Cannabis Rescheduling Update: Is a ‘Notoriously Secretive Agency’ Now Involved?

Updated April 30, 2024, at 11:25 a.m.

A “notoriously secretive agency” may have been brought into the cannabis-scheduling review picture, raising new questions and concerns about the outcome of the review ordered by President Joe Biden in October 2022. The Health and Human Services Department (HHS) recently asked the Department of Justice’s (DOJ) Office of Legal Counsel (OLC) to “weigh in on legal issues related to” rescheduling cannabis, The Wall Street Journal (WSJ) reported.

The alleged request to the OLC may stem from disagreements between the HHS—which recommend Aug. 29, 2023, that cannabis be moved from a Schedule I to a Schedule III drug—and the U.S. Drug Enforcement Administration (DEA), which is tasked with making the final determination of cannabis’s scheduling status. “… Some counterparts within the Drug Enforcement Administration are resistant, saying the drug’s medicinal benefits remain unproven and that it has a high potential for abuse, people familiar with the matter said,” according to the WSJ. “Officials at the DEA … remain concerned about modern cannabis strains that can be many times as potent as those that were common years ago, the people said. Some agency officials also think more research is needed about marijuana’s long-term health effects.”

The reported involvement of the OLC comes as the cannabis industry, advocates and lawmakers continue to await the DEA’s response to the HHS recommendation and as frustration is mounting.  

“OLC provides legal advice concerning the most sensitive matters of government, and the Office and the entities it advises therefore have an interest in candid deliberation shielded from scrutiny,” according to the American Constitution Society. “OLC and executive branch officials must also protect classified information from exposure.”

So, if the HHS did request an OLC opinion on the matter, what does that mean? (CBT reached out to HHS to confirm whether the request had been made but had not heard back at the time of publication.) What role does the OLC have? And what impact could it have on the outcome of the rescheduling review? According to attorney Shane Pennington, quite a significant impact, and he’s “chomping at the bit” to know more.

Pennington is a partner in the Litigation Department at Porter Wright, where he advises clients on federal regulatory issues involving controlled substances, among other industries. In recent years, he has become driven to delve deep into federal cannabis-related policy and its history.

Pennington (while previously working at Yetter Coleman LLP) and attorney Matt Zorn, partner at Yetter Coleman LLP, worked (pro bono) with Dr. Sue Sisley and the Scottsdale Research Institute (SRI) to file a lawsuit in June 2019 against the DEA, “requesting a writ of mandamus to order the DEA to process [SRI’s] application to grow cannabis for clinical research,” according to a Yetter Coleman summary. Sisley and the SRI had applied for a DEA license to grow cannabis for medical research, following the DEA’s invitation to do so.   

And this is where the OLC comes in.

As part of a settlement in the Scottsdale Research Institute v. Department of Justice suit, the “Department of Justice’s (DOJ) Office of Legal Counsel (OLC) has released, in unredacted form, a copy of its previously undisclosed June 6, 2018 memorandum on ‘Licensing Marijuana Cultivation in Compliance with the Single Convention on Narcotic Drugs,’ … [explaining] in detail, how and why DOJ concluded in June 2018 that the DEA could not process applications from Scottsdale Research Institute and more than 30 others to manufacture marijuana for research that DEA solicited back in 2016,” the Yetter Coleman summary stated. “Over the past two years, across ten letters and numerous congressional hearings, members of Congress from both political parties have repeatedly asked DOJ and the Drug Enforcement Administration (DEA) to explain why they had refused for years to process these applications or at least identify any legal barriers that were causing the delay. A key reason for the delay was this OLC memo, but DOJ and DEA refused to provide it to Congress (or the American public) or to even acknowledge its existence.”

RELATED: DEA Announces Steps to Expand Medical Cannabis Research

The OLC’s 2018 memo, or opinion, noted above, states, “To comply with the Single Convention, DEA’s licensing framework must provide for a system in which DEA or its legal agent has physical possession and ownership over the cultivated marijuana and assumes control of the distribution of marijuana no later than four months after harvesting.”

“It said that the NIDA [National Institute of Drug Abuse] monopoly and the way that DOJ was considering ending the NIDA Monopoly both violated the treaty,” Pennington said. “And, in fact, it revealed that since the day DEA became an agency in 1973, all the way through until that day [in 2018], DEA's policy toward cannabis growers had placed the U.S. in violation of the Single Convention in three different ways.”

One of those ways was, per the OLC opinion, that the DEA did “not purchase or take physical possession of lawfully grown marijuana at any point in the distribution process. Instead, the only currently licensed marijuana cultivator grows and distributes the marijuana itself pursuant to a contract with, and under the supervision of, the National Institute on Drug Abuse (“NIDA”), a component of the Department of Health and Human Services’ National Institutes of Health.” (The licensed cultivator referenced is the University of Mississippi.)

This explains why the DEA essentially now serves as the administrator (and collects administrative fees for doing so) of cannabis cultivated by researchers who are licensed by the DEA to cultivate cannabis for medical research. (In a 2021 keynote address at Cannabis Business Times’ Cannabis Conference, Sisley explained that she had to sell the cannabis grown under the SRI’s license back to the DEA, which would then issue it for research; she joked that she never thought she’d be selling marijuana to the DEA.)

