

clear error, its legal conclusions de novo, and its balancing of 

the factors for a preliminary injunction for abuse of discretion.” D.U. v. Rhoades, 825 F.3d 331, 335 (7th Cir. 2016). “The 

question for [this Court] is whether the judge exceeded the 

bounds of permissible choice in the circumstances, not what 

we would have done if we had been in his shoes.” Cooper v. 

Salazar, 196 F.3d 809, 813 (7th Cir. 1999).

Our focus here, as is often the case, is on the first issue: 

likelihood of success on the merits. At the district court, C.Y. 

Wholesale offered three principal reasons why it cleared that 

hurdle. First, it argued that Act 516 was expressly preempted 

by the terms of the 2018 Farm Law. Second, it argued that Act

516 was preempted by the 2018 Farm Law under principles of 

conflict preemption. Finally, it argued that Act 516 violates

the Commerce Clause of the Constitution. We address these 

contentions in that order.

A

The district court found that federal law expressly 

preempted Act 516’s provisions criminalizing the possession, 

manufacture, and delivery of smokable hemp. Express 
No. 19-3034 7

preemption exists when Congress “declares its intention to 

preempt state regulation through a direct statement in the text 

of federal law.” Fifth Third Bank ex rel. Trust Officer v. CSX 

Corp., 415 F.3d 741, 745 (7th Cir. 2005). When interpreting ambiguous statutes, courts favor the interpretation that does not 

preempt state law. Patriotic Veterans, Inc. v. Indiana, 736 F.3d 

1041, 1046 (7th Cir. 2013).

The 2018 Farm Law provides that “[n]o State ... shall prohibit the transportation or shipment of hemp or hemp products produced in accordance with subtitle G of the Agricultural Marketing Act of 1946 ... through the State.” Pub. L. 115-

334, § 10114 (codified at 7 U.S.C. § 1639o note). At the same 

time, the Farm Law expressly authorizes the states to continue 

to regulate hemp production, by stating that nothing 

preempts any state law regulating hemp production, even if 

it is “more stringent” than federal law. Pub. L. 115-334,

§ 10113 (codified at 7 U.S.C. § 1639p). The 2018 Law says nothing about whether a state may prohibit possession or sale of 

industrial hemp.

The district court concluded, and C.Y. Wholesale argues

on appeal, that the express preemption clause broadly precludes Indiana from prohibiting the possession, manufacture, 

and delivery of smokable hemp. Because one cannot transport 

hemp without possessing it, the court reasoned, the challenged provision of Act 516 necessarily prohibits the transportation of certain varieties of industrial hemp through Indiana in violation of the Farm Law. The same is true for the “delivery” of smokable hemp. A driver from Ohio travelling 

across Indiana to deliver smokable hemp to Illinois would violate Act 516’s prohibitions on the possession and delivery of 

smokable hemp and be subject to criminal penalties. This, the 
8 No. 19-3034

district court thought, would violate the Farm Law’s express 

preemption clause.

As for the provision of Act 516 prohibiting the “manufacture” of smokable hemp, C.Y. Wholesale argues that “manufacture” differs from the “production” that the Farm Law

leaves the states free to regulate. It argues that, in the agricultural context, “production” refers only to the growing of 

crops. “Manufacture,” in C.Y. Wholesale’s view, refers to the 

act of converting raw hemp into a smokable product. The 

Farm Law permits the states to regulate only production and

thus leaves manufacture under the federal regime.

Indiana argues that the Farm Law does not expressly 

preempt Act 516, because the Farm Law expressly permits the 

states to continue to regulate hemp production. Even if manufacture differs from production, Indiana points out that the 

Law is silent on the question whether states are authorized to 

prohibit the manufacture of smokable hemp. Silence, it urges, 

does not give rise to express preemption. Moreover, Indiana

points out that the Farm Law does not address possession at 

all. Once again, it contends that this omission reveals that 

Congress has not expressly preempted Act 516’s prohibition 

on possession of smokable hemp. Indiana finally argues that 

one can transport smokable hemp through the state without 

violating its prohibition on possession of smokable hemp. 

