On April 30, 2024, the Associated Press (AP) reported the Drug Enforcement Administration (DEA) will propose a rule to reschedule cannabis from Schedule I to Schedule III under the Controlled Substances Act (CSA). More specifically, the Department of Justice (DOJ), which has authority over the DEA, submitted a formal rescheduling recommendation to the White House following an August 2023 recommendation from the Department of Health and Human Services (HHS) to the DEA to reschedule cannabis. This process was initiated by President Biden in October 2022 when he instructed HHS and the Attorney General to “initiate the administrative process to review expeditiously how marijuana is scheduled under federal law.” The DEA is required to follow certain procedures established in both the CSA and the Administrative Procedures Act (APA), which we will discuss in detail below.

OMB Review
The proposed rule will be subject to review by the White House Office of Management and Budget (OMB) before publication in the Federal Register as a “significant regulatory action” pursuant to Executive Order 12866. The Office of Information and Regulatory Affairs (OIRA), part of OMB, has up to ninety (90) days to review the proposed rule. This deadline could be extended for thirty (30) days; however, the rescheduling review process has thus far progressed with unprecedented speed and there is little reason to believe that the government would slow down at this stage. In other words, if the recent past is any indication, it will take significantly less than 90 days for OMB to complete its review.

Notice and Comment Period
Most rulemaking related to scheduling or re-scheduling drugs or substances under the CSA requires a formal rulemaking process. As we discussed last year, the CSA requires the DEA to undertake formal rulemaking procedures because the APA requires formal rulemaking when the relevant statute explicitly requires rules to be “made on the record after opportunity for a hearing,” which the CSA does. While both formal and informal rulemaking require “notice” and both allow for a public comment period, the processes differ with respect to stakeholder input. Formal rulemaking allows interested parties to request a hearing, while informal rulemaking does not. The hearing involves the presentation of evidence, which may or may not include cross-examination of the agency proposing the rule. Cross-examination could extend the timeline for a final rule.

Following OMB approval, the proposed rule will be published in the Federal Register and become publicly accessible during the comment period, which lasts 30-60 days. If the DEA is accepting written comments, the NPRM will contain detailed instructions for the submission of comments.

We should note the CSA permits the Attorney General to bypass the notice and comment period and the hearing process by issuing an “order” to reschedule a drug without engaging in the rulemaking procedures discussed above, in certain limited circumstances, including when the United States is required to “control” a drug pursuant to an international convention, which is the case with respect to the 1961 Single Convention on Narcotic Drugs (“Single Convention”). The APA likewise carves out a “foreign affairs function” from these rulemaking requirements, which is applicable in the context of rescheduling cannabis and compliance with the Single Convention. In 2018, the DEA leveraged these authorities to reschedule the FDA-approved drug Epidiolex, a form of purified cannabidiol derived from the cannabis plant used to treat seizures associated with rare forms of epilepsy. While the “final order” path would result in a significantly accelerated timeline to a final rule, based on public statements from various government officials, it’s reasonable to anticipate the DEA proceeding with formal rulemaking to reschedule cannabis.

During the rescheduling process, there are several opportunities for outreach and participation from the public. For example, while the proposed rulemaking is under review by OIRA, there is an opportunity for outreach from interested parties to support or oppose the rulemaking. Following OIRA’s approval, the public comment period creates an opportunity for interested parties to submit comments in support or in opposition to the proposed rule. Lastly, there may be an opportunity to submit briefs during the hearing phase, which we explain in greater detail below.

Hearings
The NPRM is also expected to contain detailed instructions for submitting a hearing request within a set timeframe (the “comment period” will be 30-60 days). It’s important to note that the DEA has some level of discretion in granting a hearing, although based on recent public comments from government officials, it’s reasonable to assume that a hearing will be granted. When requesting a hearing, interested parties¹ will be permitted to submit written positions (e.g., briefs) to the Administrative Law Judge (ALJ), who will preside over the hearing, giving interested parties the opportunity to provide testimony in support of or in opposition to rescheduling.

