[Federal Register Volume 67, Number 245 (Friday, December 20, 2002)]
[Notices]
[Pages 78015-78019]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-32008]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration


Marion ``Molly'' Fry, M.D.; Revocation of Registration

    On March 7, 2002, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration (DEA), issued an 
Order to Show Cause to Marion ``Molly'' Fry, M.D. (Dr. Fry), proposing 
to revoke her DEA Certificate of Registration, BM4859178, and deny any 
pending applications for registration as a practitioner under 21 U.S.C. 
823(f). The Order to Show Cause alleged that Dr. Fry's continued 
registration is inconsistent with the public interest as that term is 
used in 21 U.S.C. 823(f) and 824(a)(4). The show cause order also 
notified Dr. Fry that should no request for a hearing be filed within 
30 days, her hearing right would be deemed waived.
    The Order to Show Cause was sent by certified mail to Dr. Fry at 
her registered location in Cool, California, and DEA received a signed 
receipt indicating that it was received on March 12, 2002. A second 
copy of the Order to Show Cause was sent by certified mail to Dr. Fry 
at her residence in Greenwood, California (the Greenwood residence). 
However, the second copy was returned to DEA as ``not deliverable.'' 
DEA's Sacramento District Office then sent the Order to Show Cause to 
Dr. Fry's residence by Federal Express.
    DEA has not received a request for hearing or any other reply from 
Dr. Fry or anyone purporting to represent her in this matter. 
Therefore, the Deputy Administrator, finding that (1) 30 days have 
passed since the receipt of the Order to Show Cause, and (2) no request 
for a hearing having been received, concludes that Dr. Fry is deemed to 
have waived her hearing right. After considering material from the 
investigative file in this matter, the Deputy Administrator now enters 
his final order without a hearing pursuant to 21 CFR 1301.43(d) and (e) 
and 1301.46.
    The Deputy Administrator's review of the investigative file reveals 
that Dr. Fry graduated from Western Washington University in 
Bellingham, Washington with a bachelor's degree in both chemistry and 
biology. Dr. Fry subsequently graduated from the University of 
California--Irvine in 1985 with a degree in medicine. Shortly 
thereafter, Dr. Fry obtained a medical license in the State of 
California where she initially specialized in general medicine. Dr. Fry 
is currently licensed to practice medicine in the State of California.
    In October 1999, Dr. Fry and her husband Dale Schafer (Mr. Schafer) 
opened the California Medical Research Center located in Cool, 
California. Cool is a small mountain community in El Dorado County, 
California. The investigative file reveals that Mr. Schafer is an 
attorney, licensed to practice law in the State of California.
    The Deputy administrator finds that as a result of a routine DEA 
interdiction operation in August 2000, an individual was arrested on an 
Amtrak train possessing ten pounds of processed

[[Page 78016]]

