[Federal Register Volume 74, Number 9 (Wednesday, January 14, 2009)]
[Notices]
[Pages 2101-2133]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-521]


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DEPARMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 05-16]


Lyle E. Craker; Denial of Application

    On December 10, 2004, the Deputy Assistant Administrator, Office of 
Diversion Control, issued an Order to Show Cause to Lyle E. Craker, 
Ph.D. (Respondent), of Amherst, Massachusetts. The Show Cause Order 
proposed the denial of Respondent's pending application for a 
registration as a bulk manufacturer of marijuana on two grounds. Show 
Cause Order at 1.
    First, the Show Cause Order alleged that Respondent's 
``registration would not be consistent with the public interest as that 
term is used in 21 U.S.C. 823(a).'' Show Cause Order at 1. Second, the 
Show Cause Order alleged that the Respondent's registration would be 
inconsistent ``with the United States'

[[Page 2102]]

obligations under the Single Convention on Narcotic Drugs (Single 
Convention), March 30, 1961, 18 U.S.T. 1407.'' Id.
    With respect to both of these contentions, noting that Respondent 
sought registration ``to supply analytical, pre-clinical and clinical 
researchers with marijuana,'' the Show Cause Order emphasized that the 
``National Institute on Drug Abuse (NIDA), a component [of] the 
National Institutes of Health (NIH)'' and ``the United States 
Department of Health and Human Services [HHS], oversees the 
cultivation, production and distribution of research-grade marijuana on 
behalf of the United States Government.'' Id. at 2.
    With respect to the contention that Respondent's proposed 
registration is inconsistent with the public interest, the Show Cause 
Order stated that, under 21 U.S.C. 823(a), ``DEA must limit the number 
of producers of research-grade marijuana to that which can provide an 
adequate and uninterrupted supply under adequately competitive 
conditions.'' Id. at 4. The Show Cause Order then stated: ``For the 
past 36 years, the University of Mississippi has provided such supply 
under the foregoing criteria, and there is no indication that this 
registrant will fail to do so throughout the duration of its current 
registration. While the University of Massachusetts is free to compete 
with the University of Mississippi to obtain the next NIDA contract to 
produce research-grade marijuana, there is no basis under Section 
823(a) to add an additional producer.'' Id.
    With respect to the contention of Respondent's sponsor, the 
Multidisciplinary Association for Psychedelic Studies (MAPS), that 
marijuana provided by NIDA to researchers was both qualitatively and 
quantitatively inadequate, the Show Cause Order alleged that marijuana 
provided by NIDA was ``of sufficient quantity and quality to meet'' the 
needs of ``legitimate and authorized research[ers].'' Id. at 3.
    The Show Cause Order also noted MAPS's contentions that ``NIDA is 
limited to supplying marijuana for research purposes and cannot supply 
marijuana on a prescription basis,'' that ``this limitation effectively 
prohibits a sponsor * * * from expending the necessary large amounts of 
funds to conduct drug development studies resulting in [a] marijuana 
prescription product,'' and that granting Respondent a registration 
would resolve this problem. Id. In response to these contentions, the 
Show Cause Order alleged that to obtain approval for the marketing of a 
new drug under the Food, Drug, and Cosmetic Act (FDCA), the safety and 
effectiveness of the drug must be demonstrated through three phases of 
clinical trials, and that clinical trials involving marijuana had not 
progressed beyond the first phase (phase 1). Id. at 2-4.
    The Show Cause Order further noted that the policy of HHS for 
approving the distribution of marijuana to researchers ``has not unduly 
limited clinical research with marijuana.'' Id. at 5. More 
specifically, the Show Cause Order alleged that ``[s]ince the year 
2000, there have been or are eleven approved clinical trials utilizing 
smoked marijuana,'' and that approved ``marijuana researchers 
administer marijuana to almost 500 human subjects.'' Id. The Show Cause 
Order also alleged that since 2000, there were ``four approved pre-
clinical trials in laboratory and animal modes.'' Id. at 5. Relatedly, 
the Show Cause Order also asserted that ``DEA has no statutory 
authority to overturn HHS' policy.'' Id.
    With respect to the contention that Respondent's registration would 
be inconsistent with the United States' obligations under the Single 
Convention, the Show Cause Order again referenced that HHS, through 
NIDA, oversees the cultivation, production and distribution of 
research-grade marijuana on behalf of the United States Government and 
alleged that ``[i]n accordance with the Single Convention, the Federal 
Government [is required] to limit marijuana available for clinical 
research to [this] source.'' Id. at 4.
    Respondent timely requested a hearing. The matter was assigned to 
Administrative Law Judge (ALJ) Mary Ellen Bittner, who conducted a 
hearing on August 22-26 and December 12-14 and 16, 2005. At the 
hearing, the parties put on testimonial evidence and introduced 
documentary evidence. Following the hearing, the parties submitted 
briefs containing their proposed findings of fact, conclusions of law, 
and argument.
    On February 12, 2007, the ALJ issued her recommended decision. 
Therein, the ALJ rejected the Government's contention that the Single 
Convention precluded Respondent's registration. In so holding, the ALJ 
acknowledged that the Convention requires that its signatories maintain 
a ``government monopoly on importing, exporting, wholesale trading, and 
maintaining stocks.'' ALJ at 82. The ALJ reasoned, however, that ``[i]t 
also appears, although it is not entirely clear, that the marijuana 
grown by the National Center \1\ or by any other registrant for 
utilization in research would qualify as either `medicinal' * * * or as 
`special stocks' within the meaning of'' the Convention. Id. at 82 
(citing Single Convention, art. 1, para. (1)(o) & (x)).
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    \1\ The National Center is an entity of the University of 
Mississippi which currently holds the contract with NIDA for growing 
marijuana to supply United States researchers.
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    The ALJ then turned to whether Respondent had established that his 
registration would be consistent with the public interest when 
considering the six enumerated factors of 21 U.S.C. 823(a). With 
respect to the first factor, 21 U.S.C. 823(a)(1), the ALJ first recited 
the relevant text of this provision, which requires DEA to consider 
maintenance of effective controls against diversion by limiting the 
manufacturing of schedule I or II controlled substances ``to a number 
of establishments which can produce an adequate and uninterrupted 
supply of these substances under adequately competitive conditions for 
legitimate medical, scientific, research, and industrial purposes.'' 
ALJ at 82 (quoting Sec.  823(a)(1)). Noting that there is precedent for 
the agency to interpret this provision in two distinct ways regarding 
the issue of adequacy of competition (either by considering or not 
considering the issue),\2\ the ALJ stated that she would evaluate the 
issue in both ways. Id. at 83.
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    \2\ The meaning of 21 U.S.C. 823(a)(1) and the competition issue 
are discussed in detail in part C of the discussion section of this 
final order.
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    Under the first approach of interpreting 21 U.S.C. 823(a)(1) to 
allow DEA to disregard the issue of adequacy of competition as long as 
the agency finds that the applicant for registration would provide 
effective controls against diversion, the ALJ concluded that ``there is 
no evidence or contention that either Respondent or anyone working with 
him would be likely to divert the marijuana from the growing or drying 
or storage areas.'' Id.
    The ALJ next rejected the Government's contention that there was a 
risk of diversion because Mr. Rick Doblin, the Director of MAPS, would 
determine who was to receive the marijuana. In so holding, the ALJ 
reasoned that Mr. Doblin would not have physical possession of the 
marijuana and that Respondent would only send marijuana to researchers 
with DEA registrations and the requisite approval of HHS. ALJ at 84. 
The ALJ thus concluded that ``the research project has procedures in 
place to adequately protect against diversion of the marijuana'' and 
that ``there is minimal risk of diversion.'' Id.

[[Page 2103]]

    Under the second approach of interpreting 21 U.S.C. 823(a)(1) to 
require DEA to consider whether competition is inadequate, the ALJ 
first turned to whether the supply of marijuana currently available to 
researchers through HHS is adequate. In this regard, the ALJ found that 
while ``there have been some problems with the marijuana that the 
National Center produces, * * * a preponderance of the evidence 
establishes that the quality is generally adequate.'' Id. The ALJ 
further found, however, that ``NIDA's system for evaluating requests 
for marijuana for research has resulted in some researchers who hold 
DEA registrations and requisite approval from [HHS] being unable to 
conduct their research because NIDA has refused to provide them with 
marijuana.'' Id. The ALJ thus concluded ``that the existing supply of 
marijuana is not adequate.'' Id. The ALJ also concluded that 
competition is inadequate within the meaning of 21 U.S.C. 823(a)(1). 
Id. \3\ The ALJ thus held that the first public interest factor, 21 
U.S.C. 823(a)(1), supported granting Respondent's application.
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    \3\ In so finding, the ALJ rejected the Government's contention 
that because the NIDA contract is open to competitive bidding, 
adequate competition exists. According to the ALJ, ``[t]he question 
is not * * * whether the NIDA process addresses that agency's needs, 
but whether marijuana is made available to all researchers who have 
a legitimate need for it in their research. As discussed above, I 
answer that question in the negative.'' Id. at 85.
    As further support for her conclusion, the ALJ reasoned that 
``the NIDA contract requires the contractor to analyze'' marijuana 
seized by law enforcement agencies, and that ``a qualified 
cultivator may not be able to fulfill'' this requirement.''Id.
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    Under the second public interest factor, 21 U.S.C. 823(a)(2), the 
ALJ found that there was ``neither evidence nor contention that 
Respondent has not complied with applicable laws'' and thus concluded 
that this factor supported the granting of Respondent's application. 
See id.
    Under the third public interest factor, 21 U.S.C. 823(a)(3), as to 
whether granting Respondent's application would promote technical 
advances in the art of manufacturing controlled substances, the ALJ 
found that Respondent has ``considerable experience in cultivating 
medicinal plants, which might promote technical advances in the 
cultivation of marijuana or developing new medications from it.'' ALJ 
at 85-86. The ALJ nonetheless found that ``there is not sufficient 
evidence in the record on which to base a finding as to whether 
granting Respondent's registration would promote technical advances.'' 
Id. at 86.
    Under the fourth public interest factor, 21 U.S.C. 823(a)(4), the 
ALJ found that it was ``undisputed that Respondent has never been 
convicted of any violation of any law pertaining to controlled 
substances'' and therefore this factor weighed in favor of granting the 
application. Id.
    Under the fifth public interest factor, 21 U.S.C. 823(a)(5), the 
ALJ considered Respondent's ``past experience in manufacturing 
controlled substances and the existence of effective controls against 
diversion.'' Id. The ALJ acknowledged that ``Respondent has no 
experience in manufacturing controlled substances.'' Id. Noting that 
Respondent ``does have experience in growing medicinal plants'' and 
that ``the risk of diversion is minimal,'' the ALJ concluded that this 
factor supported granted the application. Id.
    Finally, under the sixth public interest factor, 21 U.S.C. 
823(a)(6), in analyzing such other factors as are relevant to and 
consistent with public health and safety, the ALJ rejected the 
Government's contention that granting the application would 
``circumvent[]'' HHS's policy with respect to the provision of 
marijuana to researchers. Id. Reasoning that ``the NIH Guidance by its 
own terms applies to marijuana that [HHS] makes available, [and] not 
[to] marijuana that might be available from some other legitimate 
source[,]'' the ALJ concluded that ``the NIH Guidance is not a factor 
in determining whether Respondent's application should be granted.'' 
Id. The ALJ thus concluded that granting Respondent's application 
``would be in the public interest,'' and recommended that I grant his 
application. Id. at 87.
    The Government excepted to the ALJ's decision on numerous grounds, 
and Respondent filed a response to the Government's exceptions. 
Thereafter, the record was forwarded to me for final agency action.
    Having considered the record as a whole, I hereby issue this 
Decision and Final Order. For reasons explained more fully below, I 
reject the ALJ's legal conclusion ``that the Single Convention does not 
preclude registering Respondent.'' Id. at 82. Moreover, I reject the 
ALJ's finding that the proposed registration is consistent with the 
public interest when considering the six factors enumerated in 21 
U.S.C. 823(a). Id. at 82-86. I therefore reject the ALJ's 
recommendation that the application be granted. See id. at 87.

Findings

    Under Federal Law, marijuana and tetrahydrocannabinols (THC) are 
schedule I controlled substances. 21 U.S.C. 812(c), Schedule I(c)(10) & 
(17). Congress placed marijuana and THC in schedule I because the 
substances have ``a high potential for abuse,'' ``no current accepted 
medical use in treatment in the United States,'' and ``a lack of 
accepted safety for use * * * under medical supervision.'' 21 U.S.C. 
812(b)(1). See also 66 FR 20038 (2001) (denying petition to reschedule 
marijuana from schedule I), petition for review dismissed, Gettman v. 
DEA, 290 F.3d 430 (D.C. Cir. 2002).\4\
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    \4\ As related in the Notice, the FDA recommended that marijuana 
be maintained in schedule I of the CSA. The FDA based its finding 
on, inter alia, the extensive evidence that marijuana has a history 
and pattern of abuse, that it is ``[t]he most frequently used 
illicit drug,'' and that it ``has a high potential for abuse.'' 66 
FR at 20047 & 20051. The FDA also found that ``[t]here are not FDA-
approved medical products,'' ``marijuana does not have a currently 
accepted medical use in treatment in the United States or a 
currently accepted medical use with severe restrictions,'' and 
``that, even under medical supervision, marijuana has not been shown 
to have an acceptable level of safety.'' 66 FR at 20052.
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    Marijuana is cultivated from the cannabis plant, which is 
recognized as ``a very adaptive plant [whose] characteristics are even 
more variable than most plants.'' GX 25, at 7. Marijuana, which 
consists primarily of the dried flowering tops and leaves of the 
cannabis plant,\5\ ``is a variable and complex mixture of biologically 
active compounds.'' Id. As of 2001, 483 different chemical constituents 
had been identified in marijuana, including approximately 66 
cannabinoids.\6\ 66 FR at 20041; Tr. 1142, 1147. ``THC \7\ is the main 
psychoactive cannabinoid in marijuana''; the plant, however, also 
contains ``[v]arying proportions of other cannabinoids, mainly 
cannabidiol (CBD) and cannabinol (CBN),'' which ``sometimes [exist] in 
quantities that might modify the pharmacology of THC or cause effects 
of their own.'' Id. at 7-8.
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    \5\ The legal definition of marijuana, as set forth in the CSA, 
21 U.S.C. 802(16), is as follows: The term ``marihuana'' means all 
parts of the plant Cannabis sativa L., whether growing or not; the 
seeds thereof; the resin extracted from any part of such plant; and 
every compound, manufacture, salt, derivative, mixture, or 
preparation of such plant, its seeds or resin. Such term does not 
include the mature stalks of such plant, fiber produced from such 
stalks, oil or cake made from the seeds of such plant, any other 
compound, manufacture, salt, derivative, mixture, or preparation of 
such mature stalks (except the resin extracted therefrom), fiber, 
oil, or cake, or the sterilized seed of such plant which is 
incapable of germination.
    \6\ Cannabinoids are chemical compounds that are unique to the 
cannabis plant (not found in any other plant). Tr. 1140-41.
    \7\ While there are numerous isomers of THC (all of which fall 
within the listing of ``Tetrahydrocannabinols'' in schedule I of the 
CSA and many of which are found in the cannabis plant), delta-9-THC 
is the isomer that is recognized as the primary psychoactive 
component in marijuana and, for this reason the term ``THC'' is 
often used to refer to delta-9-THC. See 66 FR at 20045; Tr. 1146-47.

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[[Page 2104]]

The National Center and NIDA's Drug Supply Program

    Since 1968, the National Center for Natural Products Research 
(National Center), a division of the University of Mississippi, has 
held a contract with the Federal Government to grow marijuana for 
research purposes and held the requisite registrations under the 
Controlled Substances Act (CSA), as well as the federal law that 
preceded the CSA, authorizing the University to conduct such 
activity.\8\ Tr. 1152-53, 1350-51. See also 21 CFR 1301.13. The 
contract, which is open for competitive bidding at periodic intervals, 
see GX 15, is administered by NIDA, a component of NIH (which is part 
of HHS), pursuant to its Drug Supply Program. RX 1, at 231. Since 1999, 
the term of the contract has been five years. See GXs 13 & 15; Tr. 
1156.
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    \8\ Initially, the National Center obtained a researcher's 
registration; it now also holds a manufacturer's registration.
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    Under the NIDA contract, the National Center ``[g]row[s], 
harvest[s], store[s], ship[s] and analyze[s] cannabis of different 
varieties, as required.'' GX 13, at 6. The contract requires that the 
National Center ``shall serve as NIDA's cannabis drug repository,'' as 
well as ``develop and produce standardized marijuana cigarettes within 
a range of specified THC content, and placebos for use in pre-clinical 
and clinical research programs,'' and maintain minimum stocks of both 
bulk marijuana and marijuana cigarettes of various THC contents, and 
store them in a DEA approved facility. Id. at 6-7.
    Marijuana potency is primarily based on the concentration 
(percentage by weight) of THC in the plant material. Tr. 1148-49. As of 
August 25, 2005, the National Center held on behalf of NIDA 
approximately 1055 kilograms (kg) of marijuana with THC contents 
ranging up to 12.26 percent. See RX 53. This inventory includes six 
batches of marijuana with THC contents ranging from 9.02 to 9.89 
percent,\9\ one batch (of nearly 19 kg) with a THC content of 10 
percent, nearly 25 kg with a THC content of 11.34 percent, and 
approximately 27 kg with a THC content of 12.26 percent.\10\ See id. In 
his testimony, Mahmoud ElSohly, Ph.D., who is the Principal 
Investigator under the NIDA contract, and who has overseen the National 
Center's work with marijuana since 1980, stated that the Center is 
capable of producing marijuana with a THC content of 20 percent or 
more.\11\ Tr. 1130-31, 1152, 1203, 1254-55.
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    \9\ These batches range from approximately 12 to 15 kg in size.
    \10\ As of the date of the hearing, more than 920,000 marijuana 
cigarettes of various THC concentrations including placebo had been 
manufactured pursuant to the NIDA contracts between 1974 and 2003. 
GX 27.
    \11\ 11 As Dr. ElSohly explained, he has grown numerous strains 
of marijuana from seeds that have been obtained from a variety of 
countries and has used them to do ``genetic selection to have 
genetic material of high potency.'' Tr. 1255.
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    The contract also requires the National Center to ``ship to 
research investigators as authorized by the [NIDA] Project Officer upon 
receipt of a shipment order.'' GX 13, at 7. While the NIDA ``Project 
Officer may pre-authorize any normal recurring requests that the 
contractor will then fill once it has received'' various 
assurances,\12\ the contract further states that ``[a]ll other requests 
should be submitted to the NIDA Project Officer for approval.'' Id. at 
8. Moreover, ``[i]f there is a reason to question a particular request, 
the Contractor shall inform the NIDA Project Officer who will make a 
final decision on providing the material and quantity requested.'' Id. 
As these provisions make clear, the National Center has no authority to 
distribute any of the marijuana it produces pursuant to the NIDA 
contract without NIDA's approval.\13\
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    \12\ These include that the researcher have the appropriate DEA 
registration and FDA/IND approvals, provide assurance that the 
marijuana ``will not be resold'' and ``will be used only for 
research or patient purposes,'' that the use of the marijuana will 
adhere to the appropriate Safety Standards for research,'' and that 
the researcher agree ``to comply with all Federal, State and Local 
Safety requirements for use of the materials.'' See GX 13, at 8.
    \13\ Independent of its contract with NIDA, the National Center 
holds an additional registration to manufacture marijuana and THC. 
GXs 75 & 78. The National Center was granted this registration under 
the terms of a Memorandum of Agreement (MOA) entered into with DEA 
in 1999. GX 78. As set forth in the MOA, the purpose of the 
registration was ``to allow the Center to develop a new product 
formulation for effecting delivery of [THC] in a pharmaceutically 
acceptable dosage form suppository * * * and to provide crude THC 
extract to a DEA-registered manufacturer of THC for further 
purification.'' Id. at 2. The MOA further stated that, under the 
terms thereof, the Center would ``manufacture marijuana for the 
purpose of extracting THC therefrom.'' Id. Subsequently, the Center 
submitted a new application for a registration to bulk manufacture 
marijuana and THC ``to prepare marihuana extract for further 
purification into bulk active [THC] for use in launching FDA-
approved pharmaceutical products.'' 70 FR 47232 (2005). DEA has not 
yet issued a final order as to this application. (DEA publishes in 
the Federal Register all final orders on applications for 
registration to bulk manufacture schedule I and II controlled 
substances.)
    The MOA further provided that ``[i]n accordance with articles 23 
and 28 of the Single Convention on Narcotic Drugs * * * private 
trade in `cannabis' is strictly prohibited. Therefore, the Center 
shall not distribute any quantity of marijuana to any person other 
than an authorized DEA employee.'' GX 78, at 2. Continuing, the MOA 
explained that ``[t]he Single Convention does not prohibit private 
trade in `cannabis preparations,' '' and noted that this term, 
``within the meaning of the Single Convention, is a mixture, solid 
or liquid containing cannabis, cannabis resin, or extracts or 
tinctures of cannabis.'' Id. Because ``[t]he THC that the Center 
will extract from marijuana [is] considered such a `cannabis 
preparation[,]' * * * the Center may, in accordance with the Single 
Convention, distribute the crude THC extract to private entities'' 
provided the Center otherwise complies with the CSA and DEA 
regulations. Id. at 2-3. The MOA also set forth a detailed series of 
controls to maintain accountability of the marijuana from 
acquisition of the seeds through the extraction of THC from the 
harvested material. Id. at 3-7.
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    In 1997, the White House Office of National Drug Control Policy 
asked the Institute of Medicine (IOM), a component of the National 
Academy of Sciences, to conduct a review of the scientific evidence 
regarding the potential health benefits and risks of marijuana and its 
constituent cannabinoids. RX 1, at 7. In 1999, the IOM published its 
report. The IOM found, among other things, that ``[d]efined substances, 
such as purified cannabinoid compounds, are preferable to plant 
products, which are of variable and uncertain composition. Use of 
defined cannabinoids permits a more precise evaluation of their 
effects, whether in combination or alone.'' RX 1, at 22. With respect 
to this issue, the IOM reached the following conclusion: ``Scientific 
data indicate the potential therapeutic value of cannabinoid drugs, 
primarily THC, for pain relief, control of nausea and vomiting, and 
appetite stimulation; smoked marijuana, however, is a crude THC 
delivery system that also delivers harmful substances.'' Id. The report 
further stated:

    The therapeutic effects of cannabinoids are most well 
established for THC, which is the primary psychoactive ingredient of 
marijuana. But it does not follow from this that smoking marijuana 
is good medicine.
    Although marijuana smoke delivers THC and other cannabinoids to 
the body, it also delivers harmful substances, including most of 
those found in tobacco smoke. In addition, plants contain a variable 
mixture of biologically active compounds and cannot be expected to 
provide a precisely defined drug effect. For those reasons there is 
little future in smoked marijuana as a medically approved 
medication. If there is any future in cannabinoid drugs, it lies 
with agents of more certain, not less certain, composition.'' \14\
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    \14\ To similar effect, an ad hoc group of experts, who were 
selected by NIH and convened in 1997 as part of a workshop to assess 
the potential medical uses of marijuana, issued a report to the 
Director of NIH, which noted:
    As with any smoked drug (e.g., nicotine or cocaine), 
characterizing the pharmacokinetics of THC and other cannabinoids 
from smoked marijuana is a challenge. A person's smoking behavior 
during an experiment is difficult for a researcher to control. 
People differ. Smoking behavior is not easily quantified. An 
experienced marijuana smoker can titrate and regulate doses to 
obtain the desired acute psychological effects and to avoid overdose 
and/or minimize undesired effects. Each puff delivers a discrete 
dose of THC to the body. Puff and inhalation volume changes with 
phase of smoking, tending to be highest at the beginning and lowest 
at the end of smoking a cigarette. * * * During smoking, as the 
cigarette length shortens, the concentration of THC in the remaining 
marijuana increases; thus, each successive puff contains an 
increasing concentration of THC.
    One consequence of this complicated process is that an 
experienced marijuana smoker can regulate almost on a puff-by-puff 
basis the dose of THC delivered to lungs and thence to brain. A less 
experienced smoker is more likely to overdose or underdose. Thus a 
marijuana researcher attempting to control or specify dose in a 
pharmacologic experiment with smoked marijuana has only partial 
control over the drug dose actually delivered.
    See GX 25, at 9-10 (Workshop on the Medical Utility of 
Marijuana).


[[Page 2105]]


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Id. at 195-96. See also GX 53 (letter from Alice P. Mead, GW 
Pharmaceuticals, P.L.C., to Christine V. Beato, Acting Asst. Sec. for 
Health, HHS (Apr. 12, 2005)) (``[H]erbal cannabis should comprise only 
the starting material from which a bona fide medical product is 
ultimately derived. * * * [S]tandardizing herbal starting material 
represents only the first of many steps necessary to create a modern 
medicine that is safe and effective for use in specific medical 
conditions. * * * [A] final medical product * * * must also be 
delivered in a dosage form that is consistent in composition and that 
allows the patient to obtain an identifiable and reliable amount of 
medication.'') (emphasis in original).
    Accordingly, the IOM recommended that clinical trials using 
cannabinoid drugs should be conducted with ``the goal of developing 
rapid-onset, reliable, and safe delivery systems.'' Id. at 197. The IOM 
also advised that clinical trials involving smoked marijuana ``should 
involve only short-term marijuana use (less than six months), should be 
conducted in patients with conditions for which there is a reasonable 
expectation of efficacy, should be approved by institutional review 
boards, and should collect data about efficacy.'' Id.
    Also in 1999, due in part to an increased interest in marijuana 
research and taking into account the IOM report, HHS decided to change 
the procedures by which it would supply marijuana to researchers. Tr. 
1632-33; GX 24. The new procedures were announced in a document 
released by NIH on May 21, 1999. GX 24, at 1. In the announcement, 
``HHS recognize[d] the need for objective evaluations of the potential 
merits of cannabinoids for medical uses[,]'' and that ``[i]f a positive 
benefit is found, * * * the need to stimulate development of 
alternative, safer dosage forms.'' Id. at 2. Toward this end, NIH 
explained that the new procedures were designed to increase the 
availability of marijuana for research purposes by, among other things, 
making such marijuana ``available on a cost-reimbursable basis.'' Id. 
This new procedure allowed researchers who were privately funded to 
obtain marijuana from HHS by reimbursing the NIDA contractor for the 
cost of the marijuana. Tr. 1633; see also GX 31, at 3. This was a 
departure from the prior practice (pre-1999), whereby HHS only made 
marijuana available to persons who received NIH funding. Id. The new 
procedures implemented by HHS in 1999 remain in effect today. Tr. 1629.
    HHS further stated in 1999 that it intended through the new 
procedures ``to make available a sufficient amount of research-grade 
marijuana to support those studies that are the most likely to yield 
usable, essential data.'' GX 24, at 2. With respect to those 
researchers who do not have NIH funding, HHS explained that ``the 
scientific merits of each protocol will be evaluated through a Public 
Health Service interdisciplinary review process [which] will take into 
consideration a number of factors, including the scientific quality of 
the proposed study, the quality of the organization's peer-review 
process, and the objective of the proposed research.'' Id.
    HHS then identified the criteria it would apply in evaluating 
requests for marijuana:

    The extent to which the protocol incorporates the elements of 
good clinical and laboratory research;
    The extent to which the protocol describes an adequate and well-
controlled clinical study to evaluate the safety and effectiveness 
of marijuana and its constituent cannabinoids in the treatment of a 
serious or life threatening condition;
    The extent to which the protocol describes an adequate and well-
controlled clinical study to evaluate the safety and effectiveness 
of marijuana and its constituent cannabinoids for a use for which 
there are no alternative therapies;
    The extent to which the protocol describes a biopharmaceutical 
study designed to support the development of a dosage form 
alternative to smoking; [and]
    The extent to which the protocol describes high-quality research 
designed to address basic, unanswered scientific questions about the 
effects of marijuana and its constituent cannabinoids or about the 
safety or toxicity of smoked marijuana.

Id. at 3.

