Amid new evidence suggesting that the Drug Enforcement Administration (DEA) gave preferential treatment to an anti-rescheduling organization and partnered with another, cannabis rescheduling proponents stepped up their effort to disqualify the DEA from the hearing process.
Cannabis company Village Farms International and veterans group Hemp for Victory (the “movants”) filed a motion to reconsider on Jan. 6 with DEA Chief Administrative Law Judge (ALJ) John J. Mulrooney, asserting that the DEA is attempting to use its authority to prevent cannabis from being reclassified from a Schedule I to Schedule III drug under the Controlled Substances Act (CSA).
The legal filing, authored by attorney Shane Pennington, a partner at Porter Wright Morris & Arthur LLP, requests that Mulrooney reconsider a prior motion filed in November that sought to remove the DEA as the proponent of a proposed rule that the Department of Justice (DOJ) put forward to reschedule cannabis. Mulrooney is tasked with presiding over a fair and transparent hearing process that will allow DEA-selected parties to debate the merits of the DOJ’s proposal.
This week’s motion to reconsider includes additional evidence, according to Pennington, that the DEA had undisclosed conflicts of interest with rescheduling adversaries and extensive improper ex parte communications that should be disclosed and made part of the public record for the hearing that’s scheduled to begin with expert testimonies on Jan. 21.
Village Farms and Hemp for Victory are among the designated participants (DPs) for the hearing, as is the Office of the Cannabis Ombudsman (OCO), which, represented by Matthew Zorn, a partner at Yetter Coleman LLP, joined the latest motion to reconsider.
The new motion also requests that Mulrooney grant a “brief” continuance of the merits of the hearing in order to investigate the “nature, extent, source and effect” of the alleged improper communications made by the DEA with DPs. This was one of six requests grouped in the motion. Should Mulrooney deny these requests, the movants will pursue an immediate interlocutory appeal.
In other words, Village Farms International, Hemp for Victory and OCO would seek to appeal the denial of their motion requests before the rescheduling proceedings are final, possibly derailing the course of the hearing process. However, that decision is now in the hands of Mulrooney (more on this later).
“The new evidence presented in this filing strongly suggests the DEA is using its authority in these proceedings to subvert the process and thwart the Schedule III proposal which it vehemently opposes,” Pennington said in a public statement on Jan. 6.
“We believe an immediate special evidentiary hearing into the nature, extent, source, and effect of all ex parte communications is essential,” he said, “and until that process is unquestionably complete there will be no way to ensure fairness and transparency, preserve any meaningful opportunity for judicial review based on the whole record, or to salvage the public legitimacy of these proceedings.”
The motion claims the DEA has prejudiced the hearing’s pro-rescheduling DPs and extended off-the-record assistance to at least one anti-rescheduling DPs that exhibited bias. In addition, the motion asserts that the DEA’s partnership with another anti-rescheduling DP constitutes a conflict of interest.
While the movants’ original motion from November alleged the DEA had ex parte communications with prohibitionist DP Smart Approaches to Marijuana (SAM), the DEA denied those collusion allegations, and SAM’s legal counsel responded by saying the motion offered no evidence of any improper communications.
Now, in this week’s motion to reconsider, the movants imply there’s new evidence suggesting that the DEA improperly communicated and coordinated with at least one other anti-rescheduling DP: the Tennessee Bureau of Investigation (TBI).
In addition to the DEA’s alleged ex parte communications with SAM, “another headquarters-level DEA official was working with anti-rescheduling DP TBI in secret to ensure it would be able to oppose the Proposed Rule in these proceedings,” Pennington wrote.
Specifically, the TBI explained in a recent filing that on Sept. 17—after DEA Administrator Anne Milgram announced on Aug. 26 that she would grant an ALJ hearing—it received a letter from DEA Deputy Assistant Administrator Matthew Strait requesting that the TBI provide supplemental information showing that it qualified as an “interested person” to participate in the hearing process, according to this week’s motion for reconsideration.
The movants and their counsel are not aware of the DEA providing this preferential treatment to any “pre-rescheduling party,” Pennington wrote in the motion.
Many pro-rescheduling parties that sought to participate in the hearing process, including the state of Colorado, the American Trade Association of Cannabis and Hemp (ATACH) and MedPharm, among others, received no response at all from the DEA regarding their requests to participate, much less assistance from the government in securing their qualification as an interested party, according to the motion.
