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DEA Unveils New Rule To Finally Allow More Marijuana Growers For Research

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The Drug Enforcement Administration (DEA) announced on Friday that it will be taking significant steps to expand marijuana research.

The agency is proposing a rule change that would enable it to approve additional cannabis growers and diversify the types of marijuana available to be used in studies. The move comes more than three years after the agency initially said it was accepting applications for additional marijuana manufacturers.

DEA stressed throughout the new notice that it will have sole ownership over any marijuana that’s cultivated for research purposes. That includes any cannabis that’s stored at cultivation facilities. This appears to be a fundamental change in policy. As it stands, a single facility in Mississippi is authorized to grow cannabis through a contract with the National Institute on Drug Abuse (NIDA), and DEA does not maintain ownership over its products.

“The Drug Enforcement Administration continues to support additional research into marijuana and its components, and we believe registering more growers will advance the scientific and medical research already being conducted,” Acting Administrator Uttam Dhillon said in a press release. “DEA is making progress to register additional marijuana growers for federally authorized research, and will continue to work with other relevant federal agencies to expedite the necessary next steps.”

A 60-day public comment period will be open for individuals to provide feedback on the proposal, which will be formally published in the Federal Register on Monday.

After DEA said in 2016 that it would allow more cannabis cultivators, 37 institutions submitted applications. Many applicants grew frustrated with inaction on their proposals, and one filed a lawsuit alleging that the agency was deliberately avoiding making good on its pledge. The plaintiff won a procedural victory in that case, with the court mandating that DEA take action.

However, because the agency did provide an update on the status of its process, the suit was dismissed last year. DEA argued that the high volume of applicants to manufacture cannabis, as well as what it saw as complications arising from international drug treaties to which the U.S. is a party, meant that it would have to develop new regulations to approve them.

“This is an important step and a byproduct of the legal action we filed last summer,” Sue Sisley, a researcher with the institution that filed the suit, told Marijuauna Moment. “The agency indicated it would propose new rules to govern approving new applicants to manufacture marijuana for research, and these appear to be those rules.”

Lawmakers have repeatedly pressured the agency to expedite the process of allowing more cannabis to be grown for studies. Last year, thirty bipartisan members of the House and Senate sent a letter to the Justice Department, urging officials to approve additional applications.

Attorney General William Barr has said he favors expanding research opportunities and testified at a Senate Appropriations Committee hearing last year that it’s something he’s “ been pushing very hard over the last few weeks.” He also said at that meeting that he’d prefer some level of federal regulations over cannabis as opposed to maintaining the status quo of prohibition.

His interim predecessor, Matthew Whitaker, had previously told Congress that international treaty obligations were complicating efforts to authorize more marijuana manufacturers—a point that’s was disputed by the U.S. State Department’s Bureau of International Narcotics and Law Enforcement in a 2016 letter to senators.

President Trump’s first attorney general, Jeff Sessions, had reportedly interfered in the process during his time in office. The anti-cannabis official also rescinded Obama era guidance laying out enforcement guidances on marijuana for federal prosecutors.

With respect to international treaty obligations, DEA said there are five requirements that countries allowing marijuana cultivation for research must adhere to in order to maintain compliance with United Nations rules. The agency already follows three of the five, but the “proposed rule would amend DEA’s regulations so that DEA directly carries out these remaining two functions.”

Those functions are: 1) requiring cultivators to deliver their cannabis directly to a government agency in a timely manner, but no longer than four months after harvest, and 2) ensuring that the agency holds the “exclusive right of importing, exporting, wholesale trading, and maintaining stocks of cannabis and cannabis resin,” except as it concerns medical marijuana preparations.

“DEA may accept delivery and maintain possession of such crops at the registered location of the registered manufacturer authorized to cultivate cannabis consistent with the maintenance of effective controls against diversion,” the notice states. “In such cases, DEA shall designate a secure storage mechanism at the registered location in which DEA may maintain possession of the cannabis, and DEA will control access to the stored cannabis.”

Further, the agency said it will control “importing, exporting, wholesale trading, and maintaining stocks,” and it may “exercise its exclusive right by authorizing the performance of such activities by appropriately registered persons.” It will also require written notice from cultivators about their estimated harvest date. That notice should be submitted at least 15 days prior to harvest.

“It should be noted that the timing of when DEA would take physical possession of the crops, if delayed, would not only increase the risk of diversion, but would also adversely impact the quality of the crop,” DEA said.

“If this proposed rule is promulgated, the following key changes are anticipated: more persons will be authorized to grow marihuana, DEA will purchase and take title to the crops of marihuana, and DEA will, with respect to marihuana, have the exclusive right of importing, exporting, wholesale trading, and maintaining stocks,” the notice states. “These changes would mean that authorized purchasers of bulk marihuana to be used for research, product development, and other purposes permitted by the CSA may only purchase from DEA, except that DEA’s exclusive rights would not extend to medicinal cannabis or cannabis preparations.”