    HHS further noted that ``[a] clinical study involving marijuana 
should include certain core elements,'' and that ``[a] study that 
incorporates the [1997] NIH Workshop recommendations will be expected 
to yield useful data and therefore, will be more likely to receive 
marijuana under the HHS program.'' Id.
    Finally, HHS explained that the ``proposed protocols must be 
determined to be acceptable under FDA's standards for authorizing the 
clinical study of investigational new drugs.'' Id. Relatedly, HHS 
stated that ``although FDA's review of Phase 1 submissions will focus 
on assessing the safety of Phase 1 investigations, FDA's review of 
Phases 2 & 3 submissions will also include an assessment of the 
scientific quality of the clinical investigations and the likelihood 
that the investigations will yield data capable of meeting statutory 
standards for marketing approval.'' Id. HHS further made clear that if 
a protocol is approved, ``NIDA will provide the researcher with 
authorization to reference NIDA's marijuana Drug Master File.'' Id. at 
4.
    At the administrative hearing in this case, Steven Gust, Ph.D., 
Special Assistant to the Director of NIDA, explained that, in addition 
to seeking to facilitate research into the possible medical utility of 
marijuana, the new procedures implemented by HHS in 1999 were intended 
``to make the process more standardized, and to * * * provide some 
expertise that did not really exist at NIDA in terms of reviewing 
applications that involved * * * the use of marijuana * * * for 
treatment of diseases.'' Tr. 1632-33. Accordingly, HHS ``established a 
separate peer review process that * * * moved the review into the 
Public Health Service [a component of HHS] * * * where additional 
expertise from other NIH Institutes and other Federal agencies'' could 
be utilized in reviewing the scientific merit of the applications. Id. 
at 1633-34. Dr. Gust further explained that the members of the review 
committee are drawn from the various specialty institutes of NIH, and 
the Substance Abuse and Mental Health Services Administration (SAMHSA). 
Id. at 1692; 1713-15.\15\ Dr. Gust also testified that the ``scientific 
bar has been set very low, [so] that any project that has scientific 
merit is approved,'' and that ``anything that gets approved gets NIDA 
marijuana.'' Id. at 1700-01. As of April 2004, HHS had approved at 
least seventeen pre-clinical or clinical studies of marijuana, which 
were sponsored by the California Center for Medical Cannabis Research 
(CMCR).\16\ GX 31, at

[[Page 2106]]

3. According to one witness who testified on behalf of Respondent, all 
of the CMCR-sponsored researchers who applied to NIDA for marijuana did 
in fact receive marijuana from NIDA. Tr. 694-95.
---------------------------------------------------------------------------

    \15\ Dr. Gust initially testified that someone from FDA sits on 
the committee but later stated that he was not exactly sure if this 
was so. Tr. 1712.
    \16\ The California research studies were conducted pursuant to 
a law enacted by California in 1999 known as the Marijuana Research 
Act of 1999. Cal. Health & Safety Code Sec.  11362.9. This state law 
established the ``California Marijuana Research Program'' to develop 
and conduct studies on the potential medical utility of marijuana. 
Id. (The program is also referred to as the ``Center for Medicinal 
Cannabis Research'' (CMCR). Tr. 396.) The state legislature 
appropriated a total of $9 million for the marijuana research 
studies. Tr. 397. The state law was enacted following the passage of 
Proposition 215, a ballot initiative otherwise known as the 
Compassionate Use Act of 1996. Tr. 395-96; see also United States v. 
Oakland Cannabis Buyers' Cooperative (``OCBC''), 532 U.S. 483, 486 
(2001).
---------------------------------------------------------------------------

Respondent's Application and Contentions

    Respondent is a Professor in the Department of Plant, Soil and 
Insect Sciences at the University of Massachusetts Amherst. Tr. 13. On 
June 28, 2001, Respondent submitted an application to bulk manufacture 
the schedule I controlled substances marijuana and 
tetrahydrocannabinols.\17\ GXs 1 & 3; 21 CFR 1308.11(d). Respondent's 
application is sponsored by the Multidisciplinary Associations for 
Psychedelic Studies (MAPS). GX 3, at 1.
    Because Respondent seeks a registration to manufacture a schedule I 
controlled substance, DEA required that he complete a 
questionnaire.\18\ In response to the question regarding the purpose 
for which he sought registration, Respondent stated that ``[t]he plant 
material will be grown for federally-approved uses only, including 
analytical, pre-clinical, and clinical research,'' and that ``no 
material is intended for illegal use or for medical marijuana patients 
whose use may be legal under state, but not federal law.'' GX 3, at 
1.\19\
---------------------------------------------------------------------------

    \17\ On his application for registration (GX 1), Respondent 
incorrectly checked the box for ``dosage form'' manufacturing when, 
in fact (based on the activity in which he proposes to engage), he 
is seeking to become registered as a ``bulk'' manufacturer. In 
written questions DEA submitted to Respondent as a follow-up to the 
application, DEA properly characterized the activity as ``bulk 
manufacture,'' and Respondent, in his written answers to these 
questions, gave no indication that he disagreed. See GX 3. Also, in 
his testimony at the hearing, Respondent acknowledged that his plan 
was to send marijuana ``in bulk'' to others, who would roll it into 
cigarettes. Tr. at 243. Respondent also testified that MAPS 
President Rick Doblin ``assisted in the response to the bulk 
manufacturer's questions.'' Tr. 352 (emphasis added). Cf. 32 CFR 
1300.02(b)(32) (defining ``drug product'' as ``an active ingredient 
in dosage form that has been approved or otherwise may be lawfully 
marketed under the Food, Drug, and Cosmetic Act for distribution in 
the United States''); 21 CFR 1301.72(a) & 1304.22(a) (listing ``bulk 
materials awaiting further processing'' separately from ``finished 
products'').
    \18\ As set forth in 21 CFR 1301.15: ``The Administrator may 
require an applicant to submit such documents or written statements 
of fact relevant to the application as he/she deems necessary to 
determine whether the application should be granted.''
    \19\ Respondent further testified that it was his intention to 
simply send bulk marijuana to researchers who would then roll their 
own cigarettes. Tr. at 243.
---------------------------------------------------------------------------

    Respondent added that ``[t]he production costs * * * would be 
underwritten by a grant'' from MAPS. Id. According to Respondent, 
``MAPS is seeking to develop the marijuana plant into an FDA-approved 
prescription medicine,'' and that ``[t]he growth of plants at [UMASS] 
is a necessary step for supplying quality marijuana for use in MAPS' 
drug development process.'' Id. Respondent also advised that ``MAPS 
will sponsor research at other institutions using smoked marijuana and 
marijuana delivered through a vaporizer device that heats, but does not 
burn the plant material, thus reducing the products of combustion 
normally found in smoked marijuana.'' Id.
    Respondent further stated that his ``[c]ustomers would include both 
MAPS-sponsored research and research sponsored by other 
organizations.'' Id. at 3. Relatedly, Respondent explained that 
``[r]esearchers conducting MAPS sponsored research would receive 
supplies of the plant material free, while other researchers would 
either receive the marijuana free or through a donation to MAPS.'' Id. 
at 1. See also Tr. 225 (``I may very well be approached by other people 
with approved studies who need a source also.'').
    At the hearing, Mr. Rick Doblin, the President of MAPS,\20\ also 
testified regarding the purpose of Respondent's application. Mr. 
Doblin, who admitted that he engages in recreational use of marijuana 
on a weekly basis, explained that ``[t]he reason we need a supply from 
Dr. Craker is that we are engaged in trying to make marijuana into an 
FDA-approved prescription medicine, and * * * we need to establish a 
drug master file for a particular product, and * * * we need to conduct 
research with that product, and have that product available to us for 
potential marketing should we get FDA approval.'' Tr. 603, 718-19. Mr. 
Doblin testified as to his ``belie[f] that smoked marijuana or 
vaporized marijuana in plant form will successfully compete with 
marijuana extracts on price.'' Id. at 605. He also testified as to his 
belief that the ``efficacy and safety'' of vaporized plant-form 
marijuana ``will be similar'' to drugs containing cannabinoid extracts 
and that ``the efficacy will be similar and safety slightly different 
with smoked'' marijuana than with drugs containing cannabinoid 
extracts. Id.
    Mr. Doblin further testified that he ``disagree[d]'' with the 
Institute of Medicine's conclusion that defined and purified 
cannabinoid compounds ``are preferable to plant products, which are of 
variable and uncertain composition.'' Id. at 654. Mr. Doblin also 
testified that ``what we're trying to do is get the Public Health 
Service and NIDA out of the picture; they're only in the picture just 
for marijuana only because they have a monopoly. And that is what is so 
obstructing the system.'' Id. at 666.
---------------------------------------------------------------------------

    \20\ When asked during the hearing about the title of his 
organization (Multidisciplinary Association for Psychedelic Studies) 
and, in particular the term ``Psychedelic,'' Mr. Doblin explained, 
in part, ``it's about tools and procedures that bring to the surface 
people's subconscious and unconscious and, you know, deeper 
emotions.'' Tr. 474.
---------------------------------------------------------------------------

    Finally, Mr. Doblin testified that MAPS would only need between $5 
to $10 million ``to make marijuana into a medicine'' through the 
various stages of the FDA new drug approval (NDA) process.\21\ Id. at 
701; see also id. at 703. In his testimony, Mr. Doblin did not, 
however, identify a single instance in which an entity (whether for-
profit or nonprofit) had taken a drug--let alone a botanical substance 
with known safety issues, See, e.g., GX 43, at 9--through the multi-
faceted NDA process for a similar cost.\22\ Moreover, while Mr.

[[Page 2107]]

Doblin testified that ``the mission statement [of MAPS] is to develop 
psychedelics and marijuana into FDA-approved medicines and then to 
educate the public about that'' (Tr. 478), the vagaries of his 
testimony prevent a clear determination of how far along in that goal 
he envisions MAPS to be.\23\
---------------------------------------------------------------------------

    \21\ In a recent Supreme Court decision, Justice Ginsberg, in a 
dissenting opinion, summarized the process by which FDA approves new 
drugs for marketing as follows:
    The process for approving a new drug begins with preclinical 
laboratory and animal testing. The sponsor of the new drug then 
submits an investigational new drug application seeking FDA approval 
to test the drug on humans. See 21 U.S.C. 355(i); 21 CFR 312.1 et 
seq. (2007). Clinical trials generally proceed in three phases 
involving successively larger groups of patients: 20 to 80 subjects 
in phase I; no more than several hundred subjects in phase II; and 
several hundred to several thousand subjects in phase III. 21 CFR 
312.21. After completing the clinical trials, the sponsor files a 
new drug application containing, inter alia, ``full reports of 
investigations'' showing whether the ``drug is safe for use and * * 
* effective''; the drug's composition; a description of the drug's 
manufacturing, processing, and packaging; and the proposed labeling 
for the drug. 21 U.S.C. 355(b)(1).
    Riegel v. Medtronic, Inc., 128 S.Ct. 999, 1018-19 n.15 (2008) 
(Ginsburg, J., dissenting).
    \22\ While Respondent produced evidence establishing that the 
$800-880 million costs of bringing a new drug to market includes 
research and development costs incurred for drugs that are not 
approved, as well as opportunity costs (the cost of investing in 
research rather than something else), see Tr. 161, 734-36, 
Respondent has not shown a single instance in which an entity has 
obtained FDA approval of a drug through the NDA process for the cost 
range which Mr. Doblin claimed would be sufficient to obtain 
approval of plant-form marijuana.
    Moreover, the IOM Report states that the average cost of a 
Supplemental New Drug Application (SNDA), which is used when a 
company seeks to obtain FDA approval to market a drug (which has 
already gone through the three phases of clinical trials and been 
approved for marketing) for a new indication, was $10 to 40 million. 
RX 1, at 214. It should be noted, however, that in taking a drug 
through the three phases, its sponsor will have obtained extensive 
data regarding the drug's safety including ``adverse effects of the 
drug [and] clinically significant drug/drug interactions.'' 21 CFR 
314.50(d)(5)(vi).
    In support of his assertion that MAPS could obtain FDA approval 
for only $5 to $10 million, Mr. Doblin testified that marijuana is 
different than other drugs that go through the FDA approval process. 
Mr. Doblin based this assertion on his contentions that: marijuana 
has been used by ``tens of millions of people'' while others drugs 
going though the NDA process are only used by a few thousand; there 
is ``an enormous body of evidence about [marijuana's] safety * * * 
that we don't need to replicate;'' and sufficient data to satisfy 
the FDA as to marijuana's safety and efficacy could be obtained by 
testing only 500 to 600 people. Id. at 737-38.
    The FDA's guidance document for botanical drug products makes 
plain that ``[a] botanical drug product that is not generally 
recognized as safe and effective for its therapeutic claims is 
considered a new drug under Sec.  201(p) of the [Food, Drug, and 
Cosmetic] Act,[]'' and that ``any person wishing to market a 
botanical drug product that is a new drug is required to obtain FDA 
approval of an NDA * * * for that product.'' GX 92A, at 7. Moreover, 
``an NDA must contain substantial evidence of effectiveness derived 
from adequate and well-controlled clinical studies, evidence of 
safety, and adequate CMC [chemistry, manufacturing, and controls] 
information.'' Id. See also GX 92A, at 27-38 (specifying the 
information that must be provided to FDA for phase 3 clinical 
studies of a botanical product to meet the requirements of the FDA 
regulations governing the contents of INDs). Finally, with respect 
to the nonclinical safety assessment required to support phase 3 
clinical trials, the FDA guidance states:
    To support safety for expanded clinical studies or to support 
marketing approval of a botanical drug product, toxicity data from 
standard toxicology studies in animals may be needed * * * . A 
botanical product submitted for marketing approval as a drug will be 
treated like any other new drug under development. Safety data from 
previous clinical trials conducted in foreign countries will be 
considered in determining the need for nonclinical studies. However, 
previous human experience may be insufficient to demonstrate the 
safety of a botanical product, especially when it is indicated for 
chronic therapy. Systematic toxicological evaluations could be 
needed to supplement available knowledge on the general toxicity, 
teratogenicity, mutagenecity, and carcinogenicity of the final drug 
product.
    Id. at 34. While Mr. Doblin asserted that MAPS would not ``need 
to replicate all those studies about the genetics, * * * the effect 
on reproduction, the effect in all sorts of bodily systems,'' Tr. 
737, he did not identify any specific studies performed in other 
countries that establish the safety of marijuana for testing in 
phase 3 clinical studies. While millions of people have undoubtedly 
used marijuana, few have done so subject to the scientific rigor of 
a controlled clinical trial. Nor did Respondent produce any credible 
evidence establishing that the various types of animal studies which 
FDA usually requires to support phase 3 clinical trials would not 
have to be performed. GX 92A, at 35-37.
    \23\ As indicated above, based on the record, no clinical trials 
involving marijuana have advanced beyond phase 1. Moreover, each 
sponsor must submit to FDA his/her own IND to be authorized to 
conduct clinical investigation with a new drug (such as marijuana). 
See 21 CFR 312.20, 312.23. Again, given the vagaries of Mr. Doblin's 
testimony, it cannot be determined whether there is sufficient 
existing preclinical laboratory and animal studies data to support a 
submission of an IND for whatever proposed indications that Mr. 
Doblin has in mind for his envisioned FDA-approved marijuana 
medicine. But even assuming, arguendo, that MAPS could successfully 
submit an IND based on existing data, it would still have to proceed 
through extensive clinical trials (see 21 CFR 312.21), and then--
assuming that such trials are fully successful at demonstrating the 
basis for safety and efficacy (which often is not the case with 
clinical trials)--MAPS would still have to submit and obtain 
approval of an NDA. All of these steps, and the uncertainties as to 
the outcomes of each step, further call into question Mr. Doblin's 
estimate of being able to obtain FDA approval of marijuana for only 
$5 to $10 million.
---------------------------------------------------------------------------

Correspondence Pertaining to the Application

    Subsequent to Respondent's submission of his application for a DEA 
registration, on March 4, 2003, the Chief of DEA's Drug and Chemical 
Evaluation Section wrote to Respondent noting that ``it appears that 
the basis for your application is the purported need for a higher 
potency and higher 'quality' marijuana product than that currently 
available from the National Institute on Drug Abuse.'' GX 29, at 1. The 
DEA letter further explained that the Agency had ``contacted NIDA, the 
Department of Health and Human Services * * * and some current 
researchers'' and had ``determined that * * * the quality of marijuana 
available from NIDA is acceptable,'' that a high potency product with a 
THC content of 7 to 8 percent was currently ``available to bona fide 
research protocols,'' and that if ``[i]n the future, should federally 
approved research protocols require a higher potency marijuana (i.e. 15 
percent THC), all believe that it could be supplied by NIDA.'' Id.
    Thereafter, on June 2, 2003, Respondent wrote to DEA acknowledging 
that during a visit with several agency Diversion Investigators, the 
discussion had ``primarily focused[ed] on the need for an alternative 
source of plant material to that grown at the University of Mississippi 
under contract to the National Institute of Drug Abuse (NIDA).'' GX 30. 
Continuing, Respondent stated that ``[a] second source of plant 
material is needed to facilitate privately-funded, FDA-approved 
research into medical uses of marijuana, ensuring a choice of sources 
and an adequate supply of quality, research-grade marijuana for 
medicinal applications.'' Id. Consistent with these statements, 
Respondent has declined to bid on the NIDA contract. Tr. 252-53.
    Respondent further asserted that while ``the primary researchers 
now receiving plant material may openly state to you that they are 
satisfied with the current source, * * * in private conversations these 
same researchers indicate a fear of having the current supply 
eliminated if they complain about the available source material.'' GX 
30. As support for his contention regarding the level of researcher's 
satisfaction with NIDA's marijuana, Respondent attached two items: a 
reprint of a newspaper article and a letter from a Dr. Ethan Russo to 
the then-Chief of DEA's Drug and Chemical Evaluation Section. See GX 
30a & 30b.
    At the hearing, Respondent testified that at the time he filed his 
application, he had become concerned, based on conversations he had 
with ``other people,'' that the marijuana provided by the National 
Center ``may have been of relatively low quality, and that [it] was not 
readily available to run the clinical trials which some people wanted 
to run.'' Tr. 215. When asked to provide the names of these ``other 
people'' who had told him this, Respondent said he did not recall. Id.

Respondent's Contentions Regarding the Inadequacy of NIDA Marijuana

    Respondent makes three principal claims in support of his 
contention that the supply of marijuana currently available through 
NIDA is inadequate. First, he claims that ``NIDA does not provide 
medical marijuana to all legitimate researchers'' and that ``NIDA has 
refused to provide marijuana to at least three legitimate 
researchers.'' Resp. Prop. Findings at 12. Second, he claims that ``the 
quality of the NIDA marijuana raises concerns for researchers and 
patients.'' Id. at 16. Third, he claims that ``the NIDA supply was 
inadequate because a pharmaceutical developer could not reasonably rely 
on NIDA marijuana to take marijuana through the FDA new drug approval 
process.'' Respondent's Response to Govt.'s Exceptions (hereafter, 
``Respondent's Resp.'') at 16.

HHS's Denials of Researcher's Requests for NIDA Marijuana

    Respondent's first claim is based on three incidents over a decade-
long time period in which he alleges that researchers were improperly 
denied access to NIDA's marijuana. The first incident, which occurred 
in 1995, involved an application submitted by Donald Abrams, M.D., who 
sought

[[Page 2108]]

marijuana from NIDA to study its effects on persons with HIV-related 
wasting syndrome. RX 15, at 1. NIDA rejected Dr. Abrams's application 
``based upon issues of design, scientific merit and rationale.'' \24\ 
Dr. Abrams subsequently submitted a revised research protocol that NIDA 
found to be scientifically meritorious and for which NIDA supplied 
marijuana in 1997.\25\ See GX 21, at 1. NIDA also supplied Dr. Abrams 
with marijuana for subsequent studies. Id.; Tr. 689. In any event, for 
purposes of determining the relevance of the 1995 incident in which Dr. 
Abrams' original protocol was rejected by NIDA, it is notable that this 
occurred before HHS adopted its new guidelines for the provision of 
marijuana for research purposes. As Dr. Gust testified, in 1995, HHS's 
practice was to provide marijuana only to researchers who obtained NIH 
funding--a practice that was abandoned by HHS in 1999 when the agency 
adopted its new procedures for facilitating marijuana research 
(allowing privately funded researchers to also obtain marijuana). Tr. 
1749.
---------------------------------------------------------------------------

    \24\ That the above-quoted grounds were the bases upon which 
NIDA denied Dr. Abrams' original application is implicit from the 
letter that Dr. Abrams submitted to NIDA in response to the denial 
(RX 15). These bases are explicitly stated in NIDA's April 19, 1995, 
letter to Dr. Abrams, which appears on MAPS' Web site (at http://www.maps.org/mmj/leshner.html) and of which I take official notice. 
This letter from NIDA stated, among other things, the following:
    Our decision here is based upon issues of design, scientific 
merit and rationale. We believe that your study will not adequately 
answer the question posed.
    Although the study propose[d] seeks to make a dose-effect 
comparison of smoked marijuana to delta-9-tetrahydrocannabinol 
(THC), there is no real dosing control. The marijuana is to be taken 
home and there is no requirement and way to ensure that the subjects 
smoke all available materials on any fixed schedule. Additionally, 
that they are given a two-week supply of marijuana at one time 
further confounds the study design. Thus, we believe the dose-effect 
component is confounded since the study cannot correlate variability 
in weight gain with dosage.
    We also believe the study lacks adequate sample size to make any 
inferences regarding the dose-effect relationship. . . . Another 
confounding variable not adequately controlled for in your proposed 
study is diet. Neither the total daily caloric intake nor the 
percentages of the composition of the foodstuffs is assessed.
    In accordance with the Administrative Procedure Act (APA), an 
agency ``may take official notice of facts at any stage in a 
proceeding--even in the final decision.'' U.S. Dept. of Justice, 
Attorney General's Manual on the Administrative Procedure Act 80 
(1947) (Wm. W. Gaunt & Sons, Inc., Reprint 1979). In accordance with 
the APA and DEA's regulations, Respondent is ``entitled on timely 
request to an opportunity to show to the contrary.'' 5 U.S.C. 
556(e); see also 21 CFR 1316.59(e). To allow Respondent the 
opportunity to refute the facts of which I take official notice, 
Respondent may file a motion for reconsideration within fifteen days 
of service of this order which shall commence with the mailing of 
the order.
    \25\ Following the 1996 passage of proposition 215, NIDA 
contacted Dr. Abrams and asked him if he would redesign his study to 
determine whether marijuana usage by persons who were HIV-positive 
(but who did not have AIDS-wasting syndrome) increased viral load as 
well as the interaction of marijuana with protease inhibitors. Tr. 
523-24. Dr. Abrams agreed to do so and NIDA provided him with a $1 
million grant to fund the study.
---------------------------------------------------------------------------

    The second incident involved an application by Dr. Ethan Russo, a 
neurologist, who sought funding from NIDA to study the use of marijuana 
to treat migraine headaches beginning around 1996. Tr. 527-28. The 
precise dates of the events related to Dr. Russo are somewhat unclear 
as Respondent presented these events through the testimony of Mr. 
Doblin. (Dr. Russo did not testify.) Id. Based on Mr. Doblin's 
testimony, it appears that during 1996-97, NIDA twice rejected Dr. 
Russo's protocol for reasons which are not clearly established by the 
record. Id. at 527, 691-92. However, according to Mr. Doblin, Dr. Russo 
conceded that, on both of these two occasions when NIDA rejected his 
protocol, NIDA's bases for doing so did include ``some valid 
critiques.'' Tr. 692. Mr. Doblin testified that Dr. Russo subsequently 
attempted for a third time to obtain marijuana from NIDA, but on this 
third occasion he decided not to seek government funding but to seek 
private funding to purchase the marijuana from NIDA. Id. at 692. 
According to Mr. Doblin, this third protocol submitted by Dr. Russo was 
approved by both the FDA and Dr. Russo's institutional review board, 
but NIDA again refused to supply marijuana. Id. at 692-93. When asked 
when this last denial by NIDA occurred, Mr. Doblin testified: ``I think 
it was 1999.'' Id. at 693.
    As noted above, NIH announced on May 21, 1999, HHS's new procedures 
for making marijuana available to researchers. Bearing in mind that 
Respondent had the burden of proving any proposition of fact that he 
asserted in the hearing, 21 CFR 1301.44(a), nothing in Mr. Doblin's 
testimony, or any other evidence presented by Respondent, established 
that HHS denied Dr. Russo's request for marijuana under the new 
procedures implemented by the agency in 1999. Indeed, Respondent 
produced no evidence showing that HHS has denied marijuana to any 
clinical researcher with an FDA-approved protocol subsequent to the 
adoption of the 1999 guidelines.
    The third incident involved an application by Chemic Laboratories 
(Chemic), which--at the request of Mr. Doblin--sought marijuana from 
NIDA in 2004 \26\ for a proposed study involving a device known as the 
``Volcano Vaporizer'' (hereafter ``Volcano''). RX 49 & 52B. To 
understand the nature and purpose of this proposed study, some earlier 
facts that were disclosed at the hearing need to be considered. 
According to Mr. Doblin's testimony, prior to this incident (i.e., 
before Chemic applied to NIDA for marijuana in 2004), Mr. Doblin had 
devised an elaborate arrangement whereby Chemic received marijuana to 
conduct an earlier study with the Volcano using marijuana obtained 
outside of the HHS process and without the knowledge or approval of HHS 
or DEA. Specifically, Mr. Doblin admitted that he encouraged persons 
who obtained marijuana from ``buyers' clubs'' in California as well as 
persons who obtained their marijuana from NIDA under HHS's 
``compassionate use program'' \27\ to anonymously send their marijuana 
to a DEA-registered drug testing laboratory so that MAPS could compare 
the potency of the ``buyers' clubs'' marijuana with that supplied by 
NIDA.\28\ Tr. 668-82. Acting at the behest of Mr. Doblin, once the drug 
testing laboratory completed its analysis of the marijuana it received 
through these sources, it delivered the ``extra'' marijuana to Chemic, 
so that Chemic could conduct testing on the Volcano. Id. Chemic did 
conduct such testing,\29\

[[Page 2109]]

which was funded by MAPS and the California National Organization for 
the Reform of Marijuana Laws (CaNORML), and Chemic published its 
results in two reports, one of which was co-authored by CaNORML.\30\ 
See id.
---------------------------------------------------------------------------

    \26\ It appears from the record that Chemic initially applied to 
HHS for marijuana in 2003 but, at HHS's request, Chemic submitted a 
revised protocol, which HHS considered to be submitted in 2004. See 
GXs 49 & 52B.
    \27\ See Kuromiya v. United States, 78 F.Supp.2d 367 (E.D. Pa. 
1999) (describing compassionate use program under which less than 10 
persons currently receive marijuana from HHS).
    \28\ Because marijuana is a schedule I controlled substance, 
human use is limited to ``Government-approved research'' in 
accordance with 21 U.S.C. 823(f). See OCBC, 532 U.S. at 491-492 and 
n.5. In accordance with Sec.  823(f) and the DEA regulations, where 
a schedule I controlled substance is used in research--including the 
HHS compassionate use program--the activities involving the 
substance must be limited to those authorized in the research 
protocol. See 21 CFR 1301.13(e)(1)(v), 1301.18. Research activities 
beyond those specified in the protocol are prohibited absent the 
submission and approval of a supplemental protocol. 21 CFR 
1301.18(d). Respondent made no attempt to assert that any of the 
research protocols associated with the compassionate use program 
allow for the distribution of marijuana to a drug testing 
laboratory, as there is no basis for such an assertion. The CSA 
prohibits the distribution of any controlled substance except as 
authorized by the Act, 21 U.S.C. 841(a)(1), and the Act makes no 
allowance for ultimate users (including research subjects) to 
distribute their controlled substances to others.
    \29\ Chemic was not registered with DEA under 21 U.S.C. 823(f) 
to conduct research with marijuana and when DEA later learned that 
Chemic was seeking to conduct a second marijuana study (when Chemic 
subsequently sought to obtain marijuana directly from NIDA and 
sought DEA's authorization for doing so), the agency so advised 
Chemic that this activity required a research registration. See RX 
49, at 2. DEA registrants are only authorized to conduct activities 
with controlled substances ``to the extent authorized by their 
registration and in conformity with other provisions of [the CSA].'' 
21 U.S.C. 822(b).
    \30\ The first report, which was submitted by Chemic in 2003 to 
MAPS and CaNORML, is titled ``Evaluation of Volcano(r) Vaporizer for 
the Efficient Emission of THC, CBD, CBN and the Significant 
Reduction and/or Elimination of Polynuclear-Aromatic (PNA) Analytes 
Resultant of Pyrolisis,'' and is available on MAPS' Web site at 
http://www.maps.org/mmj/vaporizerstudy4.15.03. The second report, 
titled ``Cannabis Vaporizer Combines Efficient Delivery of THC with 
Effective Suppression of Pyrolitic Compounds,'' also appears on 
MAPS' Web site at http://www.maps.org/mmj/Gieringer-vaporizer.pdf. I 
take official notice of both documents. See also http://www.maps.org/news-letters/v13n1/13111gie.pdf (2003 MAPS news letter 
discussing Vaporizer studies sponsored by MAPS and NORML and the 
Marijuana Policy Project), of which I take official notice.
---------------------------------------------------------------------------

    Thus, this ``third incident'' to which Respondent points involved 
an effort by MAPS to expand upon the research that Chemic had conducted 
on the Volcano--this time using marijuana directly obtained from NIDA 
rather than using marijuana obtained without the knowledge or approval 
of HHS or DEA. Id. Under MAPS sponsorship and oversight, Chemic so 
applied to NIDA in 2004. Id.; RX 52B. The protocol submitted by Chemic 
proposed to heat marijuana obtained from NIDA and from a Dutch 
``medical marijuana'' program to three different temperature levels 
below its combustion temperature and to then ``compare the quality and 
relative percentage of available cannabinoids'' in the material 
obtained from each source. RX 52B, at 2-3.
    By letter dated July 27, 2005, a U.S. Public Health Service (PHS) 
committee of scientists, which evaluated Chemic's protocol pursuant to 
the 1999 Guidance, rejected it on the grounds that the ``project does 
not add to the scientific knowledge base in a significant way.'' \31\ 
Id. at 4. With respect to the protocol's purpose of comparing the 
cannibinoid content of NIDA and Dutch marijuana, the PHS committee 
found that ``[m]arijuana varies in THC content and [that] simply 
demonstrating that this device can measure those differences is of 
little scientific value.'' Id. at 3. The PHS committee also found that 
the protocol's other purposes (``to conduct a reliability study of the 
device by analyzing multiple vapor collections'' and to ``determine the 
`precision, accuracy, robustness and efficacy' of the vaporizing 
device'') did ``not appear to be a hypothesis driven research 
project,'' but rather, ``analogous to a process that is used to 
`validate' an analytical method.'' Id. The PHS committee thus concluded 
that the ``overall aims of the project appear to be descriptions of 
work that would need to be conducted as part of good standard 
laboratory procedure prior to a clinical study.'' Id.
---------------------------------------------------------------------------