Pennington’s previous experience lends insights into the “secretive” government office and why its role in cannabis’s rescheduling review—if HHS requested the OLC’s opinion—raises important questions and could have a significant impact on the review’s outcome. Here, in this exclusive interview with Cannabis Business Times, Pennington explains. 

Noelle Skodzinski: So, what we know at this point is that The Wall Street Journal reported that HHS had asked for the OLC’s opinion, according to “people familiar with the matter.” What can you tell us about why this would be important?

Shane Pennington: Let's start with OLC. … The sort of germinal impetus for the creation of the office was to have legal counsel for the Attorney General of the United States. … It would be like the personal attorneys not for the person of the Attorney General but for the office of the Attorney General.

And what that means is, you're the Attorney General, you’re in charge of the entire executive branch just under the president. That means a lot of agencies, and sometimes their jurisdictions, overlap.

So, we could pick two at random. HHS and DEA. HHS oversees drug development and science and health-type issues in the executive branch, and then the DEA looks at controlled substances and whether they have accepted medical use and so forth, from a law enforcement lens. Well, because the sandboxes of those two agencies overlap, to some degree, they have to work on scheduling together.

Whenever FDA [Food and Drug Administration], which is part of HHS, decides to approve a drug, if it finds it has abuse potential, it has to report that to DEA.

And there's all these ways that these two agencies that are separate and have very different cultures and general dispositions, they have to work in parallel, sometimes cooperatively, to do their jobs well.

Sometimes conflict arises between agencies in the executive branch for any number of reasons, right? Good faith differences in how they interpret the same statutory phrase. Let's pick one at random—“Abuse potential” or “currently accepted medical use in treatment.” Those are words that you and I could argue reasonably about what they mean, and so can agencies.

And I'm speaking hypothetically here—using these examples because they're relevant and I'm trying to get people to understand the importance, but I'm not saying these are the things that are being debated.  

When there is a debate like that and it becomes difficult to resolve or it's unclear what the best resolution is, one thing that can happen is the heads of the agencies can request that the OLC resolve the dispute.

So OLC authoritatively resolves legal questions that arise in the executive branch.

And “legal questions” means things like: What does a statute mean? What procedure is required for an agency to follow in certain circumstances?

You might imagine there might be a statute that requires scientific considerations, law enforcement considerations and treaty considerations, all running all at the same time, for example. Well, that could create some thorny questions about what's the hierarchy of priorities, who decides what when, what does the statute mean?

And if those sorts of questions can't be resolved by the agencies that have the delegated authority from Congress to resolve them, they can go to OLC.

Skodzinski: What else can you tell us about the OLC and its significance, potentially, to cannabis rescheduling?

Pennington: It's a very small office within the executive branch … [and] attorneys who are absolutely elite. They're considered the brainiacs of the law.

You might think of them as … you go to see the Oracle, you know, back in Greek mythology, to figure out what the answer is. That's kind of like you go to OLC and you sort of humbly bring your question to them, and the brains pulse around it, and they spit out a definitive, authoritative answer.

That answer, once it comes down, is binding on the entire executive branch unless it’s overturned by the Attorney General of the United States.

So, you can see that is extraordinarily important.

And the way that the OLC does its work is it writes these opinions; they're just these legal documents. They are top secret. They're almost never released when they are finalized.

What will happen is, say that what The Wall Street Journal said is correct, and the HHS requested an OLC opinion about the rescheduling process; that would mean [HHS Secretary Xavier] Becerra or possibly [HHS Assistant Secretary for Health] Admiral [Rachel L.] Levine or their offices requested that OLC weigh in on some specific issue in the scheduling process that would then go to these brainiacs.

And the brainiacs will do their work and they'll write an opinion—sometimes it’s very long, sometimes it's 10 pages. That opinion will then go back to HHS.

Often … OLC will ask all the relevant agencies questions. Because remember, often it's when there's a dispute about an issue within the executive branch between multiple agencies. When that happens, sometimes OLC will request all the relevant agency heads and their chief counsels’ offices to draft basically legal briefs arguing their view of this question to OLC.

And then OLC will sit there like a judge and weigh it all and come out with this authoritative thing.

So, you'll sometimes see in OLC opinions that they'll cite the State Department's brief, DEA's brief, etc., and then they will formulate their own opinion that authoritatively resolves it.

It's kept secret. You can't get it through FOIA [Freedom of Information Act]. It's not released to the public. Sometimes years later it will be released.

And it's always under the discretion of OLC and the Attorney General, if and when they're released.*

(Editor’s note: Pennington said that when the DOJ settled the Sisley/SRI lawsuit and released the OLC opinion, that was through an “affirmative disclosure provision,” and that the forced release of an OLC opinion “like, never happens.” “This, to me, was the biggest deal in my whole legal career,” he said. He and Zorn were alerted to the potential role the OLC was playing in hindering medical research applications by a Wall Street Journal article by Sadie Gurman, he said. (Relevance of this below.))

