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It’s been a wild week in the rulemaking around marijuana rescheduling, to say the least. I’ve started writing about it a couple of times, only to be whipsawed by filings, rulings, prominent hot takes, prominent rebuttals, and more. All while trying to do my real job here at the firm.
Below are my thoughts on the state of this terrible pageant, in FAQ format.
What is even going on right now?
Let’s start with the procedural posture. Marijuana rescheduling is mired in an administrative rulemaking process, whereby the Drug Enforcement Administration (DEA) is the hapless, cynical “proponent” of a proposed Department of Justice (DOJ) rule.
Specifically, in May of 2024, DOJ appointed DEA to carry its water on moving marijuana from Schedule I to Schedule III of the Controlled Substances Act (CSA). DOJ’s recommendation takes the form of a Notice of Proposed Rulemaking (NOPR). The Notice was issued because President Biden, in October of 2022, directed the Department of Health and Human Services (HHS) to revisit the Schedule I status of marijuana. HHS did so in collaboration with its downstream agency, FDA, and recommended Schedule III. DOJ then proposed the rule.
Fast forward to this week. Midway through the rulemaking process, DEA Chief Administrative Law Judge John J. Mulrooney, II, issued an order on Monday, January 13th, cancelling the merit-based proceedings that were set to begin on Tuesday, January 21st, and granting an interlocutory appeal. The Judge so ruled on a motion by a small but steely crew of pro-Schedule III witnesses, who were selected by DEA to testify in the proceeding. This intrepid crew is led by Village Farms, International, Inc. (Let’s call them the “Villagers”.)
Judge Mulrooney’s order agitated the internet cesspit of cannabis law discourse, mightily. Certain people were quite upset with the Villagers, while others rushed to their defense. More on that below.
But what did the Judge actually say?
The Judge said several remarkable things, the likes of which we don’t often hear in administrative proceedings. Alas I cannot examine them all in this small space. However, most prominently, His Honor reprimanded DEA for “unprecedented and astonishing defiance” of an evidential directive. He also characterized DEA’s bad behavior as especially, unusually bad, “even among the numerous extraordinary and puzzling actions taken thus far by the Government during the course of this proceeding.”
Further, he cited the Villagers’ allegations against DEA that:
“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 Procedure Act].”
As someone who used to go to court, I can tell you that when you write things like that, it’s a lot of fun to have the judge repeat them. Finally, Judge Mulrooney explained that he will consider sanctions against DEA, which, woah!
How long is the delay?
It’s going to be at least three months, friends. Could be more. And there are further developments that could distend this already sorry state of affairs.
Foremost among them are imminent changes to DOJ and DEA personnel with the incoming Trump administration; and the related question of whether that administration will weigh in on rescheduling one way or another. As Trump’s Attorney General, Matt Gaetz would have been great for Schedule III prospects, given his private love of controlled substances, and his public statements on marijuana reform. Pam Bondi, well, maybe not so much. As to Trump, the man himself endorsed rescheduling on the campaign trail, for whatever that is worth.
Is the hearing cancellation good overall for Schedule III prospects?
In the long term, I believe that it is. Rulemaking is the process of making a record. The process, as well as its result, is subject to litigation and appeal. For this reason, you want a good record.
Interlocutory appeals like the Villagers’ are seldom granted, but the Judge granted this one due to DEA’s flagrant disrespect for the rulemaking process — of which it is proponent, no less! Judge Mulrooney is both making and protecting the record, and guarding against some later appeal based on the fact that DEA’s shithousery tarnished that record.
The Judge will soon examine allegedly inappropriate ex parte communications by DEA with prohibitionist parties, evidentiary dilemmas, and other unsavory matters that were entirely avoidable. Expect more fireworks to come.
Why is the cannabis industry divided over the hearing cancellation?
Many people feel that this cumbersome and essentially political process could come to a halt, owing to excessive delay. It’s making them nervous.
An attorney for the National Cannabis Industry Association (NCIA) — who, like me, is not an administrative litigator – lamented that Judge Mulrooney’s order arises from a “procedural sideshow” caused by the Villagers. The NCIA — which has never been able to move the needle on rescheduling (or much of anything) — now argues that the Villagers, although pro-Schedule III, are undermining Schedule III by litigating the rulemaking.
The charge was not well taken. The Villagers replied that their advocacy is vital to ensure a balanced record and rulemaking, and that it is DEA, not them, which has imperiled Schedule III. The Villagers have a strong ipso facto argument at this point – Judge Mulrooney granted the interlocutory appeal, after all.
I’m not going to summarize the arguments of either side further, but you can read the NCIA attorney’s charge here, and the Villagers’ response here. Or, you can watch attorney Shane Pennington with an absolute fireball of an interview here. (Shane is the administrative litigator representing Village Farms.) I’m with the Villagers.
Is the Judge being fair?
I think he is. He is paying attention, and he’s smart, and he has ruled quickly and decisively throughout the process. Generally speaking, Judge Mulrooney’s rulings have been evenhanded. To that point, we’ve also seen him take the Villagers to task throughout the proceedings, including on big-ticket items, such as their demand that DEA be removed as proponent in this rulemaking. Overall, the Judge is in a difficult position; but he’s certainly working hard.
If the Villagers didn’t screw this up, who did?