    \31\ HHS also noted that there were ``a number of technical 
concerns'' with Chemic's proposal. RX 52B, at 4.
---------------------------------------------------------------------------

    The PHS Committee further noted that, at that time (2005), a 
separate, HHS-approved clinical trial involving marijuana and the 
Volcano was already underway. Id. This then-ongoing clinical trial was 
being conducted by Dr. Abrams and was sponsored by the CMCR, using 
NIDA-supplied marijuana. Id.; Tr. 689. Moreover, as the letter from the 
PHS Committee indicates, one of the documents that Dr. Abrams had 
previously submitted in support of his then-ongoing clinical trial was 
a report that Chemic itself had prepared regarding its prior study of 
marijuana and the Volcano.\32\ GX 52B, at 3. Given that Dr. Abrams' 
clinical trial was ``underway and is examining the pharmacodynamics and 
pharmacokinetics of several different potencies of marijuana in human 
volunteers using the Volcano(c) device,'' the Committee concluded that 
``[i]t is difficult to see what additional scientific knowledge will be 
provided by the current protocol, considering the prior work done by 
the applicant, as described in the above report, and the ongoing 
clinical trial at CMCR.'' Id.
---------------------------------------------------------------------------

    \32\ The report, titled ``Evaluation of Volcano[reg] Vaporizer 
for the efficient emission of THC, CBD, CBN and the significant 
reduction and/or elimination of polynuclear-aromatic (PNA) analytes 
resultant of pyrolysis,'' appears on MAPS Web site as discussed in 
note 30.
---------------------------------------------------------------------------

    Respondent also introduced into evidence a letter from the 
President of Chemic to HHS responding to several points raised by the 
PHS Committee in denying Chemic's application. See RX 55. Respondent's 
letter does not, however, establish that HHS impermissibly denied 
Chemic's application for marijuana.\33\ To the contrary, the evidence 
supports the conclusion that HHS (acting through the PHS Committee) 
made its determination not to supply marijuana on this occasion based 
on scientific considerations, finding that Chemic's then-latest 
proposed study was duplicative of prior and ongoing research and not 
likely to provide useful data.
---------------------------------------------------------------------------

    \33\ If Chemic had a valid basis to challenge HHS's denial of 
its request for marijuana, it presumably had remedies available to 
challenge that agency action either within HHS or in the courts. 
See, e.g., 5 U.S.C. 702 (``A person suffering legal wrong because of 
agency action * * * is entitled to judicial review thereof.''). 
Respondent produced no evidence showing that Chemic has pursued any 
such remedies.
---------------------------------------------------------------------------

Respondent's Contention That NIDA's Marijuana Is of Poor Quality

    Respondent also contends that ``[t]he quality of the NIDA marijuana 
raises concerns for researchers and patients.'' Resp. Prop. Findings at 
16. In this regard, Respondent asserts that various researchers have 
complained that NIDA's marijuana is of inconsistent potency, that 
NIDA's marijuana is harsh, that NIDA's marijuana is frequently several 
years old and not fresh, that the available product is of low potency, 
and that NIDA's product includes stems and seeds. See id. at 16-27. 
Contrary to Respondent's view, the evidence does not ``demonstrate[] 
serious concerns about the quality of NIDA's'' marijuana products. Id. 
at 27. As explained below, Respondent's contentions are largely based 
on snippets from questionnaires in which the researchers generally 
indicated their overall satisfaction with the quality of NIDA's 
marijuana. As the ALJ found, ``a preponderance of the record 
establishes that the quality is generally adequate.'' ALJ at 84.
    With respect to the contention that NIDA's marijuana is of 
inconsistent potency or inadequate potency, Respondent relies on 
comments contained on three questionnaires that were completed by 
researchers at DEA's request. Resp. Prop. Findings at 17-18. One of the 
questions asked: ``Have you ever had any difficulty obtaining marijuana 
from NIDA for all strengths of cigarettes to meet research 
requirements?'' GX 16, at 8. While Dr. Grant of the CMCR answered 
affirmatively and added that ``having consistency of 6% -8% [THC] 
content have been difficult,'' he further stated that NIDA ``ha[s] been 
accommodating by trying to produce the high % products in a timely 
manner.'' Id. at 9 (emphasis in original). In response to another 
question regarding the adequacy of NIDA's products, Dr. Grant noted 
that ``NIDA has been reliable[,]'' and ``they have been easy to work 
with and amenable to accommodating for the requirements of the study.'' 
Id. at 6.
    It is true that Dr. Grant, in answering this question, noted the 
problems with the range of potency in the higher potency material. Dr. 
Grant explained, however, that the problems he found regarding the 
range of potency were attributable to the cigarettes being ``handrolled 
and thus difficult to prepare.'' Id. Moreover, Dr. Grant answered 
``yes'' to the question of whether NIDA's current products were 
``adequate for your research purposes

[[Page 2110]]

with regard to potency?'' Id. at 15. Also, in response to the question 
of whether ``these problems [have] ever compromised the study?,'' Dr. 
Grant indicated: ``N/A.'' Id. at 6.
    Dr. Grant further indicated that he had ``no'' information that 
``would lead [him] to believe that the future supply of marihuana 
required for research would be insufficient or unavailable through 
NIDA,'' id. at 8, and that he had ``no'' concerns regarding ``the 
availability of research-grade marijuana from NIDA'' to meet CMCR's 
future needs. Id. at 9. While Dr. Grant also indicated that it would be 
clinically important to evaluate a higher potency product than the 7-8 
percent THC content marijuana CMCR was currently using, he also 
indicated that CMCR had not sought a higher potency product but had 
only discussed with NIDA the feasibility of such a product. Id. at 16.
    On his questionnaire, Ronald Ellis, M.D., of the University of 
California, San Diego, noted that in ``[a]t least two shipments, 
[there] was some variability on stated THC content and the actual 
[content] measured.'' GX 17, at 6. Dr. Ellis further noted, however, 
that NIDA personnel ``have been very responsive.'' Id. Apparently, Dr. 
Ellis's clinical trial received some marijuana which was supposed to 
have a THC content of 8 percent, but only had a content of 
approximately 7 percent. Id. at 9. Dr. Ellis indicated, however, that 
the potency of NIDA's current product was adequate for research 
purposes. Id.
    Respondent also relies on Dr. Donald Abrams' ``no'' answer 
regarding the consistency of the potency of NIDA's product. Resp. Prop. 
Findings at 18 (citing GX 21, at 6). Dr. Abrams further noted that 
``[o]riginally approved for 3.9% THC content, midway through the 
`Short-term effects * * *' protocol, NIDA informed [us] that the 
potency had been downgraded to 3.5%. Everything since is said to be at 
3.5%.'' GX 21, at 6. Notably, the ``Short-term effects'' study occurred 
more than a decade ago, and Dr. Abrams did not indicate that there had 
been further problems with the consistency of the potency of the 
marijuana supplied by NIDA for several later studies he conducted.
    Nor does the evidence support Respondent's contention that the 
marijuana available through NIDA is of insufficient potency to satisfy 
the needs of legitimate researchers. In his brief, Respondent relies on 
the statements of Drs. Grant and Abrams that it would be beneficial to 
evaluate the efficacy of marijuana cigarettes with a higher THC content 
than what was currently being supplied by NIDA. Resp. Prop. Findings at 
22-23 (citing GX 16 & 21). Respondent, however, produced no evidence 
establishing that any researcher has obtained approval of FDA and other 
reviewing authorities to conduct clinical trials using higher THC 
content marijuana. As Dr. Abrams explained, he ``wanted to use a higher 
potency product but there were questions from the [scientific review 
board] and the funding agency [CMCR].'' GX 21, at 9.
    Moreover, as Dr. ElSohly testified, the National Center has in 
inventory substantial quantities of bulk marijuana material with THC 
contents of ten to eleven percent and has some material with a THC 
content of fourteen percent.\34\ Tr. 1203. Dr. ElSohly also testified 
that the National Center could produce marijuana with a THC content of 
up to 20 percent. Id. He further testified that he had informed ``some 
of the investigators that if they want to, they can order material of a 
certain potency'' and ``roll their own cigarettes.'' Id. at 1204-05.
---------------------------------------------------------------------------

    \34\ Respondent also cites the questionnaire of Prof. Aron 
Lichtman, of the Department of Pharmacology, Virginia Commonwealth 
University, who conducted research in animals. Resp. Proposed 
Findings at 23 (citing GX 28). On his questionnaire, Prof. Lichtman 
indicated that he ``would [have] prefer[red] something at a higher 
potency, but at the time, 3-4% was the highest potency available.'' 
GX 28, at 9. Prof. Lichtman's questionnaire indicated, however, that 
his study had last obtained marijuana in 1999. Prof. Lichtman's 
answer is thus not probative of whether NIDA is currently capable of 
providing marijuana of adequate potency to support legitimate 
research needs.
    Respondent's evidence regarding the potency of marijuana 
distributed by NIDA for patients in the former Compassionate 
Investigational New Drug program likewise dates back to 1999. See 
Resp. Prop. Findings at 24 (citing RX 19, at 47-48). As such, the 
evidence is not probative of whether NIDA is currently capable of 
supplying marijuana of adequate potency.
---------------------------------------------------------------------------

    Respondent also maintains that NIDA's marijuana is harsh and that 
some patients have complained that it was ``inferior in sensory 
qualities (taste, harshness) [to] the marijuana they smoke outside the 
laboratory,'' and that ``it was the worst marijuana they had ever 
sampled.'' Resp. Prop. Findings at 19-21. Yet, as the questionnaires 
completed by the researchers indicate, only a small percentage of study 
subjects have complained about the harshness of NIDA's marijuana. See 
GX 18, at 7 (one of ten patients complained); GX 21, at 8 (four out of 
fifty dropped out because of quality); GX 22, at 7 (``Out of 100 plus 
subjects, no more than [three] may have commented that the product was 
harsh.'').\35\ Moreover, as one of the researchers noted, it was 
unclear whether the harshness was related to the actual marijuana 
cigarettes or the placebo material.\36\ As for Respondent's further 
contention that some patients complained that NIDA's marijuana ``was 
the worst they had ever sampled,'' this evidence does not establish 
that the taste of the products rendered them unsuitable for their 
intended use.\37\ Furthermore, Respondent provides no scientific basis 
for his suggestion that the research subjects' description of the 
degree of their subjective satisfaction with the experience of smoking 
marijuana in a research setting should be a criterion for judging the 
adequacy of the quality of marijuana for research purposes.\38\
---------------------------------------------------------------------------

    \35\ Dr. ElSohly testified: ``I think you had like 50 subjects, 
and only three or four complained of the harshness. That's a very 
small percentage. You are going to get that regardless of what you 
administer.'' Tr. at 1589.
    \36\ As Dr. Cory-Bloom noted, it was unclear whether the 
harshness was attributable to actual marijuana cigarettes or placebo 
cigarettes. GX 18, at 7. Relatedly, Dr. ElSohly testified that the 
complaints of harshness were likely attributable to the placebo 
because ``all of the components have been extracted out . . . [s]o 
this will be just like smoking * * * grass or * * * hay or something 
like that or just paper that might have this harshness, and there's 
no soothing effect of the other components in the plant material.'' 
Tr. 1289-90.
    \37\ Respondent also cites to hearsay evidence regarding the 
experience of a single patient who had previously used non-NIDA 
marijuana (illegally obtained from California ``buyers'' clubs'') 
without problems but then purportedly developed bronchitis upon 
smoking NIDA marijuana. Resp. Prop. Findings at 21; Tr. 570. Even if 
I were to credit this testimony, the record as a whole establishes 
that NIDA's marijuana was well tolerated in the great majority of 
the various studies' subjects.
    \38\ Marijuana is known to cause, among other things, ``a 
distortion in the sense of time associated with deficits in short-
term memory and learning,'' ``difficulty carrying on an intelligible 
conversation,'' anxiety, paranoia, panic, depression, dysphoria, 
delusions, illusions, and hallucinations. RX 1 (IOM report), at 101-
102. These effects impact the determination of what, if any, weight 
to attach to research subjects' descriptions of their satisfaction 
with the marijuana they have smoked.
---------------------------------------------------------------------------

    Finally, Respondent contends that NIDA's marijuana is frequently 
``not fresh'' and that it includes stems and seeds. Resp. Prop. 
Findings at 21-22; 25-27. While the record contains some evidence that 
older marijuana loses some if its potency, all but one of the 
researchers indicated that neither the lack of freshness nor the 
existence of plant parts (stems and seeds) had adversely impacted their 
research. See GX 16, at 13 (CMCR); GX 17, at 7 (Dr. Ellis); GX 18, at 7 
(Dr. Corey-Bloom); GX 19, at 7 (Dr. Israelski); \39\ GX 20, at 7 (Dr. 
Wallace); GX 22, at 7 (Dr. Polich); GX 28, at 7 (Prof. Lichtman); but 
see GX 21, at 7-8 (Dr. Abrams) (indicating that four

[[Page 2111]]

out of fifty patients had ``dropped out due to quality'').
---------------------------------------------------------------------------

    \39\ Dr. Israelski did not recall any complaints about the 
``freshness'' of NIDA's marijuana.
---------------------------------------------------------------------------

    Moreover, with respect to the existence of stems and seeds in 
NIDA's marijuana, Dr. ElSohly acknowledged that prior to 2001, there 
may have some stems and seeds in the marijuana it sent to the Research 
Triangle Institute (the contractor for the manufacture of the 
cigarettes). Tr. 1300-01. Dr. ElSohly further testified, however, that 
in 2001, the National Center acquired a special de-seeding machine 
which removes all the seeds and stems from the marijuana that is used 
to manufacture cigarettes. Id. at 1301. Respondent produced no evidence 
showing that the marijuana which the National Center has since supplied 
has contained stems and seeds.\40\
---------------------------------------------------------------------------

    \40\ In support of its contention that NIDA marijuana contains 
stems and seeds which renders the product's quality inadequate, 
Respondent also cites an article, ``Chronic Cannabis Use in the 
Compassionate Investigational New Drug Program.'' Resp. Prop. 
Findings at 26 (citing RX 19, at 49-50). Respondent particularly 
notes two photographs of marijuana that was manufactured in April 
1999. See id. This evidence thus predates the National Center's 2001 
acquisition of a de-seeding machine.
---------------------------------------------------------------------------

Respondent's Contention That NIDA's Marijuana Is Inadequate To Support 
The Development of Plant-Form Marijuana Into an FDA-Approved 
Prescription Drug

    Respondent further contends that the existing supply of NIDA 
marijuana is inadequate because ``MAPS seeks to develop botanical 
marijuana as an FDA-approved prescription drug.'' Resp. Prop. Findings 
at 8. In support of this contention, Respondent makes two primary 
factual assertions. First, he claims that ``to develop a pharmaceutical 
product, a developer must have assured access to a reliable, dependable 
source of the particular formulation of the product the developer 
needs, both for research, and for distribution if the product is 
approved,'' and that ``[w]ithout such a source, there is no 
development.'' Id. at 9. Second, he claims that ``even before the Phase 
[1] and Phase [2] studies on a product, the developer must generally 
submit a Drug Master File,''\41\ and that the Drug Master File (DMF) 
for NIDA's marijuana contains proprietary information which NIDA 
controls. Id.
---------------------------------------------------------------------------

    \41\ I also take official notice of the FDA's Guideline For Drug 
Master Files (Sept. 1989) (available at http://www.fda.gov/cder/guidance/dmf.htm/).
    According to this FDA guideline (at 2), ``[a] Drug Master File 
(DMF) is a submission to the [FDA] that may be used to provide 
confidential detailed information about facilities, processes, or 
articles used in the manufacturing, processing, packaging, and 
storing of one or more human drugs.''
---------------------------------------------------------------------------

    As for Respondent's contentions regarding the need to submit a DMF, 
Respondent asserts that ``there is no procedure to force [the DMF's] 
owner to make a Drug Master File, or the information in it, available 
to a drug developer.'' Resp. Prop. Findings at 10 (citing Tr. 447-49; 
testimony of Dale Gieringer). While Respondent concedes that NIDA ``has 
allowed the researchers whom it chooses to supply with marijuana to 
rely on that file,'' and that FDA has approved several Phase 1 studies 
using NIDA marijuana and the information contained in the DMF, id. at 
10, it contends that because NIDA's mission is to study drug abuse, it 
is not likely that ``NIDA would authorize MAPS to rely on the NIDA 
marijuana [DMF] currently on file with the FDA.'' Id. at 45.
    The 1999 HHS Guidance makes clear, however, that if a proposed 
research project meets the Department's criteria for the provision of 
research-grade marijuana, ``NIDA will provide the researcher with 
authorization to reference NIDA's marijuana Drug Master File.'' GX 24, 
at 4. Moreover, as the FDA has explained, ``the submission of a DMF is 
not required by law or regulation,'' but rather, ``is submitted solely 
at the discretion of the holder.'' Guideline For Master Drug Files, at 
2. The FDA regulations provide: ``FDA ordinarily neither independently 
reviews drug master files nor approves or disapproves submissions to a 
drug master file. Instead, the agency customarily reviews the 
information only in the context of an application under part 312 or 
part [314].'' 21 CFR 314.420(a). Accordingly, as the FDA Guidelines 
explain, while ``the information contained in [a] DMF may be used to 
support an Investigational New Drug Application (IND), [or] a New Drug 
application (NDA) * * * [a] DMF is NOT a substitute for an IND [or] 
NDA.'' Guideline For Master Drug Files, at 3.
    Relatedly, David Auslander, M.D., the Government's expert witness 
in pharmaceutical development, testified that ``not all companies do 
Drug Master Files'' and that ``FDA does not necessarily require a Drug 
Master File to do a Phase [1] and Phase [2] study in all cases if the 
Drug Master File * * * comes from a producer that's different from the 
sponsor itself.'' Tr. 2024. Dr. Auslander also explained that a drug 
developer may not even have a Drug Master File at the time it applies 
to conduct Phase 1 or Phase 2 studies. Id. As Dr. Auslander further 
testified, the necessary information can be submitted in an IND or an 
NDA. Id. at 2024-25.
    As for the contention that NIDA is not a reliable source of supply, 
it is undisputed that a for-profit drug developer would be unlikely to 
take a drug through the FDA approval process unless it was ``assured 
that they would have a drug supply that is unchanging and reliable.'' 
Tr. 117 (testimony of Irwin Martin, Ph.D.). Dr. Martin also testified 
that ``[o]ne of the biggest problems in drug development is the 
unfortunate need sometimes to repeat studies. If you have a new 
formulation or your drug source has changed, you many need to repeat 
years worth of data because you can no longer assure that the data you 
developed with this earlier version of [the] drug will actually be the 
same drug as you now have.'' Id. at 118. Dr. Martin further testified 
that while ``no reasonably business-oriented company would ever develop 
a product'' if it did not have a reliable and consistent supply source, 
he also noted that if a company had to change its supply source, a 
company could try to show that the new product was pharmcokinetically 
equivalent to the old product. Tr. 120-21; see also Tr. 2027.
    Also on this issue, Dr. Auslander testified further on behalf of 
the Government that if the developer's source changed, it ``would not 
necessarily repeat the Phase [1] and [2] clinical studies over again, 
but * * * would do additional chemical studies, stability [studies] * * 
* to show that the quality of material from source A and the quality of 
material acquired from source B are equivalent.'' Tr. 2027-28. Both 
Respondent's and the Government's experts agreed, however, that if the 
developer could not establish equivalence between the two products, 
``it would not be a trivial experience'' for the developer. Id. at 
2029; see also id. at 121 (testimony of Dr. Martin that developer would 
have to start over).
    Relatedly, Respondent further asserts that there is 
``overwhelming'' evidence that NIDA ``would not be likely to choose to 
serve as the supplier to a medical marijuana pharmaceutical product 
developer even if it were authorized to so.'' Resp. Prop. Findings at 
10. In support of this assertion, Respondent extracts two sentences 
from a letter in which Nora Volkow, M.D., NIDA's director, responded to 
Mr. Doblin's letter accusing NIDA/HHS of ``seriously obstructing'' 
Chemic's research involving the Volcano which MAPS was sponsoring (and 
whose application HHS ultimately denied).\42\ See id. (quoting RX 13; 
``It is

[[Page 2112]]

not NIDA's role to set policy in this area or to contribute to the DEA 
licensing procedures. Moreover, it is also not NIDA's mission to study 
the medicinal use of marijuana or to advocate for the establishment of 
facilities to support this research.''). See also RX 14 (letter of Mr. 
Doblin; ``NIDA/HHS is seriously obstructing a privately-funded drug 
development program aimed at evaluating marijuana's potential use as an 
FDA-approved medication.'').
---------------------------------------------------------------------------

    \42\ In that letter, Mr. Doblin also mentioned that DEA had 
indicated that it would not review Chemic's application to import 
ten grams of Dutch marijuana until NIDA/HHS completed its review of 
Chemic's protocol. RX 14. Mr. Doblin also referenced DEA's handling 
of Respondent's application.
---------------------------------------------------------------------------

    In that letter, Dr. Volkow declined to intervene explaining that:

    * * * NIDA is just one of the participants on the HHS review 
panel and continues, on behalf of the U.S. Government, to provide 
supplies of well-characterized cannabis for both NIH and non-NIH-
funded research. The latter is conducted according to the procedure 
established in 1999 by HHS for obtaining access to marijuana for 
research purposes. It is not NIDA's role to set policy in this area 
or to contribute to the DEA licensing procedures. Moreover, it is 
not NIDA's mission to study the medicinal uses of marijuana or to 
advocate for the establishment of facilities to support this 
research. Therefore, I am sorry but I do not believe that we can be 
of help to you in resolving these concerns.

RX 13. As both this letter and the 1999 Guidance make plain, HHS--and 
not NIDA--is the policymaker regarding the criteria for determining who 
can obtain research-grade marijuana from NIDA. As NIDA does not 
independently control to whom it may supply marijuana for legitimate 
research, the letter is not indicative of whether NIDA would be a 
reliable source of marijuana for an entity which sought to develop 
plant-form marijuana into an FDA-approved prescription medicine.
    Respondent also points to the 1999 Guidance document's statement 
that ``[t]he goal of this program must be to determine whether 
cannabinoid components of marijuana administered through an alternative 
delivery system can meet the standards enumerated under the Federal 
Food, Drug, and Cosmetic Act for commercial marketing of a medical 
product. As the IOM report stated, 'Therefore, the purpose of clinical 
trials of smoked marijuana would not be to develop marijuana as a 
licensed drug, but such trials could be a first step towards the 
development of rapid-onset, nonsmoked cannabinoid delivery systems.' '' 
\43\ GX 24, at 2.
---------------------------------------------------------------------------

    \43\ In discussing the content of the HHS Guidance, Respondent 
asserts: ``And it expressly states that `the purpose of clinical 
trials of smoked marijuana would not be to develop marijuana as a 
licensed drug.' '' Resp. Proposed Findings at 11 (quoting GX 24, at 
2). Notably, Respondent's quotation edits out the Guideline's 
reference to the IOM Report. The complete text of the Guidance 
shows, however, HHS did not come to this conclusion without 
evidentiary support, but rather, relied on the extensive findings of 
the IOM.
---------------------------------------------------------------------------

    As found above, the IOM's recommendation was based on its 
conclusion that ``[a]lthough marijuana smoke delivers THC and other 
cannabinoids to the body, it also delivers harmful substances, 
including most of those found in tobacco smoke. In addition, plants 
contain a variable mixture of biologically active compounds and cannot 
be expected to provide a precisely defined drug effect. For those 
reasons there is little future in smoked marijuana as a medically 
approved medication.'' RX 1, at 195-96.
    Moreover, the HHS Guidance does not address what the Secretary's 
response would be were the current clinical trials to show that the 
efficacy/safety profile of smoked marijuana supported FDA approval of 
it as a prescription medicine for particular indications or patient 
populations. Nor does it address what the Secretary's response would be 
if clinical trials were to show that the efficacy/safety of vaporized 
plant form marijuana for particular indications supported its approval 
as a prescription drug.
    Dr. Gust testified that notwithstanding the stated goal of the 1999 
Guidance, a researcher who ``had an IND from FDA * * * would not have a 
problem getting marijuana.'' Tr. 1718. Further, in response to the 
ALJ's question as to whether a researcher whose goal was to obtain FDA 
approval of plant-form marijuana would have more difficulty obtaining 
marijuana from HHS than a researcher who sought to produce an extract-
based product, Dr. Gust testified: ``I don't believe so.'' Id. at 1719-
20.
    Dr. Gust also explained that whether plant-form marijuana should be 
approved as a prescription medicine is ``not a question for the'' PHS 
committee that reviews requests for NIDA marijuana. Id. at 1720. 
Rather, ``it's a question for the regulation and approval process that 
goes on through FDA.'' Id. Finally, while Dr. Gust acknowledged that 
``HHS would strongly endorse'' the IOM's view that ``if there's going 
to be an approved medication, it's going to be a purified constituent 
of marijuana that will be delivered in a non-smokable form,'' he 
further testified that in his experience, there was no bias against 
``the concept of approving marijuana as a medication'' at the level of 
PHS review. Id. at 1722.\44\
---------------------------------------------------------------------------

    \44\ In discussing this testimony, the ALJ noted that Dr. Gust 
had acknowledged that a researcher with an FDA-approved protocol 
might nonetheless be denied marijuana by the PHS committee under the 
criteria set forth in the guidance. ALJ at 51 (citing Tr. 1694). 
There is, of course, no evidence that any researcher with an FDA-
approved protocol has been denied marijuana subsequent to the 1999 
guidelines. Dr. Gust's answer was based on a hypothetical question. 
Accordingly, this portion of Dr. Gust's testimony provides no basis 
to question his credibility as to whether in his experience, HHS 
(and the PHS review committees) are biased against researchers who 
seek to obtain FDA approval for plant-form marijuana.
---------------------------------------------------------------------------

    Respondent further asserts that ``it is not at all clear that NIDA 
could serve as a source for a pharmaceutical product.'' Resp. Prop. 
Findings at 11 (emphasis in original). Notwithstanding Mr. Doblin's 
beliefs regarding the likely safety/efficacy profiles of smoked and 
vaporized marijuana, see Tr. at 605, it is highly speculative whether 
clinical trials will ultimately support FDA approval of plant-form 
marijuana through either delivery system.\45\
---------------------------------------------------------------------------

    \45\ Given that, as indicated above, marijuana has been found to 
contain hundreds of different chemicals, including a variable 
mixture of biologically active compounds that cannot be expected to 
provide a precisely defined drug effect, IOM has expressed the view 
that, ``if there is any future in cannabinoid drugs, it lies with 
agents of more certain, not less certain, composition.'' RX 1, at 
195-96.
---------------------------------------------------------------------------

    As further support for this contention, Respondent references that 
Dr. ElSohly answered ``That's correct'' when asked the following 
question by Respondent's counsel: ``So if somebody wants to develop a 
commercial product with marijuana, they could not use the NIDA 
marijuana; is that fair?'' Resp. Prop. Findings at 11 (quoting Tr. 
1463). It is not clear exactly what to make of Dr. ElSohly's answer to 
this question.\46\ In

[[Page 2113]]

any event, no provision of the National Center's contract with NIDA 
imposes any prohibition on the use of the marijuana produced under the 
contract for the purposes of the development of a commercial product. 
Indeed, the language of the contract with NIDA suggests otherwise. 
While Article H.13 states that ``contract funds shall not be used to 
support activities that promote the legalization of any drug or other 
substance included in schedule I'' of the CSA, it further provides that 
``[t]his limitation shall not apply when the contractor makes known to 
the contracting officer that there is significant medical evidence of a 
therapeutic advantage to the use of such drug or other substance or 
that federally sponsored clinical trials are being conducted to 
determine therapeutic advantage.'' GX 13, at 20 (citing Pub. L. 108-
447, Sec.  510, 108 Stat. 2809 (2005)). Likewise, the new procedures 
that HHS announced in 1999 for providing marijuana for medical research 
contain no restriction on using NIDA-supplied marijuana for the 
development of commercial products. GX 24. To the contrary, by adopting 
a new procedure whereby privately funded researchers could obtain 
marijuana from NIDA at cost, HHS made it possible starting in 1999 for 
a commercially sponsored researcher to develop a drug product using 
NIDA-supplied marijuana. See id. at 2. Finally, Respondent cites no 
provision of law that prohibits NIDA from serving as a supply source 
for a prescription drug approval process.\47\
---------------------------------------------------------------------------

    \46\ Based on the questions that led up to the above-quoted 
question, it appears that, in answering ``That's correct,'' Dr. 
ElSohly was confirming that the marijuana he grows pursuant to the 
NIDA contract may not be taken by the University of Mississippi 
(without prior authorization from NIDA) for use in the commercial 
development of a THC extract product where such commercial activity 
was not authorized by NIDA. See Tr. at 1462-63. Indeed, the 
following subsequent exchange between Respondent's counsel and Dr. 
ElSohly suggests that Dr. ElSohly correctly understood that there 
was no prohibition on the use of NIDA marijuana for the development 
of commercial products:
    Q: Dr. ElSohly, if an organization like MAPS, for example, a 
nonprofit or pharmaceutical organization, wanted to try to develop 
smoked marijuana into an FDA-approved medicine, could it use the 
marijuana that you grow to the preclinical and clinical testing if 
NIDA agreed?
    A: I would say yes.
    Tr. 1562-63. Moreover, even if Dr. ElSohly was of the mistaken 
view that the marijuana he grew for NIDA could never be used by 
anyone for commercial product development, such a misunderstanding 
on Dr. ElSohly's part would not be controlling for purposes of this 
proceeding. The record is clear that it is HHS--not Dr. ElSohly--
that determines the terms of his contract, including to whom and 
under what circumstances he may supply marijuana; and the record is 
also clear that Dr. ElSohly follows the instructions he receives 
from NIDA as to whom to deliver the marijuana. Further, as explained 
above, the record reveals that HHS's policy contains no prohibition 
on the use of the marijuana grown pursuant to the NIDA contract for 
commercial development purposes.
    \47\ As for Respondent's contention that the Government did not 
``introduce any evidence that NIDA could or would [serve as a supply 
source] to support its claim that NIDA's supply is adequate to meet 
all legitimate medical and scientific purposes,'' Resp. Prop. 
Findings at 11, Respondent, and not the Government, has the burden 
of proof on the issue of whether supply is inadequate within the 
meaning of 21 U.S.C. 823(a)(1). See 21 CFR 1301.44(a).
---------------------------------------------------------------------------

Evidence Regarding the Remaining Statutory Factors

    There is no evidence that Respondent has not complied with 
applicable state or local laws. See Gov. Proposed Findings at 139 
(discussing 21 U.S.C. 823(a)(2)). Moreover, Respondent has never been 
convicted of any controlled-substance related offense. Tr. 78; see 21 
U.S.C. 823(a)(4).
    As for factor five, on the questionnaire, Respondent acknowledged 
that he ``has no current or previous registrations and is unaware of 
any registration [having] previously [been] granted to the 
university.'' GX 3, at 3. While Respondent testified that he would meet 
all ``appropriate security conditions,'' he also acknowledged that 
``I've never grown marijuana or any other controlled substance.'' Tr. 
79. He further testified that ``We have not--I have no experience in 
the control against diversion.'' Id. Relatedly, Respondent testified 
that he had no personal experience in providing security for plants, 
id. at 255, and that both graduate students and technicians would be 
used to perform the various tasks associated with the project. Id. at 
254 (``I usually don't go down and water the plants in the greenhouse; 
I usually have a technician that does that.''); id. at 254-55 (``They 
[the graduate students and technicians] would probably do the 
transplanting[,]'' and ``a daily check on any environmental controls we 
have.''). Respondent presented no evidence that any person who would be 
involved in the daily operation of the project would have experience in 
the lawful manufacture or distribution of schedule I and II controlled 
substances.\48\
---------------------------------------------------------------------------

    \48\ Respondent testified that he had performed classified work 
on plants for the U.S. Army and that ``there were security systems 
in place similar to the security systems you have in this building'' 
(referring to DEA Headquarters, where the hearing took place), and 
he answered ``Yes'' when asked by his counsel whether he recognized 
``the importance of that sort of security in a situation like this 
registration application.'' Tr. 367. It is unclear what Respondent 
meant by ``the security systems you have in this building,'' since 
the only security to which he would have been exposed in entering 
DEA Headquarters to testify were the requirements of passing through 
a metal detector, being accompanied by a DEA employee, and wearing a 
visitor's badge. These DEA Headquarters security measures have 
nothing to do with the security measures required of DEA registrants 
who handle controlled substances, which are set forth in 21 CFR 
1301.71 through 1301.76. Thus, this portion of Respondent's 
testimony was ambiguous and did not establish, for purposes of 21 
U.S.C. 823(a)(5) that, if his application were granted, there would 
exist in his establishment effective controls against diversion.
---------------------------------------------------------------------------

    Finally, Respondent testified that he believed that granting his 
application would promote technical advances in the art of 
manufacturing controlled substances and the development of new 
substances. Id. at 74-76. More specifically, Respondent asserted that 
granting his application would advance ``the understanding [of] any 
possible clinical use of marijuana if we were able to supply this to 
investigators to run trials.'' Id. at 75-76. Respondent also testified 
that ``we would learn more about how the environment affects the 
constituents in the plant material which would enable'' a potential 
manufacturer, were marijuana to become approved by the FDA as a drug, 
to ``know the environment it needs to be grown under to produce a 
clinical marijuana.'' Id. at 76. Respondent further opined that 
granting his registration would promote technical advances because part 
of the purpose of growing the marijuana was to allow MAPS to test its 
vaporizer. Id. at 77-78. Respondent acknowledged, however, that he 
would not personally be working on MAPS's vaporizer device or on any 
other delivery device. Id. at 230. He also acknowledged that he has no 
patents regarding the growing of any medicinal plants. Id. at 238.