DEA said this notice, which also lays out criteria for eligible cultivation applicants, “is the latest and most significant action taken to expand the number of registered marijuana growers in the United States and underscores the federal government’s support for scientific and medical research with marijuana and its chemical constituents.”

Corey Cox, a senior associate at Vicente Sederberg LLP, told Marijuana Moment that DEA’s application approval process has been “very slow” so far, but that the new filing is a positive sign.

“Given this history, even if the rules leave significant room for improvement, their publication in the Federal Register represents meaningful movement beyond the stalling tactics DEA has employed to date,” he said.

The agency said the proposed rule would increase the diversity of cannabis grown for research purposes—including products of varying quality and potency—which could produce “more effective research” and facilitate possible development of Food and Drug Administration-approved medicines.

There’s been widespread criticism over the quality of cannabis produced at the only federally authorized cultivation facility at the University of Mississippi. Studies have indicated that the institute’s products are chemically more similar to hemp than marijuana available in state-legal markets, raising questions about the applicability of studies that have relied on the government’s cannabis on real consumers.

The head of the federal cultivation facility said last year that he couldn’t understand demand for marijuana with higher THC concentrations, arguing that even eight percent THC (significantly lower that most products in commercial markets) is “extremely” potent.

Unlike the current system, DEA would have a much more hands-on role under the proposed rule.

For example, “DEA would travel to the National Center at the time of harvest and take title and possession to the crop.” After that point, the material would be maintained, under seal, in DEA’s possession in the National Center’s schedule I vault until such time that a distribution to another DEA registrant is authorized.”

It remains unclear how many cultivator applications will be approved. An economic analysis the agency will conduct will consider two hypothetical scenarios. Under the first, DEA would consider the impact of approving three additional growers. Under the second, it would look at the effects of approving 15 more. However, the agency said that “this range of potential registrants is not necessarily reflective of the actual number of applications that DEA will grant.”

The agency also described how it will judge various manufacturer applications, explaining that it would consider their “ability to consistently produce and supply marihuana of a high quality and defined chemical composition” and also look into whether “the applicant has demonstrated prior compliance with the CSA and DEA regulations.”

That second criterion could pose problems for several companies that have filed applications—such as Columbia Care and The Giving Tree Wellness Center—which operate cannabis dispensaries in defiance of federal marijuana prohibition.

Individuals with prior cannabis convictions may also be adversely impacted in the application process, as the proposed rule states that the agency will take into account violations of federal or state law “relating to the manufacture, distribution, or dispensing of such substances.”

Another provision of the rule concerns pricing for cannabis sold or purchased by DEA for research purposes. The agency said it will negotiate a fee based on “market forces” and also potentially add an administrative cost “to add onto the sales price of the marihuana it sells to end users.”

“DEA believes that economic forces will not only drive the types, varieties and strains of marihuana materials that will be produced by growers, but that such forces will also drive the fees that DEA-registrants will be willing to pay for marihuana used for research purposes,” it states.

The agency also said it anticipates “minimal procedural change for authorized researchers who plan to acquire bulk marihuana for research” as compared to current policy and that the “only anticipated procedural change is that some researchers would acquire the bulk marihuana from DEA, rather than from NIDA.”

This story has been updated to include additional information about the proposed rule change.

USDA Secretary Again Blames DEA For Interfering In Hemp Regulations

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Kyle Jaeger is Marijuana Moment's Los Angeles-based associate editor. His work has also appeared in High Times, VICE and attn.

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DEA’s Hemp Rule On THC Content Misinterprets Congressional Intent, Senators Say

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A pair of senators representing Oregon sent a letter to the Drug Enforcement Administration (DEA) on Thursday to demand changes to the agency’s proposed hemp regulations.

This is the second congressional request DEA has received on the subject this week, with a group of nine House members similarly imploring a revision of a rule concerning hemp extractions on Tuesday.

DEA released an interim final rule (IFR) for the crop in August, and it said the regulations were simply meant to comply with the 2018 Farm Bill that legalized hemp and its derivatives. But stakeholders and advocates have expressed serious concerns about certain proposals, arguing that they could put processors at risk of violating federal law and hamper the industry’s growth.

Sens. Ron Wyden (D-OR) and Jeff Merkley (D-OR) said in the new letter that despite DEA’s claim that its IFR is only about compliance, the proposal “does significantly more.”

“The IFR treats hemp as a Schedule I controlled substance at any point its THC content exceeds 0.3% THC,” they said. “However, when Congress passed the 2018 Farm Bill, we understood that intermediate stages of hemp processing can cause hemp extracts to temporarily exceed 0.3% THC, which is why we defined hemp based on its delta-9 THC level.”

