WASHINGTON—Editor’s Note:This story is the sixth part in a series of articles and video documentaries that surveys the state of the legal marijuana and hemp industries.To read the previous article on hemp research in Kentucky, go here.

Ken Anderson had managed to transport 286 pounds of hemp seeds to Lexington, Kentucky from Italy. That’s when the Drug Enforcement Agency seized them at a UPS air terminal in Lexington, Kentucky, riling agricultural officials, farmers and politicians in a state that is still searching for a crop to replace the maligned tobacco leaf.

Kentucky agricultural officials were awaiting the seeds in anticipation of commencing hemp research projects in collaboration with universities and private growers under federal legislation signed in February by President Obama: Section 7606 of the 2014 Farm Bill.

Although federal law classifies hemp as a Schedule I controlled substance, the Farm Bill carved out an exception—authorizing institutions of higher education or state agriculture departments to study the growth, cultivation or marketing of industrial hemp in states where such activity is permitted.

“It amazes me that the DEA spent resources to intercept my seed going into the Kentucky Department of Agriculture," said Anderson, founder and CEO of Original Green Distribution, which is providing seed and infrastructure to support American hemp. “They spent a ton of money confiscating seed going to the Kentucky Department of Agriculture when they didn’t have a single agent in front of a recreational [marijuana] dispensary in Colorado. That blows my mind. What a waste of resources."

The feds could have seized the Italian hemp seeds before they had cleared the interior of the United States. But U.S. Border Patrol dropped the ball—it should have never let in the seeds without the proper federal licensing and import certification, a DEA executive assistant told Canadian Hemp Trade Alliance President Russ Crawford, according to a May 5 email he sent Anderson. Crawford had wanted to know if DEA would let into the United States seeds from Canada.

On May 13, the DEA offered to release the Italian seeds to the Kentucky Department of Agriculture (KDA), provided the state agency applied to register as an importer of controlled substances. But a DEA official, Joseph Rannazzisi, declared the Farm Bill did not authorize any activity by private growers and suggested the state provide the names of the institutions of higher education to which it planned to distribute seeds.

The very next day, KDA responded to DEA by filing a lawsuit against the agency, which is a part of the U.S. Justice Department.

“Defendant DEA/and or other Defendants are violating the provisions of the Farm Bill by engrafting upon it additional regulatory and bureaucratic requirements that were not contemplated or enacted by the U.S. Congress," according to the lawsuit, which argued the Farm Bill excluded hemp seeds from the Controlled Substances Import and Export Act. “There is no provision in the Farm Bill or in any regulation in furtherance of the Farm Bill allowing Defendant DEA and/or other Defendants to impose additional requirements, restrictions, or prohibitions upon an institution of higher education or a state department of agriculture that is engaged in industrial hemp cultivation as contemplated by the Farm Bill."

Following a hearing before the U.S. District Court in Louisville, Kentucky, DEA issued a registration and import permit to KDA, allowing the state agency to possess the seeds, according to court records. Anderson said the Italian seeds were released on May 23.

According to KDA records, seven growing sites received the impounded seeds, including Kentucky State University, Murray State University and Western Kentucky University.

Threats of Criminal Prosecution

But DEA still made it clear in a letter on May 22 that it had plans “to criminally prosecute and seize, under the federal Controlled Substances Act … hemp plants grown by the private farmers who have entered written contracts with KDA to carry out the pilot projects," several Kentucky farmers disclosed in a request to intervene in the case and enjoin DEA from prosecuting—or destroying plants grown by—them.

The proposed interveners included Brian Furnish, a farmer who had expected to receive seed to begin a pilot project in conjunction with the University of Kentucky, and seven other farmers who had entered memoranda of understanding with KDA.

The Farm Bill “clearly shows Congress’ assumption and intent that private farmers be utilized by state agriculture departments to carry out the pilot projects," lawyers for the farmers stated in June 12 court papers. “To read the law as requiring the officials and employees of a small state agency like KDA, who are not themselves active farmers, to leave their offices in Frankfort and cultivate the hemp seed would be absurd and would completely frustrate the intent of Congress."