This argument requires drawing a distinction between possession of something and “moving it around.” Even a driver 

travelling through Indiana with a load of smokable hemp in 

the vehicle would, on this view, not be “in possession” of the 

hemp. 

We are not persuaded by the last argument: hundreds of 

criminal cases under federal laws prohibiting possession of 
No. 19-3034 9

controlled substances, or possession with intent to distribute,

have involved highway stops of loaded trucks. A defense that 

“I was just moving the heroin around” would have been 

laughed out of court. But that point to one side, we conclude 

that the district court read the Farm Law’s express preemption clause too broadly. The Farm Law authorizes the states 

to continue to regulate the production of hemp, and its express preemption clause places no limitations on a state’s 

right to prohibit the cultivation or production of industrial 

hemp. Thus, the part of Act 516 prohibiting the manufacture 

of smokable hemp does not fall within the ambit of the Farm 

Law’s express preemption clause. We are also unconvinced 

that the express preemption clause, standing alone, precludes 

a state from prohibiting the possession and sale of industrial 

hemp within the state. What it unequivocally does cover is the 

interstate transportation of smokable hemp. This means that 

a more limited injunction of Act 516 that addresses only 

transit through the state, along with ancillary restrictions on 

the possession and delivery of smokable hemp to the extent 

that those provisions interfere with that transit, is the most 

that would have been warranted on express preemption 

grounds.

B

C.Y. Wholesale has not, however, put all of its eggs in the 

express preemption basket. It also argues that the Farm Law

preempts Act 516 through conflict preemption. In order to 

show conflict preemption, a plaintiff “must show either that 

it would be ‘impossible’ ... to comply with both state and federal law or that state law ... constitutes an ‘obstacle’ to satisfying the purposes and objectives of Congress.” Nelson v. 

Great Lakes Educ. Loan Servs., Inc., 928 F.3d 639, 650 (7th Cir.
10 No. 19-3034

2019). A court should not find conflict preemption “unless 

that was the clear and manifest purpose of Congress.” Arizona 

v. United States, 567 U.S. 387, 400 (2012). The challenger must 

show that applying the state law would do “major damage” 

to clear and substantial federal interests. Patriotic Veterans, Inc.

v. Indiana, 736 F.3d at 1049; see also, id. at 1046 (“We ascertain 

the intent of Congress, however, through a lens that presumes 

that the state law has not been preempted.”).

The district court found that C.Y. Wholesale had shown 

some likelihood of success on its conflict preemption argument. It held that the Farm Law showed a clear intent on the 

part of Congress to legalize all forms of low-THC hemp and 

that the hemp sellers had shown at least some likelihood of 

succeeding in their claim that Act 516 frustrated Congress’s 

purpose. The court concluded that the portions of Act 516 that 

criminalize smokable hemp reach well beyond growing restrictions and thus do not qualify as regulations on hemp production that come within the 2018 Farm Law’s express antipreemption provision.

Here, too, although there is much that is sound in the district court’s reasoning, it does not support a complete injunction of Act 516. Although Congress may have relaxed federal 

restrictions on low-THC cannabis in order to facilitate a market for hemp, the Law indicates that the states were to remain 

free to regulate industrial hemp production within their own 

borders. Despite legalizing industrial hemp on the federal 

level, the Farm Bill expressly permits the states to adopt rules 

regarding industrial hemp production that are “more stringent” than the federal rules. Pub L. 115-334 § 10113 (codified 

at 7 U.S.C. § 1639p). The federal government has adopted a 

similar stance towards other psychoactive drugs, such as 
No. 19-3034 11

salvia, which are not scheduled by the DEA but which some

states nonetheless choose to criminalize. Congress’s silence 

on these drugs does not, through conflict preemption, preclude their proscription, nor does the 2018 Farm Bill’s lenience

toward industrial hemp. See Puerto Rico Dep’t of Consumer Affairs v. Isla Petroleum Corp., 485 U.S. 495, 500 (1988). We see 

nothing in the 2018 Farm Law that supports the inference that 

Congress was demanding that states legalize industrial hemp, 

apart from the specific provisions of the express preemption 

clause. 