marijuana. A search of the individual's belongings revealed an address 
to a ranch property in El Dorado County owned by an individual 
hereinafter referred to as ``RS.'' During the subsequent execution of a 
search warrant at RS' home, DEA agents found over 1,000 mature 
marijuana plants. Also found during the execution of the search warrant 
were approximately 50 sets of documents consisting of medical 
recommendations from Dr. Fry to several individuals, and what purported 
to be registration forms for a marijuana buyers club called Sierra CPO 
(Cannabis Patients Only). The medical recommendations from Dr. Fry were 
for ailments such as anxiety, insomnia, asthma, pre-menstrual syndrome 
and restless leg syndrome. Each of the recommendation certificates 
included a waiver provision where the client signed an acknowledgment 
that marijuana use remains a violation of federal law.
    DEA subsequently initiated an investigation of Dr. Fry and Mr. 
Schafer when on December 28, 2000, the agency received a telephone call 
from the District Security Representative of United Parcel Service 
(UPS) regarding seven packages that were received at a UPS location in 
Rocklin, California. The UPS representative informed DEA that the seven 
packages each contained gram quantities of marijuana and were addressed 
to individuals at different residential locations. The return address 
on each of the seven packages listed ``DALE, COOL CORNER VIDEO,'' at a 
location in Cool, California. The seven packages were seized. DEA 
subsequently learned that at least one of the packages was sent through 
UPS by Michael John Harvey, an employee of Dr. Fry and Mr. Schafer.
    On January 2, 2001, DEA was contacted by Mr. Schafer who stated 
that he was the attorney representing the recipients of the marijuana 
packages. Mr. Schafer demanded the return of the packages and stated 
that his clients had a legal right to them. DEA subsequently informed 
Mr. Schafer that the marijuana packages would not be returned to his 
clients and were seized because they were Schedule I controlled 
substances unlawfully shipped through a private mail carrier, in 
violation of 21 U.S.C. 843(b).
    During an investigation by DEA of a marijuana buyer's club in late 
2000, it was learned from various clients whose marijuana 
recommendation forms were previously found at RS' ranch that Dr. Fry 
provided the recommendations under questionable circumstances. Several 
clients reported that their visits to Dr. Fry's office lasted no more 
than 20 minutes, and that time was usually spent with Mr. Schafer. Mr. 
Schafer would typically advise clients about the legal aspects of 
medical marijuana, and that the drug was illegal under federal law. Mr. 
Schafer also reportedly advised clients on how to respond if arrested 
while possessing marijuana.
    According to some of the clients, consultations involving Dr. Fry 
were brief and consisted of no medical examination or review of medical 
records. These clients further reported that despite the lack of a 
medical examination, Dr. Fry would routinely issue recommendation 
certificates for marijuana.
    One person familiar with Dr. Fry's practice reported that Dr. Fry 
and Mr. Schafer advised their staff to turn away potential clients who 
were too ``clean-cut'' because of a concern that these clients might be 
undercover law enforcement agents. DEA learned that Dr. Fry and Mr. 
Schafer charged $150 per visit which were referred to as a ``medical/
legal consultation'' and the couple saw as many as 100 clients each 
week. DEA also received information that client fees were deposited 
into the bank account of Mr. Schafer's law practice.
    DEA obtained further information that Mr. Schafer kept processed 
marijuana in a duffel bag in Dr. Fry's office, and on several 
occasions, he sold processed marijuana to individuals. On one occasion, 
Mr. Schafer purchased three pounds of processed marijuana from a third 
party for $3,600.00 per pound, and gave a portion of the marijuana to 
another individual to sell for him.
    A source familiar with Dr. Fry's practice reported to DEA that in 
or around March 2000, hundreds of marijuana ``clones'' were observed 
being grown in the residential garage of Dr. Fry and Mr. Schafer. A 
marijuana ``clone'' is a branch clipping from a healthy, female 
marijuana plant. The clipping is then placed into a growing medium to 
allow the branch to establish a root system and mature into a marijuana 
plant. The clones are reported to be of high quality and high THC (the 
primary psychoactive chemical component of marijuana). The source 
further observed ``grow lights'' (a type of fluorescent light used for 
indoor growing of marijuana), fertilizer, plant nutrients, and cubes of 
a growing medium into which clones are inserted to take root.
    DEA also received information that on more than 100 occasions, Mr. 
Schafer reportedly offered to sell marijuana ``growing kits'' to 
clients who came to Dr. Fry's office to receive recommendation 
certificates. DEA learned that these growing kits contained six 
marijuana clones plants, a growing tub, and grow lights. Payment for 
the kits were made to a business concern owned by Dr. Fry and Mr. 
Schafer known as ``Cool Madness.'' The kits were later delivered to 
clients by, among others, the son of Dr. Fry and Mr. Schafer, their 
daughter and her boyfriend. DEA agents also obtained information from a 
source familiar with Dr. Fry and Mr. Schafer that on April 16, 2000, 
Mr. Schafer sold approximately 40 marijuana plants to an individual in 
exchange for marijuana smoking paraphernalia.
    DEA's investigation further revealed that in February 2001, El 
Dorado County, California law enforcement officials received an 
anonymous tip from a source that claimed that he had just completed an 
inspection or appraisal of the residential property of Dr. Fry and Mr. 
Schafer. The source reported seeing marijuana growing in the yard of 
the residential location. This information was later corroborated by 
aerial surveillance conducted by the El Dorado County Sheriff's Office 
(EDCSO) of the Greenwood residence of Dr. Fry and Mr. Schafer. During 
an aerial flight on September 26, 2001, a detective for EDCSO observed 
marijuana plants growing in an outdoor growing area as well as inside 
the greenhouse of that property.
    The investigative file further reveals that in April 2000, a 
detective for the Western El Dorado Narcotic Enforcement Team (WENET) 
received a telephone call from a woman regarding her 19-year old son, 
who received a written recommendation for the use of marijuana from Dr. 
Fry. The woman informed WENET that in addition to the written 
recommendation, her son received a flyer stating that marijuana was 
``an alternate way to party. ''
    On January 11, 2001, undercover agents for WENET conducted an 
undercover operation involving the office of Dr. Fry and Mr. Schafer. 
The primary objective of the undercover visit was to have an undercover 
agent obtain a recommendation for marijuana from Dr. Fry or one of her 
associates, without the agent providing medical records or having a 
physical exam performed.
    Upon entering the office of Fry/Schafer, the agent was shown a 
video on subjects related to marijuana use. Mr. Schafer then questioned 
the undercover agent as to why the agent came to the office. Mr. 
Schafer then told the agent that the number one reason people were 
written a marijuana recommendation was for chronic pain.

