doomed
6 horas hace
Home / Cultivation
Oklahoma loses nearly 40% of licensed medical marijuana operators in 12 months
By Doomed
March 25, 2025
A reckoning is under way in the Oklahoma medical marijuana market.
Over a 12-month period through July 2024, the number of commercial MMJ businesses in the state decreased by nearly 40%, according to a fiscal year 2024 annual report recently published by the Oklahoma Medical Marijuana Authority (OMMA).
Through July 2024, the total number of licensed MMJ operators totaled 6,937, down from 11,330 a year earlier.
Licensed medical cultivators, dispensaries and processors all experienced significant shifts over the 12-month period.
Grower permits fell to 3,645 in July 2024, down nearly 44% from 6,497 in July 2023.
Licensed dispensaries dropped 27%, from 2,852 to 2,051.
MMJ processing licenses decreased 39% from 1,792 in July 2023 to 1,092 a year later.
The licensing decline was first reported by the Tulsa World.
Meanwhile, the number of registered MMJ patients declined by 2.5% during the 12-month period, from 353,437 to 344,556.
In response to the ongoing exodus of licensed medical cannabis businesses:
Last year, the OMMA said it planned to eliminate 10% of its workforce in a reorganization, or roughly 25-30 employees.
In May 2023, Oklahoma lawmakers extended a moratorium on new MMJ business licenses until 2026. About a month later, the OMMA published the results of a study that concluded the state was producing 32 times more marijuana than was needed for the number of MMJ patients who were registered at the time.
doomed
6 horas hace
Home / Finance
What’s causing the decline in M&A activity in the cannabis industry?
Omar Sacirbey, Interim Editor in chief
March 25, 2025
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Image of Frank Colombo
Frank Colombo (Courtesy photo)
Mergers and acquisitions in the cannabis industry in 2024 totaled $1.169 billion, a decrease of $579 million – or 33% – from the $1.749 billion of industry M&A the previous year, according to Viridian Capital Advisors.
What’s behind the decline?
There are several factors, according to Frank Colombo, managing director at Viridian, a New York-based, cannabis-focused investment banking and data analytics firm, who spoke with Doomed about the cannabis industry’s decreasing M&A activity and what it means moving forward.
What are the biggest reasons behind the decline of cannabis M&A in 2024?
Cash is very tight. Over the last two years, cannabis companies have been in cash conservation mode, and a lot of deals have been canceled.
The motivation for M&A has also changed.
Going back in time, it was kind of a land grab, companies wanted to be in every state. Now it’s more of a concentration game.
The poster child of the land-grab movement was Acreage (Holdings, a New York-headquartered multistate operator now owned by Canopy Growth Corp.).
A few years ago, Acreage had more states on their map than practically anybody. But they were an inch deep and a mile wide, as they say.
The MSOs have figured out that you just can’t be profitable that way.
You have to have concentration in a market to really take advantage of it.
You basically have to have a sizable presence and vertical integration.
And you’re not going to be able to do that if you just have one or two dispensaries here and there.
What a lot of these companies have been trying to do is really pick their shots and try to go big in those markets.
What else has dampened M&A?
The other thing that has restrained things are stock prices. You need cash or stock to finance an acquisition.
Cash is tight because it’s hard to raise money. You can’t really sell equity in this market because we’re at all-time lows now.
Stock is not an attractive currency to use because your stock is not worth what it ought to be.
You can go out and borrow money, or you can use seller notes – and a lot of people did – but you’re starting to see a lot of these MSOs have gotten to the point where they are borderline over-leveraged.
Businesses don’t really want to take on more debt. They can’t sell equity. They don’t want to use equity in an acquisition.
So how do they continue to do acquisitions?
The answer, in a lot of cases. is that they don’t.
They’ve decided to concentrate on building out the places they already have and spend some judicious capex (capital expenditures), making sure that operations are as efficient as they can be.
Do merging cannabis companies typically integrate well?
Integrating any companies in an acquisition is always hard, no matter what industry you’re in.
The data pretty clearly shows that the majority of large acquisitions in America, not just in cannabis, fail. And it’s because of this integration.
On paper, it looks good.
But then you start trying to meld the two cultures of people together and decide who’s going to run that area and who’s going to run this area?
