Key Takeaways in This Article:
- A potential Schedule III final rule would likely have to stand the test of judicial review with a lopsided administrative record due to the DEA selecting only anti-rescheduling participants for the hearing.
- Pro-rescheduling parties who argued they’d be “adversely affected or aggrieved” by a potential Schedule II rule were rejected, because the proposed rule is for Schedule III, even though the Code of Federal Regulations states that parties can qualify as an interested person for any rule “issuable.”
- Hemp for Victory previously qualified as an interested person for the same proposed rule, meeting the same definition of an interested person under a former DEA administrator, but was rejected under the current DEA administrator.
- The hearing’s evidence-based record will now lack a key pillar behind the proposed rule – that cannabis has “currently accepted medical use” in the U.S. – because the DEA’s new administrative law judge will only allow evidence and testimony on whether nonmedical cannabis should be moved to Schedule III.
The vast majority of 43,000 commenters on the proposed rule to reclassify cannabis as a Schedule III substance were supportive of reform, yet none of those voices will be heard in the Drug Enforcement Administration’s (DEA) upcoming hearing.
That’s because the DEA invited seven anti-rescheduling parties and zero pro-rescheduling parties to participate in its administrative law judge (ALJ) hearing. The purpose of the hearing is to receive “factual evidence and expert opinion regarding” whether marijuana should be transferred to Schedule III under the Controlled Substances Act (CSA).
This is the first known instance of an ALJ hearing in which one side is entirely excluded from participation related to a notice of proposed rulemaking (NPRM) that’s garnered significant public interest. The hearing is scheduled to begin June 29 and conclude no later than July 15.
Researchers at Johns Hopkins University and the University of California San Diego reported on April 29 that 92.4% of commenters either supported the Schedule III proposal as is (29.8%) or supported even more reform (63.5%). Only 6.7% opposed any change to cannabis’s Schedule I status under the CSA.
But that prohibitionist 6.7% is now in the driver’s seat of the DEA’s ALJ hearing, which is supposed to provide a forum for adversarial testimony to build a fulsome record as part of the Administrative Procedures Act, and for the presiding judge to ensure that the hearing provides for a fair and impartial review of the proposed rule.
RELATED: DEA Names 7 Anti-Rescheduling Parties for Cannabis Hearing, Zero Pro Parties
According to the hearing notice that U.S. Acting Attorney General Todd Blanche issued in April, every “interested person” – defined in 21 CFR 1300.0l(b) as “any person adversely affected or aggrieved by any rule or proposed rule issuable under 21 U.S.C. 81” – who wishes to participate in the hearing shall file a written notice of intention to participate.
The order did not say that only those who oppose the proposed rule should apply. Rather, it included a key word in Section 1300.01 of Title 21 of the Code of Federal Regulations: “issuable.”
While the proposal is to move cannabis from Schedule I to Schedule III on the list of controlled substances, the DEA could ultimately decide to issue a final rule to reclassify cannabis as a Schedule II substance.
Some pro-rescheduling entities that applied to participate in the ALJ hearing leaned on that possibility in an attempt to satisfy the definition of an “interested person” who would be “adversely affected or aggrieved” by any rule “issuable.”
In multiple DEA rejection letters obtained by Cannabis Business Times, aspiring hearing participants argued they met the definition of an interested person, in part by leaning on the possibility that the DEA issues a rule to reclassify cannabis as a Schedule II substance rather than a Schedule III substance.
“The harms that you claim you would suffer from a rule ‘issuable’ from the proceedings (that is, a decision to keep marijuana in Schedule I or a decision to transfer marijuana to Schedule II), are not harms that would result from the NPRM proceedings,” DEA Administrator Terry Cole wrote in a rejection letter to Nabis, the nation’s largest licensed cannabis wholesale distribution platform.
“You state that ‘DEA/DOJ could ultimately conclude that marijuana should remain on Schedule I or be transferred to Schedule II’ and ‘in either case, Nabis’s business and operations would suffer in concrete and direct ways,’” Cole wrote. “Potential harms from future, underdetermined regulatory changes are speculative, do not demonstrate that you are adversely affected or aggrieved by the proposed rule to transfer marijuana to Schedule III, and are beyond the scope of this hearing, which is to ‘receive factual evidence and expert opinion regarding whether marijuana should be transferred to Schedule III.”
In a similar rejection letter, Cole determined that Hemp for Victory, a veterans advocacy group, does not qualify as an interested person. The nonprofit organization argued that its board members and the veterans they support have standing to challenge the “misclassification” of cannabis as a Schedule III substance, because they would remain subject to discrimination and penalties for using cannabis for its medicinal purposes.
In its petition to participate in the hearing, Hemp for Victory asserted that veterans use medical cannabis instead of “dangerous and addictive opioids and other controlled substances” as a natural solution to “manage the mental and physical challenges that often result from military service,” and that keeping cannabis listed as a Schedule I substance or moving it to a Schedule II substance will result in higher suicide and or overdose rates when compared to moving it to a lower schedule or declassifying it altogether.
“Upon review, your participation request fails to sufficiently explain how or why Hemp for Victory is adversely affected or aggrieved by the promulgation of a rule transferring marijuana … from Schedule I to Schedule III,” Cole wrote, “Any purported harm that Hemp for Victory would suffer from marijuana not being ‘descheduled’ exists regardless of whether marijuana remains in Schedule I or is transferred to schedules II, III, IV or V.”
What’s peculiar about this rejection is that Hemp for Victory previously qualified as an interested person for the same proposed rule – meeting the same definition of an interested person – for the DEA’s ALJ hearing under the Biden administration, when former Administrator Anne Milgram selected both pro- and anti-rescheduling parties to participate.