[[Page 78017]]

    During that same undercover visit, the agent then met with Dr. 
Fry's physician assistant. The physician assistant questioned the 
undercover agent regarding the agent's health. The agent then 
complained of a false back injury suffered in a car accident. After a 
cursory examination (which consisted of the agent grabbing and 
squeezing the fingers of the physician assistant), the physician 
assistant concluded that one side of the agent's back was weaker than 
the other side. Despite the cursory nature of the exam and the lack of 
a medical record, the undercover agent was provided with a written 
recommendation for marijuana by Dr. Fry's physician assistant.
    In February 2001, an undercover WENET agent again went to the 
office of Dr. Fry and Mr. Schafer posing as a potential client in need 
of a recommendation certificate for marijuana. In a recorded 
conversation, Dr. Fry was heard telling the undercover agent that she 
and her husband ran a business selling marijuana-growing kits. Dr. Fry 
was also heard complaining to the agent that her husband was not making 
enough money with the business. Dr. Fry then offered to provide to the 
undercover agent marijuana clones, lights, and plant nutrients to grow 
marijuana, and if the agent signed up, she would provide the agent with 
low-cost organic marijuana and growing equipment. Dr. Fry further 
advised the agent to buy everything from she and her husband because a 
local store was ``staked out by the narcs.''
    On September 28, 2001, DEA and WENET agents executed a federal 
search warrant at Dr. Fry's registered location in Cool, California. 
Among the items seized from that location was drug paraphernalia. On 
that same date, a second federal search warrant was executed at the 
Greenwood residence. During a search of the living room area, agents 
seized several grocery bags of marijuana. Agents also seized from the 
master bedroom and bedroom closets numerous brown grocery bags and 
large ziplocks plastic bags containing marijuana and/or marijuana buds, 
two scales, a bong as well as other drug paraphernalia.
    Marijuana is listed in Schedule I of the Controlled Substance Act 
(CSA). 21 U.S.C. 812(c); 21 CFR 1308.11. The CSA defines Schedule I 
controlled substances as those drugs or other substances that have ``a 
high potential for abuse,'' ``no currently accepted medical use in 
treatment in the United States,'' and ``a lack of accepted safety for 
use * * * under medical supervision.'' Also, every drug listed in 
Schedule I of the CSA lacks approval for marketing under the Federal 
Food Drug and Cosmetic Act (FDCA). Therefore, marijuana has not been 
approved for marketing as a drug by the Food and Drug Administration 
(FDA).
    The deleterious effects of marijuana use have been outlined 
extensively in previous DEA final orders and will not be repeated at 
length here. See 66 FR 20038 (2001); 57 FR 10499 (1992). However, it 
bears mentioning again that the numerous significant short-term side 
effects and long terms risks linked to smoking marijuana, including 
damage to brain cells; lung problems such as bronchitis and emphysema; 
a weakening of the body's antibacterial defenses in the lungs; the 
lowering of blood pressure; trouble with thinking and concentration; 
fatigue; sleepiness and the impairment of motors skills, Id.
    Marijuana was placed in Schedule I for the same fundamental reason 
that it has never been approved for sale by the FDA; there have never 
been any sound scientific studies which demonstrate that marijuana can 
be used safely and effectively as medicine. See 66 FR 20038 (April 18, 
2001) (DEA final order denying petition to initiate proceeding to 
reschedule marijuana). The Supreme Court recently explained the legal 
significance of marijuana's placement in Schedule I of the CSA:

