Scottsdale Research Institute v. DEA

United States Court of Appeals
For the First Circuit

No. 21-1055

DR. LYLE E. CRAKER,

Petitioner,

v.

UNITED STATES DRUG ENFORCEMENT ADMINISTRATION; ANNE MILGRAM,* in
her official capacity as Administrator of the Drug Enforcement
Administration,

Respondents.

No. 21-1323

SCOTTSDALE RESEARCH INSTITUTE,

Petitioner,

v.

UNITED STATES DRUG ENFORCEMENT ADMINISTRATION; ANNE MILGRAM,* in
her official capacity as Administrator of the Drug Enforcement
Administration; MERRICK B. GARLAND, Attorney General,

Respondents.

PETITIONS FOR REVIEW OF A FINAL RULE OF THE DRUG ENFORCEMENT
ADMINISTRATION

* Pursuant to Fed. R. App. P. 43(c)(2), Administrator Anne
Milgram has been substituted for former Acting Administrator
D. Christopher Evans in both petitions for review.
 Before

Barron, Chief Judge,
Lynch and Kayatta, Circuit Judges.

Shane Pennington, with whom Vicente Sederberg LLP, Michael
Perez, Perez Law, Alexandra H. Deal, Paik, Brewington & Deal, LLP,
Matthew C. Zorn, and Yetter Coleman LLP were on brief, for
petitioners.
Daniel Aguilar, Attorney, Appellate Staff, Civil Division,
with whom Brian M. Boynton, Acting Assistant Attorney General, and
Mark B. Stern, Attorney, Appellate Staff, Civil Division, were on
brief, for respondents.

August 9, 2022
 KAYATTA, Circuit Judge. Petitioners -- botany professor

Dr. Lyle Craker and clinical research company Scottsdale Research

Institute (SRI) -- challenge a rule promulgated by the Drug

Enforcement Administration (DEA) that sets the framework through

which applicants may register to lawfully manufacture and

cultivate cannabis for research purposes. For the following

reasons, we deny their petitions for review.

I.

A.

We begin by laying out the statutory and administrative

scheme that governs the registration of prospective cannabis

growers. The Controlled Substances Act (CSA), 21 U.S.C. § 801 et

seq., requires "[e]very person who manufactures . . . any

controlled substance" to first register with the federal

government. 21 U.S.C. § 822(a)(1). This mandate applies to anyone

seeking to "produc[e]" or "cultivat[e]" marijuana, a schedule I

substance. Id. § 802(15), (22) (defining "manufacture" to include

production and cultivation); see also id. § 812, sched. I(c)(10)

(designating "[m]arihuana" as a schedule I controlled substance).1

Congress granted the Attorney General the authority to

register prospective manufacturers of controlled substances, see

id. §§ 822(a), 823(a), and the authority "to promulgate rules and

1 We use the terms marijuana (or marihuana as the CSA calls
it) and cannabis interchangeably throughout this opinion.

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regulations . . . relating to the registration and control of the

manufacture, distribution, and dispensing of controlled

substances," id. § 821. The Attorney General in turn delegated

those powers to the Administrator of the DEA. See 28 C.F.R.

§ 0.100.

Pursuant to this delegated authority, the DEA "shall

register an applicant to manufacture controlled substances in

schedule I or II if [the agency] 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." 21 U.S.C. § 823(a). To

determine whether registration is consistent with the public

interest, the statute enumerates six factors that must be

considered, including the "maintenance of effective controls

against diversion" of the substance, "compliance with applicable

State and local law," the "prior conviction record of [the]

applicant," and "such other factors as may be relevant to and

consistent with the public health and safety." Id. The statute

does not specify how the DEA is to determine that a registration

is consistent with the United States' international treaty

obligations.