And somebody’s pissed off, and you have different underlying accounting systems and control systems, and it’s just so much harder to get these deals to work.
But look at Vireo (Growth), which had operations in Minnesota, New York and Maryland.
In December, they announced four acquisitions – one in Utah, one in Missouri, one in Nevada and one in Florida.
Those are all new operations.
They’re all in markets where those four companies don’t have anything to do with each other. They don’t compete, they don’t cooperate there, they just don’t relate to each other at all.
So, there’s no integration issues here, because they’re not going to try and put their own people in to run the Utah operation. They’re going to let Utah run Utah. Nevada runs Nevada.
Only at the very high level of maybe some capital allocation are they going to try and manage this thing at all.
What other types of acquisitions are you seeing?
The other thing that we see happening is intrastate M&A, consolidation within states.
Lots of little companies in Missouri are combining together to make a bigger entity. We see the same thing in Michigan.
Not so much in Massachusetts, because of the screwed-up laws of Massachusetts.
In Massachusetts, you can only have three dispensaries and 100,000 square feet of canopy.
So, everybody who wants to be in Massachusetts is already in Massachusetts.
If you want to sell your company in Massachusetts, the list of MSOs you can go to, it’s an empty set.
There’s nobody left that’s not already there.
You’re forced to be talking about trying to sell it to private companies or to combine with smaller companies.
That’s part of the whole story of what’s restraining M&A.
Why is hemp-derived THC M&A down?
It’s smaller, private legacy companies that are fuelling that market.
And they have not yet gotten to the point where they’re consolidating from an M&A point of view.
You have a lot of smaller competitors there making these products that are going into the convenience store chains, gas stations and whatnot.
And we just have not yet seen them start to consolidate and do M&A.
How’s the outlook for cannabis M&A this year?
The overall restraint on stock prices, the challenges of getting any reform done in Washington, D.C., industry revenues are flat to down, margins are down.
So, going out and making yourself bigger in that environment is just not that attractive right now.
Over the long term, we’ve got to have consolidation in this business still.
A bunch of people have said this, but I agree with it.
I think you end up with an hourglass-shaped industry where there’s a lot of concentration of big companies and there’s a bunch of little craft growers in the bottom, and there’s not that many in the middle.
doomed
4 días hace
More bunk weed caper.
Home / Manufacturing / Testing
Marijuana pre-rolls in New Jersey contain yeast, mold and bacteria, study shows
Doomed
March 21, 2025
Marijuana pre-rolls purchased in New Jersey by secret shoppers participating in a study have tested for high levels of yeast, mold and bacteria and were less potent than advertised.
The shoppers, participating in a Safe Leaf Society study, submitted 25 pre-rolls they purchased at licensed marijuana retailers for testing, the Asbury Park Press reported.
According to the study, the microbial levels in seven of the pre-rolls, which had undergone testing before hitting store shelves, were much higher than the legal limit of 100,000 colony-forming-units-per-gram set by the New Jersey Cannabis Regulatory Commission (CRC).
Levels of yeast and mold were five times higher than the limit in two of the products tested.
“Mislabeled cannabis is equivalent to a pharmacy providing the wrong prescription or a restaurant regularly serving moldy food,” Andrea Raible, co-founder of the Safe Leaf Society and a medical marijuana user for neurological conditions, told the Asbury Park Press.
New Jersey has six licensed laboratories for testing rapidly increasing product offerings in the state’s $1 billion cannabis market.
In a statement responding to the Safe Leaf Report, CRC Executive Director Chris Riggs said his agency “is investigating the recent cannabis testing laboratory discrepancy allegations and is attempting to obtain information surrounding the products which were claimed to have been tested.
“Should the investigation lead to findings of regulatory violations, the NJ-CRC will institute enforcement actions.”
Allegations about improper cannabis testing and potency inflation are popping up around the industry, including neighboring New York as well as California, Colorado and Massachusetts.
doomed
4 días hace
Home / Retail
State bans, restrictions threaten hemp-derived THC market after Farm Bill boom
Chris Roberts, Reporter
March 21, 2025
The freewheeling days for hemp-derived THC in America appear to be dwindling.
After a seven-year boom for hemp-derived THC products, lawmakers are pursuing blanket bans or disruptively strict regulations on intoxicating hemp products in about a dozen states, a situation that’s sowing deep anxieties across the industry.