C

Finally, C.Y. Wholesale argues in the alternative that Act

516 violates the Commerce Clause of the Constitution. The 

Commerce Clause prohibits a state from enacting any statute 

“that clearly discriminates against interstate commerce ... unless the discrimination is demonstrably justified by a valid 

factor unrelated to economic protectionism.” Fort Gratiot Sanitary Landfill Inc. v. Michigan Dep’t of Nat. Res., 504 U.S. 353, 359 

(1992) (internal quotation marks omitted). The district court 

dispensed with this argument in a footnote, observing only

that it found the argument “less convincing.”

Indiana argues that a law violates the Commerce Clause 

only when it “discriminate[s] against interstate commerce, either expressly or in practical effect.” Park Pet Shop, Inc. v. City 

of Chicago, 872 F.3d 495, 501 (7th Cir. 2017). The state contends 

that because Act 516 applies equally to all smokable hemp, 

whether produced inside or outside of Indiana, it does not 

discriminate between states and thus does not violate the

Commerce Clause. C.Y. Wholesale, in response, relies upon 

Kassel v. Consolidated Freightways Corporation of Delaware, 450 

U.S. 662 (1981), where the Supreme Court struck down an 
12 No. 19-3034

Iowa law precluding trucks from pulling 65-foot trailers on 

the state’s highways on the ground that the law “substantially 

burden[ed] the interstate flow of goods by truck.” Id. at 671. 

According to C.Y. Wholesale, Act 516 burdens interstate commerce in the same way, by precluding a major industry from 

shipping its goods through the state by truck. As the district 

court held, this argument does not show sufficient promise of 

success on the merits to warrant a preliminary injunction.

Further, this argument adds nothing of substance to C.Y. 

Wholesale’s express preemption theory.

IV

Although we find that the district court’s injunction was 

too broad, we should not be misunderstood as saying that a 

properly tailored injunction is not warranted. It may well be 

that Indiana, in proscribing the possession of industrial hemp, 

has illegally prohibited the transportation of interstate shipments of industrial hemp. Should that be the case, the district 

court may appropriately issue an injunction preventing Indiana from enforcing its law against those transporting smokable hemp through Indiana in interstate commerce. A state 

cannot evade the Farm Law’s express preemption of laws prohibiting the interstate transportation of industrial hemp by 

criminalizing its possession and delivery. On remand, the district court should evaluate whether Indiana’s law violates the 

express preemption clause of the Farm Bill while keeping in 

mind the extent to which the Law reserves to the states the 

authority to regulate the production of industrial hemp.

Finally, we say a few words about Act 335, which Indiana 

passed after the district court enjoined the provisions of Act

516 at issue here. Act 335 modifies Act 516 to elaborate on the 

prohibition on possession and delivery of smokable hemp, in 
No. 19-3034 13

a way consistent with Indiana’s briefs in this court. Act 335 

clarifies that Indiana’s prohibition on the delivery and possession of smokable hemp does not apply to shipments from producers in other states that simply pass through Indiana. However, Act 335 still permits only shipments of smokable hemp 

through Indiana “from a licensed producer in another state ... 

to a licensed handler in any state.” We leave for the district 

court to decide whether this language violates the Farm Bill’s 

express preemption clause, given that the Farm Bill places no 

such licensing limitation on the freedom to transport industrial hemp through states that regulate or prohibit its production.

One final point is worth noting. When this litigation began, the Midwest Hemp Council, an Indiana-based advocacy 

group for the hemp industry, was a party to this case. It has 

since dropped out of the litigation. On remand, the district 

court should take care to ensure that the remaining plaintiffs 

have standing to challenge the licensing provision. All plaintiffs at this point are Indiana based hemp sellers and wholesalers. They were affected by the broader injunction, but they 

may not be the right parties to challenge Indiana’s requirement that businesses seeking to transport smokable hemp 

through the state be licensed in the states in which they do

business.

V

Because the district court’s injunction swept too broadly, 

we REVERSE the decision of the district court and REMAND for 

proceedings consistent with this opinion.