“In effect, the IFR criminalizes the intermediate steps of hemp processing, which is wholly inconsistent with Congress’s clearly stated purpose and the text of the 2018 Farm Bill,” the letter states.

In other words, while Congress intended to legalize hemp extracts, businesses that produce the materials could find themselves inadvertently breaking the law and be subject to enforcement action if THC levels temporarily increase beyond 0.3 percent.

A public comment period on DEA’s proposed rules closed on Tuesday. It saw more than 3,300 submissions, many of which focused on issues with the “work in progress” hemp THC issue.

Another issue identified by more than 1,000 commenters concerns delta-8 THC. The most widely known cannabinoid is delta-9 THC, the main component responsible for creating an intoxicating effect, but delta-8 THC from hemp is also psychoactive and is an object of growing interest within the market.

Because DEA’s proposed regulations state that all “synthetically derived tetrahydrocannabinols remain schedule I controlled substances,” some feel that would directly impact the burgeoning cannabinoid, as its converted from CBD through the use of a catalyst—and that could be interpreted as a synthetic production process.

In any case, it’s not clear whether DEA deliberately crafted either of these rules with the intent of criminalizing certain hemp producers—but stakeholders and advocates aren’t taking any chances.

The U.S. Department of Agriculture (USDA) has faced separate criticism over its own proposed hemp rules, though it has been more proactive in addressing them. Following significant pushback from the industry over certain regulations it views as excessively restrictive, the agency reopened a public comment period, which also closed this month.

USDA is also planning to distribute a national survey to gain insights from thousands of hemp businesses that could inform its approach to regulating the market.

Read the letter from Wyden and Merkley on DEA’s hemp proposal below:

Wyden and Merkley letter on… by Marijuana Moment

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USDA Releases, Then Rescinds, Hemp Loan Notice Following Congressional Action

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The U.S. Department of Agriculture (USDA) recently released—and then promptly rescinded—a notice on providing federal loans for hemp processors.

After the crop was federally legalized under the 2018 Farm Bill, USDA announced that regulations were being developed to offer direct and guaranteed loans to the industry. The federal agency unveiled those guidelines in April and then issued a new notice this month notifying applicants about the policy change ahead of the planned expiration of the earlier 2014 hemp pilot program.

The next day, however, it posted an “obsoleting notice” invalidating the prior document.

The new guidance “was developed with the understanding that operators would no longer be authorized to produce hemp under the 2014 Farm Bill Pilot Program,” USDA said. However, because Congress approved a continuing resolution that extends the program until September 30, 2021, the loan policies are not currently applicable.

That pilot program extension came at the behest of numerous stakeholders, advocates and lawmakers who have been pushing USDA to make a series of changes to its proposed hemp regulations. As those rules are being reviewed and finalized, they said it was necessary to keep the 2014 program in place.

The president signed the continuing resolution late last month, so it’s not clear why the notice on loan policy changes was released weeks later, which then necessitated a follow-up recision. But in any case, it’s another example of the fluidity and challenges of rulemaking for the non-intoxicating cannabis crop following its legalization.

It stands to reason that the loan processes outlined in the now-invalid notice will likely be consistent with what’s ultimately released next year, assuming the pilot program does expire then.

The primary rule change concerns licensing requirements for borrowers. After the 2014 regulations are no longer in effect, hemp loan applicants must be licensed under a USDA-approved state or tribal hemp program, or under the agency’s basic regulations if the jurisdiction the business operates in has not submitted its own rules.

Borrowers who are not licensed to grow hemp will be considered in non-monetary default and any losses will not be covered. For direct and guaranteed loans, hemp businesses must have a contract with USDA’s Farm Service Agency laying out termination policies and their ability to repay the loans.

As of this month, USDA has approved a total of 69 state and tribal hemp regulatory proposals—mostly recently for Illinois, Indiana, Michigan, New Mexico, Oklahoma and South Dakota. Illinois and Oklahoma were among a group of states that USDA had asked to revise and resubmit their initial proposals in August.

While the agency released an interim final rule for a domestic hemp production program last year, industry stakeholders and lawmakers have expressed concerns about certain policies it views as excessively restrictive.

USDA closed an extended public comment period on its proposed hemp regulations earlier this month. Its initial round saw more than 4,600 submissions, but it said last month that it was reopening the feedback period in response to intense pushback from stakeholders on its original proposal.

The federal Small Business Administration (SBA) said last month that the new 30-day comment window is too short and asked USDA to push it back, and it also issued a series of recommended changes to the interim final rule on hemp, which it says threaten to “stifle” the industry and benefit big firms over smaller companies.