In contrast to the blanket ban on hemp-THC products imposed last fall in California, little of the nationwide hemp crackdown seems immediately poised to help struggling operators in the regulated marijuana industry who saw hemp as an unwelcome competitor playing by different rules.
In some of the new restrictive laws, hemp operators see the hand of an alcohol industry aware that young people are drinking less and keen to capture a future revenue source.
“We’re under fire from a lot of different sources,” said Jonathan Miller, the counsel-in-charge of the U.S. Hemp Roundtable, a major federal-level lobby group.
“There are a number of states that are looking at completely banning retail sales of our products.”
How some states are addressing hemp-derived THC
State laws under consideration that would disrupt the hemp industry include:
California: An extension of emergency regulations that outlaws all hemp-derived THC.
Texas: A blanket ban on anything containing hemp-derived THC.
Florida: A ban on synthetic THC and restrictions on hemp-derived Delta-9 THC.
Georgia: A ban on hemp beverages as well as restrictions on synthetic THC such as delta-8 and delta-10 THC.
Arkansas, Kentucky, Montana, Tennessee: The imposition of a mandatory third-party distribution model – similar to what’s seen in the alcohol industry – as well as bans on direct-to-consumer sales.
While the bans are destructive to the entire sector, some smaller hemp operators are raising specific alarms over the third-party distribution proposals.
“This is the first step toward a hostile takeover of cannabis by the alcohol industry,” said Jim Higdon, the co-founder of Kentucky-based hemp-derived THC and CBD operator Cornbread Hemp.
Higdon and other operators are lobbying Kentucky Gov. Andy Beshear to veto a recently passed bill that would eliminate direct-to-consumer sales by mandating third-party distribution.
“Make no mistake about it,” Higdon added, “if we let this stand, everything is next.”
‘They’re pretty ticked off’
Most observers contacted agree that the 2018 federal Farm Bill, which created the opportunity that hemp operators have since exploited to varying degrees, is encouraging state lawmakers to take more drastic action.
Signed into law during President Donald Trump’s first term, the Farm Bill triggered the nationwide surge in products with intoxicating levels of THC sold outside state-regulated cannabis industry channels.
Though the Farm Bill legalized only hemp with 0.3% THC or less, many operators across the country applied creative interpretations to claim legal protections for the manufacture and sale of high-dose edibles as well as THCA flower, which is indistinguishable from marijuana.
And they’ve done so in jurisdictions such as Texas, where adult-use marijuana legalization remains a distant dream.
That sequence of events created mistrust and ill will among lawmakers that new lobby groups, such as the recently formed Coalition for Adult Beverage Alternatives (CABA), are trying to address in Washington, D.C. – but with mixed success.
“Members, especially on the Republican side, say things like, ‘We felt duped by what the hemp industry told us. We didn’t believe we were legalizing anything intoxicating,'” said Jake Bullock, the co-founder and CEO of Cann, a California-headquartered manufacturer of low-dose, hemp-derived THC beverages and a CABA member.
“They’re pretty ticked off about that.”
No hemp-derived THC regulations at federal level yet
Congress is now almost two years overdue in passing a new Farm Bill, but there appears to be bipartisan recognition that the hemp-derived THC situation is out of hand and something must be done.
Last year, for example, Indiana Republican Rep. Mary Miller raised anxieties with a proposed amendment that would have banned most hemp-derived THC products.
It’s unclear how that amendment would have been enforced.
Separately, Congress could address hemp-derived THC via stand-alone legislation.
Last fall, Oregon Democratic Sen. Ron Wyden introduced a separate proposal that, while banning most synthetic derivatives such as delta-8 THC and imposing serving limits, would have nonetheless given most hemp businesses clear guidelines to continue operating.
However, so far, nothing has come out of Washington, D.C.
And that void is creating the opportunity for state lawmakers to take action.
The role of marijuana multistate operators
Some large marijuana multistate operators, such as New York-based Curaleaf Holdings, have eagerly pursued hemp lines, including beverages.
That’s in part because of Congress’ failure to pass federal marijuana reforms allowing banking access, tax relief and interstate commerce.