Discussion

    Pursuant to 21 U.S.C. 823(a), ``[t]he Attorney General shall 
register an applicant to manufacture controlled substances in schedule 
I or II if he determines that such registration is consistent with the 
public interest and with the United States obligations under 
international treaties, conventions, or protocols in effect on May 1, 
1971.'' 21 U.S.C. 823(a). ``In determining the public interest,'' Sec.  
823(a) directs the Attorney General to consider the following factors:

    (1) Maintenance of effective controls against diversion of 
particular controlled substances and any controlled substances in 
schedule I or II compounded therefrom into other than legitimate 
medical, scientific, research, or industrial channels, by limiting 
the importation and bulk manufacture of such controlled substances 
to a number of establishments which can produce an adequate and 
uninterrupted supply of these substances under adequately 
competitive conditions for legitimate medical, scientific, research, 
and industrial purposes;
    (2) Compliance with applicable State and local law;
    (3) Promotion of technical advances in the art of manufacturing 
these substances and the development of new substances;
    (4) Prior conviction record of applicant under Federal and State 
laws relating to the manufacture, distribution, or dispensing of 
such substances;
    (5) Past experience in the manufacture of controlled substances, 
and the existence in the establishment of effective controls against 
diversion; and
    (6) Such other factors as may be relevant to and consistent with 
public health and safety.

    Id. This Agency's regulations further provide that ``[a]t any 
hearing on an application to manufacture any controlled substance 
listed in Schedule I or II, the applicant shall have the burden of 
proving that the requirements for such registration pursuant to [Sec.  
823(a)] are satisfied.'' 21 CFR 1301.44(a).
    As Sec.  823(a) makes plain, even if an applicant satisfies its 
burden of proof with respect to the public interest inquiry, it cannot 
be granted a registration unless its proposed activities are consistent 
with the United States' obligations under international treaties. The 
United States is a party to

[[Page 2114]]

the Single Convention. Accordingly, whether Respondent's proposed 
activities are consistent with this Nation's obligations under the 
Convention is a threshold question.

A. Whether Respondent's Proposed Registration Is Consistent With the 
Single Convention

    The Single Convention imposes a comprehensive series of measures to 
control narcotic drugs and other substances including marijuana (which 
is referred to in the Single Convention as ``cannabis'').\49\ Under the 
Convention, cannabis is both a Schedule I and Schedule IV \50\ drug and 
is subject to the control measures applicable to each schedule. Single 
Convention, art. 2, para. 5; see also Secretary-General of the United 
Nations, Commentary on the Single Convention on Narcotic Drugs, 1961, 
65 (1973) (hereinafter, Commentary). Moreover, under article 28, ``[i]f 
a Party permits the cultivation of the cannabis plant for the 
production of cannabis or cannabis resin, it shall apply thereto the 
system of controls as provided in article 23 respecting the opium 
poppy.'' Single Convention, art. 28, Para. 1. As the Commentary further 
explains:
---------------------------------------------------------------------------

    \49\ Under the Single Convention, `` `cannabis plant' means any 
plant of the genus Cannabis.'' Article 1(c). The Single Convention 
defines ``cannabis'' to include ``the flowering or fruiting tops of 
the cannabis plant (excluding the seeds and leaves when not 
accompanied by the tops) from which the resin has not been 
extracted, by whatever name they may be designated.'' Article 1(b). 
This definition of ``cannabis'' under the Single Convention is less 
inclusive than the CSA definition of ``marihuana.'' See 21 U.S.C. 
802(16). However, this distinction in inconsequential for purposes 
of the matters at issue in this proceeding.
    \50\ The Single Convention's use of the term ``Schedule IV'' is 
not to be confused with the CSA's use of the same term. Under the 
Convention, the terms ``Schedule I, Schedule II, Schedule III and 
Schedule IV mean the correspondingly numbered list of drugs or 
preparations annexed to this Convention.'' Single Convention, art. 
1, para. 1(u). As the Convention further explains, ``[t]he drugs in 
Schedule IV shall also be included in Schedule I and subject to all 
measures of control applicable to drugs in the latter Schedule'' as 
well as the additional measures contained in article 2, paragraph 5. 
Id. art. 2, para. 5.
    Under Article 2, paragraph 5, the Convention requires that [a] 
Party shall adopt any special measures of control which in its 
opinion are necessary having regard to the particularly dangerous 
properties of a drug so included. Id. art. 2, para. 5(a). The 
Convention further directs that:
    A Party shall, if in its opinion the prevailing conditions in 
its country render it the most appropriate means of protecting the 
public health and welfare, prohibit the production, manufacture, 
export and import of, trade in, possession or use of any such drug 
except for amounts which may be necessary for medical and scientific 
research only, including clinical trials therewith to be conducted 
under or subject to the direct supervision and control of the Party.
    Id. art. 2, para. 5(b).

    The system of control over all stages of the drug economy which 
the Single Convention provides has two basic features: limitation of 
narcotic supplies of each country * * * to the quantities that it 
needs for medical and scientific purposes, and authorization of each 
form of participation in the drug economy, that is, licensing of 
producers, manufacturers and traders. * * * In the case of the 
production of opium, coca leaves, cannabis and cannabis resin, this 
regime is supplemented by the requirement of maintaining government 
monopolies for the wholesale and international trade in these drugs 
---------------------------------------------------------------------------
in countries which produce them. * * *

Commentary at 263.

    Among these controls is the requirement that ``[t]he Agency shall * 
* * have the exclusive right of importing, exporting, wholesale trading 
and maintaining stocks other than those held by manufacturers of opium 
alkaloids, medicinal opium or opium preparations.'' Single Convention 
art. 23, para. 2(e). The Convention further provides, however, that the 
``Parties need not extend this exclusive right to medicinal opium and 
opium preparations.'' \51\ Id.
---------------------------------------------------------------------------

    \51\ Article 23 of the Convention further provides that ``[a] 
Party that permits the cultivation of the opium poppy for the 
production of opium shall establish, if it has not already done so, 
and maintain, one or more government agencies * * * to carry out the 
functions required under this article.'' Single Convention art. 23, 
para. 1. Moreover, ``[a]ll cultivators of the opium poppy shall be 
required to deliver their total crops of opium to the Agency. The 
Agency 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.'' Id. para. 2(d).
---------------------------------------------------------------------------

    The Commentary to article 28 thus explains that ``[a] Party 
permitting the cultivation of the cannabis plant for cannabis and 
cannabis resin must, pursuant to article 23, paragraph [2(e)(2)] in 
connexion with article 28, paragraph 1, grant its national cannabis 
agency the exclusive right of wholesale * * * trade in these drugs.'' 
Commentary at 314 (emphasis added). The Commentary further explains 
that the Government ``need not extend this exclusive right to extracts 
and tinctures of cannabis.'' Id.
    Respondent raises several arguments as to why his registration 
would be consistent with the Single Convention. First, he argues that 
``the Convention clearly contemplates that more than one cultivator or 
bulk manufacturer may be licensed by the member nation's licensing 
agency.'' Resp. Prop. Findings at 66. Second, he argues that because 
his ``crop would be medical marijuana, grown and processed to be 
adapted for medicinal use, it is not subject to the agency's `exclusive 
right' for `maintaining stocks.' '' Id. at 67.
    Relatedly, Respondent argues that because DEA has granted Dr. 
ElSohly a registration to ``grow marijuana for private purposes'' and 
does not require him to ``turn[] over those stocks to any government 
agency,'' granting his application will likewise conform with the 
Single Convention. Respondent further contends that Dr. ElSohly has 
been able to grow marijuana outside of the NIDA contract and that ``DEA 
would not have issued those licenses had they violated the Single 
Convention.'' Id. at 68. Respondent also argues that the United 
Kingdom, which is also Party to the Convention, has allowed marijuana 
to be grown by a private entity (GW Pharmaceuticals) without its 
government taking physical possession. Id. Likewise, in his Response to 
the Government's exceptions to the ALJ's recommended decision, 
Respondent argues that the ALJ ``correctly held that Article 23 [para.] 
2(d) does not require the government to take physical possession of 
[his] crop.'' Respondent's Resp. at 9.
    In concluding that the ``Single Convention does not preclude 
registering Respondent,'' the ALJ offered three reasons. First, based 
on the United Kingdom's regulatory scheme, she reasoned that ``it 
appears * * * that the parties to the Single Convention are free to 
construe the term `physical possession' as they see fit.'' ALJ 82. As 
for the remaining two reasons, the ALJ explained that ``[i]t also 
appears, although it is not entirely clear, that the marijuana grown by 
the National Center or by any other registrant for utilization in 
research would qualify as either `medicinal' within the meaning of 
article 1, paragraph (1)(o), or a `special stocks' within the meaning 
of article 1, paragraph (1)(x), and that therefore the government 
monopoly on importing, exporting, wholesale trading, and maintain 
stocks would not apply.'' Id.
    Neither the ALJ's rationales nor Respondent's arguments are 
persuasive. As for the argument that the Single Convention does not 
require that the Government take physical possession, the argument 
provides no comfort to Respondent for two reasons. First, the argument 
ignores that taking possession and engaging in wholesale distribution 
are two separate activities under the Convention. Notably, in his 
briefs, Respondent does not even acknowledge the distinction. See Resp. 
Proposed Findings and Conclusion of Law at 64-70; Respondent's Resp. at 
9-12.
    Second, as Respondent's evidence makes clear, his purpose for 
seeking a registration is not simply to grow marijuana, but to 
distribute it outside of the HHS system. Mr. Doblin's testimony

[[Page 2115]]

that ``what we're trying to do is get the [PHS] and NIDA out of the 
picture,'' Tr. 666, makes this plain. See also Tr. 225 (testimony of 
Respondent; ``I may very well be approached by other people with 
approved studies who need a source also.''). Thus, Respondent's 
contention that the Single Convention does not prohibit multiple 
cultivators is beside the point, since his proposed purpose for gaining 
authorization to grow marijuana (so that MAPS--rather than HHS/NIDA--
can control distribution of the marijuana) would defy one of the 
central control provisions of the Single Convention with respect to 
cannabis cultivation. As the Commentary to the Single Convention 
states:

    Countries * * * which produce * * * cannabis * * * , [i]n so far 
as they permit private farmers to cultivate the plants * * *, cannot 
establish with sufficient exactitude the quantities harvested by 
individual producers. If they allowed the sale of the crops to 
private traders, they would not be in a position to ascertain with 
reasonable exactitude the amounts which enter their controlled 
trade. The effectiveness of their control r[eacute]gime would thus 
be considerably weakened. In fact, experience has shown that 
permitting licensed private traders to purchase the crops results in 
diversion of large quantities of drugs into illicit channels. * * * 
[T]he acquisition of the crops and the wholesale and international 
trade in these agricultural products cannot be entrusted to private 
traders, but must be undertaken by governmental authorities in the 
producing countries. Article 23 * * * and article 28 * * * therefore 
require a government monopoly of the wholesale and international 
trade in the agricultural product in question in the country which 
authorizes its production.

Commentary at 278. Indeed, the central theme of Respondent's argument--
starting with the opening sentence of his Proposed Findings and 
Conclusion of Law and repeated throughout the document--is that the 
very Government monopoly over the wholesale distribution of marijuana 
that the Single Convention demands is the primary evil that Respondent 
seeks to defeat through obtaining a DEA registration. Thus, from the 
outset of the analysis, Respondent's proposed registration cannot be 
reconciled with United States obligations under the treaty.
    Respondent offers no argument that his proposed distributions would 
not constitute wholesale trading under the Convention. See, e.g., GX 3, 
at 3 (``customers would include both MAPS-sponsored research and 
research sponsored by other organizations.''). Respondent's proposed 
activity in distributing to researchers does not constitute retail 
trading because his customers are not the ultimate users of the 
marijuana, but rather researchers, who would then dispense the drugs to 
ultimate users. See Commentary at 329 (A manufacturer's ``license does 
not in any event * * * include the retail trade in drugs.'').\52\
---------------------------------------------------------------------------

    \52\ Under the CSA and DEA regulations, wholesale distribution 
and dispensing (retail distribution) are independent activities and 
require separate registrations. See 21 U.S.C. 802(11) (definition of 
``distribute'' excludes dispensing); compare 21 U.S.C. 823(b) with 
823(f) (separate registration required for distributor versus 
dispenser); see also 21 CFR 1301.13(e) (listing categories of 
registration and authorized activities). Only a practitioner (and 
not a manufacturer or distributor) can dispense a controlled 
substance to a patient. See id. at 1301.13(e)(1).
    Moreover, the Single Convention is a drug-control regime. The 
precise economic arrangements between Respondent, MAPS, and any 
other potential customers, are therefore irrelevant in determining 
whether his proposed activity would constitute wholesale trading.
---------------------------------------------------------------------------

    In construing the meaning of ``United States obligations under [the 
Single Convention]'' in the context of 21 U.S.C. 823(a), any reliance 
by the ALJ or Respondent on the United Kingdom's practice is 
misplaced.\53\ For one, as set forth in Sec.  823(a), Congress assigned 
to the Attorney General sole authority to determine whether a proposed 
registration under this provision is consistent with United States 
obligations under the Single Convention. Nowhere in the CSA does 
Congress call upon the Attorney General to rely on--or even consider--
how other nations interpret the Single Convention as a basis for the 
Attorney General's determination of what are the United States 
obligations under the treaty.\54\ Second, the Single Convention 
contains provisions that call upon each nation that is a party to the 
treaty to determine, in its own opinion, whether and how to tailor its 
control measures commensurate with the circumstances particularized to 
that country. For example, article 2, paragraph 5, of the Single 
Convention states the following with respect to drugs included in 
Schedule IV (including cannabis):
---------------------------------------------------------------------------

    \53\ There was a dispute between the parties as to the 
admissibility of the document Respondent submitted (attached to RX 
26) purporting to set forth the United Kingdom's explanation of how 
it carried out its obligation under the Single Convention to 
establish a national cannabis agency. Tr. 1812. After having the 
parties brief the issue, the ALJ noted, in a ``Memorandum to Counsel 
and Ruling,'' that one of the Government's objections was that 
Respondent did ``not explain how exhibit 26 was issued or under what 
authority.'' The ALJ concluded that ``although the circumstances 
under which exhibit 26 came to be promulgated are not clear, it 
appears that the document is in effect in the United Kingdom.'' Id. 
The ALJ did not explain her basis for this conclusion. See id. It is 
unnecessary to determine whether this ruling by the ALJ was proper 
because, even assuming, arguendo, that the document accurately 
represented the official position of the United Kingdom and was 
issued by the appropriate representative of the British Government, 
for the reasons explained above, reliance on this document for 
determining how to interpret the Single Convention for purposes of 
21 U.S.C. 823(a) is inappropriate.
    \54\ For this reason, it is unnecessary to expressly reject the 
interpretation contained in the document submitted by Respondent 
(attached to RX 26) titled ``United Kingdom National Cannabis 
Agency: Protocol.''

    (a) A Party shall adopt any special measures of control which in 
its opinion are necessary having regard to the particularly 
dangerous properties of a drug so included; and
    (b) A Party shall, if in its opinion the prevailing conditions 
in its country render it the most appropriate means of protecting 
the public health and welfare, prohibit the production, manufacture, 
export and import of, trade in, possession or use of any such drug 
except for amounts which may be necessary for medical and scientific 
research only, including clinical trials therewith to be conducted 
under or subject to the direct supervision and control of the Party.

Thus, what the United Kingdom might, in its opinion, deem to be 
appropriate control measures to meet its obligations under the Single 
Convention given the circumstances involving cannabis in Britain might 
be distinct from what the United States finds, in its opinion, to be 
the appropriate control measures to fit the circumstances involving 
cannabis in the United States.\55\
---------------------------------------------------------------------------

    \55\ In any event, there is no evidence that the British 
Government has allowed GW to engage in the type of activity for 
which Respondent seeks to become registered--the wholesale 
distribution of plant-form marijuana. Rather, as DEA has done with 
respect to the National Center and its project to supply THC extract 
to Mallinckrodt (GX 78), the British Government has granted GW a 
license to grow marijuana for the limited purpose of producing 
extract for a pharmaceutical product. Rx 26, Ex. A at 2.
---------------------------------------------------------------------------

    If the United States were to look to any outside entity for 
guidance on compliance with the Single Convention, that entity would be 
the International Narcotics Control Board (INCB), which is the United 
Nations organ created by the Single Convention to implement, and 
monitor compliance with, the Convention. See Single Convention, 
articles 5, 9-15, 19-20. In its 2005 Annual Report, the INCB 
reiterated: ``Articles 23 and 28 of the [Single] Convention provide for 
a national cannabis agency to be established in countries where the 
cannabis plant is cultivated licitly for the production of cannabis, 
even if the cannabis produced is used for research purposes only.'' 
\56\ Similarly, the INCB issued a statement in 2008 stating, with 
respect to the standards under the Single Convention

[[Page 2116]]

relating to the control of cannabis, that ``[s]uch standards require, 
inter alia, the control of cultivation and production of cannabis by a 
national cannabis agency.'' \57\ As explained above, it is this control 
of the cultivation and production of cannabis by a national agency of 
the United States to which Respondent is fundamentally opposed, thereby 
demonstrating the inconsistency between his application and the Single 
Convention.
---------------------------------------------------------------------------

    \56\ The above-quoted statement appears on page 16, in paragraph 
81, of the 2005 INCB Annual Report, which is available at http://www.incb.org/pdf/e/ar/2005/incb_report_2005_2.pdf. I take 
official notice of the report.
    \57\ This statement was made in an INCB press release issued on 
February 8, 2008, which is available at http://www.unis.unisvienna.org/unis/pressrles/2008/usinar1023.html, and of 
which I take official notice.
---------------------------------------------------------------------------

    The ALJ further reasoned that ``although it is not entirely 
clear,'' the marijuana Respondent seeks to grow would be exempt from 
the Government's exclusive right to engage in wholesale trading because 
it would qualify as either ``medicinal'' or ``special stocks.'' ALJ at 
82. As explained below, the ALJ erred on both counts.
    In his response to the Government's exceptions, Respondent contends 
that the ``[t]he Single Convention defines `medicinal' marijuana as 
that `which has undergone the process necessary to adapt it for 
medicinal use.' '' Respondent Resp. at 10 (quoting art I. para 1 (o)). 
The Single Convention, however, contains no such term.
    Rather, the Convention defines only the term ``[m]edicinal opium.'' 
Single Convention art 1, para.1(o) (defining ``medicinal opium'' as 
``opium which has undergone the processes necessary to adapt it for 
medicinal use.''). Accordingly, Respondent's argument rests solely on 
an analogy to the term ``medicinal opium.'' Respondent's reliance is 
misplaced as it ignores several critical distinctions between what was 
formerly known as ``medicinal opium'' and what it contends is 
``medicinal marijuana.''
    As the Commentary explains: ``The Single Convention follows earlier 
narcotics treaties in defining `medicinal opium' as a special form of 
opium in which that drug is used in medical treatment.'' Commentary at 
21-22. The Commentary goes on to state that ``medicinal opium'' is a 
form of opium powder to which lactose has been added ``to reduce its 
morphine content to the standard of about 10 percent prescribed for 
`medicinal opium.' '' Id. (emphasis added).
    In a footnote, the Commentary further explains that ``[t]he fifth 
edition of the Pharmacop[oelig]a Helvetica (1949) * * * defines 
`medicinal opium' as opium powder reduced to a content of 9.2 to 10.2 
per cent of anhydrous morphine by the addition of lactose. This 
pharmacop[oelig]a calls `medicinal opium' also `powdered opium.' '' 
Commentary at 22 n.8. The Commentary then notes that ``[t]he term 
`medicinal opium' ha[d] been abandoned in'' in favor of the terms 
``powdered opium'' and ``standardized powered opium'' in several 
pharmacop[oelig]as which had been published in the late 1960s. Id. 
(citing British Pharmacop[oelig]a 686 (1968), and Pharmacop[oelig]a 
Internationalis 403 (2d ed. 1967)). Of further note, the term is not 
used at all in more recent pharmacop[oelig]as.\58\ See, e.g., The 
United States Pharmacopeia 2008, at 2860-61 (31st Rev. 2007); British 
Pharmacopoeia 2008, at 1599-1601 (2007).
---------------------------------------------------------------------------

    \58\ There is also no listing of any opium-containing product in 
the latest edition (2008) of FDA's ``Orange Book,'' which lists each 
drug product currently approved for marketing under the FDCA based 
on a determination by the FDA that the drug is safe and effective. 
See http://www.fda.gov/cder/orange/obannual.pdf.
---------------------------------------------------------------------------

    Thus, the term ``medicinal opium'' is now obsolete. The term's 
obsolescence itself provides ample reason to disregard it in 
determining the scope of the United States' obligations with respect to 
marijuana. But even if the term is still relevant, Respondent ignores 
that the term referred to a product which had not only been extracted 
from the opium poppy but had also undergone several further processes 
(including the addition of another substance, lactose) to prepare it 
for use in other drugs and to obtain a specific and standardized 
content of morphine, its primary active ingredient. See British 
Pharmacopoeia 2008, at 1599 (``Raw opium is intended only as a starting 
material for the manufacture of galenical preparations. It is not 
dispensed as such.''); GX 53, at 3 (letter of GW Pharmaceuticals) 
(``[O]pium is a Schedule II substance, but it merely provides the 
starting material for a number of pharmaceutical dosage forms that are 
lawfully marketed in the U.S. Herbal opium is not itself used directly 
by patients.'').
    Indeed, the inclusion of ``medicinal opium'' in the various older 
Pharmacop[oelig]as indicates that there were recognized standards for 
the substance's manufacture and composition and that the drug had an 
accepted medical use in humans. See, e.g., The United States 
Pharmacopeia (17th Rev. ed. 1965), at xxv (noting that federal law 
``designate[s] the Pharmacopeia as establishing the standards of 
strength, quality, and purity of medicinal products recognized therein 
when sold in interstate commerce for medicinal use''); \59\ see also 
The United States Pharmacopeia 2008, at v (``USP 31 * * * contains 
science-based standards for drugs, biologics, dietary, and excipients 
used in dosage forms and products. With few exceptions, all articles 
for which monographs are provided in USP 31 * * * are legally marketed 
in the United States or are contained in legally marketed articles.''); 
British Pharmacopoeia 2008, at 4 (``The requirements stated in the 
monographs of the Pharmacopoeia apply to articles that are intended for 
medicinal use. * * * An article intended for medicinal use that is 
described by means of an official title must comply with the 
requirements of the relevant monograph.'').
---------------------------------------------------------------------------

    \59\ See also European Pharmacopoeia 1, Sec.  1.1 (4th ed. 2001) 
(General Statements) (``The active ingredients (medicinal 
substances), excipients (auxiliary substances), pharmaceutical 
preparations and other articles described in monographs are intended 
for human consumption and veterinary use (unless explicitly 
restricted to one of these uses)'').
---------------------------------------------------------------------------

    In contrast, there are no recognized standards with respect to 
herbal marijuana. And consistent with the recognition in almost every 
country that marijuana has no accepted medical use, neither marijuana, 
cannabis, nor THC is listed in the various pharmacopeias. See The 
United States Pharmacopeia 2008, at 1620, 2588-2589, 3366-3367; British 
Pharmacopoeia 2008, at 375-376, 1373-1374, 2111-2112; European 
Pharmacopoeia, at 777, 1495, 1997. Cf. James Everard's Breweries v. 
Day, 265 U.S. 545, 562 (1924) (rejecting contention that Congress 
arbitrarily determined that ``intoxicating malt liquors possessed no 
substantial and essential medicinal properties''; ``Neither beer nor 
any other intoxicating malt liquor is listed as a medicinal remedy in 
the United States Pharmacopeia. They are not generally recognized as 
medicinal agents. There is no consensus of opinion among physicians and 
medical authorities that they have any substantial value as medical 
agents. * * * '').
    Moreover, it is beyond question that, in the United States, 
marijuana has no currently accepted medical use and there are no FDA-
approved medical products consisting of marijuana. See OCBC, 532 U.S. 
at 491 (``for purposes of the [CSA], marijuana has `no currently 
accepted medical use' at all.''); 66 FR at 20052 (as stated by the FDA, 
``[t]here are no FDA-approved marijuana products.''). Thus, by any 
plausible application of the term ``medicinal opium'' to cannabis, as a 
factual matter, there is currently no such thing in the United States 
as ``medicinal cannabis.'' Respondent effectively concedes this point, 
by describing the purpose of his proposed registration as being ``to 
develop the marijuana plant into an

[[Page 2117]]

FDA-approved prescription medicine.'' GX 3, at 1 (emphasis added).
    Finally, even if all the foregoing considerations were ignored and 
DEA were to treat the marijuana that Respondent seeks to grow as akin 
to ``medicinal opium'' for purposes of the Single Convention, 
Respondent's proposed activity would still be inconsistent with the 
Convention for the following reason. As the Commentary explains: 
``Opium-producing countries may thus authorize private manufacture of, 
and private international and domestic wholesale trade in, medicinal 
opium and opium preparations. The opium other than medicinal opium 
needed for such manufacture must however be procured from the national 
opium agency.'' Commentary at 284 (emphasis added). Thus, under the 
Convention, even if ``medicinal cannabis'' may be privately traded, the 
treaty requires that the raw material needed to produce the ``medicinal 
cannabis'' (i.e., the marijuana plant material) must be obtained from 
the national cannabis agency. This again reflects the central theme of 
cannabis control under the Single Convention--that the national agency 
must control the production and distribution of the raw marijuana 
material used for research or any other permissible purpose. 
Respondent's unwillingness to accept this principle illustrates how his 
proposed registration is fundamentally at odds with the treaty.
    The ALJ also reasoned that the marijuana Respondent seeks to grow 
would qualify under the Convention as ``special stocks'' and thereby be 
exempt from the ``exclusive government's right to maintain stocks.'' 
ALJ at 82. Even Respondent acknowledges the ALJ's error on this point. 
See Respondent's Resp. at 12 (``[I]t is evident that [the ALJ] simply 
inadvertently referenced the wrong term from Article 1.''). The term 
``special stocks'' under the Convention refers to ``drugs held in a 
country or territory by the Government of such country or territory for 
special government purposes and to meet exceptional circumstances.'' 
Single Convention, Art. 1, para. 1(w). Neither party is suggesting, and 
there is no basis to conclude, that the marijuana Respondent seeks to 
produce fits into this definition.\60\
---------------------------------------------------------------------------