ALJ hearings conducted pursuant to formal rulemaking are conducted similarly to federal bench trials. All parties to the ALJ hearing will receive the “record,” meaning a transcript of the testimony and exhibits, in addition to all papers and requests filed. Once the hearings conclude, the DEA will take the public input into consideration for the final rule.

Outside of providing testimony and evidence for official hearings and submitting (solicited) comments, the APA prohibits interested parties from communicating with the DEA related to the cannabis rescheduling rule before the rule is finalized.

Final Rule and Judicial Review
Upon the conclusion of the ALJ hearing and the expiration of the notice and comment period, the DEA will consider the public input from hearings and solicited comments (if applicable) before promulgating a final rule on cannabis rescheduling. OMB will review the final rule before it can be published in the Federal Register. Pursuant to the Congressional Review Act (CRA), the federal agency promulgating a “major rule,” defined as an economically significant rule that requires OIRA to review, must submit a report to Congress (and GAO) and allow for a 60-day review session, in advance of the rule going into effect. Assuming the cannabis rescheduling rule is a “major rule,” DEA will have to submit the report to Congress and allow for a 60-day review before the rule can go into effect.

Administrative procedures such as judicial review might prolong timelines. If an interested party challenges the final rule during this window, a federal court of appeals may grant jurisdiction whereby a three-judge panel will weigh in on the final rule and its compliance with the APA. While it is impossible to predict whether anyone will challenge the final rule during the judicial review process, precedent indicates that a challenge of this type is unlikely to succeed.

Timing
The process of rescheduling a drug or substance typically takes several years and, in some instances, has taken up to nine years to complete. However, there is ample evidence that the timeline for cannabis rescheduling is moving (and will likely continue to proceed) with unprecedented speed given the political nature of cannabis rescheduling, particularly in the backdrop of a presidential election year and President Biden’s increasingly frequent mentions of cannabis rescheduling efforts. When HHS issued its recommendation to reschedule Marinol from Schedule II to Schedule III in 1998, the NPRM was published in the Federal Register 57 days later, and the Final Rule became effective 180 days after that. Also, when HHS issued its recommendation to reschedule hydrocodone combination products in 2013, the NPRM was published in the Federal Register 73 days later, and the Final Rule became effective 176 days after that. However, even if the OMB took a full 90 days for their review, the notice-and-comment period (including the ALJ hearing process) concluded at the expiration of this 60-day window, and the final rule becomes effective 30 days thereafter, the rule could become effective before the November election.

Related Legal Issues
In recent years, there has been a growing bipartisan push for a legislative solution to legalizing cannabis, though the topic remains contentious. GOP lawmakers have focused their proposed legislation on states’ rights while Democrat lawmakers have emphasized the need for a federal regulatory framework akin to alcohol along with criminal and restorative justice measures, so Congress is far from a consensus on plugging any legal or policy gaps left by rescheduling. Lawmakers likewise have focused on the near-term incremental reform to allow for insurance, commercial banking, and other financial service providers to service the state-sanctioned cannabis industry in the form of the SAFER Banking Act. Time will tell whether the rescheduling announcement lets the air out of the SAFER Banking momentum or if it provides convenient political cover to support a legislative fix that no longer appears controversial within the backdrop of more comprehensive reform like rescheduling.

It’s also highly likely that Attorney General Merrick Garland will issue an updated and expanded version of the “Cole Memorandum,” which was rescinded under the Trump Administration. The 2013 Cole Memorandum (issued by then-Deputy Attorney General James Cole under the Obama Administration) advised the Department of Justice not to enforce Federal prohibition in states that “legalized marijuana in some form . . . except where a lack of federal enforcement would undermine federal priorities.” It is very possible that Attorney General Garland will reinstate and expand upon the Cole Memorandum in the near future in light of the rescheduling process.

What Happens Next?
As of this writing, the DEA has not released its NPRM. Once published in the Federal Register, we anticipate there will be significant public engagement. Our team of experts at Foley Hoag has years of experience with each step of the rulemaking process, starting with OIRA engagement to comment development and drafting and thereafter, and we will continue to monitor and provide timely updates.

[1] “Interested parties” is the term used by federal agencies to describe individuals who are affected by and interested in a rule.