    Whereas some other drugs [those in Schedules II through V] can 
be dispensed and prescribed for medical use, see 21 U.S.C. 829, the 
same is not true for marijuana. Indeed, for purposes of the 
Controlled Substances Act, marijuana has ``no currently accepted 
medical use'' at all.

United States v. Oakland Cannabis Buyers' Cooperative, 532 U.S. 483, 
491 (2001).

    Federal law prohibits human consumption of marijuana outside of 
FDA-approved, DEA registered research. Id. at 490 (``For marijuana (and 
other drugs that have been classified as `schedule I' controlled 
substances), there is but one express exception, and it is available 
only for Government approved research projects, section 823(f).''). 
Further, as the Supreme Court made clear, there is no ``medical 
necessity exception'' that allows anyone to violate the CSA when it 
comes to marijuana, ``even when the patient is `seriously ill' and 
lacks alternative avenues for relief.'' Id. at 495 n. 7.
    Despite provisions of both the CSA and the FDCA regarding the non-
acceptance of marijuana as an adjunct to medical treatment, several 
states have enacted laws in recent years (primarily through ballot 
initiatives) authorizing marijuana for medical purposes. These state 
provisions authorize a physician to provide an oral or written 
``recommendation,'' ``approval,'' or some other affirmative statement 
indicating support for a particular patient's use of marijuana.
    Effective November 6, 1996, voters in California adopted 
Proposition 215, otherwise known as the Compassionate Use Act of 1996 
(hereinafter referred to as ``Proposition 215''). Cal. Health & Safety 
Code Sec.  11362.5 (2002). Proposition 215 provides that persons may 
grow or possess marijuana ``upon the written or oral recommendation or 
approval of a physician.'' Cal. Health & Safety Code Sec.  11362.5. 
Thus, a physician's ``recommendation'' serves as the ``permission 
slip'' under California law that allows the patient (the recipient of 
the recommendation) to grow or possess marijuana. Although California 
law does not actually allow anyone to distribute marijuana, numerous 
marijuana traffickers began to openly grow and distribute marijuana 
under the purported authority of state law following the passage of 
Proposition 215.
    One example of this trend was the sudden appearance of ``cannabis 
clubs,'' one of which was the subject of the Oakland Cannabis Buyers' 
Cooperative Case. The Supreme Court's ruling in Oakland Cannabis 
Buyers' Cooperative reaffirmed what was already clear in the CSA: that 
marijuana is not medicine under federal law and that federal law 
prohibits the manufacture, distribution, and possession of marijuana--
even in a state such as California, which has modified its state law to 
treat marijuana as medicine.
    The legal significance of marijuana ``recommendations'' was 
explained recently by a federal court:

    [A] physician who recommends marijuana in a state that 
recognizes that such an act facilitates the ability of a patient to 
receive marijuana is essentially writing a prescription. The same 
rules should apply. Both situations involve a violation of the CSA, 
and, thus, both situations could warrant the revocation of a 
physician's [DEA registration].
    Moreover, DEA has the authority to revoke the registrations of 
physicians whose conduct may threaten public health or safety.
    ***Given marijuana's status as a Schedule I drug, the government 
could reasonably conclude that a prescription or recommendation from 
a physician to use marijuana could threaten public health and 
safety.

Pearson v. McCaffrey, 139 F.Supp.2d 113, 124 (D.D.C. 2001).