    \60\ The term ``special stocks'' is operative in the Single 
Convention only in ways that have no bearing on this adjudication. 
See art. 19, paras. 1(d) & 2(d) (requiring parties to furnish the 
INCB with annual estimates of, among other things, ``[q]uantities of 
drugs necessary for addition to special stocks'' and amounts taken 
therefrom); art. 20, para. 3 (parties' statistical returns to INCB 
need not address those relating to special stocks); art. 21, para. 2 
(explaining how to take into account special stocks for purposes of 
countries' limitations on manufacture and importation).
---------------------------------------------------------------------------

    While recognizing that the ALJ misread the term ``special stocks,'' 
Respondent argues that the marijuana he seeks to produce nonetheless 
qualifies as retail ``stocks,'' because it is marijuana that will be 
held `` `by institutions or qualified persons in the duly authorized 
exercise of therapeutic or scientific functions.' '' Id. (quoting 
Single Convention, art. 1, para. 1(x)). Respondent thus contends that 
the marijuana he seeks to produce is exempt from the government 
monopoly provisions of article 23, paragraph 2, subparagraph (e).
    Respondent is mistaken. The entire text of the relevant provision 
explains that the marijuana Respondent would maintain does not fall 
within the exception to the definition of ``stocks.'' What is excluded 
under the treaty from the definition of ``stocks'' are those drugs held 
``[b]y retail pharmacists or other authorized retail distributors and 
by institutions or qualified persons in the duly authorized exercise of 
therapeutic or scientific functions.'' Single Convention, art. 1, para. 
1(x)(iv). As this provision makes plain, the exemption applies only to 
the drugs held by those persons or entities who are authorized to 
dispense to ultimate users.
    Respondent is not, however, a licensed pharmacist or physician and 
obviously cannot legally seek a practitioner's registration, which is 
required to dispense. See 21 U.S.C. 823(f). Rather, he is seeking to 
produce raw cannabis plant material to supply researchers. His proposed 
activity thus does not fall within the exemption for ``qualified 
persons in the duly authorized exercise of therapeutic or scientific 
functions'' within the meaning of the Single Convention.
    Moreover, even with respect to cannabis material acquired for 
retail purposes that does fit within the exception of article 1, 
paragraph (x)(iv), the treaty still requires that such material be 
obtained via the national agency. As the Commentary explains with 
respect to opium (and therefore also with respect to cannabis, by 
virtue of article 28), while ``[t]he retail trade in, and other retail 
distribution of, opium * * * need not be in the hands of the 
monopoly[,] [r]etail traders or distributors must, however, acquire 
their opium from the'' Government. Commentary at 284. Respondent's 
arguments repeatedly fail to acknowledge or accept this concept that 
lies at the core of the Single Convention. Yet, there is no escaping 
that, by seeking through his application to dismantle the existing 
Government control over the distribution of cannabis produced by 
growers and turn a share of that control over to MAPS, Respondent's 
goal is antithetical to the treaty. For the foregoing reasons, the 
provision of article 1, paragraph (x)(iv) exempting certain material 
from the definition of ``stocks'' does not support Respondent.
    As for Respondent's point that DEA has previously allowed the 
University of Mississippi to grow marijuana to produce ``marijuana 
extracts that the University then sells to pharmaceutical companies to 
develop products'' (Resp. Prop. Findings at 68), it is true that DEA 
has previously allowed such activity under a Memorandum of Agreement 
(MOA) that was entered into in 1999. GX 78. However, that MOA expressly 
states:

    In accordance with articles 23 and 28 of the Single Convention 
on Narcotic Drugs, 1961 (``Single Convention''), private trade in 
``cannabis'' is strictly prohibited. Therefore, the Center shall not 
distribute any quantity of marijuana to any person other than an 
authorized DEA employee.
    The Single Convention does not prohibit private trade in 
``cannabis preparations,'' however. A ``cannabis preparation,'' 
within the meaning of the Single Convention, is a mixture, solid or 
liquid containing cannabis, cannabis resin, or extracts or tinctures 
of cannabis. The THC that the Center will extract from marijuana 
would be considered such a ``cannabis preparation.'' Therefore, the 
Center may, in accordance with the Single Convention, distribute the 
crude THC extract to private entities (provided such distributions 
of THC by the Center comply with all requirements set forth in the 
CSA and DEA regulations).

Id. at 2-3 (footnote explaining treaty definition of cannabis omitted). 
Thus, the MOA was specifically designed to ensure that the University 
of Mississippi would not be distributing cannabis outside of the 
Government-controlled system required by the Single Convention. See 
Single Convention, art. 23, para. 1(e) (exempting ``preparations'' from 
government monopoly on wholesale distribution). In contrast, Respondent 
does not seek to distribute a cannabis extract or any other processed 
cannabis material that constitutes a ``preparation'' within the meaning 
of the Single Convention. Instead, Respondent seeks to grow and 
distribute marijuana plant material that has undergone no processing 
other than drying (and therefore does not come within the Single 
Convention definition of ``preparation'').\61\
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    \61\ The above-quoted 1999 MOA was issued with respect to the 
University of Mississippi's 1998 application to become registered to 
manufacture marijuana for the purposes of product development. GX 
78, at 1-2. In 2005, the University of Mississippi applied for a new 
registration to manufacture marijuana ``to prepare marihuana extract 
for further purification into bulk active [THC] for use in launching 
FDA-approved pharmaceutical products.'' 70 FR 47232; see also Tr. 
1521. DEA has not yet issued a final order as to this application 
and the University therefore does not currently have DEA 
authorization to undertake such activity. As with Respondent's 
application, DEA may only grant the pending University of 
Mississippi application if the agency determines that the University 
has demonstrated that the registration would be consistent with 
United States treaty obligations and the public interest. See GX 79, 
at 3. In making such determinations, DEA will not simply rely on the 
prior issuance of registration under the 1999 MOA but will consider 
the application anew, in view of the current circumstances and 
consistent with this final order. Among other things that must be 
considered with respect to the pending University of Mississippi 
application, I note that the Commentary to the Single Convention 
states the following with respect to the exemption for ``opium 
preparations'' under Article 23, paragraph (e): ``Opium-producing 
countries may thus authorize private manufacture of, and private 
international and domestic wholesale trade in, medicinal opium and 
opium preparations. The opium other than medicinal opium needed for 
such manufacture must however be procured from the national opium 
agency.'' Commentary at 284 (emphasis added). Whether the University 
of Mississippi's proposed registration would be consistent with this 
aspect of the treaty has not yet been determined by DEA and is not 
the subject of this adjudication.

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[[Page 2118]]

    As the foregoing demonstrates, while the Single Convention does not 
necessarily prohibit the registration of an additional manufacturer, 
what it does prohibit is the wholesale distribution of plant-form 
marijuana by any entity other than the United States Government. 
Respondent is not under contract with HHS to supply it with marijuana 
and has made clear that the purpose of his registration is to 
distribute marijuana outside of the HHS system. Because it is clear 
that Respondent's proposed activity is not within one of the exemptions 
from the obligatory government monopoly imposed by the Convention, he 
has failed to show that his proposed activities would be consistent 
with the Single Convention.\62\ See 21 U.S.C. 823(a). Accordingly, his 
proposed registration is precluded under Federal law.
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    \62\ Though the above discussion provides ample basis on which 
to conclude that Respondent has failed to meet his burden of proving 
that his proposed registration is consistent with United States 
obligations under the Single Convention, I also note briefly the 
following statement in the Commentary regarding the obligation of 
the United States under article 23, paragraph 2(a) to designate the 
areas in which cultivation takes place: ``It is also suggested that 
[such areas] should to the greatest extent possible be located in 
the same part of the country, and be contiguous, in order to 
facilitate more effective control.'' Commentary at 280. Thus, in a 
situation in which a country that is a party to the treaty allows 
for multiple growers of opium or cannabis with the national agency 
maintaining control over the distribution of such material in 
accordance with the Single Convention, the Commentary suggests that 
proper adherence to the treaty would result in that country keeping 
the growers located as near as possible to one another.
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B. Whether Respondent's Proposed Registration Is Consistent With the 
Public Interest

    As explained in the preceding section, Respondent's registration is 
clearly inconsistent with the United States' obligations under the 
Single Convention. While this ground alone compels DEA to deny the 
application, as explained below, an analysis of the public interest 
criteria of 21 U.S.C. 823(a) leads to the conclusion that Respondent's 
registration is inconsistent with the public interest. This provides a 
separate basis--independent of the treaty consideration--on which the 
application must be denied.
    As stated above, under Sec.  823(a), there are six factors that 
must be evaluated in determining whether a proposed registration is 
consistent with the public interest. The public interest factors ``are 
considered in the disjunctive.'' Southwood Pharmaceuticals, Inc., 72 FR 
36487, 36497 (2007). I may rely on any one or a combination of factors 
and give each factor the weight I deem appropriate in determining 
whether to deny an application for a registration. See Green Acre 
Farms, Inc., 72 FR 24607, 24608 (2007); ALRA Laboratories, Inc., 59 FR 
50620, 50621 (1994). Moreover, I am ``not required to make findings as 
to all of the factors.'' Hoxie v. DEA, 419 F.3d 477, 482 (6th Cir. 
2005); Morall v. DEA, 412 F.3d 165, 173-74 (D.C. Cir. 2005).
1. Public Interest Factor One
    The first public interest factor is the:

    maintenance of effective controls against diversion of 
particular controlled substances and any controlled substance in 
schedule I or II compounded therefrom into other than legitimate 
medical, scientific, research, or industrial channels, by limiting 
the importation and bulk manufacture of such controlled substances 
to a number of establishments which can produce an adequate an 
uninterrupted supply of these substances under adequately 
competitive conditions for legitimate medical, scientific, research, 
and industrial purposes.

21 U.S.C. 823(a)(1) (emphasis added).

    As the ALJ observed, DEA has construed paragraph 823(a)(1) in two 
different ways in prior final orders, both of which were simultaneously 
upheld in a case that was reviewed by a United States Court of Appeals. 
ALJ at 82-83. Because of this, I have undertaken an extensive analysis 
of this provision, which is found in part C of this discussion.\63\ For 
the reasons explained therein, I believe that the most sound reading of 
the text of paragraph 823(a)(1) requires DEA to consider limiting the 
number of bulk manufacturers and importers of a given schedule I or II 
controlled substance to that which can produce an adequate and 
uninterrupted supply under adequately competitive conditions. The 
Government so asserted in the Show Cause Order and throughout the 
proceedings. Although Respondent offered a different interpretation of 
paragraph 823(a)(1),\64\ he asserted that, under any interpretation, 
this factor weighed in favor of finding the proposed registration 
consistent with the public interest.\65\
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    \63\ For ease of exposition, the detailed analysis of the 
meaning of paragraph 823(a)(1) appears in a separate section of this 
discussion (part C), due to its length.
    \64\ See note 65, infra, regarding Respondent's proposed 
interpretation of paragraph 823(a)(1).
    \65\ Because I have concluded, for the reasons set forth in part 
C of the discussion, that DEA is obligated under the text of 
paragraph 823(a)(1) to consider limiting the number of bulk 
manufacturers and importers of a given schedule I or II controlled 
substance to that which can produce an adequate and uninterrupted 
supply under adequately competitive conditions, I reject 
Respondent's alternative reading of paragraph 823(a)(1). 
Specifically, I reject the interpretation of paragraph 823(a)(1) 
under which ``the registration should be granted without regard to'' 
adequacy of competition and supply so long as the ``registration 
would not interfere with DEA's maintenance of effective diversion 
controls.'' See Respondent's Resp. at 13. Respondent cites Noramco 
v. DEA, 375 F.3d 1148 (D.C. Cir. 2004) in support of this 
interpretation. Id.; Resp. Proposed Findings and Conclusion of Law 
at 36. The Noramco decision is examined at length in part C of this 
discussion. Because I interpret paragraph 823(a)(1) to require 
consideration of the adequacy of supply and competition, I decline 
to undertake an analysis of the facts of this case whereby the 
adequacy of competition and supply is disregarded. However, as 
indicated above, Respondent has alternatively argued that there is a 
sufficient basis to grant his application when construing paragraph 
823(a)(1) as requiring a showing of inadequate competition or 
supply, and that argument is addressed at length in this final 
order.
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    As discussed at length in part C of this discussion, infra, to 
properly construe paragraph 823(a)(1), it must be viewed in comparison 
with Sec.  823(d)(1). Whereas Sec.  823(d)(1) contains no requirement 
that DEA consider limiting in any way the total number of registered 
manufacturers of controlled substances in schedules III, IV, and V, 
paragraph 823(a)(1) does require DEA to consider limiting the total 
number of bulk manufacturers of schedule I and II controlled 
substances. Specifically, paragraph 823(a)(1) calls upon DEA to 
consider ``limiting'' (i.e., placing an upper boundary on) the number 
of registered bulk manufacturers of a given schedule I or II controlled 
substance to that ``which can produce an adequate

[[Page 2119]]

and uninterrupted supply of these substances under adequately 
competitive conditions for legitimate medical, scientific, research, 
and industrial purposes.''
    Thus, an applicant seeking to become registered to bulk manufacture 
a schedule I or II controlled substance bears the burden of 
demonstrating that the existing registered bulk manufacturers of a 
given schedule I or II controlled substance are unable to produce an 
adequate and uninterrupted supply of that substance under adequately 
competitive conditions. As a threshold matter, Respondent misconstrues 
this provision as placing the burden on DEA, whenever someone applies 
for registration under 21 U.S.C. 823(a), to demonstrate that 
competition is already adequate within the meaning of paragraph 
823(a)(1). See Resp. Proposed Findings and Conclusion of Law at 47 (in 
which Respondent contends that the ``requirement'' of ``adequately 
competitive conditions'' ``is not met by the by the current NIDA 
monopoly''). In fact, the DEA regulations plainly state that every 
applicant seeking registration under Sec.  823(a) has ``the burden of 
proving that the requirements for such registration pursuant to [this 
section] are satisfied.'' 21 CFR 1301.44(a).
    Accordingly, the analysis under paragraph 823(a)(1) (and 
Respondent's burdens thereunder) must be divided into the following 
parts: (a) an analysis of the adequacy of supply and (b) an analysis of 
the adequacy of competition. If Respondent can demonstrate by a 
preponderance of the evidence that either supply or competition is 
inadequate within the meaning paragraph 823(a)(1), this weighs heavily 
in favor of granting the registration. If, however, Respondent fails to 
meet his burden with respect to both supply and competition, this 
weighs heavily against granting the registration. (See part C of this 
discussion.)
(a) Adequacy of Supply Within the Meaning of Paragraph 823(a)(1)
    The first question under paragraph 823(a)(1) is whether Respondent 
has demonstrated that the existing supply of marijuana is inadequate to 
meet the legitimate needs of the United States. As the parties 
essentially agree, the adequacy of supply of marijuana must be 
evaluated in two respects: (i) quantity and (ii) quality.
(i) Adequacy of the Quantity of the Existing Supply
    With respect to the adequacy of the quantity of supply, the record 
establishes that as of the date of the hearing, there were 
approximately 1055 kg of marijuana of various potencies in the NIDA 
vault. RX 53. Moreover, some of this marijuana apparently had been 
harvested as early as 1997, and it appears that as of the date of the 
hearing, no marijuana had been grown since 2001. Id. For the following 
reasons, this amount of existing supply far exceeds any present demand 
for research-grade marijuana as well as any reasonably anticipated 
demand for such marijuana in the foreseeable future.
    Lawful research involving marijuana can be divided into two 
categories: NIH-funded and privately funded. See GX 31, at 3. With 
respect to NIH-funded research, Respondent does not contend, and there 
is no basis in the record to conclude, that NIDA has failed to provide, 
or is incapable of providing, an adequate quantity of marijuana. 
Rather, to the extent Respondent is claiming that NIDA is unable to 
provide an adequate quantity of marijuana,\66\ this claim relates to 
privately funded researchers. Yet, even as to this claim, the evidence 
indicates otherwise.
---------------------------------------------------------------------------

    \66\ Respondent appears to challenge the process by which NIDA 
supplies marijuana to researchers and the quality of the marijuana, 
rather than the quantity. See, e.g., Respondent's Resp. at 15-16. 
The ALJ's recommendation regarding the adequacy of supply also 
focused on the process by which NIDA supplies marijuana, and she was 
not of the opinion actual quantity of marijuana supplied by NIDA was 
inadequate. See ALJ at 84. Nonetheless, for the sake of 
completeness, and in accordance with 21 U.S.C. 823(a)(1), I am 
addressing the adequacy of supply from a quantitative perspective.
---------------------------------------------------------------------------

    The record reflects that since HHS changed its policies in 1999 to 
make marijuana more readily available to researchers (by, among other 
things, allowing privately funded researchers to obtain marijuana), 
every one of the 17 CMCR-sponsored pre-clinical or clinical studies 
that requested marijuana from NIDA was provided with marijuana. GX 31, 
at 3; Tr. 694-95. Significantly, according to one of the witnesses who 
testified on behalf of Respondent, CMCR funding of research involving 
marijuana has currently ended and it appears doubtful that a resumption 
of such funding is ``on the horizon.'' Tr. at 397-402, 441. Thus, the 
witness testified, once the research projects sponsored by CMCR that 
utilize NIDA marijuana reach their conclusion, ``[i]t's likely that the 
[CMCR] research is done.'' Id. at 401-02. Other than the CMCR-sponsored 
research, the record reveals only one other instance in which a 
privately funded researcher sought marijuana from NIDA after HHS 
changed its policies in 1999 to make marijuana more readily available 
to researchers. That one other instance was the MAPS-sponsored request 
submitted by Chemic to obtain marijuana to conduct research on the 
Volcano. See RX 52B. According to Mr. Doblin, Chemic ``applied to NIDA 
to purchase ten grams'' of marijuana. Tr. 531; RX 14. Although, as 
discussed above, HHS denied that request on scientific grounds (see RX 
52B), there is no basis to conclude that NIDA was incapable of 
providing Chemic with the quantity of marijuana it was seeking. Indeed, 
the ten grams of marijuana that Chemic requested is less then one 
100,000th of the amount of marijuana that NIDA has available to supply 
researchers. See RX 53.
    Accordingly, the evidence overwhelmingly establishes that NIDA is 
capable of providing an adequate quantity of marijuana to meet all 
current and foreseeable research needs of the United States. And while 
NIDA's existing system for supplying marijuana is quantitatively 
adequate regardless of how much or how little additional marijuana 
Respondent seeks to produce, it is notable that the approximately 1055 
kg of marijuana currently on hand is more than 90 times the amount of 
marijuana that Respondent proposes to grow.
    Respondent nonetheless contends that the process by which HHS 
provides marijuana to researchers--which involves a peer review of the 
scientific merits of the research proposal \67\--results in a barrier 
to research that effectively renders the supply of marijuana 
inadequate. Respondent points to three prior incidents to support his 
contention that the HHS scientific review process impedes research. As 
discussed above, the first two of these incidents (those involving Dr. 
Abrams and Dr. Russo) are irrelevant as they occurred before HHS 
adopted its new procedures in 1999 for making marijuana more widely 
available to researchers.\68\ The third incident involved the 
application of Chemic to obtain marijuana to conduct research on the 
Volcano. As discussed above, HHS

[[Page 2120]]

declined to supply Chemic with marijuana in 2005 based on scientific 
considerations, finding that Chemic's then-latest proposed study was 
duplicative of prior and ongoing research and not likely to provide 
useful data. Thus, the success of Respondent's claim that the HHS 
scientific review process renders the existing supply of marijuana 
inadequate depends on whether one accepts Respondent's assumption that 
anyone in the United States who has a proposed research project 
involving marijuana should be entitled to obtain marijuana--regardless 
of whether the competent Government authority finds the research to be 
lacking in scientific merit.\69\
---------------------------------------------------------------------------

    \67\ Tr. at 1626-28, 1635. In his testimony, Dr. Gust explained 
the term ``peer review'' as follows: ``Peer review is a process that 
has been used, certainly by NIH, and I think in other agencies in 
the Department of Health and Human Services, and probably the 
Federal Government, where outside expertise is acquired and outside 
opinions on the scientific merit of specific research proposals.'' 
Id. at 1627. Dr. Gust added that the NIH peer review committees 
``review proposals three times a year for the NIH, and there are--
occasionally a Federal employee participates in one of those 
reviews, but probably 90 percent or more of the participants are 
researchers who are in the private sector, for the most part in 
academic institutions.'' Id. at 1627-28.
    \68\ Further, as discussed above, the evidence indicates that 
the denials involving of Dr. Abrams and Dr. Russo were based on HHS 
finding their protocols to be lacking in scientific merit.
    \69\ It is not even clear whether Respondent continues to cite 
the Chemic situation of an example of supposedly ``legitimate 
research'' for which HHS declined to provide marijuana. While 
Respondent did so characterize the Chemic situation in his proposed 
findings of fact and conclusions of law (at 14), in his subsequently 
filed response to the Government's exceptions to the ALJ 
recommendation, he listed only Dr. Abrams and Dr. Russo as examples 
of ``legitimate research'' for which marijuana was not supplied. 
Respondent's Resp. at 16. As noted, the incidents involving Dr. 
Abrams and Dr. Russo occurred prior to HHS's promulgation of the 
1999 guidelines. As such, these incidents are not probative of the 
current availability of research-grade marijuana from HHS.
---------------------------------------------------------------------------

    Respondent's assumption about who is entitled to conduct research 
with marijuana is directly undercut by the text of the CSA. As set 
forth in 21 U.S.C. 823(f), persons seeking to conduct research with 
schedule I controlled substances (such as marijuana) may only obtain a 
DEA registration ``for the purpose of bona fide research'' (emphasis 
added), with the Secretary of HHS being responsible for determining 
``the qualifications and competency'' of the applicant ``as well as the 
merits of the research protocol.'' The process HHS has established to 
assess the scientific merit of proposed research studies involving 
marijuana is that described in the 1999 HHS announcement of its new 
procedures.\70\ GXs 24 & 31; Tr. at 1626-35. That Respondent finds this 
process to be scientifically rigorous \71\--and thereby not 
automatically accepting of any proposed study sponsored by MAPS--
provides no basis for any valid objection or any contention that the 
HHS supply of marijuana is inadequate.\72\
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    \70\ Respondent points out that the Secretary of HHS has 
delegated to the FDA Commissioner the Secretary's functions under 21 
U.S.C. 823(f) relating to research with controlled substances in 
schedule I. Respondent's Resp. at 4-5 (citing FDA Staff Manual 
Guides 1410.10). While this is correct as a general matter for 
schedule I controlled substances, the record plainly indicates that 
with specific regard to research involving marijuana, HHS has 
retained its authority to determine the qualifications and 
competency of the researcher, as well as the merits of the research 
protocol, for purposes of Sec.  823(f). See GX 24. Indeed, the 1999 
HHS announcement of its policies for providing marijuana to 
researchers expressly states: ``To receive such a registration 
[under Sec.  823(f)], a researcher must first be determined by HHS 
to be qualified and competent, and the proposed research must be 
determined by HHS to have merit.'' Id. at 1 (emphasis added). Dr. 
Gust's testimony confirms that, in fact, HHS--through its peer 
review process--does make these determinations for persons seeking 
to conduct research with marijuana. Tr. 1626-35.
    Moreover, as discussed above, Respondent produced no evidence 
showing that HHS has denied marijuana to any clinical researcher 
with an FDA-approved protocol subsequent to the adoption of the 1999 
guidelines. The lone applicant whose post-1999 request for marijuana 
was denied (Chemic) submitted its request to, and had it reviewed by 
HHS--not FDA. See GXs 49 & 52B. For all these reasons, it is 
unfounded for Respondent to suggest that the supply of marijuana is 
somehow inadequate because HHS has not assigned FDA sole 
responsibility for determining what research proposals involving 
marijuana are scientifically meritorious.
    \71\ Any suggestion that the HHS scientific review process is 
unduly rigorous is belied by the testimony of Dr. Gust that the 
``scientific bar has been set very low, [so] that any project that 
has scientific merit is approved,'' and that ``anything that gets 
approved gets NIDA marijuana'' (Tr. at 1700-01) as well as the 
uncontroverted evidence that every one of the 17 CMCR-sponsored 
research protocols submitted to HHS was deemed scientifically 
meritorious by HHS and was supplied with marijuana (GX 31, at 3; Tr. 
694-95).
    \72\ For the same reasons, I find wholly unpersuasive the ALJ's 
recommended finding that the supply of marijuana is inadequate 
because of the HHS scientific review process.
---------------------------------------------------------------------------

(ii) Adequacy of the Quality of the Existing Supply
    As for Respondent's contention that the quality of marijuana 
supplied by NIDA is unsatisfactory and that this renders the supply of 
marijuana inadequate within the meaning of 21 U.S.C. 823(a)(1), the ALJ 
rejected this contention, finding that a preponderance of the evidence 
established that ``the quality is generally adequate.'' ALJ at 84. In 
this regard, Respondent contended that NIDA's marijuana was of 
inconsistent potency, that it was of too low a potency, that it 
included stems and seeds, that it was not fresh, and that some of the 
patients had complained that it ``was the worst marijuana they had ever 
sampled.'' Resp. Proposed Findings at 16-27 & 49.
    As found above, Respondent's contentions rest largely on snippets 
taken from questionnaires which were completed by a number of 
researchers. On balance, however, the researchers indicated their 
overall satisfaction with NIDA's marijuana and noted that the agency 
had been accommodating and responsive to their concerns. See, e.g., GX 
16, at 6 & 19. Moreover, most of the researchers indicated that the 
potency of NIDA's product was adequate and had not compromised their 
research. See, e.g., GX 16, at 6 & 15; GX 17, at 9. Furthermore, while 
Respondent notes that several researchers stated that it would be 
beneficial to evaluate a higher potency product, he produced no 
evidence that any researcher had obtained approval from FDA and other 
reviewing authorities to conduct clinic trials with such a product. See 
GX 21, at 9 (researcher explaining that he ``wanted to use a higher 
potency product but there were questions from the [scientific review 
board] and the'' CMCR). In any event, the evidence establishes that 
NIDA's stock includes substantial quantities of high THC content 
marijuana and that its contractor is capable of producing marijuana 
with a THC content of up to twenty percent.\73\ Tr. 1203-05.
---------------------------------------------------------------------------

    \73\ Despite Respondent's suggestion that human research 
subjects should be given marijuana of higher potencies than that 
supplied by NIDA (see, e.g., Tr. 552, 567 (testimony of Mr. 
Doblin)), there is no basis in the record to conclude that it would 
be medically or scientifically appropriate to do so. To the 
contrary, Dr. ElSohly testified that he was told by CMCR researchers 
that they did not want Dr. ElSohly to supply them with marijuana 
with a THC content as high as eight percent because, based on their 
prior observations of research subjects being given NIDA marijuana 
containing eight percent THC, ``the subject couldn't tolerate that, 
and if we can make a six percent, that would be more appropriate.'' 
Tr. 1280. Dr. ElSohly also testified that other scientists expressed 
the same opinion that six percent THC content was preferable because 
the research subjects ``would not tolerate'' marijuana with eight 
percent THC. Tr. 1295. Large doses of marijuana (in terms of the 
amount of THC administered) have been found to cause adverse mood 
reactions, including anxiety, paranoia, panic, depression, 
dysphoria, depersonalization, delusions, illusions, and 
hallucinations. RX 1, at 102. A primary reason that researchers are 
required to submit an IND to FDA prior to engaging in research with 
human subjects is ``to assure the safety and rights of subjects.'' 
21 CFR 312.22(a).
---------------------------------------------------------------------------

    Related to this argument, Respondent also contends that NIDA's 
marijuana has stems and seeds and that some patients complained that 
``that the marijuana is inferior in sensory qualities (taste, 
harshness) than the marijuana they smoke outside the laboratory. Some 
have stated it was the worst marijuana they had ever sampled.'' Resp. 
Proposed Findings at 20 (other citation omitted); see also id. at 49. 
The evidence establishes, however, that the contractor has rectified 
the problem with respect to the stems and seeds. Tr. 1301.
    As for the complaints regarding the sensory qualities of NIDA's 
products, only a small percentage of the numerous studies' subjects 
complained about the harshness of NIDA's marijuana, and as one 
researcher explained, it is not clear whether it was placebo or actual 
marijuana that was the cause of the complaints. GX 18, at 7. Relatedly, 
it seems a strained argument for Respondent to make that experienced

[[Page 2121]]

marijuana smokers reported, after consuming a hallucinogenic substance, 
that they found NIDA's marijuana to be less pleasing to their senses 
than the marijuana they had illegally obtained and used. People 
generally take medicines--which marijuana is not--for their therapeutic 
benefits and not their taste. And in any event, Respondent has not 
established that NIDA's products were unsuitable for their intended 
use.\74\
---------------------------------------------------------------------------

    \74\ Moreover, Respondent presented no evidence to show that he 
is capable of producing marijuana with any degree of quality 
control--let alone the type of evidence that would allow an 
inference that he could improve upon the quality of marijuana 
produced at the University of Mississippi. To the contrary, as 
explained below in the discussion of public interest factor five, 
Respondent's lack of experience in growing marijuana is in stark 
contrast to Dr. ElSohly's decades of experience in manufacturing, 
analyzing, and publishing scientific articles on the subject.
---------------------------------------------------------------------------

    For these reasons, I accept the ALJ's recommended finding that 
Respondent did not meet his burden of demonstrating that NIDA is 
incapable of providing marijuana of sufficient quality to meet the 
legitimate research needs of the United States.
    Thus, I conclude that the evidence does not support Respondent's 
contention that the supply of marijuana is inadequate--in terms of 
quantity or quality--within the meaning of paragraph 823(a)(1).
(b) Adequacy of Competition Within the Meaning of Paragraph 823(a)(1)
    The second question under paragraph 823(a)(1) is whether Respondent 
has demonstrated that the existing supply of marijuana is not being 
produced under adequately competitive conditions to meet the legitimate 
needs of the United States. Again, as explained below in part C of this 
discussion, paragraph 823(a)(1) does not require DEA simply to register 
as many bulk manufacturers of a given schedule I or II controlled 
substance as the market will bear. Nor does paragraph 823(a)(1) require 
the registration of an additional bulk manufacturer based merely on the 
assertion the additional registration will result in some vague, 
theoretical incremental increase in competition. If such a theoretical 
assertion would suffice, then the language of paragraph 823(a)(1) 
requiring DEA to consider ``limiting'' the number of registered bulk 
manufacturers would be rendered meaningless. This is because every 
person seeking to enter the market as a new bulk manufacturer of a 
given schedule I or II controlled substance could make the theoretical 
claim that every new registrant increases the overall amount of 
competition.
    Thus, to avoid reading the limiting language of paragraph 823(a)(1) 
in a superfluous manner, in final orders where DEA has analyzed 
competition under paragraph 823(a)(1), DEA has looked to empirical 
data; specifically, DEA has focused on the historical and present 
prices charged to those who lawfully acquire the controlled substance 
from the existing registered bulk manufacturers.\75\ This approach is 
consistent with the following statement made by the Department of 
Justice stated during Congressional hearings leading up to the 
enactment of the CSA:
---------------------------------------------------------------------------

    \75\ See Penick Corporation Inc., 68 FR 6947 (2003); Roxane 
Laboratories, Inc., 63 FR 55891 (1998).

