Four years after first announcing that, for the first time in history, more than one entity would be federally licensed to grow cannabis for research, the US Drug Enforcement Administration and the US Department of Justice released rules for the road.
On Monday, March 23, the proposed rule will be published in the Federal Register, the DEA announced Friday, to “expand opportunities for marijuana growers who seek to grow marijuana for research purposes and outline the agency’s proposed process for administering the new program, consistent with applicable law.” There will then be a public comment period.
A twist: the DEA first announced it would do this in 2016, and 37 applications came in. But then in August 2019, the DEA hit pause. They announced, “Before making decisions on these pending applications, DEA intends to propose new regulations that will govern the marijuana growers program for scientific and medical research.”
As Cannabis Wire reported, these applicants are some major names, both inside and outside the cannabis industry, from cannabis giant Canopy Growth to Battelle, which is perhaps better known for its government-contracts on national security. For years, these applicants have been caught in a waiting game that’s coming to an end. (Read Cannabis Wire’s interview with one applicant.)
“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,” DEA Acting Administrator Uttam Dhillon said in a statement Friday. “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.”
One particularly significant part of this proposed rule is that the DEA would become a middle person of sorts. Licensed growers won’t deal directly with researchers and research entities, but instead will sell cannabis to the DEA so the DEA could then sell it to them. The reasoning, the DEA notes, is compliance with the Single Convention on Narcotic Drugs of 1961, a global drug control treaty.
The DEA writes that the Single Convention, among other requirements, notes that regulators of federal cannabis research must: “Require all cultivators of the cannabis plant to deliver their total crops of cannabis and cannabis resin to the agency and ensure that the agency purchases and takes physical possession of such crops as soon as possible, but not later than four months after the end of the harvest.”
Also that they “Have the exclusive right of importing, exporting, wholesale trading, and maintaining stocks of cannabis and cannabis resin, except that this exclusive right need not extend to medicinal cannabis, cannabis preparations, or the stocks of cannabis and cannabis resin held by manufacturers of such medicinal cannabis and cannabis preparations.”
Some other major takeaways:
Will there be different license types?
It’s not clear whether there will be multiple license types awarded to applicants, but the DEA so far has lumped existing applicants into three buckets: The first is a grower (they call them “bulk manufacturers”) that wants to conduct their own research and development; the second is a grower that would supply DEA-registered researchers (any researcher who wants to handle cannabis must be DEA-registered); the third is a grower that would supply the Drug Supply Program of the National Institute on Drug Abuse, which is essentially the current supplier, via the one federally licensed cannabis farm at the University of Mississippi.
In fact, the DEA went out of their way to nod to NIDA’s long history overseeing cannabis research, writing that “DEA is committed to ensuring that the National Institute on Drug Abuse (NIDA) program continues with minimal disruption and there is no impact on the availability of marihuana through the NIDA Drug Supply Program (DSP).”
Will there be license limits?
The DEA has not set a cap on the number of licenses that will be made available. But they did note that they will consider whether “an applicant’s registration is necessary to produce an adequate and uninterrupted supply of marihuana under adequately competitive conditions.”
Also, in a costs calculation exercise, the DEA did the math according to licensing three entities on the low end, and fifteen on the high end. But they were clear that this is no indication of how many would ultimately be awarded.
Who has an advantage?
Any entity that is currently FDA-approved manufacturer of a cannabis-derived medicine has a head start and a leg up. There is currently exactly one company in the US that matches this description: Greenwich Biosciences, the United States subsidiary of the British GW Pharmaceuticals, which, as Cannabis Wire reported, has registered to lobby in every single state in the country. In 2018, the company’s CBD-based product, Epidiolex, became the first FDA-approved medicine derived from cannabis plants.
It is not clear whether the company plans to participate, as its products are currently produced using cannabis grown in the UK. GW Pharmaceuticals did not return a request for comment.
The DEA is clear on the importance of research that leads to FDA-approved drugs:
They write that, as a key part of this proposed rule, “DEA is proposing changes to support using marihuana (including extracts and substances derived therefrom) cultivated in the United States to perform research which, among other things, may lead to the approval of FDA-approved medicines.”
Who could be at a potential disadvantage?
Existing cannabis companies, like Columbia Care and Pharmacann, which hold cannabis business licenses in multiple states, might be at a disadvantage. The DEA is clear that one consideration is “Whether the applicant has demonstrated prior compliance with the CSA and DEA Regulations.”
Of course, considering cannabis is federally illegal under the CSA, the Controlled Substances Act, any cannabis company, even if state legal, could be seen as flouting federal law.
The DEA writes, “These criteria are further aimed at selecting applicants that can be entrusted with the responsibility of a DEA registration and complying with the corresponding obligations under the CSA and DEA regulations.”
Can entities still apply for a federal license to grow research-grade cannabis?
Yes. But, the DEA writes, “with a limited exception, applications accepted for filing after the date the final rule becomes effective will not be considered pending until all applications accepted for filing on or before the date the final rule becomes effective have been granted or denied by the Administrator.”
What are the fees?
To cover their costs of overseeing this program, DEA anticipates two types of fees: one fee for licensees, and another for licensees’ cannabis sold to the DEA.
On the latter, with regard to cannabis prices that would determine this fee, DEA writes 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. Accordingly, DEA proposes to allow market forces to direct prices for marihuana grown by the manufacturer and purchased by DEA.”
On the former, “DEA will calculate this variable cost annually by taking the preceding fiscal year’s cost to operate the program and dividing it by the quantity in kg of the manufacturing quota for marihuana issued during the current quota year.”
On that note: how much cannabis is currently grown for research?
In 2020, the annual production quota for cannabis is 3,200 kilograms.
How many people are conducting cannabis research?
As of March 2020, there are 595 researchers “registered with DEA to conduct research with marijuana, marijuana extracts, and marijuana derivatives.”
