DEA judge’s choice of marijuana rescheduling participants tilts toward opponents

Every party that applied to argue against moving marijuana to Schedule 3 of the Controlled Substances Act has full standing to participate in an upcoming landmark hearing, a top U.S. Drug Enforcement Administration judge ruled late Tuesday.

But only one organization supporting marijuana rescheduling will have full standing for the highly anticipated Dec. 2 hearing, according to DEA Chief Administrative Law Judge John Mulrooney II, who ruled that two parties who support rescheduling “may not independently continue to participate” in a process that might decide the fate of the federal prohibition of the drug.

Mulrooney’s order, obtained by MJBizDaily late Tuesday, sent marijuana supporters – and many investors in publicly traded cannabis multistate operators – into a frenzy as they struggled to interpret its meaning and what it might portend.

Rescheduling would represent a potential vital lifeline for plant-touching companies, which would no longer be subject to the onerous Section 280E of the federal tax code that prevents them from taking normal business deductions.

Mulrooney’s order outlined a four-part test to determine whether a party had standing:

Only the National Cannabis Industry Association was granted full standing for the Dec. 2 hearing.

The Washington, D.C.-based NCIA represents small- and medium-sized businesses in the $32 billion regulated marijuana industry.

Aside from the NCIA, of the nine remaining parties on the pro-rescheduling side, seven “have not demonstrated standing but may continue to participate,” Mulrooney ruled:

Two, however, have no standing and “may not independently continue to participate in these proceedings”:

In the case of My Doc App, its filing failed to raise “a single issue that could or should be addressed” by rescheduling, Mulrooney wrote.

The platform showed “at best, mild positivity regarding (the proposed rule) and does not indicate any manner in which it, its customers, or its business interests would be even marginally affected by the proposed rescheduling,” he added.

According to Mulrooney’s order, 12 parties opposed to rescheduling have full standing:

In the case of SAM, it claimed to have standing based on “the potential affect rescheduling would have on its training and advocacy expenditures as a marijuana-skeptical material and lecturing source,” Mulrooney wrote.

Separately, Mulrooney addressed in a footnote a motion filed Monday by Hemp for Victory and Village Farms that sought to keep the DEA from presiding over the process and asked that the Department of Justice – which oversees the DEA – be put in direct control.

Part of the argument, according to the filing, rested on apparent direct communication between the DEA and SAM.

Mulrooney appeared neither convinced nor amused.

“To argue, at this procedural juncture, that the DEA is an improper advocate or sponsor of its own NPRM (Notice of Proposed Rulemaking) adds nothing to the standing equation and (at least on the present record) presents little more than an ad hominem distraction from the important advocacy and adjudicative work to be accomplished in these proceedings,” he wrote.

“A separate motion has been filed on this issue and it will be addressed in a separate order.”

Many observers decried what they now believe is a process weighted against them but one that favors a coterie of legalization opponents that includes representatives of law enforcement and the nation’s most prominent – and antagonistic – anti-marijuana lobby.

The NCIA’s chief executive officer, Aaron Smith, said in a statement that the organization is “beyond proud to represent the legal industry in these historic proceedings.”

“We are working with our membership to ensure their voices are included in this important process,” he added.

Mulrooney did rule that others without standing can still participate, but not “fully.”

And that lack of standing might affect how much “weight” Mulrooney gives their argument, he wrote in the Tuesday order.

Mulrooney “has taken a one-sided view here, that is, only interest groups that will be harmed by adoption of the rule can demonstrate an injury (are) legally required to receive standing,” said attorney Jesse Alderman, co-chair of the National Cannabis Practice at the Boston-based law firm Foley Hoag.

“But what about groups who demonstrated they would be injured if DEA does not adopt the Rule?” he added in an email to MJBizDaily.

“In any other legal context, including other federal agency proceedings and federal courts, these groups have standing.

“At least based on general legal principles, this decision baffles the mind.”

But some observers – speaking with MJBizDaily on the condition of anonymity because they are not authorized to comment publicly – noted that Mulrooney’s choice of participants could be to rescheduling advocates’ advantage in the long term.

In that analysis, giving rescheduling opponents their full say – or, perhaps, more of a voice than proponents receive – might limit their ability to later challenge the proceedings on procedural grounds if the outcome is not to their liking.

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The hearing – and the ongoing legal jockeying over what can be said and who can say it – is the latest step in a potentially transformative rescheduling process launched in October 2022 by President Joe Biden.

Biden’s executive order led to a revolutionary declaration in August 2023 from health regulators that cannabis has medical value in the United States.

That, in turn, led to the Justice Department’s May 2024 proposal that marijuana be moved from Schedule 1 of the Controlled Substances Act to Schedule 3.

In August, DEA Administrator Anne Milgram scheduled the Dec. 2 hearing with Mulrooney presiding.

Interested parties were invited to submit requests to participate, and on Oct. 31, Milgram invited 25 “designated participants.”

Mulrooney required the invitees to submit briefs by Nov. 12 to argue why they had standing.

Several “designated participants” declined to submit briefs.

Everyone still involved with the rescheduling odyssey now has more homework to do before Thanksgiving.

Mulrooney ordered all parties to file by 2 p.m. ET Nov. 26:

That timeline also raises questions regarding what future DEA administrators might do.

Experts note that the DEA could choose to ignore Mulrooney’s final ruling altogether.

President-elect Donald Trump has nominated Matt Gaetz, a controversial former U.S. representative from Florida, to serve as his attorney general.

Gaetz is a cannabis advocate, but he might face a difficult nomination process, and, if he succeeds, it’s unclear whom he might choose to lead the DEA.

Chris Roberts can be reached at chris.roberts@mjbizdaily.com.