The pertinent treaty obligations to which the parties

direct us are those set forth in the Single Convention on Narcotic

Drugs, Mar. 30, 1961, 18 U.S.T. 1407, 520 U.N.T.S. 204 (the "Single

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Convention"). As relevant here, the Single Convention requires

signatories to "prohibit the production, manufacture, export and

import of, trade in, possession or use of [substances including

cannabis] except for amounts which may be necessary for medical

and scientific research only." Id. art. 2.5(b). With respect to

cannabis specifically, the treaty adopts the "system of controls

as provided in article 23 [of the Single Convention] respecting

the control of the opium poppy." Id. art. 28.1. Those controls

require that a signatory's designated government agency (here, the

DEA): (1) "designate the areas in which . . . cultivation . . .

shall be permitted"; (2) authorize only "licensed" cultivators to

"engage in such cultivation"; (3) "specify the extent of the land

on which the cultivation is permitted"; (4) "purchase and take

physical possession of" the cultivated crops; and (5) "have the

exclusive right of importing, exporting, wholesale trading and

maintaining stocks other than those held by manufacturers of . . .

medicinal [cannabis] or [cannabis] preparations." Id. art. 23.2.

Article 23 also makes clear that the functions described above

must be "discharged by a single government agency if the

constitution of the [signatory nation] permits it." Id. art. 23.3.

B.

Prior to the initiation of the present petitions for

review, the DEA had licensed only a single grower under the

registration scheme detailed above -- the National Center for

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Natural Products Research (the "National Center"), a division of

the University of Mississippi. See Lyle E. Craker; Denial of

Application, 74 Fed. Reg. 2101, 2104 (Jan. 14, 2009). The National

Center grows cannabis under a contract with the National Institute

on Drug Abuse, a component of the Department of Health and Human

Services. See id.

In 2016, due in part to greater public interest in

research involving cannabis, the DEA announced a new policy

designed to increase the number of federally registered cannabis

growers. See Applications To Become Registered Under the

Controlled Substances Act To Manufacture Marijuana To Supply

Researchers in the United States, 81 Fed. Reg. 53,846, 53,847

(Aug. 12, 2016). Under the 2016 program, licensed growers would

be "permitted to operate independently, provided the grower

agrees . . . that it will only distribute marijuana with prior,

written approval from DEA." Id. at 53,848. A number of interested

parties, including the petitioners, submitted applications to grow

cannabis under this new policy.

Over the next few years, however, the DEA neither

approved nor denied any applications pursuant to the 2016 program.

Unbeknownst to the applicants, the Department of Justice's Office

of Legal Counsel (OLC) -- the entity charged with providing

authoritative legal advice to executive branch agencies -- was

asked to evaluate the lawfulness of the DEA's existing marijuana

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licensing practices, including the 2016 program. In June 2018,

the OLC issued a formal legal opinion to the acting chief counsel

of the DEA, concluding that the agency "must change its current

practices and the [2016 program] to comply with the Single

Convention." Licensing Marijuana Cultivation in Compliance with

the Single Convention on Narcotic Drugs at 2 (Off. Legal Couns.

Jun. 6, 2018), https://www.justice.gov/olc/file/1272131/download

(the "Marijuana Cultivation Opinion"). Specifically, the OLC

explained that to fulfill the United States' obligations under the

Single Convention, the "DEA must adopt a framework in which it

purchases and takes possession of the entire marijuana crop of

each licensee after the crop is harvested," and the agency "must

generally monopolize the import, export, wholesale trade, and

stock maintenance of lawfully grown marijuana." Id. The OLC's

Marijuana Cultivation Opinion was not released to the public at

the time.

To comply with the OLC's directive, the DEA announced in

March 2020 a notice of proposed rulemaking, indicating its intent

to adopt new rules that would supersede the 2016 program and

"ensure that DEA regulations comply with applicable law." Controls

To Enhance the Cultivation of Marihuana for Research in the United

States, 85 Fed. Reg. 16,292, 16,294 (proposed Mar. 23, 2020) (to

be codified at 21 C.F.R. pts. 1301, 1318) (the "Proposed Rule").

In apparent reference to the OLC's Marijuana Cultivation Opinion,

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the notice of proposed rulemaking indicated that the "DOJ advised

DEA that it must adjust its policies and practices to ensure

compliance with the CSA, including the CSA's requirement that

registrations be consistent with the Single Convention," but the

notice did not include or otherwise incorporate the OLC opinion.

Id. The notice identified the relevant provisions of the Single

Convention, see id. at 16,293–94, and indicated that the Proposed

Rule was needed to "ensure that DEA carries out all five functions

under Article 23 and Article 28 of the Single Convention pertaining

to marihuana," id. at 16,298. The notice of proposed rulemaking

invited comments from the public and interested parties through

May 22, 2020. See id. at 16,292.

