DEA Faces Lawsuit Alleging Bias In Marijuana Rescheduling Process

A Washington-based researcher has filed a lawsuit against the Drug Enforcement Administration (DEA), alleging multiple legal violations in the agency's process of rescheduling marijuana. As Forbes reported, the complaint, filed in the U.S. District Court for Western Washington, names the Department of Justice, Attorney General Merrick Garland, DEA Administrator Anne Milgram and DEA Judge John J. Mulrooney II as defendants.

Accusations Of Flawed Process

David Heldreth, CEO of psychedelic research firm Panacea Plant Sciences, claims the DEA's recent actions violate federal law and constitutional principles. He seeks injunctive and declaratory relief to halt the agency’s rulemaking process until these issues are addressed. The case marks a significant challenge to the DEA's handling of marijuana rescheduling, an effort initiated in 2022 following President Joe Biden's directive to reexamine marijuana’s classification.

Currently, marijuana is listed as a Schedule I drug, a category reserved for substances with no accepted medical use and a high potential for abuse. Reclassification to Schedule III would acknowledge its medical potential and lower abuse risk, placing it alongside substances like ketamine and anabolic steroids. Such a shift would also exempt cannabis businesses from Section 280E of the Internal Revenue Code, which prevents them from being able to deduct operating expenses, a significant financial burden on the industry.

A Shift In Federal Marijuana Policy

In April 2024, the DEA endorsed a recommendation from the Department of Health and Human Services (HHS) to reschedule marijuana from Schedule I to Schedule III. This decision was seen as a step forward for the cannabis industry, potentially easing regulatory restrictions and facilitating greater access to traditional banking services. Following this recommendation, the DEA initiated a 62-day public comment period, which concluded on July 22, gathering roughly 43,000 comments from a wide range of stakeholders, including medical professionals, law enforcement and industry advocates.

Despite submitting a request to participate in the hearings, Heldreth's company, Panacea Plant Sciences, was excluded from the list of 25 participants chosen by Milgram. This exclusion is at the heart of Heldreth's lawsuit, which accuses the DEA of bias and of sidelining critical voices in favor of larger, established players in the industry.

Allegations Of Constitutional Violations And Tribal Neglect

Heldreth's complaint highlights several alleged legal violations in the DEA's rulemaking process. He contends that the agency failed to consult Native American tribes despite the significant impact that rescheduling marijuana would have on tribal law enforcement and health services. The lack of federal funding to support these changes, Heldreth argues, places an undue burden on tribal governments.

The lawsuit also claims that the DEA's process favors large cannabis companies with existing Schedule III licenses, effectively shutting out smaller businesses like Panacea Plant Sciences. Heldreth asserts that this exclusion undermines fair participation in the rulemaking process and disproportionately benefits well-established firms.

Additionally, Heldreth challenges the constitutionality of the DEA's Administrative Law Judges (ALJs), arguing that their appointment by the DEA administrator violates Article II of the U.S. Constitution. He calls for a suspension of the ALJ hearings until these issues are resolved, citing bias and a lack of due process in the agency's participant selection.

New Political Climate

The lawsuit emerges during a transitional period in federal marijuana policy. The November election outcome signals potential changes in the cannabis landscape. President-elect Donald Trump has voiced support for reclassifying marijuana at the federal level and expanding banking access for regulated cannabis companies. He also endorsed state-led efforts to legalize recreational marijuana, including a high-profile measure in Florida that ultimately failed to pass.

What's Next For The DEA's Rulemaking?

The DEA's rulemaking process continues, with the presiding administrative law judge set to file a report on the gathered testimony. The agency is required to review this report, along with all materials from the public comment period, before issuing its final decision. The DEA must address significant issues raised during the hearings and provide detailed explanations for its conclusions. The final rulemaking, once completed, will be published in the Federal Register, formally enacting any changes to marijuana's scheduling status.

Potential Turning Point

Heldreth's lawsuit could significantly impact small businesses and Native American tribes, challenging the cannabis industry rules. As the debate over marijuana's legal status continues, the case highlights tensions between federal regulators and stakeholders pushing for a more inclusive, transparent drug policy reform.

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