    There is no reason to assume that the Attorney General will 
prejudice his primary objectives of effective control by excessive 
licensing. Nor will he undertake direct price control. He will be 
empowered to take cognizance of evidence showing that prices are 
clearly and persistently excessive. The criteria for determining 
whether prices far exceed that which is reasonable relate to 
reasonable costs and reasonable profits. * * * If evidence indicates 
that additional licensing will result in more reasonable prices with 
no significant diminution in the effectiveness of drug control, the 
Attorney General should be able to license the additional 
manufacturers.\76\
---------------------------------------------------------------------------

    \76\ Hearings Before the Subcomm. to Investigate Juvenile 
Delinquency of the Comm. on the Judiciary, United States Senate, 
91st Cong. 372 (1969) (discussed more fully in part C of this 
discussion).

    Here, the evidence demonstrates that NIDA has always provided 
marijuana to researchers at cost or for free--and at no profit to NIDA. 
Privately funded researchers receive marijuana at NIDA's cost \77\ and 
HHS-funded researchers (who have historically comprised the bulk of the 
marijuana recipients) receive the marijuana at no cost. GX 24, at 2; GX 
31, at 3; Tr. 1212, 1633, 1670-71. Thus, there is no basis to suggest 
that the cost to any researcher under the existing supply arrangement 
is unreasonable. Respondent himself does not so contend; nor does he 
claim that the cost to any researcher of obtaining marijuana would be 
lower if Respondent became registered to grow marijuana. Respondent 
hypothesizes that ``if another manufacturer could produce suitable 
medical marijuana for a lower cost, competitive conditions would, as 
they usually do, benefit the researcher-consumer.'' Resp. Prop. 
Findings at 48. However, Respondent provides no evidentiary basis for 
the proposition that he (or anyone else) could produce marijuana at a 
lower cost than NIDA. Moreover, Mr. Doblin acknowledged that MAPS would 
have a ``profit-making'' motivation as part of its ``operation'' to 
supply marijuana for the purposes of drug development, and that this 
would impact ``costs.'' Tr. 605-606. In contrast, there is no evidence 
that HHS or NIDA is driven in any respect by a profit motive in 
deciding to whom and at what cost to supply marijuana. Even accepting, 
arguendo, Mr. Doblin's testimony that ``we [MAPS] would either provide 
[marijuana] free or at cost through donations to MAPS to other 
researchers who are not doing MAPS funded projects'' (Tr. at 589), this 
would still not demonstrate a lowering of the cost to researchers. This 
is because, if MAPS were so willing to fund all researchers, they could 
do so under the existing system by paying NIDA on a cost-reimbursable 
basis for the marijuana, allowing the researchers to obtain the 
marijuana at no cost to the researchers. Thus, Respondent has not 
demonstrated that competition is inadequate in the way that other 
applicants for registration under Sec.  823(a) have successfully done 
in prior final orders; i.e., by focusing on prices charged by the 
existing registrants that supply the market for the schedule I or II 
controlled substance in question and showing those prices to be 
unreasonable.\78\
---------------------------------------------------------------------------

    \77\ According to Dr. ElSohly, where marijuana is supplied to 
privately funded researchers, ``the researchers would just pay the 
production costs.'' RX 5, at 2.
    \78\ See Penick Corporation, supra; Roxane Laboratories, supra 
(both of which are examined in part C of this discussion). As one 
DEA scientist testified in this proceeding, based on his experience, 
when the agency has historically considered the adequacy of 
competition within the meaning of paragraph 823(a)(1), the analyses 
``all seem to be geared around the economics.'' Tr. at 945.
---------------------------------------------------------------------------

    Respondent also claims that the process by which the NIDA contract 
is awarded is not adequately competitive because the contract requires 
not only that the contractor manufacture marijuana, but also that it 
analyze marijuana samples sent in by law enforcement agencies. Id. at 
48. Respondent further contends that the NIDA process ``does not ensure 
that researchers pay a competitive price [because] NIDA sets the price 
and there is no evidence as to how that price is set.'' Id. Finally, 
Respondent rehashes his argument regarding the quality of NIDA's 
marijuana contending that granting his application would promote 
competition and improvement in the quality of research marijuana. Id. 
at 49.
    The ALJ agreed with Respondent and rejected the Government's 
contention that the NIDA process provides for adequate competition 
because demand for research grade marijuana is limited, the contract is 
periodically put up for

[[Page 2122]]

competitive bidding, and the Convention requires that the Government 
maintain a monopoly on the wholesale distribution of the substance. 
More specifically, the ALJ reasoned that ``[t]he question is not * * * 
whether the NIDA process addresses that agency's needs, but whether 
marijuana is made available to all researchers who have a legitimate 
need for it in their research.'' ALJ at 85. Based on her finding that 
NIDA denied marijuana to two researchers, the ALJ ``answer[ed] that 
question in the negative.'' Id.
    The ALJ also reasoned that analyzing marijuana samples was ``a 
separate activity from cultivating marijuana for research purposes and 
a requirement that a qualified cultivator may not be able to fulfill.'' 
Id. The ALJ thus concluded that ``the NIDA contractual process does not 
* * * render competition in the manufacture of marijuana adequate.'' 
Id.
    I reject both the ALJ's legal conclusions and Respondent's 
arguments. As for the ALJ's (and Respondent's) reasoning that the NIDA 
contractual process does not render competition adequate because the 
contract requires the analyzing of marijuana samples, in executing its 
authority under Sec.  823(a), DEA does not act as a board of contract 
appeals. In any event, the contract does not prohibit the contractor 
from subcontracting this function. See GX 15, at 4 (Request for 
Proposal) (``As this procurement may require expertise in several 
scientific areas, offerors are encouraged to solicit subcontractors or 
expert consultants as appropriate.'') (emphasis added).\79\
---------------------------------------------------------------------------

    \79\ The University of Mississippi subcontracts to another 
entity, Research Triangle Institute (RTI), the responsibilities 
under the contract to produce the marijuana cigarettes (using 
marijuana supplied by the University of Mississippi) and deliver 
them to authorized recipients. Tr. 1162-65, 1168-69; see also 72 FR 
73369 (notice of registration for RTI).
---------------------------------------------------------------------------

    Finally, as for the contention that granting his application would 
provide for competition and thereby promote improvement in the quality 
of research-grade marijuana,\80\ if Respondent believes that he can 
produce a higher-quality product than the current contractor, he should 
bid on the contract.\81\ If he prevails, and demonstrates that his 
project will implement effective controls against diversion, he can 
establish that his registration would be consistent with the public 
interest. Respondent, however, has not been awarded a contract to 
supply NIDA, which, consistent with the Single Convention, is the only 
lawfully authorized wholesale distributor of plant-form marijuana.
---------------------------------------------------------------------------

    \80\ As discussed above, Respondent failed to put forth any 
evidence demonstrating that he is capable of any type of quality 
control relating the manufacture of marijuana and his lack of 
experience and expertise in this field compared to that of Dr. 
ElSohly suggests that he is incapable of improving on the quality of 
marijuana produced by the University of Mississippi.
    \81\ I also note Respondent's contention that the NIDA process 
``does not ensure that researchers pay a competitive price [because] 
NIDA sets the price and there is no evidence as to how that price is 
set.'' Resp. Prop. Findings at 48. Even if marijuana were not 
subject to the Convention's requirement, I would still reject the 
argument because Respondent had the burden of proving that the 
prices are excessive.
---------------------------------------------------------------------------

    Thus, whether viewing the competition aspect of paragraph 823(a)(1) 
by considering the reasonableness of prices paid by those who lawfully 
acquire bulk marijuana for research or by considering the adequacy of 
the competitiveness of the process by which persons may bid to become 
the grower of marijuana for NIDA, Respondent has failed to meet his 
burden. This combined with his failure to meet his burden of 
demonstrating inadequate supply within the meaning of paragraph 
823(a)(1) weighs heavily against granting his application. Nonetheless, 
Respondent raises a host of arguments under the heading of paragraph 
823(a)(1) which--though not actually germane to paragraph 823(a)(1)--
are addressed below.
(c) Additional Arguments Raised by Respondent Under the Heading of 
Paragraph 823(a)(1)
    In lieu of presenting evidence to show that competition is 
inadequate by virtue of unreasonable prices for research-grade 
marijuana or any other economic data, Respondent argues that 
competition should be deemed inadequate within the meaning of paragraph 
823(a)(1) based on his objection to the to ``government monopoly'' 
whereby HHS distributes marijuana to researchers. In other words, the 
very monopoly over the wholesale distribution of marijuana that is 
mandated by the Single Convention (indeed, the element that is at the 
heart of the structure of cannabis control under the treaty) is the 
central basis on which Respondent relies in attempting to meet his 
burden of demonstrating inadequate competition within the meaning of 
paragraph 823(a)(1). This argument is flawed in the following respects. 
As explained above and in part C of this discussion, the competition 
analysis set forth in paragraph 823(a)(1) must be based on actual 
economic considerations in the existing market--not policy questions 
about the wisdom of having the Federal Government control the wholesale 
distribution of marijuana.
    In addition, Respondent's suggestion that paragraph 823(a)(1) can 
be used to defeat the Single Convention's requirement of a government 
monopoly over wholesale marijuana distribution mistakenly construes the 
treaty criterion Sec.  823(a) as being in competition with the public 
interest criterion. In fact, as explained above, an applicant for 
registration under Sec.  823(a) must demonstrate that the proposed 
registration is consistent with both the Single Convention and the 
public interest--and neither criterion is at odds with the other. Both 
the Single Convention and the United States Code are the ``supreme law 
of the land,'' U.S. Const. art VI, and in enacting the CSA, Congress 
made clear that Sec.  823(a) should be interpreted in a manner that is 
consistent with the United States' obligations under the Convention. 
The Agency's interpretation of paragraph 823(a)(1) must therefore 
recognize not only the Convention's specific provisions applicable to 
marijuana, which expressly prohibit competition in the wholesale 
distribution of the substance, but also the background principles which 
underlie both the Convention and the CSA. Accordingly, I reject 
Respondent's invitation to interpret Sec.  823(a) in a manner that 
would abrogate the United States' obligation under the Convention to 
maintain a monopoly in the wholesale trade of marijuana.
    While Sec.  823(a) was enacted subsequent to the Convention--indeed 
it implements the Convention \82\--it is a provision of general 
applicability and contains no explicit reference to marijuana. Under 
settled principles of statutory construction, while a later enacted law 
can sometime repeal an earlier provision, `` `[r]epeals by implication 
are not favored' and will not be presumed unless the `intention of the 
legislature to repeal [is] clear and manifest.' '' National Ass'n of 
Home Builders v. Defenders of Wildlife, 127 S.Ct. 2518, 2532 (2007) 
(quoting Watt v. Alaska, 451 U.S. 259, 267 (1981)). Accordingly, courts 
``will not infer a statutory repeal `unless the later statute expressly 
contradict[s] the original act' or unless such a construction is 
`absolutely necessary * * * in order that [the] words [of the later 
statute] shall have any meaning at all.' '' Id. (quoting Traynor v. 
Turnage, 485 U.S. 535, 548 (1988) (int. quotations and other citations 
omitted)).
---------------------------------------------------------------------------

    \82\ See H.R. Rep. 1444 (91st. Cong., 2d Sess.), reprinted at 
1970 U.S.C.C.A.N. 4566, 4572.

---------------------------------------------------------------------------

[[Page 2123]]

    Here, this rule applies with added force for two reasons. First, 
Respondent's construction would derogate the sovereign authority of the 
United States. See, e.g., E. I. Du Pont de Nemours & Co. v. Davis, 264 
U.S. 456, 462 (1924) (noting that in taking over the railroads, ``the 
United States did so in its sovereign capacity * * * and it may not be 
held to have waived any sovereign right or privilege unless plainly so 
provided''); cf. Federal Power Comm'n v. Tuscarora Indian Nation, 362 
U.S. 99, 120 (1960) (quoting United States v. United Mine Workers of 
America, 330 U.S. 258, 272 (1947) (``There is an old and well-known 
rule that statutes which in general terms divest pre-existing rights or 
privileges will not be applied to the sovereign without express words 
to that effect.''); Sea-Land Service, Inc., v. The Alaska R.R., 659 
F.2d 243, 245 (D.C. Cir. 1981) (holding that ``[t]he Sherman Act * * * 
does not expose United States instrumentalities to liability, whether 
legal or equitable in character, for conduct alleged to violate 
antitrust constraints'').
    Second, Respondent's construction would result in the abrogation of 
the Convention's provision. While Congress may abrogate a treaty, the 
``legislation must be clear to ensure that Congress--and the 
President--have considered the consequences.'' Roeder v. Islamic 
Republic of Iran, 333 F.3d 228, 238 (D.C. Cir. 2003). The D.C. Circuit 
has further explained that ``[t]he `requirement of [a] clear statement 
assures that the legislature has in fact faced, and intended to bring 
into issue, the critical matters involved in the judicial decision.' '' 
Id. (quoting Gregory v. Ashcroft, 501 U.S. 452, 461 (1991)). See also 
Vimar Seguros y Reaserguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 539 
(1995) (``If the United States is to be able to gain the benefits of 
international accords and have a role as a trusted partner in 
multilateral endeavors, its courts should be most cautious before 
interpreting its domestic legislation in such manner as to violate 
international agreements.''); George E. Warren Corp. v. U.S. E.P.A., 
159 F.3d 616, 624 (D.C. Cir. 1998) (upholding agency rule which 
``avoid[ed] an interpretation that would put a law of the United States 
into conflict with a treaty obligation of the United States,'' and 
observing that that ``[s]ince the days of Chief Justice Marshall, the 
Supreme Court has consistently held that congressional statutes must be 
construed wherever possible in a manner that will not require the 
United States to violate the law of nations'') (internal quotations and 
other citations omitted).
    As explained above, Sec.  823(a) is not limited to applicants who 
seek a registration to manufacture marijuana, but rather is a provision 
that applies to every person who seeks a registration to manufacture 
any one of the hundreds of other controlled substances listed in 
schedules I and II. Paragraph 823(a)(1)'s direction to the Attorney 
General to consider the adequacy of competition does not provide a 
clear statement of congressional intent to abrogate the Convention's 
requirement that the United States Government maintain a monopoly on 
the wholesale trade in marijuana. Absent the requisite clear statement, 
I conclude that to the extent the CSA seeks to promote adequate 
competition in the supply of marijuana, the NIDA process satisfies 
Congress' purpose by putting the contract up for competitive bidding at 
periodic intervals then supplying the marijuana to researchers for free 
or at NIDA's cost.
    Respondent also contends that the current NIDA supply is 
``inadequate because a pharmaceutical developer could not reasonably 
rely on NIDA marijuana to take [plant-form] marijuana through the FDA 
new drug approval process.'' Respondent's Resp. at 16; see also 
Respondent Proposed Findings at 45 (``no rational drug sponsor seeking 
to develop botanical marijuana as an FDA-approved product could proceed 
without seeking a source of supply alternative to NIDA's''). Of note in 
this regard, Mr. Doblin testified that MAPS could take plant-form 
marijuana through the FDA-approval process for a cost of $5 to $10 
million notwithstanding ample evidence that the actual costs would be 
considerably more, and that he ``disagree[d]'' with the IOM's 
conclusion that defined and purified cannabinoid compounds ``are 
preferable to plant products, which are of variable and uncertain 
composition.'' Tr. 654; RX 1, at 22. See also GX 53 (letter of GW 
Pharmaceuticals; ``[H]erbal cannabis should comprise only the starting 
material from which a bona fide medical product is ultimately 
derived.''). Mr. Doblin also testified that the safety of smoked 
marijuana would be only ``slightly different'' from that of drugs 
containing cannabinoid extracts, Tr. at 605, notwithstanding the IOM's 
further conclusion that smoking ``is a crude THC delivery system that 
also delivers harmful substances'' such as those found in tobacco, and 
that ``there is little future in smoked marijuana as a medically 
approved medication.'' RX 1, at 195.
    Mr. Doblin's testimony hardly suggests that he is a ``rational drug 
developer.'' But even ignoring his testimony, Respondent's argument is 
meritless. Respondent's contention that ``MAPS can have no confidence * 
* * that NIDA would authorize MAPS to rely on'' NIDA's Drug Master 
File, Resp. Proposed Findings at 44-45, ignores that under the HHS 
Guidance, NIDA is required to ``provide the researcher with 
authorization to reference'' it. GX 24, at 4. Moreover, neither Federal 
law nor FDA's regulations require that a drug developer submit a Drug 
Master File. FDA, Guideline for Drug Master Files, at 2.
    Respondent further contends that NIDA would not be willing to serve 
as supplier to a drug developer because doing so is not part of its 
mission. It is, however, HHS, and not NIDA (which is only a 
subcomponent therein) which sets policy on whether to provide 
marijuana. As for Respondent's insinuation that HHS is biased against 
research that seeks to develop plant-form marijuana into a prescription 
medicine, it is true that Dr. Gust testified that HHS ``strongly 
endorse[s]'' the IOM's view that if marijuana is to provide the basis 
for a prescription medicine, it will be in a medicine which uses ``a 
purified constituent'' and a non-smokable delivery system. Tr. 1722. A 
view based on science is not bias. Moreover, Dr. Gust's testimony made 
clear that PHS does not have a bias against research that is directed 
at developing plant-form marijuana, id. at 1719-20, 1722; and that 
whether plant-form marijuana should be approved as a prescription 
medicine is a question for the FDA-approval process. Id. at 1720. 
Respondent's contention to this effect is therefore rejected.
    In sum, under the text of 21 U.S.C. 823(a)(1), to maintain 
effective controls against diversion, DEA is obligated to consider 
limiting the number of registered bulk manufacturers of any given 
schedule I or II controlled substance to that which can produce an 
adequate and uninterrupted supply of the substance under adequately 
competitive conditions. Thus, every applicant for registration under 
Sec.  823(a) bears the burden of demonstrating that either the existing 
supply or competition is inadequate within the meaning of paragraph 
823(a)(1). For the reasons provided above, Respondent has failed to 
meet this burden. Accordingly, factor one weighs heavily against 
granting his application.
2. Public Interest Factor Two
    The second public interest factor is ``compliance with applicable 
State and local law.'' 21 U.S.C. 823(a)(2). The ALJ stated: ``There is 
neither evidence nor

[[Page 2124]]

contention that Respondent has not complied with applicable laws and I 
therefore find that this factor weighs in favor of granting 
Respondent's application.'' ALJ at 85. In view of this statement, it 
must be repeated that at any hearing on an application to manufacture a 
schedule I or II controlled substance, the applicant has the burden of 
proving that the requirements for registration under 21 U.S.C. 823(a) 
are satisfied. 21 CFR 1301.44(a). Moreover, the issue under the second 
public interest factor is not merely whether an applicant has complied 
in the past with applicable State and local law, but also whether the 
applicant will do so if he becomes registered. Thus, it was imprecise 
for the ALJ to suggest that the absence of evidence regarding past 
compliance with applicable State and local law constitutes a favorable 
showing on behalf of the applicant for purposes of the second public 
interest factor. However, the record is not entirely silent with 
respect to this factor. As the ALJ noted (ALJ at 57), and as Respondent 
has emphasized (Resp. Prop. Findings at 57), Respondent did testify 
that he met with ``state investigators'' who told him that ``a state 
permit would depend on a federal permit being granted.'' Tr. 45. Given 
that the Government did not contest this part of Respondent's 
testimony, I will give Respondent the benefit of the doubt by inferring 
that what he intended to convey was that Massachusetts state officials 
indicated to him that he would be able to obtain a ``registration'' 
under Massachusetts law to manufacture marijuana if and when he were to 
obtain a DEA registration to do so.\83\ I do so despite the fact that 
Respondent did not indicate in his testimony or through the submission 
of any documentary exhibits whether he had actually filed an 
application with the state and submitted the appropriate fee for such 
state registration. Thus, consistent with the ALJ's recommendation, I 
find Respondent has put forth some evidence which (being unrefuted) 
allows for a conclusion that his proposed activities would be in 
compliance with State and local law.
---------------------------------------------------------------------------

    \83\ Analogous to federal law, Massachusetts law provides that 
``every person who manufactures * * * any controlled substance 
within the commonwealth shall upon payment of a fee, * * * register 
with the commissioner of public health, in accordance with his 
regulations, said registration to be effective for one year from the 
date of issuance.'' Mass. Gen. Laws Ann. ch. 94C, Sec.  7(a) (West 
2008). Massachusetts has adopted the CSA schedules of controlled 
substances, making marijuana a schedule I controlled substance under 
state law. See Mass. Gen. Laws Ann. ch. 94C, Sec.  2(a).
---------------------------------------------------------------------------

    The Government took exception, however, to the ALJ's recommendation 
that this factor (paragraph 823(a)(2)) be weighed in favor of granting 
Respondent's application. Gov. Exceptions at 12-13. The Government 
argues that this factor ``is most often relevant'' in cases in which 
practitioners have lost their state controlled substance authorization. 
Id. at 13. Further, the Government contends, ``[w]hile the failure to 
have a required state or local license would prove fatal to an 
application, * * * an expectation by Respondent that the required state 
license will ineluctably follow the granting of a DEA registration and 
a promise to comply with state and local law in the future simply 
renders this factor irrelevant and does not weigh in favor of either 
party.'' Id. In response thereto, Respondent asserts that the lack of 
evidence of noncompliance with state or local law should indeed support 
a finding that this factor weighs in favor of registration. 
Respondent's Resp. at 18-19.
    It is certainly true, as both parties agree, that the evidence 
relating to Respondent's proposed activities cannot be deemed as 
weighing against the pubic interest for purposes of paragraph 
823(a)(2). However, whether one characterizes the evidence relevant to 
this factor as weighing in favor of granting Respondent's application 
or simply neutral seems somewhat a matter of semantics. Given the 
nature of the evidence here (Respondent's mere testimony that he 
anticipates authorization from the state and that he promises to comply 
with state law), I accept the characterization that the evidence is 
favorable as to the second public interest factor, with the caveat that 
this factor is of limited weight commensurate with the nature of the 
evidence.
3. Public Interest Factor Three
    The third public interest factor is ``promotion of technical 
advances in the art of manufacturing these substances and the 
development of new substances.'' 21 U.S.C. 823(a)(3). The ALJ found 
that Respondent has ``considerable experience in cultivating medicinal 
plants, which might promote technical advances in the cultivation of 
marijuana or developing new medications from it.'' ALJ at 85-86. The 
ALJ nonetheless found that ``there is not sufficient evidence in the 
record on which to base a finding as to whether granting Respondent's 
registration would promote technical advances.'' Id. at 86. When asked 
by his own counsel how his registration would promote technical 
advances, Respondent answered in a vague manner:

    Well, I think there is two answers to that as far as I'm 
concerned. One is that, yes, it would make an advance in the 
understanding any possible clinical use of marijuana if we were able 
to supply this to investigators to run trials, and, secondly, as 
I've explained to DEA agents that visited, that we would learn more 
about how the environment affects the constituents in the plant 
material which would enable, if this does become at some stage down 
the road here, becomes a useful drug, and that the manufacturer of 
it has to be controlled under security conditions, they would know 
the environment it needs to be grown under to produce a clinical 
marijuana, medical marijuana.

