Justice Department Says Marijuana Rescheduling Case Should Be Paused In Federal Court After DEA Cancels Hearings

The Justice Department is telling a federal court that it should pause a lawsuit challenging the Drug Enforcement Administration’s (DEA) marijuana rescheduling process after the agency’s own judge cancelled upcoming administrative hearings that were set to start next week.

In a filing submitted on Wednesday with the U.S. District Court for the Western District of Washington, the federal government said it agreed with the plaintiff, Panacea Plant Sciences, that the case should be stayed following a DEA administrative law judge’s (ALJ) decision to cancel the underlying agency-level hearings.

This comes months after Panacea Plant Sciences founder and CEO David Heldreth filed the underlying lawsuit that laid out several allegations against DEA, which he said warranted judicial intervention in the agency’s hearings on DOJ’s proposal to move cannabis from Schedule I to Schedule III of the Controlled Substances Act (CSA).

That followed DEA Administrative Law Judge (ALJ) John Mulrooney’s prior denial of Panacea’s request to postpone the upcoming rescheduling hearing over the agency’s alleged “improper blocking” of witnesses.

Heldreth filed a motion last week urging the federal court to stay the case in light of a possible freeze on regulatory proceedings after President-elect Donald Trump takes office next week. The Justice Department’s reply didn’t touch on that aspect of the issue, but it agreed that the case should be postponed in light of the more recent DEA hearing cancellation.

“Although Defendants disagree with many of Plaintiff’s assertions…Defendants agree that this case should be stayed because the marijuana rescheduling hearing to which this case relates has been stayed by the Administrative Law Judge (ALJ) presiding over that hearing,” it said.

“On January 13, 2025, the ALJ cancelled the hearing on the merits of the proposal to reschedule marijuana that was scheduled to commence on January 21, 2025, and stayed the proceeding while certain participants in the hearing pursue an interlocutory appeal of the ALJ’s ruling on a prehearing motion to the Administrator of the Drug Enforcement Administration,” it said.

“In this lawsuit, Plaintiff challenges various aspects of the marijuana rescheduling hearing, but that hearing has been stayed. Accordingly, staying this lawsuit for the duration of the stay of the rescheduling hearing will avoid wasting efforts of the Court or the parties and will promote the orderly course of justice. The Court should enter a stay of all deadlines in the above-captioned case, including Defendants’ deadline to respond to the Complaint.”

In the original lawsuit, Heldreth had argued that the agency’s now-postponed hearing should be stayed for four main reasons, including alleged violations of a Clinton-era executive order requiring federal bodies to consult with tribal entities on rulemaking decisions that impact them, as well as the Regulatory Flexibility Act and Small Business Regulatory Enforcement Fairness Act.

He also claimed that his and Panacea’s exclusion from the hearing appears to be retaliatory, calling it a “punishment for challenging DEA rule-making and other legal activities.”

At least in the short-term, if the federal court ultimately accepts the mutually agreed upon motion to stay its own hearings, it appears DEA won’t need to respond to those charges.

Mulrooney, the DEA judge, cancelled the administrative hearings on Monday.

While he rejected key arguments from rescheduling proponents about how alleged improper communications and witness selection decisions by DEA Administrator Anne Milgram warranted the agency’s removal from the process altogether, he ultimately granted a request for leave to file an interlocutory appeal—canceling the scheduled January 21 merit-based hearing and staying the proceedings for at least three months.

And although Mulrooney cited statutory restrictions on his office’s ability to take actions such as removing DEA as the “proponent” of the proposal to move marijuana to Schedule III, he sharply criticized the agency over various procedural missteps that he argued contributed to a delay of the rulemaking, potentially indefinitely as a new administration is set to come into office next week.

In the background of the order, Mulrooney on Monday also condemned DEA over its “unprecedented and astonishing” defiance of a key directive related to evidence it is seeking to use in the marijuana rescheduling proposal.

At issue is DEA’s insistence on digitally submitting tens of thousands of public comments it received in response to the proposed rule to move cannabis to Schedule III.

