Indiana stores cited for selling CBD oil still face possible penalties

CBD oil products. (WTHR Photo)

INDIANAPOLIS (WTHR) - Civil cases against dozens of Indiana businesses cited for selling CBD oil will remain open while state lawmakers decide whether to legalize the product, according to the chairman of Indiana's Alcohol and Tobacco Commission.

“We're going to have to wait and see what the General Assembly does,” ATC chairman David Cook told WTHR Wednesday morning. “Everything is on hold until such time we have a determination from the legislature about the legality of CBD oil.”

The chairman’s comments come just days after he personally called about three dozen business owners across Indiana to tell them his agency made a mistake.

WTHR exposed that error last week, prompting ATC to admit it sent about 50 “Notice of Civil Penalty / Settlement Offer” letters to stores targeted by Indiana Excise Police during surprise raids in 2017. The letters – mailed just before Christmas – notified the businesses they were being fined hundreds of dollars for violations such as “possession of marijuana” and “unlawful manufacture, distribution or possession of counterfeit substance” for selling CBD oil.

ATC issued the letters despite a November announcement from Gov. Eric Holcomb, ordering the ATC and Indiana Excise Police to neither fine stores nor seize their CBD oil for at least 60 days – enough time for lawmakers to settle confusion over the product’s legal status. Just hours after 13 Investigates questioned ATC about its civil penalty letters that appeared to violate the governor’s 60-day moratorium, ATC acknowledged its error.

A statement from the commission said: “It recently came to our attention that letters were erroneously sent from our office last week. This was an administrative error and these letters should be disregarded....We apologize for any confusion and we are working to correct the issue.”

In addition to calling business owners to apologize, the commission chairman said his agency is also in the process of drafting follow-up letters that will be sent to each store. He described the mistake as “an administrative kind of glitch” that automatically generated the letters.

“I don’t buy that at all,” said James Kinee, owner of Happy Daze smoke shop. “My letter was addressed by hand. I think they knew what they were doing until they got caught.” Kinee’s west-side businesses received a civil penalty letter that included a $750 fine.

While the fines have been rescinded, the businesses are not off the hook just yet. Cook says his agency is closely watching several CBD-related bills that have been introduced by state lawmakers. The fate of the legislation will help determine the fate of the cases now pending against dozens of stores.

“The way the General Assembly reacts to those bills is going to dictate how we move forward with enforcement,” Cook said. He told WTHR fines against businesses could be reinstated and tens of thousands of dollars in seized CBD oil could be destroyed if the legislature fails to act. However, if lawmakers legalize CBD oil, ATC would likely dismiss the cases and return the confiscated products.

“It depends what the legislature says. If they legalize CBD oil, then my position would be that would be retroactive of those types of products that have been seized up to this point and time,” Cook explained.

CBD oil is made from cannabis plants – which is also the source of marijuana. But unlike marijuana, CBD oil comes from a type of cannabis that has little or no THC (the psychoactive compound that causes a “high” sensation) and does not cause users to feel “high.” Thousands of Hoosiers currently use CBD oil to treat pain, epileptic seizures, anxiety and other medical conditions. It is growing in popularity because CBD oil causes no side effects and is not addictive like many prescription painkillers.

Indiana Attorney General Curtis Hill believes all CBD oil is illegal in Indiana – a violation of both state and federal law – because it comes from cannabis plants. The governor disagrees, stating that CBD oil that contains no THC is legal to possess and sell.

The General Assembly is now considering whether to remove CBD oil from a list of controlled substances that are banned by state law, effectively legalizing CBD oil for all Hoosiers.