Seeking to review the advice from the DOJ that was

referenced in the notice of proposed rulemaking, SRI sued the DEA

and the DOJ under the Freedom of Information Act's affirmative

disclosure provision. See 5 U.S.C. § 552(a)(2). That case

eventually settled, with the DOJ publishing the OLC's Marijuana

Cultivation Opinion to its electronic reading room on April 29,

2020, twenty-three days before the end of the comment period for

the Proposed Rule.

Ultimately, after considering public comments, the DEA

issued a final rule, adopting the Proposed Rule with one minor

modification not relevant to the present petitions. See Controls

to Enhance the Cultivation of Marihuana for Research in the United

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States, 85 Fed. Reg. 82,333 (Dec. 18, 2020) (codified at 21 C.F.R.

pts. 1301, 1318) (the "Final Rule"). The Final Rule addressed,

among other things, public comments the agency had received

regarding the DEA's obligations to control cannabis under federal

law and the Single Convention. See id. at 82,338–40. It also

responded to comments pertaining to the agency's proposed

definition of the term "medicinal cannabis," see id. at 82,340,

which the Final Rule defined to mean "a drug product made from the

cannabis plant, or derivatives thereof, that can be legally

marketed under the Federal Food, Drug, and Cosmetic Act [(FDCA)],"

see 21 C.F.R. § 1318.02(b); see also Final Rule, 85 Fed. Reg. at

82,344.

The Final Rule does not preclude the DEA from registering

more cultivators of cannabis. Indeed, the DEA explained that one

of the purposes of the rule was "to increase the number and variety

of marihuana growers in order to diversify the supply available to

researchers." Final Rule, 85 Fed. Reg. at 82,337. The agency in

fact approved SRI's application to manufacture cannabis last fall.

The petitioners nonetheless challenge the rule as procedurally

deficient, in excess of the DEA's rulemaking authority, and

arbitrary and capricious, while Craker (arguing only for himself)

also claims the rule is impermissibly retroactive as applied to

his still pending application. We address each of these

contentions in detail below.

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 II.

Under the Administrative Procedures Act (APA), we set

aside agency action that is "arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law." 5 U.S.C.

§ 706(2)(A). When an agency seeks to promulgate a legislative

rule (like the Final Rule), the APA generally requires the agency

to first publish a notice of proposed rulemaking and provide

interested parties with a meaningful opportunity to comment on the

proposal. See id. § 553. An agency's failure to comply with these

procedural requirements renders a rule invalid. See N.H. Hosp.

Ass'n v. Azar, 887 F.3d 62, 70 (1st Cir. 2018).

III.

The petitioners begin by raising two perceived

procedural defects with the DEA's notice of proposed rulemaking

that would demand the Final Rule be set aside. First, they argue

that the DEA failed to provide the public with a meaningful

opportunity to engage in the notice-and-comment process by

declining to disclose the legal basis for the Proposed Rule --

namely, the full reasoning in the then-undisclosed OLC opinion

advising the DEA that it must change its registration policies to

comply with federal law and the Single Convention. Second, the

petitioners assert that the DEA never offered its own reasoned

explanation for the rule and instead erroneously characterized

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itself as bound to follow the directives of the OLC's Marijuana

Cultivation Opinion. We address each contention in turn.

A.

We first consider whether the DEA complied with its

procedural obligations under the APA to adequately explain the

legal basis of its rulemaking in its March notice. Unless an

exception applies, the APA requires federal agencies, when

promulgating new legislative rules, to first publish a notice of

proposed rulemaking in the Federal Register. 5 U.S.C. § 553(b).

This notice must include "reference to the legal authority under

which the rule is proposed." Id. § 553(b)(2).

The petitioners argue that the DEA's notice of proposed

rulemaking violated the APA's procedural requirements by failing

to disclose the agency's legal basis for its new rule. They take

aim at the DEA's reference to the OLC's then-unpublished Marijuana

Cultivation Opinion advising the DEA that it must adjust its

registration practices to ensure compliance with federal law and

the Single Convention. This reference, without actual disclosure

of the full OLC opinion, the petitioners argue, deprived the public

of a meaningful opportunity to participate in the rulemaking

process.

