Watching the Pot™ (Oct. 2021)

While it may come as a surprise to some, the U.S. Drug Enforcement Administration (DEA) has called for significantly increasing the production quotas for research-grade cannabis and other psychedelic controlled substances in 2022. In a notice published in the Federal Register on October 18, 2021, the DEA has proposed increasing production quotas for several schedule I controlled substances, citing increased demand for federal research and clinical trials.¹

Specifically, for 2022 quotas, the agency has proposed increasing cannabis extract production to 1,000,000 grams (doubling the current quota), increasing cannabis flower production by 1,200,000 grams (yielding a total of 3,200,000 grams), increasing production of psilocybin to 3,000 grams (doubling the current quota), and increasing production of MDMA from 50 to 3,200 grams (a 6,300% increase). Additionally, the notice states: “DEA supports regulated research with schedule I controlled substances, as evidenced by increases proposed for 2022 as compared with aggregate production quotas for these substances in 2021.”²

While it is not unusual for the DEA to increase production quotas for controlled substances, the agency’s expression of support for regulated research and clinical trials is notable. The DEA made a similar, if not stronger, statement in September—expressing in a Federal Register notice on the same subject: “DEA firmly believes in supporting regulated research of schedule I controlled substances. Therefore, the [Aggregate Production Quota] increases reflect the need to fulfill research and development requirements in the production of new drug products, and the study of marijuana effects in particular, as necessary steps toward potential Food and Drug Administration (FDA) approval of new drug products.”³ These statements by the DEA are consistent with a broader trend among federal authorities, including the FDA, to recognize the therapeutic potential of cannabis and psychedelics.⁴

The DEA’s October notice also recognizes the need for additional licensed cultivators and producers. Historically, DEA-registered cannabis researchers could receive supplies from just one federally-authorized marijuana grower, the University of Mississippi, under the auspices of the National Institute on Drug Abuse Drug Supply Program.⁵ Following a long-running public campaign to expand the pool of licensed growers—including lawsuits filed against the DEA by scientists and other stakeholders—DEA announced in 2019 that it would undertake a process to act on applications for licensure to cultivate marijuana for research purposes.⁶ In May 2021, the DEA announced that it was making progress on its review, with approvals likely for a number of manufacturers who had applied.⁷ Consistent with the May update, the October notice explains that “the agency is working diligently” to review and approve applications to make marijuana for research purposes, and has “approved new applications for registration from manufacturers and corresponding quota applications to grow, synthesize, extract, and manufacture dosage forms containing specific schedule I hallucinogenic substances for clinical trial purposes.”⁸

The DEA’s commitment to research involving cannabis and psychedelics signifies a major shift in the regulatory landscape. While much remains to be done, the hurdles to federal approval—particularly in the therapeutic arena—are being lowered. As this policy plays out in the months and years ahead, those operating in this fast-evolving technology space should consider the importance of intellectual property to their business objectives. Intellectual property plays a uniquely important role in regulated industries, where a period of exclusivity is crucial for recouping initial investments made to develop, test, and secure regulatory approval.⁹

[1] Department of Justice, Drug Enforcement Administration, Proposed Aggregate Production Quotas for Schedule I and II Controlled Substances and Assessment of Annual Needs for the List I Chemicals Ephedrine, Pseudoephedrine, and Phenylpropanolamine for 2022, 86 Fed. Reg. 198, 57690−57699 (Oct. 18, 2021).

[2] Id. at 57692.

[3] Department of Justice, Drug Enforcement Administration, Proposed Adjustments to the Aggregate Production Quotas for Schedule I and II Controlled Substances and Assessment of Annual Needs for the List I Chemicals Ephedrine, Pseudoephedrine, and Phenylpropanolamine for 2021, 86 Fed. Reg. 168, 49346−49354 (Sept. 2, 2021).

[4] IP Hot Topic: FDA Expedites its Efforts to Release CBD Regulations (July 31, 2019), https://www.sternekessler.com/news-insights/client-alerts/ip-hot-topic-fda-expedites-its-efforts-release-cbd-regulations.

[5] Vanessa K. Burrows, Cannabis Considerations for Health Care Entities, 24 J. Health Care L. & Pol’y 89, 105–06 (2021), available at https://digitalcommons.law.umaryland.edu/jhclp/vol24/iss1/5/.

[6] Melissa Schiller, Federal Court Orders DEA to Explain Why It Has Ignored Cannabis Cultivation Applications, Cannabis Business Times (Aug. 6, 2019), available at https://www.cannabisbusinesstimes.com/article/federal-court-orders-dea-to-explain-why-it-has-ignored-cannabis-cultivation-applications/.

[7] DEA Continues to Prioritize Efforts to Expand Access to Marijuana for Research in the United States (May 14, 2021), https://www.dea.gov/stories/2021/2021-05/2021-05-14/dea-continues-prioritize-efforts-expand-access-marijuana-research.

[8] 86 Fed. Reg. 198, 57690−57699 at 57692.

[9] Pauline Pelletier, Deborah Sterling, Monica Riva Talley, IP’s Developing Role In Cannabis Business Strategy, Law360 (June 2019), available at https://www.sternekessler.com/news-insights/publications/ips-developing-role-cannabis-business-strategy.

This article appeared in the October 2021 issue of MarkIt to Market®. To view our past issues, as well as other firm newsletters, please click here.