All told, it appears that USDA is taking seriously the feedback it’s received and may be willing to make certain accommodations on these particular policies. The department’s rule for hemp is set to take effect on October 31, 2021.

In July, two senators representing Oregon sent a letter to Perdue, expressing concern that hemp testing requirements that were temporarily lifted will be reinstated in the agency’s final rule. They made a series of requests for policy changes.

Senate Minority Leader Chuck Schumer (D-NY) wrote to Perdue in August, asking that USDA delay issuing final regulations for the crop until 2022 and allow states to continue operating under the 2014 pilot program in the meantime.

Sen. Cory Gardner (R-CO) also called on USDA to delay the implementation of proposed hemp rules, citing concerns about certain restrictive policies the federal agency has put forward in the interim proposal.

The senators weren’t alone in requesting an extension of the 2014 pilot program that was ultimately enacted legislatively, as state agriculture departments and a major hemp industry group made a similar request to both Congress and USDA in August.

Amid the coronavirus pandemic, hemp industry associations pushed for farmers to be able to access to certain COVID-19 relief loans—a request that Congress granted in the most recent round of coronavirus legislation.

While USDA previously said that hemp farmers are specifically ineligible for its Coronavirus Food Assistance Program, that decision was reversed last month. While the department initially said it would not even reevaluate the crop’s eligibility based on new evidence, it removed that language shortly after Marijuana Moment reported on the exclusion.

Meanwhile, USDA announced last week that it is planning to distribute a national survey to gain insights from thousands of hemp businesses that could inform its approach to regulating the industry.

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New York Will Legalize Marijuana ‘Soon’ To Aid Economic Recovery From COVID, Governor Cuomo Says

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New York Gov. Andrew Cuomo (D) recently said that legalizing marijuana represents a key way the state can recover economically from the coronavirus pandemic.

During a virtual event last week to promote his new book on the state’s COVID-19 response, the governor was asked when New York will legalize cannabis for adult use.

“Soon, because now we need the money,” he said, according to a recording that was obtained by USA Today Network. “I’ve tried to get it done the last couple years.”

“There are a lot of reasons to get it done, but one of the benefits is it also brings in revenue, and all states—but especially this state—we need revenue and we’re going to be searching the cupboards for revenue,” he said in remarks that will be released in full in a podcast in the coming weeks by Sixth & I, which hosted the event. “And I think that is going to put marijuana over the top.”

Cuomo has included legalization in his last two budget proposals, but negotiations between his office and the legislature fell through both times, with sticking points such as how cannabis tax revenue will be allocated preventing a deal from being reached.

A top adviser of his said earlier this month that the plan is to try again to legalize cannabis in New York in early 2021.

“We’re working on this. We’re going to reintroduce this in our budget in January,” he said. “We think we can get it done by April 1.”

Cuomo was similarly asked about legalization as a means to offset the budget deficit caused by the pandemic in May.

While he said it’s the federal government’s “obligation as part of managing this national pandemic that they provide financial relief to state and local governments,” he added that “I support legalization of marijuana passage. I’ve worked very hard to pass it.”

“I believe we will, but we didn’t get it done this last session because it’s a complicated issue and it has to be done in a comprehensive way,” he said.

The governors of New Jersey, New Mexico and Pennsylvania have also made the case that implementing a regulated marijuana program can help their states financially recover from the health crisis.

Cuomo indicated in April that he thought the legislative session was “effectively over” for the year and raised doubts that lawmakers could pass cannabis reform vote remotely via video conferencing amid social distancing measures.

Assembly Majority Leader Crystal Peoples-Stokes (D) made similar comments when asked about the policy in April, though she seemed to signal that she laid partial blame for the failure to enact reform on the governor prioritizing other issues during the pandemic.

In June, a senator said the legislature should include cannabis legalization in a criminal justice reform package, making the case that the policy change is a necessary step especially amid debates over policing reform. That didn’t come to pass, however.

The New York State Association of Counties said in a report released last month that legalizing marijuana for adult use “will provide the state and counties with resources for public health education and technical assistance” to combat the pandemic.

Meanwhile, the state Senate has approved several modest marijuana reform bills in recent months.

The chamber passed a bill in July that broadens the pool of people eligible to have their low-level marijuana convictions automatically expunged. That was preceded by a Senate vote in favor of legislation to prevent tenants from being evicted solely because of their legal use of medical marijuana.

Thanks to a bill expanding cannabis decriminalization in the state that the governor signed last year, the New York State Unified Court System made an announcement last month outlining steps that people can take to clear their records for prior marijuana convictions.

Locally, a local law enacted in New York City this summer bans pre-employment drug testing for marijuana for most positions. It was finalized in July following regulators’ approval of certain exemptions.

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