The petitioners' reliance on section 553(b)(2) is

misplaced. We have explained that section 553(b)(2) primarily

"functions to ensure that the agency considers whether it actually

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has the authority to make the rule it is proposing, and to give

interested parties a chance to comment on that question." United

States v. Whitlow, 714 F.3d 41, 46 (1st Cir. 2013). That is, it

is designed to make clear to the public the "ostensible basis and

scope of the agency's authority." Id.; see also Telesat Can. v.

FCC, 999 F.3d 707, 713 (D.C. Cir. 2021) (explaining that the agency

met its obligation under section 553(b)(2) by "referencing the

relevant legal authority" and "clearly identif[ying] the basic

governing statute").

The DEA's notice of proposed rulemaking did just that.

It indicated that the Proposed Rule was

being issued pursuant to the [DEA]
Administrator's authority under the CSA "to
promulgate rules and regulations and to charge
reasonable fees relating to the registration
and control of the manufacture, distribution,
and dispensing of controlled substances," and
to "promulgate and enforce any rules,
regulations, and procedures which he may deem
necessary and appropriate for the efficient
execution of his functions under [the CSA]."

85 Fed. Reg. at 16,293 (citations omitted and second alteration in

original) (first quoting 21 U.S.C. § 821 and then quoting 21 U.S.C.

§ 871(b)). The notice cited to the relevant provisions of the CSA

and described both the registration requirement under

section 822(a)(1) and the conditions of registration explicated in

section 823(a). See Proposed Rule, 85 Fed. Reg. at 16,293.

Indeed, the petitioners concede in reply that they "have never

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disputed DEA's legal authority to promulgate the rules at issue

here." Accordingly, the public was properly on notice of the

provenance of the DEA's rulemaking authority.

Relying primarily on D.C. Circuit law, the petitioners

nonetheless contend that section 553(b)(2) requires agencies to

make available to the public the "data the agency used to develop

the proposed rule." Am. Med. Ass'n v. Reno, 57 F.3d 1129, 1133

(D.C. Cir. 1995) (quoting Engine Mfrs. Ass'n v. EPA, 20 F.3d 1177,

1181 (D.C. Cir. 1994)). But it is unclear how this bears on the

present question. A requirement to disclose relevant data sounds

more in section 553(b)(3)'s directive that a notice include

"either the terms or substance of the proposed rule or a

description of the subjects and issues involved," than in

section 553(b)(2)'s requirement to include "reference to the legal

authority under which the rule is proposed." Cf. Conn. Light &

Power Co. v. Nuclear Reg. Comm'n, 673 F.2d 525, 530–31 (D.C. Cir.

1982) (explaining that section 553(b)(3) requires agencies to

disclose "the technical basis for a proposed rule").

In any event, the DEA's notice of proposed rulemaking

did disclose the legal reasoning behind the Proposed Rule, albeit

not at the same fulsome level of detail as in the OLC's Marijuana

Cultivation Opinion. For instance, the notice of proposed

rulemaking describes the five requirements in article 23(2) of the

Single Convention for the supervision, licensing, and distribution

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of marijuana. See Proposed Rule, 85 Fed. Reg. at 16,294. And it

explains that while the DEA "already directly performs [three of

the listed] functions," "[i]n order to ensure that DEA complies

with the CSA and grants registrations that are consistent

with . . . articles 23 and 28 of the Single Convention," the

"proposed rule would amend DEA's regulations so that DEA directly

carries out [the] remaining two functions." Id. This fairly gave

notice to the public, including the petitioners, that issuing the

Proposed Rule was motivated by the conclusion that the DEA's

current marijuana registration scheme did not fully comply with

the relevant articles of the Single Convention as required by the

CSA.