Skodzinski: You said that they don't release these opinions under FOIA. How is that possible?

Pennington: Because it's considered internal deliberations within the executive branch, which are officially exempted.

But what our law says is that if it's the law that you're talking about, if you are making law of the agency that's going to affect people out there and their rights, that's different. People should know who decided what they decided, why they decided it, when they decided it, etc.

For example, if there are a bunch of people out there who are opposed to rescheduling and are insisting that it's a political process, that the president just commanded it, and it was done instantly; but in fact, there was this huge turmoil within the executive branch that had to be elevated to this legal Illuminati to resolve. And then that legal Illuminati released a densely reasoned opinion that resolves it authoritatively in a way that obviously isn't political but is legal. Wouldn't you like to know that?

(*Editor’s update: Following this interview, Pennington found and shared with CBT an April 19 ruling by the U.S. District Court for the District of Columbia in Campaign for Accountability v. DOJ that states: “The court’s order requires OLC to produce its responsive, formal written opinions that resolve interagency disputes to CFA [Campaign for Accountability], along with an index of those materials.” Pennington said he expects it will be appealed.) 

Skodzinski: How does your past experience with the Dr. Sisley, SRI lawsuit play into this?

Pennington: Because here we are now, 4, 5, 6 years later, and we have another controversial cannabis-related DEA process. We have senators, just like we did back then, writing the DEA, asking “When are you going to get this done? Why haven't we seen action on this?” Just like with Sue Sisley.

Then we get a Wall Street Journal article written by Sadie Gurman—the same person, same outlet mentioning OLC has been called in again?

And the fact whatever this alleged OLC opinion says and whatever question they answered [or will answer], it's going to be the law of the agency because it's going to bind all of the executive branch with respect to the questions that it addresses.

So, now the questions are: Was it HHS that requested it? If so, what questions did they ask? And when did they ask them? And fourth, do we have an opinion yet from OLC?

You can see why those are important questions, ones I urgently want the answers to … and I think everybody should want to know.

Skodzinski: So the only way really to get an opinion, if one exists or will exist, is to do what you and Matt Zorn did previously, or the DOJ could release it on its own, at some point?

Pennington: I mean FOIA law says that they have to disclose law of the agency, so we really shouldn't have to do anything, and they should release it if it exists.

My hope would be that they would just post it in the Federal Register now if it exists. Because a lot of people, I think, reasonably presume that when you live in a democratic republic that has laws that … require a transparent process, that, in fact, there will be one. And it appears that members of Congress also are under this impression.

And so I'm waiting.

But I don't know that there is an OLC opinion. This is the problem, right? The whole point of FOIA’s affirmative disclosure provisions is to prevent some secret cabal within the executive branch from making laws that we would all like to know, including members of Congress and the people who vote for them, but we don't.

It's actually the tail wagging the dog on these issues that affect millions and millions of Americans in their public health and safety, and states and everything, right? And our place in the international world with our treaty partners.

We sure would like to know what the law is, and we have a right to know that.

Skodzinski: So, if the OLC issues an opinion that's legally binding, would that do away with the public comment period that the DEA has confirmed would be part of the review process, or would the DEA still have the public comment period, but it wouldn't mean anything?

Pennington: That is an excellent question, and I think the answer is there would still be a public comment period.  

Say that OLC said, “The sky is green”—I'm just making something up—and then in the comments, I and others said, “Actually, the sky is blue.” And we put in all sorts of evidence for our side of it. I think that what would happen is for everything that OLC didn't say something about, it would be fair game for comments. 

But I think for the stuff that OLC had addressed that was binding, I guess DEA would just say this is out of our hands, we're bound by OLC. And, actually, DEA released rules in 2020 after we sued for that OLC opinion [in the Sisley case].

And that is what DEA said in those rules. It said this has been resolved by an authoritative office within DOJ.

Skodzinski: Do you have anything else you think is important to say about all this?

Pennington: The fact is we don't know. We don't know if it was HHS [that requested an opinion], if one was requested. If it was HHS, to me it seems odd. I'm not saying it didn't happen. I'm saying it would be odd to me if HHS asked for this opinion because HHS has already discharged its duty. As far as we know, it gave its recommendation. That's it. Now it's in DEA’s hands.

So, to the extent that there's an issue that's making it difficult for the process to move forward, you would think that it would be DEA that's having the difficulty because DEA is the one that's got to take the next step. Perhaps the explanation is that HHS requested OLC’s views earlier in the process—before it transferred its recommendation to DEA. Again, though, we just don’t know.

And I think the members of Congress who keep asking DEA to get this done right away, well, how about we ask better questions—pull [the DEA] in front of Congress, ask about this Wall Street Journal article.

I'm eager to get this [opinion]. I'm chomping at the bit. But I don't want to tell these people how to do their jobs because I honestly don't know what all information these various congressional offices are working with that maybe I don't have.

In any event, I sure would like to know what the daggone thing says, if it exists.

But, these things are not generally released, at least not contemporaneous to the OLC’s decision. This is a notoriously secretive agency. That's why nobody even knows about it.