Federal Government Continues to Withhold Key Cannabis Scheduling Recommendation Letter Despite FOIA Requests, Lawsuit

After nearly three months, multiple public records requests and a lawsuit, the U.S. federal government has still not released an unredacted version of the widely reported letter detailing the U.S. Health and Human Services recommendation to reschedule cannabis.

HHS confirmed in an email Aug. 30 to Cannabis Business Times that it “expeditiously responded to President Biden’s directive to HHS Secretary [Xavier] Becerra and provided its scheduling recommendation for marijuana to the DEA [Drug Enforcement Administration] on August 29, 2023.”

But after email correspondence between CBT, HHS and DEA, as well as Freedom of Information Act (FOIA) requests to both the HHS and DEA from CBT and others, neither agency has confirmed if HHS recommended reclassifying cannabis from a Schedule I to a Schedule III substance in the Controlled Substances Act, as Bloomberg first reported after seeing but not obtaining the letter. No other media outlets have reported seeing nor obtaining a copy of the HHS letter to the DEA.

“This news, first reported by Bloomberg, has wide-ranging implications for the cannabis industry, including a shift in federal policy that would recognize cannabis as having medical value should the DEA take up the HHS on its recommendation,” CBT reported. “Should cannabis be reclassified as Schedule III, it would break ties with ‘high abuse’ substances like heroin, LSD, methaqualone and ecstasy, and instead join the likes of ketamine or acetaminophen products containing codeine. But the DEA has final authority over rescheduling drugs.”

In response to CBT’s FOIA request, on Oct. 27, the agency sent a heavily redacted version of the one-page letter from Rachel L. Levine, Assistant Secretary for Health, to DEA Administrator Anne Milgram, still with no details on what the HHS recommendation was.

RELATED: CBT Receives Heavily Redacted HHS Letter to DEA on Cannabis Reclassification

Matthew Zorn, partner at Yetter Zorn, who has filed a lawsuit against HHS to obtain the letter, calls this situation “profoundly disappointing.”

“Of all the lawsuits I’ve ever filed, this involves the most asinine conduct,” Zorn told CBT. “They should just post the document, moot the case, and we should all move on. They should be ashamed of themselves. There is no reason for them to withhold this document.”

Zorn filed the lawsuit Sept. 29 in the U.S. District Court in the District of Columbia, after HHS: failed to produce the letter in response to Zorn’s FOIA request (filed Aug. 30); has not made “a timely determination within 20 days” regarding the request; and has not made “a timely determination on expedited treatment” requested by Zorn in his FOIA request, according to the suit and as detailed in previous reporting from CBT.

On Nov. 14, Zorn filed a motion for summary judgment, which if the court decides the HHS exemption claims to the FOIA request applies (more on this below), it will have to explain why it applies.

“I just want the document to be posted,” Zorn said. “That’s it. I do not care about making any broader point of law. I just want the document.”

The default deadline for a response is Nov. 24, but an assistant U.S. attorney with the Department of Justice requested an extension to Dec. 12. 

“What’s unique about this case, is … not only are lots of folks in the media talking about it and the recommendation, but literally lawmakers are writing letters, like Senator [Kirsten] Gillibrand … and nobody's ever seen [the letter], right?” Zorn said about a letter Gillibrand wrote to the DEA urging the agency to move cannabis to Schedule III. “What's even more inexplicable is assuming they do go forward with rescheduling, they're going to have to release the document anyway. So really this isn't about them protecting a process at all. It's just them playing politics.”

In HHS’s response to CBT’s FOIA request, it claimed it redacted contents of the letter under FOIA Exemption (b)(5), which focuses on intra-agency communications.

Referencing a March 15, 2022, memorandum that Attorney General Merrick Garland issued titled “Freedom of Information Act Guidelines” for all heads of federal departments and agencies, Zorn noted this case does not align with the key point Garland made in the memo, that “In case of doubt, openness and transparency should prevail.”

“Read the March 2022 memorandum that he wrote and ask yourself if there's anything in that memorandum that is consistent with them withholding this document, which is clearly of massive public importance,” Zorn said.

The guidance notes that “Information that might technically fall within an exemption should not be withheld from a FOIA requester unless the agency can identify a foreseeable harm or legal bar to disclosure. In case of doubt, openness should prevail.”

Later, the memo emphasizes that “Transparency in government operations is a priority of this Administration and this Department.”

“Continue to apply the foreseeable harm standard to identify information that may be released even though it is technically within the scope of a FOIA exemption other than exemption (b)(3),” the memo continues.

Unlike other FOIA requests that can be complicated and involve several emails and records, Zorn said this involves just one piece of paper. “This is a simple lawsuit. We know exactly what document we’re talking about,” he said.

Verifying this recommendation has profound implications on state-legal cannabis operators, Zorn said. Moving from a Schedule I to a Schedule III substance would mean IRC Section 280E, which prohibits licensed operators from taking tax deductions afforded to most other businesses, would no longer apply, which would remove a significant barrier to profitability. But it goes beyond that.

“The industry functions in this really sort of odd manner because capital isn't liquid. There's just so much you can't do when you don't have money. You can't pay your employees good benefits,” Zorn says. “There's actually an equity component to it, and if your business can't turn a profit, you can't do any of the other equity initiatives that folks want to do.

“You can't operate at a loss forever. So you can't talk about reform, you can't talk about improvement, if you can't keep the lights on. … If you can't get to the black, none of that matters.”