Even if we were to agree with the petitioners that the

APA requires the DEA to have disclosed the OLC's Marijuana

Cultivation Opinion in its notice of proposed rulemaking, the

petitioners can point to no prejudice resulting from this supposed

failure to include more detail about the legal basis of the

Proposed Rule. See 5 U.S.C. § 706 ("[D]ue account shall be taken

of the rule of prejudicial error."); see also Am. Radio Relay

League, Inc. v. FCC, 524 F.3d 227, 237 (D.C. Cir. 2008) (noting

that the failure to disclose information for public comment is

subject to the rule of prejudicial error). The OLC's opinion was

publicly disclosed during the comment period, and various

commenters -- including SRI and an entity affiliated with Craker

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-- had an opportunity to raise issues relating to the document.

See, e.g., Final Rule, 85 Fed. Reg. at 82,340–41 (responding to

"some commenters['s] suggest[ion] that DEA and DOJ misinterpreted

the Single Convention"). The petitioners do not explain what

additional, concrete commentary they would have introduced had the

OLC's opinion been disclosed sooner.

B.

The petitioners also argue that the DEA's rule must be

set aside because the agency failed to provide its own reasoned

explanation for the rule by impermissibly substituting the OLC's

interpretation for its own. The petitioners, however, point to no

authority supporting their view that an agency cannot justify an

action based on its adoption of the OLC's controlling legal advice.

The OLC's purpose, after all, is to provide such authoritative

guidance to executive branch agencies. And bound or not, there is

no indication that the DEA did not itself agree with the OLC's

view on the interpretation of the CSA in the Final Rule. See,

e.g., Final Rule, 85 Fed. Reg. at 82,340 (noting that the "DEA is

bound by the law as DOJ and DEA understand it" (emphasis added)).

Accordingly, there is no merit to the petitioners' argument that

this dooms the DEA's rule.

IV.

The petitioners next contend that the Final Rule exceeds

the DEA's rulemaking authority. First, they argue that the Final

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Rule contravenes the CSA by imposing requirements that are

different from the six enumerated "public interest" factors. See

21 U.S.C. § 823(a). Second, they assert that the Final Rule

impermissibly limits the DEA's statutory authority to waive

section 823(a)'s registration requirements. See id. § 822(d).

And, third, they argue that the DEA's definition of "medicinal

cannabis" in the Final Rule is unduly narrow because it requires

cannabis products be legally marketable under the FDCA to qualify.

The petitioners instead contend that the term "medicinal" must be

given a broader meaning. We consider each argument in turn.

A.

The petitioners argue that the Final Rule exceeds the

DEA's rulemaking authority because it is contrary to Congress's

express instruction to register applicants to manufacture cannabis

if doing so is "consistent with the public interest." 21 U.S.C.

§ 823(a). Section 823(a) lists six factors that the DEA must

consider when determining the public interest:

(1) maintenance of effective controls against
diversion of particular controlled
substances . . . 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;

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 (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.

Id. § 823(a).2 The Final Rule references these six factors

verbatim. It also identifies considerations of "particular

emphasis" for determining the public interest. See 21 C.F.R.

§ 1318.05(b); see also Final Rule, 85 Fed. Reg. 82,353–54. These

considerations include "[w]hether the applicant has demonstrated

prior compliance with [the CSA] and this chapter [of the DEA's

regulations]." 21 C.F.R. § 1318.05(b)(1).

The petitioners assert that the Final Rule nevertheless

contravenes section 823(a) for two main reasons.

1.

First, the petitioners contend that the Final Rule

impermissibly allows the DEA to consider factors not expressly

2 The petitioners make no argument that section 823(a) is
itself beyond Congress's legislative authority.

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enumerated in section 823(a) -- namely, an applicant's past

compliance with state and local laws (as opposed to its current

compliance) and an applicant's compliance with federal law (as

opposed to, more narrowly, its "prior conviction record"). In

support of this narrow reading, the petitioners point out that

section 823(a)(2) only lists "compliance with applicable State and

local law" as a factor to be considered, without any express

mention of past compliance. And they contrast the more specific

reference to an applicant's "prior conviction record under Federal

and State laws" in section 823(a)(4) with more general references

to "compliance . . . with applicable Federal, State, and local

law" elsewhere in the section, see 21 U.S.C. § 823(h)(2); see also

id. § 823(f)(4). These language choices, the petitioners argue,

demonstrate that Congress did not intend for the DEA to consider

these other factors.