“Even among the numerous extraordinary and puzzling actions taken thus far by the Government during the course of this litigation, this disobedience of an unequivocal directive from the tribunal is unprecedented and astonishing,” he said.

Mulrooney hasn’t been shy about calling out DEA over various procedural missteps throughout this rescheduling process.

For example, last month he criticized the agency for making a critical “blunder” in its effort to issue subpoenas to force Food and Drug Administration (FDA) officials to testify in hearings—but he allowed the agency to fix the error and ultimately granted the request.

DEA on Monday had asked the ALJ to reject a request to have it removed from the marijuana rescheduling hearings over allegations it opposes the reform it is supposed to be defending during the proceedings—while still declining to clarify where it actually stands on the proposal.

That came in response to a motion filed by pro-rescheduling witnesses Village Farms International, Hemp for Victory, the Connecticut Office of the Cannabis Ombudsman, Ellen Brown and My Doc App, whose motion was central to the postponement of the initial hearings.

The DEA judge rejected the cannabis groups’ earlier request to remove the agency as the proponent of the rescheduling rule, but he did seem to put weight into separate allegations that it engaged in unlawful communication with another DP, the prohibitionist group Smart Approaches to Marijuana (SAM).

Relatedly, a federal judge also recently dismissed a lawsuit seeking to compel DEA to turn over its communications with the anti-cannabis organization.

Meanwhile, Mulrooney recently denied a cannabis research company’s request to allow it to add a young medical marijuana patient and advocate as a witness in the upcoming rescheduling hearing.

Also, one of the nation’s leading marijuana industry associations asked the judge to clarify whether it will be afforded the opportunity to cross-examine DEA during the upcoming hearings on the cannabis rescheduling proposal.

Further, a coalition of health professionals that advocates for cannabis reform recently asked that the DEA judge halt future marijuana rescheduling hearings until a federal court is able to address a series of allegations they’re raising about the agency’s witness selection process.

That came on the same day the Mulrooney issued a ruling that laid out the timeline for merit-based hearings on the rescheduling proposal.

Doctors for Drug Policy Reform (D4DPR) requested that the DEA judge stay the hearings—which are currently set to commence on January 21—pending a review from the U.S. District Court for the District of Columbia Circuit. A separate organization that was also denied participation, Veterans Action Council (VAC), similarly filed a petition with the same court last month to request a review of the agency’s decision to exclude it from the proceedings.

The rescheduling proceedings have generated significant public interest. While moving marijuana to Schedule III wouldn’t federally legalize it, the reform would free up licensed cannabis businesses to take federal tax deductions and remove certain research barriers.

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In a prehearing statement submitted in November, DEA previewed the testimony its two agency witnesses plan to provide at the upcoming hearing—without clarifying where it stands on the rescheduling proposal.

While the initial preliminary hearing happened last week, the merit-based proceedings were delayed until at least early 2025 after Mulrooney notified DEA that it provided insufficient information about the 25 selected witnesses that DEA Administrator Anne Milgram submitted.

Mulrooney also rejected a veterans group’s petition to participate in the rescheduling hearing, which the organization called a “travesty of justice” that excludes key voices that would be affected by the potential policy change. That group has asked the U.S. Court of Appeals for the D.C. Circuit to intervene on its behalf.

For what it’s worth, Vice President Kamala Harris said recently that part of the reason for the delay in the administration’s marijuana rescheduling effort is federal bureaucracy that “slows things down,” including at DEA.

In March, Harris also expressed some frustration with the bureaucratic process of rescheduling marijuana, prior to DOJ’s formal recommendation, calling on DEA to expediently finish the job.

While the Biden–Harris administration facilitated the review that led to the DOJ rescheduling proposal, Trump has also voiced support for the reform.

Read the DOJ reply on the motion to stay a lawsuit on marijuana rescheduling below:

DOJ Fed Suit Reply Marijuana Panacea by KyleJaeger on Scribd

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Photo courtesy of Chris Wallis // Side Pocket Images.

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