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On Heels of Senate’s Adoption of Cannabis Research Bill, DEA Issues Rule to License More Research Cannabis Growers

Posted: December 21, 2020

On December 18, 2020, just three days after the U.S. Senate adopted the Cannabidiol and Marihuana Research Expansion Act (CMREA or the Act) (more on this below), the U.S. Drug Enforcement Administration (DEA or the Administration) published in the Federal Register a final rule, “Controls To Enhance the Cultivation of Marihuana for Research in the United States” (Rule), which finally paves the way for DEA to issue additional licenses to grow “marihuana” (i.e., cannabis) for research purposes.

In 1970, Congress passed the Controlled Substances Act (CSA), which, among other things, granted DEA the authority to regulate the cultivation of cannabis for research purposes. In the roughly 50 years since, the Administration has issued only one registration for the cultivation of research cannabis, to the National Center for Natural Products Research at the University of Mississippi, which is funded through a National Institute on Drug Abuse (NIDA) contract. The resulting supply chokehold has presented significant challenges for researchers and, in recent years, has been the subject of litigation. In its amended petition for a writ of mandamus to Attorney General William Barr, to Uttam Dhillon, Acting Administrator of DEA, and to the Administration itself, the Scottsdale Research Institute referenced the “low-quality government cannabis” from the University of Mississippi that “looks more like green talcum powder than medical grade cannabis” and is “tainted with extraneous material like sticks and seeds,” with many samples being moldy.

The Rule, which becomes effective on January 19, 2021, does not specify exactly how many grower licenses DEA will issue. However, the Administration used a range of three to 15 grower licenses for purposes of the economic analysis in the Rule, but stated that “the actual number [of licenses DEA will issue] could vary considerably.” When DEA issued its research grower notice of proposed rulemaking in March 2020, it indicated that it had, at that time, 35 outstanding applications for research cannabis cultivation licenses, and that it anticipated approving between five and 13 of them upon finalizing the proposed rule.

At a high level, here are the essential elements of the application and DEA review process:

  • The research cannabis grower application process involves applicants submitting applications (online or on paper) and DEA evaluating all applications and supporting documentation submitted in accordance with the factors specified in 21 U.S.C. § 823. 
  • After receiving an application, the Administration would send a questionnaire to the applicant (assessing whether the applicant meets the factors in 21 U.S.C. § 823) to be completed and returned to DEA within 10 business days. 
  • DEA would then use the information from the questionnaire and the application to determine whether the application should be granted under 21 U.S.C. § 823. 
  • After the completed questionnaire is processed, DEA would publish a notice of application in the Federal Register, and current registrants and applicants for bulk manufacture of the same class of substance would have 60 days to comment on, or object to, the application. 
  • During the application process, DEA investigators would also complete site visits and submit reports to aid in the determination of whether to grant a registration.

Per the Administration, because the process of evaluating an application to manufacture a Schedule I controlled substance includes a 60-day public comment period, DEA cannot act on the application in a shorter timeframe, such as 30 days, as commenters to the proposed rule suggested. For this reason, DEA declined in the Rule to adopt a specific approval date applicable to all applications for registration to bulk manufacture marihuana.

Given DEA’s previous failure to act on research cannabis cultivation applications that had been pending with the Administration for years, one has to wonder whether the Rule will, in fact, alleviate the current bottleneck, and if it does, when relief will come. If DEA makes good on its promise to issue additional research cannabis grower licenses, it will be interesting to see the makeup of the applicant pool. One possibility is that multistate cannabis operators (MSOs) will apply for these licenses so that researchers can study their cannabis at sites across the country. Currently, DEA does not view the receipt of a Schedule I substance from a non-registrant (i.e., someone without a DEA cultivation license) to be “in conformity with the other provisions” of CSA. This means that, currently, absent DEA registration, a researcher may not legally obtain research cannabis from an MSO even if the MSO is in compliance with state cannabis laws. Potential application approval for MSOs could rapidly increase the availability of research cannabis, but this possibility and whether or not MSOs would want to become DEA licensees remain to be seen. One aspect of the Rule – that DEA will have the exclusive right of importing, exporting, wholesale trading, and maintaining stocks of marihuana other than those held by registered manufacturers and distributors of medicinal cannabis or cannabis preparations – could certainly factor into MSOs deciding whether or not to apply for cultivation licenses. The Rule will also require registered manufacturers to notify the Administration of its proposed date of harvest at least 15 days before the commencement of the harvest.