Tr. at 75-76. In the first part of the above answer, it appears that 
Respondent is simply accepting the word of his sponsor, Mr. Doblin, 
that his obtaining a DEA registration would result in marijuana being 
provided to researchers who would not otherwise obtain it. If so, 
Respondent is relying on a false premise. As discussed at length above, 
the evidence demonstrates that not one bona fide researcher within the 
meaning of the CSA (i.e., one whose protocol has been determined by HHS 
to be scientifically meritorious) has ever been denied marijuana \84\ 
and that, under the new procedures adopted by HHS in 1999, the 
``scientific bar'' has been set relatively low, allowing marijuana to 
be provided to 17 privately funded researchers. As for the second part 
of his answer, in which Respondent attempted to explain how his 
registration would result in learning ``more about how the environment 
affects the constituents in the plant material,'' this explanation is 
noticeably lacking in detail and without any discernable scientific 
basis. By his own admission, Respondent is ``not experienced in growing 
this plant (marijuana).'' Tr. at 40. In comparison, Dr. ElSohly, who 
has been the principal investigator under the NIDA contract and has 
overseen the National Center's work with marijuana since 1980 
(employing a wide variety of

[[Page 2125]]

manufacturing techniques),\85\ has at least seven patents relating to 
the manufacture and identification of marijuana and its derivatives, 
and has authored numerous articles on these subjects that have been 
published in scientific journals. Tr. 1136-38, 1331-36; GXs 65-71, 93. 
Respondent's lack of experience in growing marijuana does not preclude 
a finding under paragraph 823(a)(3) that his proposed activities would 
promote technical advances in the art of manufacturing marijuana and 
developing new substances. Nor does Respondent's lack of expertise in 
this area compared to that of Dr. ElSohly preclude such a finding as it 
is conceivable that a newcomer to a field could make scientific 
discoveries that others have failed to make. However, Respondent's lack 
of experience and expertise combined with the vagaries of his testimony 
as to how he would promote technical advances in the art of 
manufacturing marijuana and developing new substances do not support a 
finding that he would do so. Thus, I concur with the ALJ's 
recommendation as to this factor and conclude that Respondent has 
failed to meet his burden of demonstrating that his proposed activities 
would promote technical advances in the art of manufacturing marijuana 
and developing new substances.
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    \84\ Even with respect to Dr. Abrams--who MAPS seems to believe 
was improperly denied marijuana in the pre-1999 era (before HHS 
changed its policy for providing marijuana to researchers)--
Respondent produced no evidence that HHS's denial was lacking in 
scientific basis. To the contrary, as indicated above, the evidence 
indicates that NIDA initially denied Dr. Abrams' request based on 
valid concerns about the design and scientific merit of his 
protocol. See note 24, supra, and accompanying text. The record 
further reflects that Dr. Abrams corrected these deficiencies to 
NIDA's satisfaction upon submitting a revised protocol and, as a 
result, received marijuana from NIDA in 1997; NIDA also supplied Dr. 
Abrams with marijuana for subsequent studies. Id.
    \85\ The National Center grows marijuana both indoors and 
outdoors and has done so using conventional soil planting from seeds 
and seedlings, as well as using hydroponics (without soil), 
vegetative propagation (using cuttings to retain the genetic 
identity of the ``mother plant''), and micropropagation (vegetative 
propagation using a very small part of plant material rather than a 
cutting). Tr. 1187-1263, 1328-30. It has also utilized a variety of 
harvesting, drying, fertilization, and storage methods to affect the 
THC content of the marijuana, to promote more effective rolling of 
cigarettes, and to isolate certain cannabinoids. Id. It also has in 
its inventory seeds from different parts of the world, which can 
produce marijuana of various potencies. Id. Respondent did not 
identify any cultivation, harvesting, or other manufacturing 
techniques relating to marijuana in which the National Center lacks 
expertise.
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4. Public Interest Factor Four
    The fourth public interest factor is ``prior conviction record of 
applicant under Federal and State laws relating to the manufacture, 
distribution, or dispensing of such substances.'' 21 U.S.C. 823(a)(4). 
I adopt the ALJ's recommended finding that it was ``undisputed that 
Respondent has never been convicted of any violation of any law 
pertaining to controlled substances'' and therefore this factor weighs 
in favor of granting the application. I reject the Government's 
contention that the historical and ongoing activities of Mr. Doblin and 
MAPS relating to controlled substances (which the Government asserts 
are improper but for which there is no evidence in the record of any 
criminal convictions) should be considered under this factor.
5. Public Interest Factor Five
    The fifth public interest factor is ``past experience in the 
manufacture of controlled substances, and the existence in the 
establishment of effective control against diversion.'' 21 U.S.C. 
823(a)(5). Both parties and the ALJ agree that Respondent has no past 
experience in the manufacture of controlled substances, and I so 
find.\86\ Consideration of such experience serves two purposes. First, 
the review of an applicant's track record provides substantial 
information as to prior violations and the likelihood of its future 
compliance with the Act and regulations. See ALRA Laboratories, Inc. v. 
DEA, 54 F.3d 450, 452 (7th Cir. 1995) (``An agency rationally may 
conclude that past performance is the best predictor of future 
performance.''). Second, the experience factor recognizes that the 
regulatory scheme is complex and that having effective controls against 
diversion requires more than simply having a secure building and a 
policy and procedures manual.\87\ Rather, having effective controls 
requires that those controls be properly performed. Thus, Respondent's 
lack of experience in the manufacture of controlled substances cannot 
be dismissed as inconsequential.\88\ Indeed, there is agency precedent 
for concluding, in appropriate circumstances, that lack of such 
experience can be an independent basis for denial of registration.\89\ 
However, I find in this case that Respondent's lack of experience in 
handling controlled substances--while a factor weighing against 
granting his application--should not disqualify him from obtaining a 
registration to bulk manufacture marijuana.
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    \86\ While the ALJ correctly observed that Respondent has no 
experience in the in the manufacture of controlled substances, she 
stated that Respondent ``does have experience in growing medicinal 
plants.'' ALJ at 86. It is unclear whether the ALJ was taking this 
into account for purposes of factor 5, or simply noting it in 
passing, because she ultimately recommended that I conclude ``there 
is not sufficient evidence in the record on which to base a finding 
as to whether granting Respondent's registration would promote 
technical advances.'' Id. In any event, under the text of paragraph 
823(a)(5), experience in the manufacture of anything other than 
``controlled substances'' is immaterial for purposes of factor 5.
    \87\ The CSA and DEA regulations impose a complex and 
comprehensive scheme to protect against diversion. These include not 
only requirements pertaining to the physical security of 
manufacturing facilities, see 21 CFR 1301.73, and employee screening 
procedures, id. 1301.90, but also extensive inventory, record 
keeping, and reporting requirements. See 21 CFR 1304.04 (maintenance 
of records and inventories); id. 1304.11 (inventory requirements); 
1304.22(a) (records for manufacturers); 1304.33 (ARCOS reports); 
1301.74(c) (reporting of theft).
    \88\ Respondent notes the Government's argument that `` `[i]n no 
case involving applications to handle controlled substances, has 
`prior experience' with non-controlled substances ever been 
considered as support for granting an application.' '' Respondent's 
Resp. at 24. Respondent maintains that ``this argument is simply 
wrong,'' and that ``[i]n Chattem Chemicals, Inc., 71 FR 9834, 9838 
(2006) * * * the applicant had no prior experience in processing 
opium alkaloids, the controlled substance for which it sought a 
manufacturer's registration.'' Respondent's Resp. at 24-25. That 
much is true. Respondent ignores, however, that Chattem already held 
registrations to manufacture schedule II controlled substances 
including morphine, codeine and oxycodone, and to import other 
controlled substances. See 71 FR at 9836. In contrast to Respondent, 
who has no relevant experience, Chattem had extensive experience in 
the regulatory scheme and the effective implementation of controls 
against diversion.
    Respondent also notes Dr. ElSohly's testimony to the effect that 
when the University of Mississippi first applied in 1968 for the 
contract to grow marijuana for NIDA's predecessor, ``he lacked 
experience and expertise in security measures relating to controlled 
substances.'' Respondent Resp. at 27. Respondent ignores, however, 
that the registration belongs to the University of Mississippi and 
was issued to it 12 years before Dr. ElSohly took over the project 
and under a different statutory scheme and further that Dr. ElSohly 
had been working on the marijuana project for four years at the time 
he succeeded his predecessor. See Tr. at 1131-32, 1152.
    \89\ Cf. Stephen J. Heldman, 72 FR 4032, 4034 (2007) (noting 
that even ``[w]ere there no evidence of Respondent having engaged in 
illicit activity * * * his lack of experience bars his 
registration'').
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    As to whether there would be, within Respondent's establishment, 
effective control against diversion,\90\ Respondent testified that, 
although he ``did not have a full-blown plan when [he] applied for the 
[DEA registration],'' when DEA personnel conducted an on-site 
inspection of his premises, he assured them that he ``understood the 
need for security'' and that they thought that his proposed room for 
growing marijuana ``could be made secure with no problems.'' Tr. 44-45, 
355-56. Respondent further testified that he

[[Page 2126]]

agreed to meet all DEA security requirements. Tr. 79. The Government 
did not dispute these assertions. I therefore find that Respondent has 
met his burden of demonstrating that, if the registration were granted, 
he would have in place effective controls against diversion.\91\ In 
sum, the evidence bearing on factor five weighs both in favor of and 
against Respondent's application: it indicates that he has no past 
experience in the manufacture of controlled substances but that he will 
have in the establishment effective controls against diversion.
---------------------------------------------------------------------------

    \90\ As explained in part C of the discussion section, this 
aspect of paragraph 823(a)(5) requires DEA to consider, among other 
things, whether Respondent has demonstrated that he will have in 
place appropriate physical security and employee screening as 
required by the DEA regulations and as confirmed through a DEA on-
site inspection of the premises. Also as explained in part C, this 
aspect of paragraph 823(a)(5)--which involves an evaluation of the 
applicant's particular facility, proposed security measures, and 
other controls against diversion to be implemented by the 
applicant--is best viewed as being distinguished from the 
requirement under paragraph 823(a)(1) that DEA maintain effective 
controls against diversion ``by limiting the importation and bulk 
manufacture of such controlled substances to a number of 
establishments which can produce an adequate and uninterrupted 
supply of these substances under adequately competitive 
conditions.''
    \91\ Because the DEA regulations require all registered 
manufacturers of controlled substances to have certain control 
measures in place at all times (21 CFR 1301.71-.74, .76), DEA may 
not issue a certificate of registration to a new applicant until the 
required security measures are actually in place.
    Moreover, while I acknowledge that Respondent testified that he 
would secure the growing area and meet ``appropriate security 
conditions'' (Tr. 79), and I find it is highly unlikely that 
Respondent would personally divert, this does not establish that the 
risk of diversion is minimal. Respondent testified that he usually 
does not go down to the greenhouse to water the plants but leaves 
this task to a technician. Tr. at 254. Moreover, the graduate 
students and technicians ``would probably do the transplanting'' and 
the ``daily check on any environmental controls.'' Id. at 254-55. 
Respondent's testimony begs the question of who would be supervising 
these workers. Furthermore, while Respondent has promised to meet 
appropriate security conditions, it is undisputed that he has no 
experience in the manufacture of controlled substances and the 
regulatory scheme. As he testified: ``I have no experience in the 
control against diversion.'' Tr. 79.
    Thus, my finding under factor five that Respondent would have in 
place effective controls against diversion might be viewed as being 
generous toward Respondent.
---------------------------------------------------------------------------

6. Public Interest Factor Six
    The sixth and final public interest factor is ``such other factors 
as may be relevant to and consistent with the public health and 
safety.'' 21 U.S.C. 823(a)(6). At the outset, it should be noted that, 
because the text of this provision calls on me to consider ``such other 
factors,'' I will not restate in the discussion of factor six the 
evidence that I have already taken into account for purposes of the 
first five public interest factors--even though such evidence might be 
relevant to the determination of whether Respondent's proposed 
registration would be consistent with the public health and safety.
    The most notable evidence relevant to factor six is that relating 
to Mr. Doblin.\92\ Before addressing this evidence, it needs to be made 
clear that I consider irrelevant for purposes of this application 
whether Mr. Doblin, in the expression of his political viewpoints, 
supports the legalization of marijuana and other controlled substances. 
I also consider irrelevant the political activities of the organization 
he heads, MAPS. The expression of political viewpoints enjoys the 
protection of the first amendment. However, it is certainly relevant 
for purposes of factor six whether a person who might be in a position 
to directly influence the activities of a registrant has engaged in 
actual conduct involving controlled substances that fails to comply 
with the federal or state law.
---------------------------------------------------------------------------

    \92\ By its terms, paragraph 823(a)(6) is not limited to conduct 
on the part of the applicant. Rather, its broad wording indicates 
that it is a catchall provision that calls on the agency to consider 
``such other factors [not covered by factors (a)(1) through (a)(5)] 
as may be relevant to and consistent with the public health and 
safety.''
---------------------------------------------------------------------------

    The evidence indicates that Mr. Doblin has been significantly 
involved in Respondent's application process and plans to retain a key 
role in Respondent's activities if the registration is granted. Mr. 
Doblin came up with the idea of sponsoring an applicant for a DEA 
registration who would be a supplier of marijuana other than NIDA, and 
he selected Respondent to be that applicant. Tr. 210-12, 219. Mr. 
Doblin assisted Respondent in filling out the application, supplied 
answers to DEA's supplemental written questions, and agreed, on behalf 
of MAPS, to ``cover all the costs'' associated with the registered 
activities, including the costs of equipment, manufacturing, and 
security installations. Tr. 221-22, 351-52; 383, 583; GX 3, at 1. 
Respondent has agreed that Mr. Doblin, in his role as head of MAPS, 
will take an active role in deciding to whom Respondent will supply the 
marijuana. Tr. 224-26, 358-360. Respondent described the process of 
applying for the DEA registration and the ``project of developing 
marijuana'' as a ``joint effort'' by Mr. Doblin and himself. Tr. 390-
91. Indeed, Respondent testified that his ``understanding'' of his 
``role,'' as well as that of Mr. Doblin, was that dictated to him by 
Mr. Doblin.\93\ Id. at 358. Another part of Mr. Doblin's role would be 
to ``route'' the ``investigators'' (those seeking marijuana for 
research) to Respondent. Id. Mr. Doblin would also decide for 
Respondent the ``strains'' of marijuana to produce and ``allocate'' the 
marijuana produced in accordance with MAPS's priorities. Tr. 589.
---------------------------------------------------------------------------

    \93\ Further indication that MAPS is the driving force behind 
this application is that, when asked to explain the meaning of one 
of his written answers to the questions submitted by DEA as a follow 
up to the application, Respondent admitted that he had ``no idea'' 
whether he was referring to Chemic when he answered that one of the 
proposed recipients of the marijuana that he seeks to produce would 
be an entity that would use ``marijuana delivered through a 
vaporizer device.'' Tr. at 225-26. Nor did Respondent know if this 
entity was authorized under the law to conduct such research or the 
amount of marijuana that would be needed for this research. Id. at 
229. Respondent said that such questions would have to be referred 
to Mr. Doblin. Id. at 226. Respondent acknowledged that the only 
entity he had in mind as a recipient of the marijuana he seeks to 
grow was the researcher that would test the vaporizer. Tr. at 235.
---------------------------------------------------------------------------

    In short, Mr. Doblin has mapped out and assisted in most acts, if 
not every act, that Respondent has taken toward applying for a 
registration to manufacture marijuana and, if the registration were 
granted, Mr. Doblin would continue to maintain responsibility for 
managing and monitoring the activities of the registrant. Given this 
level of involvement by Mr. Doblin--and the passive, if not 
subservient, nature of Respondent's involvement--it is appropriate 
under factor six to consider the following conduct by Mr. Doblin 
relating to controlled substances. First, Mr. Doblin admits that he 
smokes marijuana for ``recreational use'' on a weekly basis. Tr. 716, 
718-19. Thus, Mr. Doblin violates federal and state laws relating to 
controlled substances on a weekly basis.\94\ This demonstrates that Mr. 
Doblin has disregard for the controlled substances laws. It is simply 
inconceivable that DEA would--consistent with its obligations under the 
CSA--grant a registration to engage in certain activities involving 
controlled substances where it is clear that a person who will have any 
role in the oversight and management of such activities routinely 
engages in the illegal use of controlled substances. It is still more 
untenable where that person has the level of oversight and management 
that Mr. Doblin would have--and where the controlled substance he 
illegally uses is the very controlled substance the applicant seeks to 
produce. Indeed, it is remarkable that Mr. Doblin would--given his 
admitted illegal involvement in controlled substances--ask DEA to 
effectively grant him permission to take on such a prominent role in 
the manufacture of the most widely abused illegal controlled substance 
in the United States.
---------------------------------------------------------------------------

    \94\ 21 U.S.C. 844; Mass. Gen. Laws Ann. ch. 94C, Sec.  34 (West 
2008). Mr. Doblin lives in Massachusetts. Tr. 472.
---------------------------------------------------------------------------

    Respondent points to Mr. Doblin's testimony that MAPS has 
previously sponsored research by DEA registrants involving schedule I 
controlled substances other than marijuana. Respondent's Resp. at 23 
(citing Tr. 482-491). Respondent characterizes such research as having 
taken place ``all without a hint of * * * diversion.'' Id. at 23-24. 
However, there is nothing in the record that confirms or refutes this

[[Page 2127]]

characterization; nor does the record indicate exactly what role Mr. 
Doblin played in the prior MAPS-sponsored research.\95\ In any event, 
even assuming that MAPS has previously sponsored DEA-registered 
researchers without incident, this does not undo the legitimate 
concerns that came to light in this proceeding about Mr. Doblin's 
fitness for directing, at least in part, the activities of a DEA-
registered bulk manufacturer of marijuana, given Mr. Doblin's routine 
illegal use of marijuana.
---------------------------------------------------------------------------

    \95\ Respondent does not appear to contend that DEA granted the 
prior registrations to MAPS-sponsored researchers knowing that MAPS 
was the sponsor with Mr. Doblin having the same level of involvement 
that he seeks here, and he cites no part of the record for such a 
proposition.
---------------------------------------------------------------------------

    Thus, Mr. Doblin's ongoing illegal marijuana use, by itself (i.e., 
even putting aside the treaty considerations and Respondent's failure 
to demonstrate inadequate supply or competition within the meaning of 
paragraph 823(a)(1)), provides a sufficient independent basis upon 
which DEA may deny the application.
    Accordingly, based on a consideration of all six pubic interest 
factors set forth in 21 U.S.C. 823(a), I conclude the Respondent has 
failed to meet his burden of demonstrating that his proposed 
registration is consistent with the public interest. To the contrary, 
the evidence is compelling that the registration is inconsistent with 
the public interest.

C. The Meaning of 21 U.S.C. 823(a)(1)

    This section of the discussion contains a far more extensive 
analysis of 21 U.S.C. 823(a)(1) (hereafter, ``paragraph 823(a)(1)'') 
than DEA has previously published. As indicated above, for ease of 
exposition, due to the length of this analysis, it is being presented 
here as a separate section of the discussion rather than inserting it 
directly into the above discussion of the public interest factors.
1. The Text of the Statute
    The appropriate starting point for the analysis of any statute is 
the text of the statute itself. The text of Sec.  823(a) remains the 
same today as it was when the CSA was enacted by Congress in 1970. It 
states:

(a) Manufacturers of controlled substances in schedule I or II

    The Attorney General shall register an applicant to manufacture 
controlled substances in schedule I or II if he determines that such 
registration is consistent with the public interest and with United 
States obligations under international treaties, conventions, or 
protocols in effect on May 1, 1971. In determining the public 
interest, the following factors shall be considered:
    (1) Maintenance of effective controls against diversion of 
particular controlled substances and any controlled substance in 
schedule I or II compounded therefrom into other than legitimate 
medical, scientific, research, or industrial channels, by limiting 
the importation and bulk manufacture of such controlled substances 
to a number of establishments which can produce an adequate and 
uninterrupted supply of these substances under adequately 
competitive conditions for legitimate medical, scientific, research, 
and industrial purposes;
    (2) Compliance with applicable State and local law;
    (3) Promotion of technical advances in the art of manufacturing 
these substances and the development of new substances;
    (4) Prior conviction record of applicant under Federal and State 
laws relating to the manufacture, distribution, or dispensing of 
such substances;
    (5) Past experience in the manufacture of controlled substances, 
and the existence in the establishment of effective control against 
diversion; and
    (6) Such other factors as may be relevant to and consistent with 
the public health and safety.

    Thus, the statute allows DEA to register an applicant to bulk 
manufacture a schedule I or II controlled substance only if the Deputy 
Administrator \96\ determines that the proposed registration would be 
consistent with both (i) the Single Convention and (ii) the public 
interest. In determining whether the proposed registration is 
consistent with the public interest, the statute requires DEA to 
evaluate the above six factors. The first factor, set forth in 21 
U.S.C. 823(a)(1) (referred to in this discussion as ``paragraph 
823(a)(1)''), requires the Deputy Administrator to consider 
``maintenance of effective controls against diversion * * * by limiting 
the * * * bulk manufacture of such controlled substances to a number of 
establishments which can produce an adequate and uninterrupted supply 
of these substances under adequately competitive conditions for 
legitimate medical, scientific, research, and industrial purposes.'' 
(Emphasis added.) Thus, Congress stated in paragraph 823(a)(1) that--in 
order to maintain effective controls against diversion of a given 
schedule I or II controlled substance--DEA must consider limiting the 
number of registered bulk manufactures of the substance to that ``which 
can produce an adequate and uninterrupted supply of these substances 
under adequately competitive conditions.''
---------------------------------------------------------------------------

    \96\ Pursuant to 21 U.S.C. 871(a), functions vested in the 
Attorney General by the CSA have been delegated to the Administrator 
of DEA. 28 CFR 0.100(b). The function of issuing final orders 
regarding applications for registration has been further delegated 
to the Deputy Administrator. 28 CFR 0.104, appendix to subpart R, 
sec. 7(a).
---------------------------------------------------------------------------

    While the above-quoted text of paragraph 823(a)(1) is relatively 
straightforward, consulting the dictionary helps to confirm the 
meaning. The word ``limiting'' (or ``limit''), when used as a verb, is 
defined as ``to assign certain limits to; prescribe,'' ``to restrict 
the bounds or limits of,'' or ``to curtail or reduce in quantity or 
extent.'' \97\ The word ``limit,'' when used as a noun, is defined as 
``something that bounds, restrains or confines'' or ``the utmost 
extent.'' \98\ Thus, the command under paragraph 823(a)(1) that DEA 
consider ``limiting'' the number of registered bulk manufacturers of a 
given schedule I or II controlled substance can be construed to mean 
that the upper boundary on the number of such manufacturers is that 
``which can produce an adequate and uninterrupted supply of these 
substances under adequately competitive conditions for legitimate 
medical, scientific, research, and industrial purposes.''
---------------------------------------------------------------------------

    \97\ Merriam-Webster OnLine, http://www.merriam-webster.com/dictionary (2008).
    \98\ Id.
---------------------------------------------------------------------------

    It is notable that, by requiring DEA to consider limiting the 
number of bulk manufactures of a given schedule I controlled substance 
to that ``which can produce an adequate and uninterrupted supply * * * 
under adequately competitive conditions,'' paragraph 823(a)(1) does not 
allow DEA simply to register as many bulk manufacturers of a given 
schedule I or II controlled substance as the market will bear. Rather, 
DEA is obligated under paragraph 823(a)(1) to consider disallowing 
additional entrants into the schedule I and II bulk manufacturing 
market unless DEA concludes that addition of a particular applicant is 
necessary to produce ``an adequate and uninterrupted supply of [a given 
substance] under adequately competitive conditions.''
    This reading of paragraph 823(a)(1) is also consistent with the 
overall structure of the CSA. The Act places each controlled substance 
into one of five schedules based on: whether the substance has a 
currently accepted medical use in the United States; the substance's 
relative potential for abuse; and the extent to which abuse of the 
substance may lead to psychological or physical dependence.\99\ As the 
United States Supreme Court has stated, ``[t]he Act then imposes 
restrictions on the

[[Page 2128]]

manufacturing and distribution of the substance according to the 
schedule in which it has been placed.'' \100\ ``Schedule I,'' as the 
Court observed, ``is the most restrictive schedule.'' This is 
commensurate with the fact that schedule I controlled substances are 
the only controlled substances with no currently accepted medical use 
in treatment in the United States. Schedule II restrictions are the 
next most restrictive (less restrictive than those for schedule I 
controls but more restrictive than those for schedules III, IV, and 
V)--commensurate with schedule II substances having the highest 
potential for abuse of those controlled substances that have a 
currently accepted medical use (those in schedules II through V).
---------------------------------------------------------------------------

    \99\ 21 U.S.C. 812(b).
    \100\ OCBC, 532 U.S. at 492 (2001).
---------------------------------------------------------------------------

    Consistent with this basic CSA principle of applying greater 
controls to the substances that are most subject to abuse and most 
harmful when abused, the CSA is structured to apply certain critical 
control provisions to schedule I and II substances but not to those in 
schedules III, IV, and V. For example, the CSA imposes quota 
restrictions and order form requirements for schedule I and II 
controlled substances but not for those in schedules III, IV, and 
V.\101\ Paragraph 823(a)(1) is another example of this principle. The 
required consideration in paragraph 823(a)(1) of limiting the number of 
bulk manufacturers of schedule I and II controlled substances (to that 
which can produce an adequate and uninterrupted supply of a given 
substance under adequately competitive conditions) is noticeably absent 
from paragraph 823(d)(1), which governs the registration of 
manufacturers of schedule III, IV, and V controlled substances. This 
contrast between the presence of the ``limiting'' language in paragraph 
823(a)(1) and its absence from paragraph 823(d)(1) underscores the 
importance of this requirement--particularly in view of Congress's 
overall scheme of placing the greatest restrictions on substances in 
schedules I and II.
---------------------------------------------------------------------------

    \101\ 21 U.S.C. 826 & 828.
---------------------------------------------------------------------------

    Another consideration when interpreting the language of paragraph 
823(a)(1) is a comparison of its terms with those of paragraph 
823(a)(5). As indicated above, paragraph 823(a)(5) is one of the six 
factors DEA must consider when evaluating an application for 
registration to bulk manufacture a schedule I or II controlled 
substance. Paragraph 823(a)(5) requires consideration of, among other 
things, ``the existence in the establishment of effective control 
against diversion.'' (Emphasis added.) The plain meaning of this 
language is that the Deputy Administrator must evaluate whether the 
particular facility in which the applicant proposes to manufacture the 
schedule I or II controlled substance will have in place effective 
safeguards to prevent diversion. This would include, among other 
considerations, appropriate physical security and employee screening as 
required by the DEA regulations \102\ as confirmed through a DEA on-
site inspection of the premises. That paragraph 823(a)(5) expressly 
requires the Deputy Administrator to consider ``the existence in the 
establishment of effective control against diversion'' is a further 
indication that paragraph 823(a)(1) is not intended to cover precisely 
the same consideration. To restate this interpretation somewhat, 
whereas paragraph 823(a)(1) can be viewed as preventing diversion on a 
registrant-wide scale (by directing the agency to consider limiting the 
total number of registered bulk manufacturers and importers of schedule 
I and II controlled based on the principle--discussed below--that fewer 
registrants decreases the likelihood of diversion), paragraph 823(a)(5) 
can be viewed as preventing diversion on an individual-registrant basis 
(by directing the agency to consider whether the applicant will have in 
place, in its particular establishment, effective controls against 
diversion).\103\
---------------------------------------------------------------------------

    \102\ See 21 CFR 1301.71-1301.93.
    \103\ As discussed below, some prior DEA final orders have 
construed paragraph 823(a)(1) to require consideration of the 
existence in the establishment of effective control against 
diversion. While this factor must be considered in evaluating any 
application for registration under Sec.  823(a), it is best 
considered only for purposes of paragraph 823(a)(5) and not mingled 
with the analysis under paragraph 823(a)(1).
---------------------------------------------------------------------------

    In sum, for the preceding reasons, examining the text of paragraph 
823(a)(1) can lead squarely to the conclusion that it requires DEA to 
maintain effective controls against diversion by considering ``limiting 
the * * * bulk manufacture of [schedule I and II] controlled substances 
to a number of establishments which can produce an adequate and 
uninterrupted supply of these substances under adequately competitive 
conditions.''
2. Legislative History of the Statute
    Congress derived paragraph 823(a)(1) from the Narcotics 
Manufacturing Act of 1960 \104\ (which was superseded by the CSA in 
1970). Under the 1960 Act, a person seeking to manufacture a basic 
class of narcotic drugs was required to obtain a license from the 
Secretary of the Treasury Department. Within the Treasury Department, 
this function was delegated to the Commissioner of the Bureau of 
Narcotics (a predecessor of DEA). Section 8 of the 1960 Act set forth 
the criteria that the Commissioner was required to consider in 
determining whether to issue a narcotics manufacturing license. 
Paragraph (a)(1) of section 8 of the 1960 Act was the analog to 
paragraph 823(a)(1) of the CSA. Paragraph (a)(1) provided that, in 
determining whether to issue a license to an applicant seeking to 
manufacture a basic class of narcotic drug, the Commissioner was 
required to consider:

    Maintenance of effective controls against the diversion of the 
particular basic class of narcotic drug and of narcotic drugs 
compounded therefrom into other than legitimate medical and 
scientific channels through limitation of manufacture of the 
particular basic class of narcotic drug to the smallest number of 
establishments which will produce an adequate and uninterrupted 
supply of narcotic drugs of or derived from such basis class of 
narcotic drugs for medical and scientific purposes, consistent with 
the public interest.

(Emphasis added.)
---------------------------------------------------------------------------

    \104\ 74 Stat. 55 (1960).
---------------------------------------------------------------------------

    As the italicized language above indicates, the 1960 Act reflected 
the then-policy of the United States to limit the number of licensed 
manufacturers ``to the smallest number of establishments which will 
produce an adequate and uninterrupted supply''--without regard to 
whether there was adequate competition. Plainly, there are both 
similarities to and distinctions between this provision of the 1960 Act 
and its counterpart in the CSA. The CSA carried forward the concept of 
``limiting'' the number of registered manufacturers (with respect to 
schedule I and II controlled substances). However, the CSA modified 
this requirement by providing that this limitation on the number of 
manufacturers be based not only on that which can produce ``an adequate 
and uninterrupted supply,'' but also on that which provides for 
``adequately competitive conditions.'' Put slightly differently, when 
Congress enacted the CSA, it raised the ceiling on the number of 
manufacturers from that which can produce ``an adequate and 
uninterrupted supply'' to a consideration of that which can produce 
``an adequate and uninterrupted supply * * * under adequately 
competitive conditions.'' \105\ The policies underlying

[[Page 2129]]

this change in the law are summarized in the following exchange during 
the Congressional hearings on the enactment of the CSA. The exchange 
was between Senator Hruska (one of the co-sponsors of the various bills 
that led up to the CSA) and then-Attorney General Mitchell:
---------------------------------------------------------------------------

    \105\ To be precise, the text of the CSA (in contrast to that of 
the 1960 Act) does not unambiguously impose an absolute ceiling on 
the number of registered manufacturers (that which can produce an 
adequate and uninterrupted supply under adequately competitive 
conditions). Rather, as indicated above, the text of the CSA 
requires DEA to ``consider * * * limiting'' the number of 
manufacturers to such a number (along with considering the other 
public interest factors). It should also be noted that, whereas the 
1960 Act referred to allowing only ``the smallest number of 
establishments which will produce an adequate and uninterrupted 
supply'' (emphasis added), the CSA does not contain the term 
``smallest'' in paragraph 823(a)(1). Nonetheless, as explained 
above, the use of the term ``limiting'' in paragraph 823(a)(1) can 
be construed to mean that DEA, when evaluating an application under 
Sec.  823(a), must consider keeping as the upper boundary on the 
number of manufacturers that which can produce an adequate and 
uninterrupted supply under adequately competitive conditions. In 
other words, even though Congress when it enacted the CSA did not 
carry forward from the 1960 Act the term ``smallest,'' because it 
did carry forward the term ``limiting,'' it retained the concept of 
an upper limit on the number of manufacturers as a factor to be 
considered when evaluating an application for registration under 
Sec.  823(a).

    Senator Hruska: We have two national policies involved here. One 
is the anticompetitive situation policy. The antitrust law is a very 
well-established concept * * * . We also have another national 
policy have we not, Mr. Attorney General? We have entered into a 
global series of agreements in which we undertake in joint action 
with other nations the business of controlling the manufacture and 
distribution of the opiates and final derivatives of opium. Among 
those agreements is this principle: That we urge upon nations to 
keep the number of producers down to as low a point as possible to 
facilitate and to make more certain their ability to control and 
supervise the output and to keep it in normal and proper legal 
channels. We have these two national policies involved here, have we 
not?
    Mr. Mitchell: Yes sir, you have both of them, and there is no 
intention on the part of the Justice Department nor the Bureau of 
Narcotics and Dangerous Drugs by this provision to expand beyond 
necessity, and of course those are the key words, any manufacturers 
in this particular area. We felt it was necessary to maintain the 
protection of the consumer from the price structure point of view 
and that is why the additional provisions have been added.\106\
---------------------------------------------------------------------------

    \106\ Hearings Before the Subcomm. to Investigate Juvenile 
Delinquency of the Comm. on the Judiciary, United States Senate, 
91st Cong. 261-262 (1969).