    However, before Pearson was decided, and before the Supreme Court 
issued its ruling in Oakland Cannabis Buyers' Cooperative, the United 
States District Court for the Northern District of California issued an 
unpublished opinion that reached a different

[[Page 78018]]

conclusion than the court in Pearson. In Conant v. McCaffrey, 2000 WL 
1281174 (N.D. Cal. 2000), the court observed that (i) the CSA 
authorizes the Attorney General to revoke the DEA registration of a 
physician who engages in ``[s]uch other conduct which may threaten the 
public health and safety'' and (ii) because marijuana is a ``prohibited 
substance,'' ``recommending'' it to a patient ``might arguably fall 
within such `other conduct.' '' Despite reaching this conclusion, and 
without declaring the CSA unconstitutional, the Conant court ruled that 
to enforce the CSA's revocation provisions with respect to a California 
physician who recommends marijuana based on a ``sincere medical 
judgment'' would violate the First Amendment because a doctor who 
engages in such conduct is engaging in a form of free speech. 
Therefore, the Conant court issued an injunction that (i) prohibits DEA 
from revoking the DEA registration of any California physician ``merely 
because the doctor recommends medical marijuana to a patient based on a 
``sincere medical judgment'' and (ii) prohibits DEA ``from initiating 
any investigation solely on that ground.''
    On October 29, 2002, the United States Court of Appeals for the 
Ninth Circuit affirmed the Conant injunction. The Department of Justice 
is currently reviewing the case to determine whether to petition the 
Supreme Court for certiorari. DEA has abided by the injunction since 
its inception and will continue to do so for as long as it remains in 
effect. Accordingly, the Deputy Administrator's determination regarding 
the continued registration of Dr. Fry is being made in compliance with 
the dictates of Conant, as explained in detail in this Final Order.
    Pursuant to 21 U.S.C. 823(f) and 824(a)(4), the Deputy 
Administrator may revoke a DEA Certificate of Registration and deny any 
pending applications for renewal of such registration, if he determines 
that the continued registration would be inconsistent with the public 
interest. Section 823(f) requires that the following factors be 
considered in determining the public interest:
    (1) The recommendation of the appropriate state licensing board or 
professional disciplinary authority.
    (2) The applicant's experience in dispensing, or conducting 
research with respect to controlled substances.
    (3) The applicant's conviction record under federal or state laws 
relating to the manufacture, distribution, or dispensing of controlled 
substances.
    (4) Compliance with applicable state, federal, or local laws 
relating to controlled substances.
    (5) Such other conduct which may threaten the public health or 
safety.
    These factors are to be considered in the disjunctive; the Deputy 
Administrator may rely on any one or a combination of factors and may 
give each factor the weight he deems appropriate in determining whether 
a registration should be revoked or an application for registration 
denied. See Henry J. Schwartz, Jr., M.D., 54 FR 16,422 (1989).
    The continued registration of Dr. Fry is inconsistent with the 
public interest and the activity that she seeks to engage in under that 
registration is fundamentally incompatible with the CSA. The Deputy 
Administrator finds that Dr. Fry allowed her husband to provide client 
consultations related to the medical use of marijuana. These client 
``consultations'' were oftentimes of short duration and consisted of 
legal advice and not that of a medical nature. These clients, who dealt 
primarily with Mr. Schafer, were advised on the proper conduct during 
arrests and/or how to avoid law enforcement entanglements. In addition, 
clients of Dr. Fry routinely received marijuana recommendation 
certificates despite the lack of a medical examination or a review of 
medical records. This practice was corroborated by an undercover visit 
to Dr. Fry's medical office by a law enforcement agent, where the agent 
received a written recommendation for marijuana from Dr. Fry's 
physician assistant despite receiving only a cursory examination and 
without medical records.
    Moreover, Mr. Schafer engaged in the sale of marijuana and 
requested that others sell the drug for him. Mr. Schafer also exchanged 
with an individual, marijuana plants for drug paraphernalia. Without 
evidence to the contrary, the Deputy Administrator is led to the 
conclusion that such sales were motivated by profit. This conclusion is 
supported in part by Dr. Fry's admission to an undercover agent that 
she and her husband were in the business of selling marijuana growing 
kits and her complaint regarding the non-profitability of that 
business. Finally, Dr. Fry and Mr. Schafer possessed marijuana and drug 
paraphernalia at their residential location, and not at Dr. Fry's 
office where patients purportedly received medical treatment.
    The conduct of Dr. Fry and Mr. Schafer bears no resemblance to a 
legitimate medical practice. Rather, it is more suggestive of persons 
obtaining marijuana for personal use (as evidenced by marijuana and 
drug paraphernalia found during the search warrant of the Greenwood 
residence) and engaging in the sale of dangerous drugs based upon 
monetary considerations. Such conduct is descriptive of unlawful 
distribution of a Schedule I controlled substance, in violation of 21 
U.S.C. 841(a) and conspiracy to commit such offense in violation of 21 
U.S.C. 846. DEA has previously found that similar criminal conduct 
provided a basis for revocation of a DEA Certificate of Registration 
and denial of an application for such registration under subsections 
(2), (4), and (5) of section 823(f). See, e.g., Eugene Tapia, M.d., FR 
26, 837 (1991); Geoffrey A.W. DiBella 52 FR 5844 (1987). Such conduct 
is particularly egregious where the registrant is trafficking in 
illicit (Schedule I) controlled substances. Here, the volume of 
marijuana trafficking and related criminal conduct is staggering for an 
individual entrusted with a DEA registration.
    In addition, on several occasions when they had no marijuana to 
sell, Dr. Fry and Mr. Schafer referred patients to other marijuana 
dealers, and the couple sold marijuana-growing equipment to patients. 
These acts constitute aiding and abetting the illegal manufacture and 
distribution of controlled substances. 18 U.S.C. 2. At this time, Dr. 
Fry has not been indicted for conduct relative to her handling of 
marijuana. Nevertheless, it bears mentioning that the CSA provides that 
the revocation of a DEA Certificate of Registration is independent of, 
and not in lieu of, criminal prosecutions. 21 U.S.C. 824(c).
    Although Dr. Fry provided her clients with marijuana 
recommendations on many occasions, the revocation of Dr. Fry's 
revocation announced here complies fully with the Conant injunction. 
The Deputy Administrator arrives at this conclusion based on the 
following: (i) DEA is not revoking Dr. Fry's registration ``merely 
because'' she recommended marijuana to a patient ``based on a sincere 
medical judgment''; and (ii) DEA did not initiate the investigation of 
Dr. Fry ``solely on that ground.'' As supported by the above findings, 
the Deputy Administrator's action in this regard is based primarily on 
the facts that Dr. Fry distributed marijuana and marijuana growing 
equipment directly to patients, aided and abetted the distribution of 
marijuana (by referring patients to marijuana dealers), and engaged in 
a conspiracy to commit these felony offenses.
    Furthermore, there remain questions as to whether Dr. Fry's

