Proposed Doubling of 2019 Marijuana Production Quota Brings DOJ and DEA To A Fork in the Road

September 21, 2018By John A. Gilbert & Larry K. Houck

In the words of the inimitable Yogi Berra: “When you come to a fork in the road, take it.”

Last month the U.S. Department of Justice (“DOJ”) and the Drug Enforcement Administration (“DEA”) proposed significant reductions of Schedule II opioid pain medication quantities to be manufactured next year. DOJ, Press Release, Justice Department, DEA Propose Significant Opioid Manufacturing Reduction in 2019 (Aug. 16, 2018).  See The Third Cut Is the Deepest: DEA’s Continued Slashing Of Annual Quotas Lacks A Clear Rationale (Aug. 21, 2018). In contrast with significantly reducing the aggregate production quotas (“APQs”) of certain opioids, DEA proposed a significant increase of the 2019 marijuana APQ and proposed that tetrahydrocannabinols (“THC”) APQ remain at the 2018 level. Proposed Aggregate Production Quotas for Schedule I and II Controlled Substances and Assessment of Annual Needs for the List I Chemicals Ephedrine, Pseudoephedrine, and Phenylpropanolamine for 2019, 83 Fed. Reg. 42,164, 42,167 (Aug. 20, 2018).

DEA establishes APQs for schedule I and II substances, and certain List I chemicals, that limit the aggregate quantity of a drug that can be manufactured each year. The proposed marijuana APQ for 2019 (2,450,000 grams or 5,400 pounds) represents a five and a half-fold increase over the initial 2018 marijuana APQ (443,680 grams or 978 pounds), and more than doubles the adjusted 2018 marijuana APQ (1,140,216 grams or 2,500 pounds).

The proposed marijuana APQ leads us to ask who is going to use all of this quota? Is the University of Mississippi, the current sole DEA-registered marijuana cultivator, gearing up to cultivate the increased marijuana quantities for 2019?  Or, is Attorney General Jeff Sessions finally going to give DEA the green light to review and process the twenty-six applications it began receiving in 2016, and issue registrations to legitimate entities to cultivate marijuana for research?  Given recent events and for the reasons outlined below, the latter appears more likely if not necessary.

For over 50 years, DEA has granted only one manufacturer registration for marijuana, thus restricting all marijuana production for research to the University of Mississippi under contract with the National Institute on Drug Abuse (“NIDA”). DEA limited marijuana cultivation to a single grower based on its belief that manufacturing by a single registrant decreased the likelihood of diversion.  Of course until recently, the University of Mississippi was able to meet the limited demand for research-grade marijuana.

Then, in August 2016, DEA stated that along with the National Institutes on Health and FDA it “fully supports expanding research into the potential medical utility of marijuana and its chemical constituents.” Applications to Become Registered Under the Controlled Substances Act To Manufacture Marijuana To Supply Researchers in the United States, 81 Fed. Reg. 53,846 (Aug. 12, 2016).  DEA acknowledged recent increased interest in research with cannabinoids including cannabidiol (“CBD”), and based upon discussions with NIDA and FDA, “concluded that the best way to satisfy the current researcher demand for a variety of strains of marijuana and cannabinoid extracts is to increase the number of federally-authorized marijuana growers.” Id.

DEA observed that the single cultivator system was geared towards federally-funded and academic research, not commercial product development, and announced that its new approach with multiple cultivators would foster not only federally-funded and academic research, but also private commercial drug product development. Id.

To that end, DEA announced that it would accept and consider additional applications for registration to grow and cultivate marijuana for research. DEA has received twenty-six applications for registration to manufacturer marijuana since August 2016.  Letter to Jeff Sessions, Attorney General, DOJ (July 25, 2018); Letter to Jeff Sessions, Attorney General, DOJ (Aug. 31, 2018).  DEA has requested routine background information from some of the applicants, but appears to have done little else with the applications.

So why the inaction? It appears that both the House and Senate believe the Attorney General is the hold-up.  Federal lawmakers have prodded the Attorney General on a number of occasions to allow DEA to act on the applications.  A July 25, 2018 letter from a bipartisan group of eight Senators quoted Sessions as stating during testimony in April 2018 that: “We are moving forward and we will add, fairly soon . . . additional suppliers of marijuana under the Controlled [Substances Act],” and had testified in a prior hearing that: “It would be healthy to have some more competition in the [marijuana] supply.”  Letter to Jeff Sessions, Attorney General, DOJ (July 25, 2018).

More recently, an August 31, 2018 letter from fourteen congressional members, also posed the following questions to Attorney General Sessions:

  1. What is the current status of the twenty-six marijuana manufacturer applications?
  2. What steps have DEA and DOJ taken to review the pending applications?
  3. When does Mr. Sessions estimate that DEA will have completed its review of the applications and issue registrations?

Id., and Letter to Jeff Sessions, Attorney General, DOJ (Aug. 31, 2018).

Finally, last week the House Judiciary Committee approved by voice vote the Medical Cannabis Research Act of 2018 (H.R. 5634), which was introduced in the House on April 26, 2018. The bipartisan bill would require the Attorney General through DEA to issue registrations to at least two additional applicants to manufacture marijuana for legitimate research purposes within a year, and to register at least three applicants in subsequent years.  Medical Cannabis Research Act of 2018, H.R. 5634, 115th Cong. (2018).  Registered manufacturers would be limited to transferring or selling marijuana to DEA-registered schedule I researchers for “use in preclinical research or in a clinical investigation pursuant to an investigational new drug exemption” the Food, Drug and Cosmetic Act. Id. § 2(a)(2).

DEA has analyzed relevant data and has set its 2019 APQ that “reflects the total amount of controlled substances necessary to meet the country’s medical, scientific, research, industrial, and export needs for the year and for the establishment and maintenance of reserve stocks.” DOJ, Press Release, Justice Department, DEA Propose Significant Opioid Manufacturing Reduction in 2019 (Aug. 16, 2018).  We agree with DEA’s August 2016 statement that the best way to satisfy increased researcher demand for marijuana and its extracts is to increase the number of registered cultivators.  We wonder whether the University of Mississippi can meet the increased demand for marijuana over the next year.  Clearly Members of Congress do not think so.  Clearly if DOJ and DEA are serious about approving expanded research into the medical use of marijuana they need to approve additional registrations from qualified applicants who can demonstrate compliance with DEA requirements.

Having increased the marijuana APQ necessary to meet the country’s legitimate research needs for 2019, the Attorney General, DOJ and DEA are at a fork in the road. They need to take it.