A senior federal judge, John Heyburn, later denied the motion to intervene and for the preliminary injunction, explaining the request for the injunction was moot for reasons that were stated on the record during a hearing.

DEA never filed a formal answer to KDA’s complaint. Ellen Canale, a spokeswoman with the Justice Department, a named defendant in KDA’s lawsuit, didn’t return numerous phone calls and emails seeking comment on the case.

DEA agreed “that as long as the farmers were, under contract (Memorandum of Understanding) with the KDA or universities to engage in the pilot crop program, that they would be considered agents of the KDA or universities under the 2014 Farm Act and exempt from the provisions of the Controlled Substance Act (i.e. not subjected to criminal investigation or prosecution)," said Richard Plymale, a veteran lawyer in Kentucky who represented the farmers, in an email.

DEA also agreed to quickly issue import permits for hemp oil seeds that were being held in Canada, he said. According to KDA records, the Canadian seeds were released on July 2.

Plymale, a former Assistant U.S. Attorney with the Justice Department who currently practices law with Frost Brown Todd LLC, said he appeared in Heyburn’s chambers on June 18 and read a portion of the DEA’s threatening letter to the farmers, to which the judge responded, “I thought we had settled this."

When Heyburn asked Assistant U.S. Attorney Benjamin Schecter who appeared for the hearing by phone if the matter had been resolved, he answered in the affirmative, Plymale said.

Last week, KDA moved to dismiss the entire lawsuit.

“This dismissal is based upon the Defendant, Drug Enforcement Agency’s (“DEA") continuing agreement to assist the KDA with the KDA’s implementation and supervision of programs involved with the growth, cultivation, and marketing of industrial hemp," Daniel Morgan of the law firm McBrayer, McGinnis, Leslie & Kirkland, PLLC wrote on behalf of KDA. “The KDA acknowledges that the DEA has been cooperating with the KDA and the DEA has manifested its expressed desire to assist the KDA with industrial hemp projects."

Searching for New Cash Crop

Industrial hemp contains little THC, the psychoactive ingredient in marijuana, and U.S. Rep. Thomas Massie (R-Kentucky) last year introduced a bill that would exempt hemp from the Controlled Substances Act. Katie Moyer, an appointed member of the Kentucky Industrial Hemp Commission, said the Industrial Hemp Farming Act of 2013 has bipartisan support with 49 cosponsors. Moyer said the bill only needs a few more sponsors in order to schedule a hearing on the House floor.

“Tobacco is demonized. It’s taxed into oblivion," she said in a phone interview. “They [farmers] are struggling here in Kentucky. They are trying to find a replacement to tobacco, something they can grow as a cash crop."

Private growers who have been working with KDA haven’t encountered any issues with DEA since the lawsuit was resolved, Moyer said. After the seeds were released to the KDA, farmers underwent background checks and entered agreements with the state agency, she said.

“KDA was very careful. Under the contract with the farmers … they give GPS coordinates to the fields and the farmers are required to make reports when crops are harvested, removed," Plymale said. “There is a nice gentleman’s agreement about what to do."

The agricultural community is actually hosting an event on Aug. 25 for local law-enforcement to tour the hemp fields.

“We want law enforcement to be involved with the process," Moyer said. “We try to be reasonable and consider all the issues they’ve got with it."

She said KDA has been taking samples of the hemp fields and noted most industrial hemp contains well under 0.3 percent THC, the limit specified in the Farm Bill.

According to Moyer, a hemp field in north Christian County, Kentucky is thriving with some plants likely soaring to more than 11 feet. Another field planted by Rachel McCubbin, a staff member to Sen. Rand Paul (R-Kentucky), hasn’t fared as well. After the hemp was planted, the field was drenched with 4.5 inches of rain, then suffered a drought for two months, Moyer said.

“That field needless to say is not doing well," she said. “It’s not a miracle crop. It’s not going to perform miracles."