    During that same hearing, the Department of Justice submitted in 
writing its position regarding a proposed version of what would become 
paragraph 823(a)(1). In that document, the Department of Justice stated 
the following with respect to the then-pending proposal to deviate in 
the CSA from the 1960 Act by adding the consideration of adequacy of 
competition, and how the Department would carry out such proposal, if 
---------------------------------------------------------------------------
enacted:

    There is no reason to assume that the Attorney General will 
prejudice his primary objectives of effective control by excessive 
licensing. Nor will he undertake direct price control. He will be 
empowered to take cognizance of evidence showing that prices are 
clearly and persistently excessive. The criteria for determining 
whether prices far exceed that which is reasonable relate to 
reasonable costs and reasonable profits. No explicit statement of 
criteria is needed. If evidence indicates that additional licensing 
will result in more reasonable prices with no significant diminution 
in the effectiveness of drug control, the Attorney General should be 
able to license the additional manufacturers.\107\
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    \107\ Id. at 372. Although this statement by the Department of 
Justice was commenting on an earlier version of the bill, the 
modified version of the bill that ultimately was enacted retained 
the same principles as the earlier version under which the adequacy 
of competition would become a consideration in determining whether 
to grant applications to become registered to manufacture schedule I 
or II controlled substances.

    Consistent with the foregoing statements made during the Senate 
hearings, a subsequent Senate report contained the following statement, 
which echoes the language of what is now in paragraph 823(a)(1): 
``[T]he Attorney General must limit the importation and manufacture of 
schedules I and II substances to a number of establishments which can 
produce an adequate and uninterrupted supply under adequately 
competitive conditions for legitimate purposes.'' \108\
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    \108\ Controlled Dangerous Substances Act of 1969: Report of the 
Comm. on the Judiciary, United States Senate, 91st Cong. 7 (1969).
---------------------------------------------------------------------------

    Thus, the legislative history reaffirms several principles already 
evident from the text of paragraph 823(a)(1) and expands upon those 
principles. The legislative history confirms that paragraph 823(a)(1) 
indeed was designed to require the Attorney General to take into 
account limiting the number of bulk manufacturers (and importers) of 
schedule I and II controlled substances. However, this limit was not as 
restrictive as under the law that preceded the CSA. Whereas under the 
1960 Act, additional manufacturers could only be added if supply was 
inadequate, the CSA added the consideration of adequacy of competition. 
Nonetheless, as the legislative history reflects, Congress under the 
CSA placed the burden on the applicant seeking to become registered to 
bulk manufacture a schedule I or II controlled substance to put forth 
evidence demonstrating either inadequate supply or inadequate 
competition.
    The legislative history also reflects the recognition by Congress 
of a crucial principle underlying paragraph 823(a)(1): That the risk of 
diversion tends to increase with each new registered bulk manufacturer 
of a schedule I or II controlled substance. At the same time, the 
language of paragraph 823(a)(1) reflects the determination by Congress 
that--despite the increased risk of diversion resulting from the 
addition of each new registered manufacturer--it is beneficial to the 
public interest to allow the registration of additional manufacturers 
where the Attorney General finds that doing so is necessary to produce 
an adequate and uninterrupted supply of a given substance under 
adequately competitive conditions.\109\
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    \109\ As the statute states, an application for registration 
under Sec.  823(a) may only be granted if DEA determines that such 
registration is consistent with both the public interest and United 
States obligations under the Single Convention. Thus, even if a 
proposed registration were found by DEA to be consistent with the 
public interest based on a consideration of the six public interest 
factors of Sec.  823(a), the registration must be denied if DEA 
finds it would be inconsistent with United States obligations under 
the Single Convention.
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3. Treaty Considerations
    The principle that limiting the number of producers of narcotics 
and other schedule I and II controlled substances tends to promote more 
effective control has long been a part of United States policy and 
incorporated into the international drug control treaties to which the 
United States has been a party and which predate the CSA. Under the 
Single Convention, article 29 addresses the manufacture of narcotic 
drugs. Paragraph 2(b) of article 29 requires parties to the treaty to 
``[c]ontrol under license the establishment and premises in which such 
manufacture may take place.'' With respect to this provision, the 
Commentary to the Single Convention states: ``It is suggested that, in 
order to facilitate control, the licensing system under subparagraph 
(b) should be employed to ensure that the manufacture of drugs, their 
salts and preparations is restricted to as small a number of 
establishments and premises as is practicable.'' Commentary at 322 
(emphasis added); see also id. at 319 (discussing how the concept of 
limiting the number of manufacturers of narcotic drugs was inherent in 
the international drug control treaties that preceded the Single 
Convention).\110\ This is the same

[[Page 2130]]

principle as that referred to in the legislative history of the CSA (in 
the above-quoted exchange between Senator Hruska and the then-Attorney 
General).
---------------------------------------------------------------------------

    \110\ Also illustrative of this point are the following 
statements contained in a 1979 resolution issued by the United 
Nations Commission on Narcotic Drugs, which DEA has cited in a prior 
Federal Register publication: ``Recalling the relevant provisions of 
the Single Convention * * * to limit cultivation, production, 
manufacture and use of narcotic drugs to an amount required for 
medical and scientific purposes * * *'' and ``Bearing in mind that 
the treaties which establish this system are based on the concept 
that the number of producers of narcotic materials for export should 
be limited in order to facilitate effective control. * * *'' Cited 
in 44 FR 33695 (1979) and available at http://daccessdds.un.org/doc/RESOLUTION/GEN/NR0/638/29/IMG/NR063829.pdf?OpenElement.
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4. Pertinent Provision of the DEA Regulations
    The only applications for registration for which the DEA 
regulations require the agency to publish notice in the Federal 
Register are those by persons seeking to bulk manufacture and import 
schedule I and II controlled substances. 21 CFR 1301.33(a) & 
1301.34(a). These are the applications governed by 21 U.S.C. 823(a). In 
the cases of such applications, the regulations further require DEA to 
mail (simultaneously with the publication in the Federal Register) a 
copy of the Federal Register notice to each person registered as a bulk 
manufacturer of the particular schedule I or II controlled substance 
and to each person who has submitted a pending application therefor. 
Id. Any such person may also file written comments or objections to the 
proposed registration. Id.
    That the regulations provide the foregoing procedures in the case 
of applications filed pursuant to 21 U.S.C. 823(a)--and for no other 
categories of applications--is indicative of the distinction between 
the statutory factors for registration contained in subsection 823(a) 
and those contained in all other subsections of Sec.  823. As explained 
above in the discussion of the text of the statute, whereas paragraph 
823(a)(1) requires DEA to consider limiting the number of registered 
bulk manufacturers and importers of a given schedule I or II controlled 
substance to that which can produce an adequate and uninterrupted 
supply under adequately competitive conditions, this consideration 
appears nowhere else in Sec.  823 (i.e., it is inapplicable to all 
other applications for registration). Moreover, the consideration of 
adequacy of supply and competition is the only factor that is unique to 
subsection 823(a). It is therefore implicit that the notice-and-comment 
provisions of the regulations listed above (those contained in 21 CFR 
1301.33(a) and 1301.34(a)) are designed to effectuate the consideration 
by DEA of adequacy of supply and competition. This implication is also 
consistent with the view that, in addition to DEA and the applicant 
itself, those registrants that constitute the existing suppliers (bulk 
manufacturers) of a given schedule I or II controlled substance have 
the requisite knowledge to comment on whether the existing market is 
capable of producing an adequate and interrupted supply under 
adequately competitive conditions.
    Thus, the notice-and-comment provisions of 21 CFR 1301.33(a) and 
1301.34(a) provide further support for interpreting paragraph 823(a)(1) 
as requiring DEA to consider, for purposes of determining the public 
interest, limiting the number of registered bulk manufacturers and 
importers of schedule I and II controlled substances to that which can 
produce an adequate and uninterrupted supply under adequately 
competitive conditions.
    Another provision of the regulations that warrants discussion is 21 
CFR 1301.33(b), which states:

    In order to provide adequate competition, the Administrator 
shall not be required to limit the number of manufacturers in any 
basic class to a number less than that consistent with maintenance 
of effective controls against diversion solely because a smaller 
number is capable of producing an adequate and uninterrupted supply.

Although this provision is somewhat awkwardly phrased, a careful 
examination reveals that it is merely a corollary to paragraph 
823(a)(1). In construing subsection 1301.33(b), it is important to bear 
in mind that an agency regulation cannot deviate from any mandate 
imposed by Congress under the statute that the regulation implements. 
Thus, any reading of subsection 1301.33(b) must be consistent with 
Congress's direction in paragraph 823(a)(1) that DEA consider limiting 
the number of bulk manufacturers of schedule I and II controlled 
substances to that which can produce an adequate and uninterrupted 
supply under adequately competitive conditions.
    With the foregoing principles in mind, subsection 1301.33(b) can be 
broken down into its constituent elements for purposes of analysis as 
follows:
    [squarf] ``In order to provide adequate competition''; i.e., if it 
has been determined under paragraph 823(a)(1) that granting a 
particular applicant a registration to bulk manufacture a given 
schedule I or II controlled substance is necessary to provide an 
adequate and uninterrupted supply of that substance under adequately 
competitive conditions,
    [squarf] ``The Administrator shall not be required to limit the 
number of manufacturers in any basic class to a number less than that 
consistent with maintenance of effective controls against diversion''; 
i.e., if granting the applicant's registration (based on a finding of 
inadequate competition) will bring the total number of registered bulk 
manufacturers of a given schedule I or II controlled substance to a 
number which remains consistent with maintenance of effective controls 
against diversion, DEA is not obligated to keep the total less than 
that number,
    [squarf] ``Solely because a smaller number is capable of producing 
an adequate and uninterrupted supply''; i.e., based solely on the fact 
that the existing number of manufacturers already produces an adequate 
and uninterrupted supply (but under inadequately competitive 
conditions).
    Viewing these elements together, it is apparent that subsection 
1301.33(b) merely states what are direct outgrowths of 21 U.S.C. 
823(a)(1):
    (1) That the existence of an adequate and uninterrupted supply of a 
given schedule I or II controlled substance is not a sufficient basis 
to deny an application by a person seeking to become an additional 
manufacturer of that substance (since inadequate competition may 
provide an independent basis for registration under paragraph 
823(a)(1)) and
    (2) That DEA need not keep the number of registered bulk 
manufacturers to a number below that which is consistent with 
maintenance of effective controls against diversion where adding an 
additional manufacturer is necessary to provide for adequate 
competition.
    Thus, 21 CFR 1301.33(b) can be reconciled with the statutory text 
(paragraph 823(a)(1))--as must be the case for the regulation to be 
valid.\111\
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    \111\ It is unclear why subsection 1301.33(b) was written in the 
manner that it was. Given that the regulation was promulgated 
shortly after the enactment of the CSA in 1970, it is possible that 
it was written to emphasize how paragraph 823(a)(1) represented a 
departure from the provision it superseded in the 1960 Narcotic 
Manufacturing Act. As explained above, the 1960 Act limited the 
number of licensed manufacturers ``to the smallest number of 
establishments which will produce an adequate and uninterrupted 
supply''--without regard to whether there was adequate competition. 
In contrast, when Congress enacted the CSA, it raised the ceiling on 
the number manufacturers to that which can produce an adequate and 
uninterrupted supply under adequately competitive conditions. 
Subsection 1301.33(b) seems to emphasize this distinction between 
the 1960 Act and the CSA by pointing out that, under the latter, DEA 
may not deny an application based solely on the existence of an 
adequate and uninterrupted supply.
    In 2004, the Department of Justice provided Congress with an 
explanation of subsection 1301.33(b) that is consistent with the 
explanation provided in the text above. See Marijuana and Medicine: 
The Need for a Science-Based Approach: Hearing Before the Subcomm. 
on Criminal Justice, Drug Policy and Human Resources, 108th Cong. 
208 (2004) (letter from Assistant Attorney General William Moschella 
to Subcomm. Chairman Rep. Souder) (``The meaning of [21 CFR 
1301.33(b)] can be restated as follows: If DEA determines there is 
inadequate economic competition among the existing manufacturers of 
the particular controlled substance that the applicant seeks to 
produce (e.g., substantial overcharging by the existing 
manufacturers due to an insufficient number of competing 
manufacturers of that controlled substance), and provided further 
that granting the applicant's registration (and thereby increasing 
the total number of manufacturers) is consistent with maintenance of 
effective controls against diversion, DEA is not required to deny 
the application solely because the number of manufacturers currently 
registered can adequately supply the market for that controlled 
substance in terms of quantity and quality of product.'') (emphasis 
in original).

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[[Page 2131]]

5. Prior DEA Statements Regarding the Meaning of Paragraph 823(a)(1)
    As discussed above, I now conclude that the text of paragraph 
823(a)(1) indicates a directive, which is confirmed by the legislative 
history, that the agency consider limiting the number of registered 
bulk manufacturers and importers of controlled substances in schedules 
I and II to that which can produce an adequate and uninterrupted supply 
under adequately competitive conditions. Yet, in various final orders 
and other statements issued by DEA over the years, the agency has at 
times followed this approach and at other times failed to do so.
    For example, in Roxane Laboratories, Inc., 63 FR 55891 (1998), the 
agency applied paragraph 823(a)(1) consistent with the interpretation 
that requires the applicant to demonstrate that the existing 
manufacturer of the controlled substance in question is unable to 
provide an adequate and uninterrupted supply of the substance under 
adequately competitive conditions. Roxane Laboratories, Inc. (Roxane) 
was a company that applied to become registered to import cocaine 
hydrochloride, a schedule II controlled substance, for use in 
pharmaceutical products. As Sec.  823(a) states, both an application to 
import a schedule I or II controlled substance and an application to 
bulk manufacture such a substance must be evaluated under the same 
criteria set forth in Sec.  823(a).\112\ Thus, in Roxane, the Acting 
Deputy Administrator had to evaluate whether the proposed registration 
was consistent with the public interest in view of the six public 
interest factors of Sec.  823(a), including paragraph 823(a)(1).
---------------------------------------------------------------------------

    \112\ See also 21 U.S.C. 958(a) (a registration to import a 
schedule I or II controlled substance must be consistent with the 
public interest, based on consideration of the six criteria of Sec.  
823(a)). Further, 21 U.S.C. 952(a)(2)(B) requires a person seeking 
to become registered to import a schedule I or II controlled 
substance to demonstrate not only that competition among domestic 
manufacturers of the particular substance is inadequate but also 
that competition ``will not be rendered adequate by the registration 
of additional [domestic] manufacturers under section 823.'' Thus, an 
applicant to import a schedule I or II substance must make an 
additional showing beyond that required for an applicant to bulk 
manufacture such a substance. However, as Sec.  823(a) indicates, 
both the applicant seeking to import and the applicant seeking to 
bulk manufacture are subject to the same 823(a) criteria, including 
the same determination under paragraph 823(a)(1) regarding the 
adequacy of competition.
---------------------------------------------------------------------------

    Consistent with the interpretation of paragraph 823(a)(1) under 
which the adequacy of supply and competition must be considered, the 
parties in Roxane presented extensive evidence as to whether there was 
adequate competition within the meaning of the statute.\113\ Toward 
that end, much of the testimony and other evidence introduced in the 
proceedings focused on the historical and prevailing prices for bulk 
cocaine hydrochloride charged by what was then the only registered 
importer of that substance. In addition to presenting factual evidence 
regarding such prices, each side presented its own economic expert to 
testify whether, in view of the prices, competition in the market was 
adequate within the meaning of paragraph 823(a)(1).\114\ Ultimately, 
the Acting Deputy Administrator found that the applicant had met its 
burden under paragraph 823(a)(1) of demonstrating that competition was 
inadequate and, in view of all the applicable statutory factors, 
granted Roxane's application to become registered as an importer of 
cocaine hydrochloride.
---------------------------------------------------------------------------

    \113\ That the existing supply of cocaine hydrochloride was 
adequate within the meaning of paragraph 823(a)(1) was not in 
dispute in Roxane.
    \114\ As indicated above, because Roxane involved an application 
to import a schedule II controlled substance, the applicant was 
required demonstrate that competition was inadequate not only within 
the meaning of paragraph 823(a)(1), but also within the meaning of 
21 U.S.C. 952(a)(2)(B). As to the latter, the DEA regulations 
require consideration of the factors set forth in 21 CFR 1301.34(d). 
These factors are specifically designed to assess competition in the 
context of an import application. However, as Sec.  823(a) 
indicates, an application to import a schedule I or II controlled 
substance must also be evaluated under paragraph 823(a)(1) regarding 
the adequacy of competition.
---------------------------------------------------------------------------

    Four years later, in Johnson Matthey, Inc., 67 FR 39041 (2002), DEA 
again addressed the paragraph 823(a)(1) issue. As in Roxane, Johnson 
Matthey had applied to become registered as, among other things, an 
importer of schedule II controlled substances. Thus, as in Roxane, one 
of the central issues in Johnson Matthey was whether granting the 
application was necessary to provide adequate competition within the 
meaning of paragraph 823(a)(1).\115\ The application was opposed by two 
firms that were already registered as importers of the same substances 
that Johnson Matthey sought to import. These competing firms contended 
at the administrative hearing that they maintained an adequate and 
uninterrupted supply of the substances under adequately competitive 
conditions. The two firms therefore objected to the proposed 
registration under paragraph 823(a)(1), among other grounds.
---------------------------------------------------------------------------

    \115\ As Johnson Matthey had applied to import narcotic raw 
materials, the application also had to be evaluated under 21 U.S.C. 
952(a)(1).
---------------------------------------------------------------------------

    The final order in Johnson Matthey contains no description of the 
evidence presented by the parties during the administrative hearing on 
the competition issue as the final order expressly declared such 
evidence to be irrelevant. Nor does the Johnson Matthey final order 
contain a recitation of the text of paragraph 823(a)(1) or an 
independent analysis of the statutory text. Instead, the Johnson 
Matthey final order simply adopted a proposed rule that was published 
18 years earlier by DEA and subsequently withdrawn by the agency. In 
that subsequently withdrawn 1974 proposed rule (39 FR 12138 (1974)), 
DEA proposed to revise its regulations to state that, during an 
administrative hearing on an application to manufacture a controlled 
substance in schedule I or II, if the ALJ determines that the 
registration would be consistent with maintenance of effective controls 
against diversion, he shall exclude as irrelevant evidence bearing on 
whether existing manufacturers are capable of producing an adequate and 
uninterrupted supply under adequately competitive conditions.
    The Johnson Matthey final order failed to state that, two months 
after DEA published the aforementioned proposed rule in 1974, the 
agency published a notice in the Federal Register that three firms 
(which were then registered bulk manufacturers under Sec.  823(a)) 
filed objections to, and requested a hearing on, the proposed rule, 
asserting that ``the Controlled Substances Act requires a finding 
respecting the adequacy of competition prior to registering any person 
to engage in the bulk manufacture of a schedule I or II substance.'' 39 
FR 20382 (1974). These objections that were submitted in response to 
the 1974 proposed rule reflect precisely the same conclusion regarding 
the meaning of paragraph 823(a)(1) that I find--for the reasons 
discussed above--to be most

[[Page 2132]]

reconcilable with the text of the statute. That DEA withdrew the 1974 
proposed rule a month after publishing these objections (39 FR 26031 
(1974)) is consistent with the conclusion that the proposed rule could 
not be firmly reconciled with the statute.\116\
---------------------------------------------------------------------------

    \116\ The notice of withdrawal of the proposed rule stated that 
DEA was in the midst of reviewing and revising all the agency 
regulations in their entirety and that the proposed amendments 
regarding the competition issue ``are withdrawn so that all proposed 
changes to the regulations may be published together.'' However, DEA 
never again proposed to amend its regulations to eliminate the 
consideration--that paragraph 823(a)(1) mandates--of adequacy of 
supply and competition.
---------------------------------------------------------------------------

    Thus, the Johnson Matthey final order appears to have been flawed 
both procedurally (by relying entirely upon a proposed rule that was 
withdrawn) and substantively (by relying on an interpretation of 
paragraph 823(a)(1) that is, in my view, difficult to reconcile with 
the statutory text). Nonetheless, it must be recognized that the 
Johnson Matthey final order was upheld on appeal in Noramco v. DEA, 375 
F.3d 1148 (D.C. Cir. 2004). Examining the Noramco decision is therefore 
warranted. Before doing so, however, it is necessary to review another 
DEA final order that was issued shortly after Johnson Matthey.
    In Penick Corporation Inc., 68 FR 6947 (2003), DEA evaluated the 
paragraph 823(a)(1) issue in a different manner than it had done eight 
months earlier in the Johnson Matthey final order. As in Roxane and 
Johnson Matthey, Penick had applied with DEA to become registered as, 
among other things, an importer of schedule II controlled substances. 
Also as in Roxane and Johnson Matthey, the applicant's competitors (who 
were already in the market as registered importers of the same 
substances) objected to the proposed registration contending, among 
other things, that the applicant had failed to demonstrate the 
existence of inadequate competition within the meaning of paragraph 
823(a)(1). However, in contrast to the Johnson Matthey final order, the 
Penick final order did not disregard the competition issue as 
irrelevant. Nor did the Penick final order mention the 1974 proposed 
rule (that was subsequently withdrawn), which was relied upon in 
Johnson Matthey. Rather, the Penick final order did examine the 
evidence presented on the competition issue and ultimately concluded: 
``Having found that the market is not adequately competitive, the 
Deputy Administrator concludes that this factor weighs in favor of 
granting Penick's application, even though Noramco and Mallinckrodt are 
capable of maintaining an adequate and uninterrupted supply.'' \117\ 
The Penick final order did not address the Johnson Matthey final order 
or why the two final orders took a differing approach as to the 
competition issue.
---------------------------------------------------------------------------

    \117\ 68 FR at 6950.
---------------------------------------------------------------------------

    Both the Johnson Matthey final order and the Penick final order 
were challenged by a competitor (Noramco) in Noramco v. DEA. The United 
States Court of Appeals for the D.C. Circuit consolidated Noramco's two 
petitions for review into one appellate proceeding. With respect to the 
Johnson Matthey final order, Noramco contended that DEA erred by 
failing to consider the adequacy of competition and limit the number of 
importers to that which can produce an adequate and uninterrupted 
supply under adequately competitive conditions as paragraph 823(a)(1) 
requires. The D.C. Circuit panel reviewed DEA's decision ``under the 
familiar two-step Chevron framework.'' \118\ Under this framework, if 
the reviewing court finds that the statute does not directly address 
``the precise question at issue'' (step one), the court must sustain 
the agency's interpretation if it is ``based on a permissible 
construction of the statute'' (step two).\119\ The court of appeals in 
Noramco upheld the Johnson Matthey final order, under Chevron step two, 
finding that DEA's decision to disregard competition to be a 
``permissible interpretation'' of paragraph 823(a)(1).\120\ 
Simultaneously, the court of appeals in Noramco upheld the Penick final 
order after reciting how DEA did consider the competition issue as 
paragraph 823(a)(1) directs. That the final orders in Johnson Matthey 
and Penick were inconsistent with one another as to the interpretation 
of paragraph 823(a)(1) was rejected by the court of appeals as a basis 
for reversal.\121\
---------------------------------------------------------------------------

    \118\ 375 F.3d at 1152 (citing Chevron U.S.A, Inc. v. Natural 
Res. Def. Council, 467 U.S. 837, 842-43 (1983)).
    \119\ Id.
    \120\ 375 F.3d at 1153.
    \121\ 375 F.3d at 1157 n.8.
---------------------------------------------------------------------------

    It is especially important to note here that, under Chevron step 
two, ``[t]he court need not conclude that the agency construction was 
the only one it permissibly could have adopted to uphold the 
construction, or even the reading the court would have reached if the 
question initially had arisen in a judicial proceeding.'' \122\ 
Accordingly, when the court in Noramco upheld the final order in 
Johnson Matthey, it was not offering an opinion whether that final 
order had interpreted paragraph 823(a)(1) in the best manner; rather, 
the court was merely stating that DEA (being owed the measure of 
Chevron deference accorded to an agency that administers a statute) had 
put forth a ``permissible interpretation'' of the statute. This point 
is underscored by the fact that the court in Noramco also upheld the 
Penick final order, which interpreted paragraph 823(a)(1) in a notably 
different manner than did the Johnson Matthey final order.
---------------------------------------------------------------------------

    \122\ 467 U.S. at 843 n.11.
---------------------------------------------------------------------------

    Thus, nothing in the Noramco decision constrains DEA from 
concluding, as I now do, that the most sound reading of the text of 
paragraph 823(a)(1) is that which requires the agency to consider 
limiting the number of bulk manufacturers and importers of schedule I 
and II controlled substances to that which can produce an adequate and 
uninterrupted supply of a given substance under adequately competitive 
conditions.
    In 2006, another final order was issued involving the competition 
issue. In Chattem Chemicals, Inc., 71 FR 9834 (2006), petition for 
review denied, Penick Corp., Inc. v. DEA, 491 F3d 483 (D.C. Cir. 2007), 
the applicant sought to become registered to import a schedule II 
controlled substance, just as Roxane, Johnson Matthey, and Penick had 
previously done. In the final order, which I issued, I followed the 
Johnson Matthey approach of declining to consider the adequacy of 
competition or supply. In doing so, I expressly noted that this 
approach had been ``approved by the appellate court in Noramco.'' \123\ 
Upon review of the Chattem final order, the court of appeals likewise 
reaffirmed that, under Noramco, this approach of not considering 
adequacy of competition was a permissible reading of the statute. 
Penick, 491 F.3d at 491 n.11. However, for the reasons discussed at 
length above, I now believe that this approach--though deemed 
permissible upon Chevron review--must be rejected in favor of that 
which more accurately follows the text of the statute; i.e., the 
approach that was taken in Roxane and Penick of considering limiting 
the number of bulk manufacturers and importers of a given schedule I or 
II controlled substance to that which can produce an adequate and 
uninterrupted supply under adequately competitive conditions.\124\ In 
addition

[[Page 2133]]

to finding this interpretation to be that which most closely mirrors 
the text of the statute, I believe that, upon consideration of the 
legislative history and treaty considerations discussed above, this 
interpretation most effectively achieves the principles underlying the 
statutory text: Balancing the overarching goal of preventing the United 
States from being a source of domestic and international diversion by 
limiting the number of bulk manufacturers of schedule I and II 
controlled substances with the desire to ensure a level of competition 
adequate to prevent legitimate purchasers of these substances from 
being charged unreasonable prices.\125\ The alternative interpretation, 
though found to be permissible, does not give full effect to these 
principles and provides no mechanism to prevent the proliferation of 
bulk suppliers of schedule I and II controlled substances beyond that 
necessary to adequately supply the legitimate United States demand for 
these materials under adequately competitive conditions. It is 
axiomatic that the proliferation of suppliers of bulk schedule I and II 
controlled substances heightens the risk of oversupply, which in turn 
increases the risk of diversion. The alternative interpretation, 
therefore, does not effectuate the statute and its underlying purposes 
as well as the interpretation followed in this final order.
---------------------------------------------------------------------------

    \123\ 71 FR at 9838.
    \124\ While it is certainly preferable that an agency interpret 
a statutory provision that it administers in a consistent manner 
throughout the agency's existence, the head of an agency ``is not 
estopped from changing a view she believes to have been grounded 
upon a mistaken legal interpretation.'' See Thomas Jefferson 
University v. Shalala, 512 U.S. 504, 517 (1994); cf. Chevron, 467 
U.S. at 863 (``The fact that the agency has from time to time 
changed its interpretation of [a statutory provision] does not * * * 
lead us to conclude that no deference should be accorded the 
agency's interpretation of the statute.'').
    \125\ DEA has never invoked the ``limiting'' language of 
paragraph 823(a)(1) as a basis to revoke the registration of an 
existing bulk manufacturer that is currently utilizing its 
registration to supply the market for a given schedule I or II 
controlled substance, and this final order should not be construed 
as suggesting a departure from such practice.
---------------------------------------------------------------------------

D. Summary of the Discussion

    For the reasons indicated above, I have determined that 
Respondent's proposed registration is inconsistent with United States 
obligations under the Single Convention and with the public interest 
based on a consideration of the factors set forth in 21 U.S.C. 823(a). 
With respect to the Single Convention, Respondent's desire to become 
registered in order to achieve MAPS's goal of ending the Federal 
Government's monopoly on the wholesale distribution of marijuana cannot 
be squared with the requirement under the Convention that there be 
precisely such a monopoly. With respect to the public interest, 
Respondent's failure to demonstrate that the longstanding existing 
system in the United States of producing and distributing research-
grade marijuana under the oversight of HHS and NIDA is inadequate 
within the meaning of 21 U.S.C. 823(a)(1) weighs heavily against 
granting his application. Also with respect to the public interest, the 
admitted conduct relating to controlled substances of Respondent's 
sponsor, Mr. Doblin (in particular, Mr. Doblin's past and ongoing 
conduct relating to marijuana) is unacceptable for anyone seeking to 
have a prominent role in overseeing the controlled substance activities 
of a DEA registrant--especially where the registrant's proposed 
activities are the manufacture and distribution of the very drug 
marijuana. In sum, there are three independent grounds, any of which, 
standing alone, provide a sufficient (indeed, compelling) legal basis 
for denying Respondent's application.
Order
    Pursuant to the authority vested in me by 21 U.S.C. 823(a), as well 
as 28 CFR 0.100(b) & 0.104, appendix to subpart R, sec. 7(a), I order 
that the application of Lyle E. Craker, Ph.D., for a DEA certificate of 
registration as a manufacturer of marijuana be, and hereby is, denied. 
This order is effective February 13, 2009.

    Dated: January 7, 2009.
Michele M. Leonhart,
Deputy Administrator.
[FR Doc. E9-521 Filed 1-13-09; 8:45 am]
BILLING CODE 4410-09-P