DEA Publishes Long Awaited Proposed Rules for Grower Licenses

Kelley Drye & Warren LLP

In an important step intended to expand marijuana research, the Drug Enforcement Administration (DEA) unveiled a long-awaited rule proposal last week that would permit the agency to issue additional growing licenses for research-grade cannabis.

The Notice of Proposed Rulemaking was highly anticipated: the DEA issued a Federal Notice last summer stating its intent to adjust the policies and practices of its marijuana growers program following a three-year wait since the agency first announced it was accepting applications for additional marijuana manufacturers.

The proposed rule aims to create “additional registered growers and a larger, more diverse variety” of research-grade cannabis.  For more than 50 years, the University of Mississippi has been the only research institution approved by the federal agency to grow cannabis for research purposes.

Following the agency’s initial announcement three years ago, it received 37 applications for licenses. The proposed rule changes now enables the DEA to evaluate those applications, as well as any others that it may receive.

Notably, while the University of Mississippi has not been required to give ownership of its cannabis crops to the federal agency, the new rule proposal would significantly change that policy.  Under the rule proposal, the DEA would serve as the owner of all of the research-grade cannabis, even though it would dole out licenses for growing purposes.

Here are some other key takeaways from the proposed rules:

  • Manufacturers would deliver crops to the DEA. “All registered manufacturers who cultivate cannabis shall deliver their total crops of cannabis to DEA. DEA shall purchase and take physical possession of such crops as soon as possible, but not later than four months after the end of the harvest.”
  • DEA may store cannabis at a registered manufacture’s location.  “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. 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.”
  • DEA would authorize exportation, distribution, and maintenance of stocks of marijuana with two exceptions.  “DEA shall, with respect to cannabis, have the exclusive right of importing, exporting, wholesale trading, and maintaining stocks other than those held by registered manufacturers and distributors of medicinal cannabis or cannabis preparations.”  (emphasis added)
  • Registered manufacturers must notify DEA 15 days prior to harvest date.  “A registered manufacturer authorized to grow cannabis shall notify DEA in writing of its proposed date of harvest at least fifteen days before the commencement of the harvest.”
  • Notice provides criteria for eligible cultivation applicants.  DEA will evaluate whether a particular application for a growers’ license is consistent with “public interest factors” as well as “1) The applicant’s ability to consistently produce and supply marihuana of a high quality and defined chemical composition; and (2) Whether the applicant has demonstrated prior compliance with the CSA and DEA regulations.”

Individuals interested in providing feedback on the proposal have until May 22, 2020 to submit comments under the notice-and-comment process.  Following the notice-and-comment process, the DEA will decide to issue a final rule.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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