Industrial hemp is related to marijuana and can be used to make food, clothing, paper, rope and other products. It contains only a trace of the drug found in marijuana but is illegal to grow.
Alex White Plume, vice president of the Oglala Sioux tribe, and members of his family planted hemp three times on the Pine Ridge Indian Reservation from 2000 to 2002, but it was confiscated by federal agents.
A three-judge panel of the 8th U.S. Circuit Court of Appeals said it empathized with the White Plumes but concluded their enterprise was illegal.
"We are not unmindful of the challenges faced by members of the Tribe to engage in sustainable farming on federal trust lands ... and we do not doubt that there are a countless number of beneficial products which utilize hemp in some fashion," the decision said.
The family could have asked the Drug Enforcement Administration for permission to grow the crop on the reservation in the southwest corner of South Dakota, federal prosecutor Mark Salter argued.
The family's lawyer, Bruce Ellison, argued that they were not growing a drug and did not need to get federal permission. He also argued that the family had a right to grow hemp without a permit because of an 1868 treaty that encouraged Indian farming.
But the court said the treaty does not address hemp.
White Plume and Ellison did not return phone calls Wednesday.