“Of course, no one would know about Deputy Assistant Administrator Strait’s off-the-record coordination with TBI but for TBI’s candid, though critically incomplete, disclosure in its Nov. 12, 2024, filing,” Pennington wrote. “That is true because there was no transparency regarding why the Administrator [Milgram] usurped this Tribunal’s role, how and why the Administrator created the DP list, what criteria the Administrator used to determine the interested-person status of DPs and requesters not selected as DPs, why this Tribunal had no role in making any [of] these determinations, why the Administrator excluded supporters of the Proposed Rule with legitimate claims to administrative standing (including DEA-registered marijuana researchers and a state with a long-standing medical program), or why DEA failed to notify all petitioning parties promptly of these decisions and the Administrator’s rationale for them.”
Without discovery and/or an evidentiary hearing, there’s no way of knowing that the DEA did not afford other anti-rescheduling parties similar “preferential treatment,” according to the motion.
Michael DeGiglio, founder, president and CEO of Village Farms, said the company’s initial motion in November reflected a desire for a more transparent process consistent with the Administrative Procedure Act.
“However, since then our view has only strengthened that these proceedings are a sham orchestrated by the DEA to stonewall cannabis from being transferred to a Schedule III designation,” he said in a public statement. “This would be a disgraceful outcome that will continue to harm the health and safety of Americans and benefit Big Pharma and harmful addictive drugs like opioids.”
In addition to the ex parte communication claims, the latest motion asserts there is new evidence of a conflict of interest between the DEA and the Community Anti-Drug Coalitions of America (CADCA), an anti-rescheduling DP selected by the DEA.
In documents recently published by the DEA—on preventing youth cannabis use and a drug-abuse resource guide—the DEA lists CADCA as a resource for information on cannabis. Also, CADCA announced that it’s working as a DEA “partner” on fentanyl-related matters.
“This new evidence confirms that DEA has worked to stack the deck against the Proposed Rule by favoring anti-rescheduling parties in its selection of hearing participants and obstructing a balanced and thoughtful process based on science and evidence,” Pennington wrote.
In conclusion, the movants requested that Mulrooney:
- Order DEA and all DPs to immediately disclose any ex parte communications;
- Grant a brief continuance of the merits hearing currently scheduled to begin on Jan. 21, 2025, to permit the parties and this Tribunal to investigate the nature, extent, source, and effect of any and all ex parte communications;
- Schedule and hold an evidentiary hearing to determine the nature, extent, source, and effect of any and all ex parte contacts;
- To the extent necessary to fully uncover the nature, extent, source, and effect of DEA’s ex parte communications, or in the event that this Tribunal does not grant the requested evidentiary hearing, permit Movants to conduct limited and targeted discovery, including a deposition of SAM and CADCA;
- Make all written ex parte communications, memoranda documenting all oral ex parte communications, and this Tribunal’s findings regarding the nature, extent, source, and effect of any and all ex parte communications part of the record of these proceedings; and
- Direct DEA, as it did all DPs, to declare whether it supports or opposes the proposed transfer of marijuana from Schedule I to Schedule III of the CSA.
Should Mulrooney deny the requested relief in points one through six above, then the movants requested that the judge permit them to pursue an immediate interlocutory appeal of that denial.
According to 21 C.F.R. § 1316.62, “Rulings of the presiding officer may not be appealed to the [DEA] Administrator prior to his consideration of the entire hearing without first requesting the consent of the presiding officer.”
In other words, the movants cannot seek an interlocutory appeal of Mulrooney’s potential denial order without first asking Mulrooney for permission for the appeal. The movants preemptively asked Mulrooney for permission in their latest motion.
Within 10 business days of receiving the movants’ request for consent for the interlocutory appeal—or by Jan. 21—the presiding officer (in this case, Mulrooney) “shall certify on the record or in writing his determination of whether the allowance of an interlocutory appeal is clearly necessary to prevent exceptional delay, expense or prejudice to any party, or substantial detriment to the public interest,” according to Section 1316.62 in the Federal Code of Regulations.
In response to the motion for reconsideration, Mulrooney issued an order on Jan. 7 requiring the DEA to file a response no later than 2 p.m. ET on Jan. 13. The judge also made it clear that the motion “puts all on notice that to the extent the relief it seeks is denied that the Movants will seek an interlocutory appeal.”
If Mulrooney denies the interlocutory appeal, he’s required to file his determination and the movants’ motion related to the interlocutory appeal within three business days to the DEA administrator for discretional review.
On the other hand, if Mulrooney grants the interlocutory appeal or if the DEA administrator determines that an appeal is warranted, any party participating in the hearing may file a brief with the administrator, who can grant oral arguments only if he or she chooses.
Notably, President-elect Donald Trump, whose inauguration is scheduled for Jan. 20, hasn’t named a replacement nomination for his administration’s DEA administrator following Florida Sheriff Chad Chronister’s exit for consideration in early December.
So, what does this mean for the cannabis rescheduling process that’s supposed to resume with expert testimonies on Jan. 21?
The ball is back in Mulrooney’s court.
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