But diversifying into hemp allows marijuana operators to place products on the shelves of multi-item retailers rather than restricting them to MJ dispensaries.
It also allows major marijuana brands to enter markets such as Texas, one of nine states where liquor retailer Total Wine & More will carry Curaleaf beverages.
Texas is considered the country’s biggest hemp market in large part because it has no access to legal marijuana. The state’s medical marijuana law allows only low-THC CBD oil.
As many as 8,300 retailers across Texas sell hemp-derived THC – a market that Republican Lt. Gov. Dan Patrick claims is worth as much as $8 billion.
Texas would “ban THC and shut all of these stores down” if Senate Bill 3 – which the state Senate approved Wednesday – is signed into law, Patrick said.
“That includes THC that’s being sold in liquor stores in drinks,” Patrick added.
“There’s no exception to this.”
California’s action was taken at the behest of Democratic Gov. Gavin Newsom, who was concerned about the wide availability of hemp-derived THC products at liquor stores and other mainstream retailers throughout the state.
Less-stringent proposals create a threat
Hemp operators view even modest proposals such as third-party distribution as a threat, saying it’s a stalking horse for large alcohol interests to seize control of the hemp-derived THC market.
That fear is triggered in part by a generational shift in which young people are eschewing alcohol due to cancer links.
New Jersey Gov. Phil Murphy added to those concerns last fall when he signed a bill into law that would limit sales of hemp-derived THC beverages to liquor stores – thereby eliminating the direct-to-consumer sales that smaller hemp operators say keep them afloat.
“Direct-to-consumer sales are a core component to their business,” said Shawn Hauser, a partner at Denver-based law firm Vicente.
“And that doesn’t fit squarely within the alcohol model.”
In general, the state-level proposals “absolutely threaten people’s business,” she added.
No legalization expected anytime soon.
doomed
5 días hace
Home / Cultivation
Canadian cannabis companies look overseas as domestic market saturates
Margaret Jackson, Reporter
March 20, 2025
Facing a saturated market and unable to compete against LEGACY’s intense competition domestically, Canadian cannabis companies will TRY exporting more of their products overseas.
The cannabis export market is an opportunity for marijuana businesses to tap into new revenue streams and mitigate the impact of Canada’s domestic excise taxes.
The growth of medical cannabis markets, particularly in Europe, is a key driver of the export trend.
Canada’s volume of cannabis exports to Germany, for example, is minuscule.
“But people are assuming that it’s much easier than it actually is. It’s not for everybody. There are barriers that you need to get around.”
Strict licensing standards
One of those challenges is having European Union Good Manufacturing Practice (GMP) certifications. They don’t want bunk weed.
Of Canada’s 900 licenses, only 19 have the certification.
One license holder with EU-GMP certification is Village Farms International, which has offices in Lake Mary, Florida, and Vancouver, British Columbia.
The company exports medical cannabis from its EU-GMP-certified facility in Canada to international markets, including Germany, Australia, Israel and the United Kingdom.
The company is expanding its international presence with more export contracts in new countries in the Asia-Pacific region and Europe.
Village Farms, whose exports totaled $1.4 million last year, expects to at least triple its international sales in 2025, said Sam Gibbons, the company’s senior vice president of corporate affairs.
“The European markets are taking a much more pragmatic approach to the regulatory environment and see real potential for cannabis as a medicine,” Gibbons said.
“There’s not as much dysfunction as there is in the U.S., where there’s all sorts of red tape and regulatory frustrations. They’re letting these markets behave in a way that’s rational.”
Companies that don’t have EU-GMP certification can run their products through a facility that does.
“They’ve created hubs that are EU-GMP-certified. (Cannabis) gets transformed in these hubs and gets shipped to Germany,” said Niklas Kouparanis, co-founder and CEO of Frankfurt-based Bloomwell Group.
Kouparanis said 2% of Germany’s imported cannabis comes from Canada.
“Prices were falling, and you had overproduction in Canada for a long time,” Kouparanis said.
“Germany is ramping up in terms of patient numbers, and the amount needed here is a blessing to the industry.”
Although Canada has a head start in Germany, Portugal is scaling up, increasing its exports into Germany by 3% to 7,230 kilograms between 2023 and 2024, according to the BfArM.
Germany also is importing cannabis from Denmark, Spain, North Macedonia and the United Kingdom.