Do you have a couple of hours? I’ll start from the top and try to be brief about it.
Joe Biden screwed up
First, Biden screwed up by putting us into an administrative process to reschedule marijuana, back in October of 2022. I have been saying and writing this consistently throughout.
Remember: in the 2020 campaign, Biden promised to “decriminalize the use of cannabis and automatically expunge all prior cannabis use convictions.” He didn’t do that, or even give it a shot– including when his party had control of Congress. Last year, when he announced his bid for re-election, I graded him a gentleman’s “C” for his cannabis policy efforts. And I again criticized him for “passing the buck with rescheduling, putting us on an uncertain, circuitous path.”
If Biden didn’t want to deal with Congress, he also could have leaned on Merrick Garland, as Attorney General, to commence rescheduling proceedings. He didn’t do that, either.
DOJ and Merrick Garland screwed up
DOJ screwed up. Merrick Garland screwed up. Here, it’s important to understand that the NOPR provides that DOJ itself will issue the final rule. Garland himself signed the NOPR in his official capacity as Attorney General.
All of that was high and tight, because the CSA “vests” the Attorney General with the authority to “schedule, reschedule or decontrol drugs” (21 U.S.C. 811(a)). The Attorney General has traditionally delegated that authority to the DEA administrator (28 CFR 0.100). However, the Attorney General also retains the authority to schedule drugs under the CSA in the “first instance” (28 U.S.C. 509, 510).
Garland should have done that. Instead, he kicked this down to DEA, a body which has shown repeated disdain for law and judicial orders— as I pointed out the very day that HHS made its rescheduling recommendation. Garland’s decision also stirred up a hornet’s nest of tedious legal arguments around delegation, whether the DEA should be the proponent here, etc.
DEA and Anne Milgram screwed up
Let me count the ways.
The NOPR sought submissions from “interested persons” desiring to participate in the hearing. “Interested Persons” is defined in 21 CFR 1300.01 as “any person adversely affected or aggrieved by any rule or proposed rule issuable” under 21 USC 811 (my italics). You really have to squint to see how the Villagers and others might be adversely affected by a move to Schedule III. The same can be said of many opposing party witnesses selected by DEA. So why did DEA invite them?
Ultimately, Mulrooney permitted the inclusion of all of these witnesses back in November, partly because DEA selected them, and partly based on His Honor’s consideration that their participation would “meaningfully assist the decisionmaking.” That might be true, although the Schedule III naysayers and yeasayers will likely offer trucksfull of useless, duplicative testimony. So again, why have witnesses in the first place?
Milgram and DEA ostensibly wanted a hearing because marijuana rescheduling is a matter of public import. But a hearing wasn’t necessary. In fact, none of this was really necessary. As I pointed out back when this goat rodeo commenced, DEA could have issued an Interim Final Rule, immediately, putting marijuana on Schedule III last year. (DEA does this all the time, by the way, including with hemp and many other things.)
I’m with the pro-Schedule III witnesses in that I have no faith in DEA. My colleagues have written on this blog since 2015 that DEA ought to be disbanded. I’m with them, at least in the sense that I don’t feel optimistic about DEA’s approach to the rest of these proceedings. How could anyone — regardless of who next sits in Milgram’s chair?
What’s going on in parallel proceedings?
Unless you are even more in the weeds on this stuff than someone like me (in which case, I’m sorry), I don’t think parallel proceedings are worth your attention. However, for completion:
FOIA litigation
Relentless DEA foe Matt Zorn recently sued DEA over in the D.C. Circuit on a FOIA request. He sought an order requiring DEA to immediately turn over certain emails and communications which may demonstrate DEA’s contempt for marijuana rescheduling and the rulemaking process, and collusion with prohibitionists.
The court ruled against his request for a preliminary injunction on January 6. The ruling was not particularly surprising – injunctions are tough to get — and that case isn’t over. It could be mooted at some point, though.
Excluded party litigation
Out in the Western District of Washington, DOJ told a federal court on January 15th to pause a lawsuit by Panacea Plant Sciences challenging the rescheduling process. This follows on Judge Mulrooney’s earlier denial of the plaintiff’s request to postpone the rescheduling hearing over “improper blocking” of witnesses.
Both Panacea and DOJ now agree that the litigation should be paused, because the Mulrooney granted the interlocutory appeal and canceled next week’s hearings. So this one’s on ice for now, too.
I am still hopeful for Schedule III
Friends, nothing is ever easy in cannabis.
In the narrow context of this rulemaking, it really comes down this: a bunch of people, many of them law enforcement officials, are arguing to a pretty smart Judge that they know better than HHS (who are scientists, doctors, etc.) about the medical benefits and harms of marijuana.
HHS made an exhaustive, 250 page finding that marijuana has current accepted medical use and doesn’t belong on Schedule I. And, while the CSA is clear that while DOJ maintains final authority to reschedule marijuana, it is also clear that HHS’ recommendations “shall be binding … as to [] scientific and medical matters.”
So let’s see if DEA can actually un-ring this bell, assuming that’s the actual motive. I don’t think it can, especially while being exposed by the Villagers, reprimanded by its own administrative law judge, and generally held to account.
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For more in this series, check out the following posts:
“}]] This week saw some real bumps in the road on marijuana rescheduling. It’s not coming easy, but we still think it’s coming. Read More