[[Page 78019]]

recommendations were ``based on a sincere medical judgment.'' As 
alluded to above, the evidence suggests that Dr. Fry and her husband 
gave out recommendations solely as a moneymaking venture without 
conducting anything resembling a medical evaluation of the clients. 
Because Dr. Fry's recommendations were not ``based on a sincere medical 
judgment,'' the Conant injunction does not prohibit the investigation 
of Dr. Fry ``solely on that ground.''
    Even if Dr. Fry's recommendations were ``sincere,'' DEA did not 
initiate its investigation of her ``solely on that ground.'' Rather, 
the investigation was initiated because Dr. Fry and Mr. Schafer 
distributed marijuana through a commercial shipping company. When the 
shipping company discovered that the packages contained marijuana, it 
informed DEA. During the course of the investigation, DEA agents 
learned that the return address labels on the marijuana packages 
contained an address associated with Dr. Fry and Mr. Schafer.
    Dr. Fry did not respond to the Order to Show Cause and consequently 
did not refute the Government's assertions or information contained 
within the investigative file. As a result, her DEA registration must 
be revoked. Accordingly, the Deputy Administrator of the Drug 
Enforcement Administration, pursuant to the authority vested in him by 
21 U.S.C. 823 and 824 and 28 CFR 0.100(b) and 0.104, hereby orders that 
DEA Certificate of registration BM4859178, issued to Marion ``Molly'' 
Fry, M.D. be, and it hereby is, revoked. The Deputy Administrator 
further orders that any pending applications for renewal of such 
registration be, and they hereby are, denied. This order is effective 
January 21, 2003.

    Dated: December 13, 2002.
John B. Brown, III,
Deputy Administrator.
[FR Doc. 02-32008 Filed 12-19-02; 8:45 am]
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