The timing of DEA finalizing its Rule is interesting, given the Senate’s passage of the CMREA just a few days earlier. The U.S. House of Representatives passed similar legislation just a week before the Senate, the Medical Marijuana Research Act, which would also expand access to cannabis for research purposes. Generally, the CMREA would streamline both the medical cannabis research process and the development of safe and effective cannabis-derived medications that are U.S. Food and Drug Administration (FDA or the Agency)-approved to treat serious medical conditions (e.g., intractable epilepsy).  More specifically:

  • Title I of the legislation would reduce barriers to cannabis research by:
    • Requiring researchers to be registered by the Attorney General if: (1) their research protocol is reviewed and allowed by the Secretary of Health and Human Services (HHS), the National Institutes of Health (NIH), or another federal agency; and (2) adequate security measures are in place to prevent abuse or diversion.
    • Mandating that the Attorney General approve the complete application or request supplemental information within 60 days and must approve or deny the application within 30 days of receiving the supplemental information. If the application is denied, the Attorney General must provide written explanation.
    • Expediting the process to request an increase in the quantity of Schedule I substances for approved research and changes in protocol. Those seeking to increase the quantity of drug being used would be required to notify DEA, rather than DEA and FDA. This notification would be approved upon return receipt from DEA. Researchers seeking changes to their already-approved protocols that involve changes to the quantity, type, source, or conditions under which the drug is stored, tracked, or administered must notify DEA. Unless explicitly denied, the request is considered approved after 30 days. If DEA objects to a registrant changing his or her protocol due to insufficient security measures, the registrant has 30 days to appeal this decision. The bill explicitly maintains HHS authorities related to research protocols, including changes in the administration or dosing of the substances or the number of patients involved. It also requires the Attorney General to issue regulations related to these changes within 90 days.
    • Requiring the U.S. Department of Justice (DOJ) to approve or request supplemental information for applications to bulk manufacture marihuana for research that it has solicited in the Federal Register within 60 days, and requiring DOJ to consider the need for additional strains and specific manufacturing process in determining whether to approve these applications.
    • Requiring marihuana to be stored in securely locked, substantially constructed cabinets – consistent with requirements for Schedule I and II drugs under DEA regulations – eliminating other more severe, cost-prohibitive measures as well as arbitrary enforcement.
    • Amending the definition of marihuana in the CSA to exclude the synthetic equivalent of hemp-derived CBD that contains less than 0.3% delta-9 tetrahydrocannabinol (THC).
    • Requiring the Attorney General to determine if there is an adequate and uninterrupted supply of marihuana on an annual basis.
    • Prohibiting HHS from reinstating the interdisciplinary review process for marihuana research.
  • Title II of the Act would streamline the development of FDA-approved drugs using cannabidiol (CBD) and cannabis by:
    • Allowing accredited medical and osteopathic schools, practitioners, research institutions, and manufacturers with a Schedule I registration to manufacture marihuana for their research.
    • Requiring DEA to license manufacturers for the commercial production of an FDA-approved CBD or marihuana drug.
    • Allowing institutions appropriately registered with the DEA to import marihuana, marihuana seeds, or CBD to conduct medical research for drug development.
  • Title III would allow physicians to discuss the potential harms and benefits of cannabis derivatives, including CBD, as a treatment with the legal guardian of a patient if the patient is a child. It would also allow physicians to discuss the potential harms and benefits of both marihuana and its derivatives with adult patients.
  • Title IV would require HHS to report to Congress on the potential effects of cannabis, including its effects on the human body, the adolescent brain, and on cognitive abilities, such as those required to operate vehicles. It would also require HHS to report on the barriers to researching cannabis that is grown in states that have legalized its use, and to provide recommendations as to how to overcome these barriers. Finally, it would encourage the federal government to facilitate more medical research on cannabis and its components, including the potential therapeutic effects on serious medical conditions.

While there is broad, bipartisan support for expanding access to cannabis for medical research purposes in both the House and Senate, it seems unlikely that the same piece of legislation will pass in both chambers before the end of the current Congress, given the limited time remaining in the session and the more pressing legislative matters that remain outstanding (e.g., stimulus package and government funding measure). However, companion cannabis research bills could be taken up early in the 117th Congress.

We are continuing to monitor DEA’s Rule rollout, cannabis research legislation, and related developments, and will issue further analyses regarding the same, as appropriate. In the meantime, if you have questions regarding an issue raised in this post, please contact the authors or the attorney at the Firm with whom you are regularly in contact.