In her final days under President Joe Biden’s administration, Drug Enforcement Administration (DEA) Administrator Anne Milgram is now back in the driver’s seat of the current proposal to reschedule cannabis under the Controlled Substances Act.
That’s because DEA Chief Administrative Law Judge (ALJ) John J. Mulrooney, whom Milgram tasked in August with overseeing a fair and transparent hearing to debate the merits of the Schedule III proposal, transmitted an interlocutory appeal to her office on Jan. 15.
Mulrooney granted the rare appeal on Jan. 13 to three of the hearing’s designated participants (DPs) after he denied their motion to reconsider in which the DPs asked the judge to order the DEA to disclose alleged ex parte communications it had with anti-rescheduling DPs.
Mulrooney also denied a request that he force the DEA to declare on record whether the agency supports the Department of Justice’s (DOJ) rescheduling proposal.
Of note, Mulrooney correctly asserted in his Jan. 15 letter to Milgram that the notice of proposed rulemaking (NPRM) to reschedule marijuana was issued by the DOJ on May 21, 2024—and signed by Attorney General Merrick Garland.
Previously, Mulrooney issued an order on Nov. 19 stating that Village Farms International’s “unsupported accusation” that the DEA is an improper advocate or sponsor “of its own NPRM” added “nothing to the standing equation.”
Village Farms, along with fellow pro-rescheduling DPs Hemp for Victory and the Connecticut Office of the Cannabis Ombudsman (OCO), requested the interlocutory appeal, which Mulrooney said in his letter to Milgram had caused a “delay” in the hearing process. Two days earlier, he used the word “canceled.”
“As discussed in further detail, infra, this interlocutory appeal (and its attendant delay of the proceedings) is at the exclusive request of a subset of designated participants who filed the motions that form the basis of this appeal (the interlocutory appellants),” Mulrooney wrote to Milgram. “The government timely opposed both underlying motions as well as leave for this interlocutory appeal.”
In his letter, Mulrooney also recommended to Milgram that all 20 DPs for the hearing be included in any briefing schedule she issues and that all DPs on both sides of the proposed be allowed to brief the issues included in the interlocutory appeal.
Mulrooney’s denied relief that led to the appeal included a petition to have Milgram and the DEA removed as the proponent of the NPRM: The interlocutory appellants have repeatedly asserted that the DEA cannot serve as a “proponent” to a rule that it did not propose and does not support.
After Mulrooney granted the appeal, there were mixed reactions from the cannabis industry as it relates to delaying the rescheduling hearing that was scheduled to begin with expert testimonies on Jan. 21.
Khurshid Khoja, legal counsel representing the National Cannabis Industry Association, which is also a pro-rescheduling DP for the hearing, wrote an op-ed bashing the interlocutory appellants for engaging in a “procedural sideshow” rather than working constructively toward securing a final rule for the Schedule III proposal.
While it may seem silly to seek an interlocutory appeal to the head of an agency that the appellants are trying to disqualify from the hearing, attorney Shane Pennington, a partner at Porter Wright Morris & Arthur LLP who authored the motion to reconsider on behalf of Village Farms, addressed this perception Jan. 15 on The Dales Report.
“Here, the only step that we’re allowed, by law, is an appeal to the DEA,” he said. “Now you might think, ‘Well, that’s crazy. Why would you go to the DEA and ask their permission when you’re saying that they’re corrupt?’ I’m not saying they’re corrupt. They are. … And what I’m doing by asking DEA about it—that is a really good thing to do. You know why? Because they’ve got to say something.”
Pennington pointed back to when he and fellow attorneys filed their original motion on the ex parte communications on Nov. 18.
“[Mulrooney] gave them a chance to respond,” he said. “Did [Smart Approaches to Marijuana] or DEA deny that they had engaged in ex parte communications? No. Did they disclose them as they were required to do by law? No. They didn’t. They just sat there and took a bunch of technical points. Then they’re given another chance for this latest motion. Did anybody deny what we were saying? No. Did they disclose anything? No.”
Editor’s note: In response to the original motion, DEA Deputy Section Chief James J. Schwartz wrote, “As an initial matter, undersigned counsel unequivocally denies any and all allegations of ex parte communications.” However, officials accused of collusion in the motion to reconsider, including DEA Deputy Assistant Administrator Matthew Strait, did not publicly deny the allegations. Rather, DEA counsel argued that the allegations lacked merit.
“And every time that that happens, we’re building this record,” Pennington said. “So, by the time that this thing gets to court, or if we end up in a congressional hearing … we will have all of the goods. It’s not going to be an allegation where you have to trust [me] and Matt [Zorn] and Andrew [Kline]. It’s going to be: ‘Here’s the meat in front of you.’ That’s what we’re doing.”
While Pennington and fellow attorneys accused the DEA of having improper communications with the prohibitionist group Smart Approaches to Marijuana in the initial motion from Nov. 18, they offered new evidence in their motion to reconsider, claiming the DEA also conspired with another anti-rescheduling DP, the Tennessee Bureau of Investigation (TBI), to ensure TBI qualified as an “interested person” for the hearing.
Through the motion to reconsider, Pennington and his fellow attorneys—Andrew Kline, a senior counsel at Perkin Coie LLP who represents Hemp for Victory, and Matt Zorn, a partner at Yetter Coleman LLP who represents OCO—have sparked Mulrooney’s scathing criticism of the DEA on the record.
If the ex parte communication allegations are true, the judge wrote on Jan. 13, they “demonstrate a puzzling and grotesque lack of understanding and poor judgment from high-level officials at a major federal agency with a wealth of prior experience with the [Administrative Procedures Act]. And that is a charitable perspective.”
While it is likely that President-elect Donald Trump will name a new DEA administrator to take the helm after he’s inaugurated on Jan. 20, the current record would remain, potentially influencing future legal proceedings related to how cannabis is scheduled under federal law. However, with a final rule not yet published in the Federal Register, new leadership in the White House could scrap the proposed rule altogether.
Nonetheless, following his duties under Section 1316.62 in the Federal Code of Regulations, Mulrooney transmitted the interlocutory appeal to Milgram this week with all the records included after ordering the DEA to work with the appellants to provide him with a joint status update in 90 days and every 90 days thereafter.
“The [ex parte reconsideration order] … is based on allegations that certain members of the Drug Enforcement Administration (DEA) have engaged in improper ex parte communications which, at least in the view of the interlocutory appellants, has resulted in an irrevocable taint to the proceedings,” Mulrooney wrote to Milgram. “Contrary to the request of the interlocutory appellants, no hearing has been conducted on these allegations, no evidence or testimony was received on the underlying factual allegations, and no facts have been found.”
Instead of seeking the appeal, the three pro-rescheduling DPs had hoped Mulrooney would schedule and hold an evidentiary hearing to determine the “nature, extent, source, and effect” of the ex parte allegations.
From their perspective, a final rule could have already been issued and published in the Federal Register had Milgram not granted an ALJ hearing in the first place.
The judge asked DEA Administrator Anne Milgram to include all designated participants for the cannabis rescheduling hearing to be part of a briefing schedule. Read More