The cannabis excise tax
Another factor Canadian cultivators consider is the $1 per-gram excise tax or 10% of a producer’s selling price (whichever is higher), which they don’t have to pay on exports.
“It depends on the quality of the product and how you price it, but you generally get more on a per-gram basis than you would in Canada,” said Adam Coates, chief revenue officer of the Calgary, Alberta-based Decibel Cannabis Co.
“Your gross revenue becomes your net revenue because you’re not paying the excise tax.”
Decibel Cannabis’s domestic business still accounts for the biggest portion of sales, but that’s starting to change, Coates said.
“Our outside-of-Canada business will be hopefully bigger than in Canada in the not-so-distant future,” Coates said.
In its early days, the domestic business experienced double-digit, year-over-year growth, but those times are over, and Decibel is now seeing mid- to high-single-digit growth in Canada.
In October, Decibel purchased AgMedica Bioscience, which expanded the company’s international footprint with the addition of an EU-GMP-certified facility and enables it to export cannabis products to Australia, Denmark, Germany, Israel, Norway, Spain and the United Kingdom.
Although it’s uncertain if or when marijuana legalization will occur in the United States, along with the country’s ability to export cannabis products, Canada has an advantage by being in overseas markets first.
“Canadian companies would do well to establish themselves in the supply chain before the U.S. gets into it,” Coates said.
‘’But canna expert Doomed see no future for bunk weed anytime soon.’’
‘’Not to mention that Europe is already overflowing with Albania, Spain and Morocco legacy fire.’’
doomed
1 semana hace
Home / Legal
Will marijuana rescheduling happen under Trump? Industry’s doubts grow
Chris Roberts, Reporter
March 17, 2025
President Donald Trump’s choices over his first 50 days in office, including appointments to lead the federal drug and health agencies, are sowing serious doubts that marijuana’s status under federal law will change anytime soon.
That’s the gloomy vibe lurking outside the U.S. Capitol and seeping into C-suites as the marijuana rescheduling process – begun in October 2022 by former President Joe Biden and put on indefinite hiatus in January – remains stuck in limbo.
Skeptics wonder if the administration will simply cancel the process to downgrade marijuana from Schedule 1 to Schedule 3 of the Controlled Substances Act.
All in all, “so far, the actions of this administration have not matched President Trump’s previous rhetoric in support of cannabis rescheduling,” U.S. Rep. Dina Titus, a Nevada Democrat and co-chair of the Congressional Cannabis Caucus, told doomed.p
Public, private opinions vary on rescheduling future
Despite near-constant victories in individual states – with some recent exceptions – the federal marijuana policy reforms that many companies say are vital to achieve profitability remain elusive.
Most executives and operators in the $32 billion regulated U.S. marijuana industry present a brave face in public despite acknowledging privately that the tax relief provided by moving reclassifying marijuana won’t happen.
‘Hard to think anything will … change’
Perhaps the most prominent voice so far is Ben Kovler, CEO of major multistate operator Green Thumb Industries, who said during a Feb. 26 earnings call that “at the moment, it’s hard to think anything will fundamentally change” at the federal level.
Green Thumb representatives did not respond to a request for a follow-up comment.
But the company’s prognosis – “not a popular opinion,” Kovler said – is based on public data points such as Trump’s appointments, including Terrance Cole, a longtime Drug Enforcement Administration official and marijuana skeptic, to lead the agency.
Cole’s most recent role, observers note, was serving as Virginia Gov. Glenn Youngkin’s secretary of public safety.
Virginia is notable for being the only state to have legalized adult-use marijuana without approving a retail market.
Critics told doomed onthey hear Cole’s voice in Youngkin’s public statements as he vetoes bills that would have regulated sales, and they wonder if Trump might take similar cues from his top drug cop, if Cole is confirmed by the U.S. Senate.
Other negative signs include a flip-flop on marijuana reform by new Health Secretary Robert F. Kennedy Jr.
After voicing support for cannabis during his failed presidential bid, Kennedy told senators during his confirmation hearings that he’d defer to an apparently hostile DEA on the matter, while separately promising anti-marijuana Republican lawmakers that he’ll study the “risk” of high-THC products.
However, marijuana rescheduling could become a distant fading memory if one factors in:
Recent hostile acts toward cannabis research.