So, if the definition didn’t change, and if the proposed rule didn’t, then what did?
During the now-withdrawn hearing process that Milgram initiated under the Biden administration, the DEA’s previous chief ALJ granted an interlocutory appeal that stayed the hearing process after pro-rescheduling participants accused the DEA of improper ex parte communications with anti-rescheduling participants.
Doctors for Drug Policy Reform (D4DPR) later filed a lawsuit after obtaining “cure letters” that the DEA had sent to several anti-rescheduling entities, providing them the opportunity to submit supplemental information showing that they met the “interested person” status under the APA. In light of these letters, D4DPR argued that the DEA had ex parte communications with at least three anti-rescheduling parties who were selected for the hearing and asked the U.S. Court of Appeals for the D.C. Circuit to force the DEA to redo its selection process.
Two of those entities were selected again for the upcoming ALJ hearing: the Tennessee Bureau of Investigation and Phillip A. Drum, a pharmacist.
The other participants include:
- National Drug & Alcohol Screening Association (NDASA)
- Smart Approaches to Marijuana (SAM)
- The states of Nebraska, Idaho, Indiana and Louisiana
- DUID Victim Voices
- Kenneth Finn, M.D.
Although many cannabis policy stakeholders have argued that the hearing’s outcome potentially represents the most historic impact on controlled substances law in more than 50 years and therefore should include those who support the proposed rule, others have said that the DEA’s prohibitionist lineup “is neither surprising nor concerning” and that “they’re not going to lose their own case.”
The DEA’s new chief ALJ, Derek C. Julius, who will preside over the upcoming hearing, indicated in a preliminary order on June 18 that the DEA, “as the proponent of the proposed rule, has the burden of proof.”
However, according to the proposed rule, the “DEA has not yet made a determination as to its views of the appropriate schedule for marijuana.” While former Attorney General Merrick Garland signed the proposed rule in May 2024, it’s the same rule that remains on the table for the upcoming hearing under President Donald Trump’s administration.
Also, DEA Attorney James J. Schwartz – the agency’s lead counsel who dodged a question about whether the DEA “supported” the proposed rule during the now-withdrawn hearing – remains on the department’s bench. It’s also important to note that Blanche, the head of the Department of Justice, signed the order for the new, expedited hearing process – not a DEA official such as Cole.
“Under the direction of President Trump and Acting Attorney General Blanche, DEA is expeditiously moving forward with the administrative hearing process – bringing consistency and oversight to an area that has lacked both,” Cole said in an April 23 statement. “Our men and women in law enforcement remain committed to fighting drug cartels, the fentanyl epidemic and protecting American lives.”
Cole stopped short of saying that he supported Trump’s directive or the proposed rule.
Why did the DEA select only seven anti-rescheduling parties for the upcoming hearing?
- Did all of the Schedule III supporters who petitioned for participation truly not qualify as interested persons?
- Did the DEA want to avoid further delaying the issuance of a final rule by eliminating the possibility of a pro-rescheduling party challenging the process?
- Did the DEA want to steer a lopsided administrative record for judicial review by eliminating pro-rescheduling parties’ rebuttals to prohibitionist testimonies?
These questions may be pertinent in future litigation, no matter whether the DEA’s final determination from the hearing is evidence-driven by the record or politically driven by Trump’s executive order.
Furthermore, the hearing’s evidence-based record will now lack a key pillar behind the proposed rule – that cannabis has “currently accepted medical use” in the U.S. and therefore cannot be listed as a Schedule I controlled substance.
When issuing his preliminary order last week, Julius said he won’t entertain discussions on medical cannabis/cannabis products regulated in state-legal markets or those approved by the U.S. Food and Drug Administration, because Blanche issued a separate order on April 22 that already placed these products in Schedule III.
“Accordingly, no evidence or testimony will be received on that matter,” the new ALJ wrote. “The narrow issue in this matter is whether the remainder of marijuana, as defined in the CSA, should be transferred from its current place on Schedule I of the list of controlled substances to Schedule III.”
In other words, Julius will only allow discussion on nonmedical cannabis, making it more difficult for the DEA, as the proponent of the proposed rule, to justify the U.S. Department of Health and Human Services’ (HHS) recommendation that cannabis should be moved to Schedule III because it has currently accepted medical use.
With the HHS conducting an extensive scientific and medical evaluation of cannabis before making its recommendation, the proposed rule leans heavily upon the department’s findings, including that more than 30,000 health care practitioners in the U.S. are authorized to recommend cannabis for more than 6 million registered patients.
The proposed rule does not distinguish between medical and nonmedical cannabis: It’s for all cannabis to be moved to Schedule III. But Julius indicated in the preliminary order that the DEA now has the burden of proof that nonmedical cannabis has a currently accepted medical use, and the government must do so through witnesses who can’t talk about recommending cannabis to their patients in a state-legalized marketplace.
On top of that, the DEA won’t have the assistance of a pro-rescheduling witness list for its burden of proof because the department didn’t invite any outside entities that support the proposed rule.
That means the DEA will be playing a game of one-versus-seven, with each of the seven anti-rescheduling participants allowed two witnesses to testify for two hours each. In addition, each anti-rescheduling participant will also be allowed to cross-examine each of the DEA’s witnesses for up to an hour.
With Trump directing the U.S. attorney general to “take all necessary steps to complete the rulemaking process related to rescheduling marijuana to Schedule III of the CSA in the most expeditious manner in accordance with federal law,” Blanche’s job appears finished.
It’s now up to the DEA to carry the load.