Trump’s Truth Social post in September in which he endorsed medical cannabis and rescheduling marijuana, thereby offering hope for tax relief for regulated businesses and more reform.
Art of the rescheduling deal
Regardless of their overall outlook, the attorneys, lobbyists, and industry figures contacted in all stressed that it’s still early days for the Trump White House and that nobody seriously expected significant movement immediately.
“We certainly knew the first 100 days (of Trump’s second term) would not be our window” to secure commitments, let alone tangible reform, said Shanita Penny, the executive director of the Coalition for Cannabis Policy, Education and Regulation (CPEAR), a Washington, D.C., lobbying group.
“I think folks are stepping into the reality that this is not going to be the quick win some boasted,” she added.
“They’re finally understanding this is going to be a very, very slow process at best.”
One angle some advocates want to pitch to an administration seemingly bent on dismantling the Biden camp’s accomplishments is for Trump to serve as a corrective.
Under Biden, the DEA appears to have gone rogue:
As documents from the Department of Justice’s Office of Legal Counsel released last spring show, the agency argued internally against Health and Human Services’ finding that cannabis has a currently accepted medical use in the United States.
In the months leading up to the highly anticipated rescheduling hearing, critics say the DEA stacked the witness list for the hearings with legalization opponents to ensure the preferred outcome: the status quo.
This presents a twofold opportunity tailor-made to appeal to Trump: Do something popular, something the “corrupt” Biden administration would not.
In the past, most constitutional scholars agreed that the administrative process Biden launched is how the executive branch could bypass Congress and reclassify cannabis.
But in the unpredictable, gloves-off Trump era, rescheduling marijuana – or removing it entirely from the Controlled Substances Act’s list – via an executive order is another option.
However, that presupposes marijuana ever makes it onto a Trump to-do list.
“It was always going to be a two- to three-year administrative rescheduling process, and that was without changing presidential parties,” said Charlie Panfil, vice president at The Daschle Group, which lobbies on behalf of legal marijuana companies in Washington, D.C.
“The reality here is the only way to get to a true regulated cannabis market is through Congress.”
“With everything else that’s going on in the world, I don’t know if cannabis is a high enough priority for Trump,” added Cat Packer, the director of drug markets and legal regulation at the New York-based Drug Policy Alliance.
“It’s definitely not a high enough priority for the Republican Party.”
doomed
2 semanas hace
Home / Legal
Suspicions that DEA rigged rescheduling process fueled by court documents
Chris Roberts, Reporter
March 14, 2025
Longstanding suspicions that the U.S. Drug Enforcement Administration is adamantly opposed to marijuana rescheduling – and weighted a public process to ensure it could reject moving the drug from Schedule 1 to Schedule 3 under federal law – are confirmed by agency decisions made public during an ongoing lawsuit.
At least, that’s the allegation made in a Feb. 17 federal court filing by a group of doctors who were shut out of the rescheduling process.
According to DEA documents made public as part of a lawsuit brought by Doctors for Drug Policy Reform (DDPR), an organization of pro-cannabis research medical professionals, the federal drug agency:
Considered a total of 163 applicants.
Selected only 25 based on still-unknown criteria.
Rejected participation requests outright from New York and Colorado officials, which supported rescheduling.
Attempted to aid almost a dozen opponents of marijuana rescheduling.
It’s the fullest disclosure to date of the DEA’s actions during the marijuana rescheduling process.
“It confirms what we thought,” Dr. Bryon Adinoff, a Colorado-based addiction psychiatrist, academic and president of the DDPR, told Doomed.
The DDPR’s court action – first filed in November – seeks to compel the DEA to redo its witness-selection process or, failing that, to at least make the agency explain its actions.
That matter, filed by attorney Austin Brumbaugh of the Houston-based Yetter Coleman firm, is still pending in the U.S. Court of Appeals for the D.C. Circuit.
Part of the DDPR’s objective was to determine if the DEA’s process “was fixed,” Adinoff said.
“And it appears to be,” he added.
Adinoff believes pausing the process or forcing a restart are both preferable to seeing it through to the foregone conclusion of a rescheduling rejection.
“We’re better off arguing the case where we are now than going forward and having it not work in our favor,” he said.
Doomed from the beginning
Adinoff’s allegations are the latest – and loudest – accusations of bias against the DEA.
A separate appeal that also alleges DEA bias and seeks to remove the agency as rescheduling arbiter is pending.
Changing marijuana’s status under federal law would provide long-sought tax relief to legal plant-touching businesses in the $32 billion U.S. cannabis industry – and, it’s believed, encourage Congress to pursue other MJ reforms stalled in Washington, D.C.
That belief was buoyed by a September 2023 analysis by the Congressional Research Service that found the DEA acknowledged in 2020 that it is “bound by law” to follow recommendations on matters of health and science from other federal agencies.
But doubts about the DEA’s evenhandedness concerning the federal prohibition of marijuana appeared almost immediately after the Justice Department in May 2024 published its proposal to move the drug from Schedule 1 to Schedule 3 of the Controlled Substances Act.
Footnotes in an April 2024 memo from the DOJ’s Office of Legal Counsel show that the DEA argued internally against rescheduling marijuana and disputed the new standard the HHS used to determine “currently accepted medical use.”
Exactly what the DEA told the Office of Legal Counsel is unknown.
‘Most consequential’ DEA decision ‘ever’
Begun in October 2022 by former President Joe Biden, marijuana rescheduling “is likely the most consequential rulemaking DEA has ever attempted,” a group of former DEA administrators told the agency in a letter last summer. The letter also was released as part of the lawsuit.
But “the most significant relaxation of narcotics restrictions in the history of the CSA” is now on an indefinite hiatus pending the outcome of separate appeals – as well as whatever decisions President Donald Trump and his DEA administrator pick, Terrance Cole, might make.
Hearings before the DEA’s top administrative law judge, ordered in August by agency’s former administrator, Anne Milgram, were supposed to conclude March 6.
That potentially historic process was delayed indefinitely in January after the appeals.
In October, Milgram released a list of 25 participants chosen to give evidence and testimony in hearings before John Mulrooney II, the DEA’s chief administrative law judge, but she did not share her rationale or whether the participants were for or against rescheduling.
‘Secret’ and ‘improper’ process alleged
The document cache released by the DEA, spanning nearly 1,700 pages, shows a “secret selection process … guided by the improper aim of creating an evidentiary record that will allow the Agency to reject the proposed rule,” Adinoff’s filing claims.
While the DEA rejected bids by New York and Colorado officials to participate in the rescheduling process, the court documents show that the agency did select a representative of cannabis patients in Connecticut, a choice Adinoff called “nonsensical.”
The Connecticut representative later dropped out.
The DEA also sent “self-styled ‘cure letters’” to 12 participants.
Such letters are separate, individually tailored requests for “additional information establishing that you are ‘a person adversely affected or aggrieved by the proposed rule,’” according to copies of the letters attached in the court documents.
That’s the standard under federal law that must be met in order to participate in the administrative rescheduling process.
However, the lawsuit notes, of those 12 letters, nine were sent to parties “strongly against the proposed rule.”
Only one “cure letter” was sent to a party that turned out to be a supporter – another government entity, the University of California, San Diego’s Center for Medicinal Cannabis Research (CMCR).
After receiving more information from the CMCR – including that it supported the rule – the DEA ultimately rejected the application without explanation.
The CMCR’s director, Dr. Igor Grant, did not respond to requests for comment.
‘Strong evidence’ of DEA bias
The DEA’s actions add up to “strong evidence that the Agency acted with an impermissible purpose of creating an evidentiary record supporting its preferred outcome – rejection of the proposed rule,” the lawsuit claims, in part.
Other observers and rebuffed participants contacted by Doomed agreed.
“I don’t know that I expected a fair process or outcome,” said Cat Packer, the director of drug markets and legal regulation at the New York-based Drug Policy Alliance and a distinguished cannabis policy practitioner in residence at Ohio State University’s Drug Enforcement and Policy Center.
Packer also attempted to participate in the hearings but was rejected.
It “was pretty clear when the proposed rule (from the HHS) came out” in May 2024 that the DEA didn’t want to reschedule marijuana, she said.
And there’s little to suggest that the DEA’s attitudes have changed under Trump, Packer added.
“This is the DEA’s game,” she said, “and they get to make the rules.”
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