But the petitioners' reading of the CSA finds limited

support in the text of the statute. The CSA expressly vests the

DEA with the authority to register an applicant to cultivate

cannabis "if [the agency] determines that such registration is

consistent with the public interest," listing six factors the

agency must consider. 21 U.S.C. § 823(a). While Congress required

the DEA to assess specific factors such as "compliance with

applicable State and local law" and the "prior conviction record

of [an] applicant under Federal and State laws," id. § 823(a)(2),

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(4), the statute also directs the DEA to consider "such other

factors as may be relevant to and consistent with the public health

and safety," id. § 823(a)(6). The question then is whether

considerations like the applicant's past compliance with state and

local laws and compliance with federal law are "such other

factors."

The DEA thought so, and so do we, even without the

benefit of any deference to the DEA's interpretation that might be

called for. The statute expressly authorizes the DEA to consider

"other factors as may be relevant to and consistent with the public

health and safety." Id. Congress itself has concluded that "[t]he

illegal . . . distribution[] and possession and improper use of

controlled substances have a substantial and detrimental effect on

the health and general welfare of the American people." Id.

§ 801(2). Given these considerations, the petitioners make no

serious argument that past compliance with federal, state, or local

laws is not "relevant to and consistent with the public health and

safety." Id. § 823(a)(6). And, indeed, the Final Rule explained

that, among other things, prior compliance is "relevant to past

experience in the manufacture of a schedule I controlled

substance, past experience in preventing diversion of a controlled

substance from other than DEA-authorized sources, and the

promotion and protection of public health and safety," as well as

"determining whether the applicant can be entrusted with the

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responsibilities associated with being a DEA registrant." 85 Fed.

Reg. at 82,335. We see nothing in the DEA's explanation that

conflicts with section 823(a) or would lead us to part company

with the agency's reading of the statute.

2.

The petitioners next complain that the Final Rule

misconstrues section 823(a)(1), which directs the DEA to

"consider[]" the "maintenance of effective controls against

diversion of [cannabis] by limiting the importation and bulk

manufacture of [cannabis] 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." 21 U.S.C.

§ 823(a)(1). They contend that the DEA impermissibly reads the

provision to require the agency to limit the number of

manufacturers to only the number of establishments that can produce

an adequate and uninterrupted supply of cannabis under adequately

competitive conditions. See Final Rule, 85 Fed. Reg. at 82,336–

37. And they argue that the DEA's interpretation of that provision

to mandate (rather than merely "consider") an upper limit to the

number of registrants conflicts with both the CSA and the DEA's

prior interpretation of the relevant provision.

Contrary to the petitioners' contentions, however, the

Final Rule does not purport to apply a specific cap on the number

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registrants. First, with respect to the CSA, the regulation as

codified simply restates the statutory language verbatim. Compare

21 C.F.R. § 1318.05(a)(1), with 21 U.S.C. § 823(a)(1). To the

extent the petitioners find fault with the DEA's further

explanation that it is "not allowed to register an unlimited amount

of manufacturers" and "must perform an analysis of each application

to determine whether the addition of the applicant is necessary to

provide the adequate and uninterrupted supply of marihuana for

research needs or whether the legitimate need will be met by the

registration of others," Final Rule, 85 Fed. Reg. at 82,336, those

statements are consistent with both the CSA and the DEA's prior

rulemakings.

In particular, the petitioners fasten attention to a

footnote in a past DEA action that acknowledged that "the CSA . . .

does not unambiguously impose an absolute ceiling on the number of

registered manufacturers." Lyle E. Craker; Denial of Application,

74 Fed. Reg. at 2128 n.105. But that same footnote also explained

that "[n]onetheless," section 823(a)(1) "can be construed to mean

that DEA . . . 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."

Id. That is, the DEA interpreted the CSA in its earlier action as

"retain[ing] the concept of an upper limit on the number of

manufacturers as a factor to be considered when evaluating an

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application for registration under § 823(a)." Id. The Final

Rule neatly follows the DEA's prior interpretation as well as the

text of section 823(a)(1) -- which, again, the Final Rule

incorporates verbatim. We therefore do not read this portion of

the Final Rule as contrary to either the CSA or the DEA's own

interpretive precedent.

B.

The petitioners argue next that the Final Rule

impermissibly circumscribes the DEA's authority under the CSA to

waive registration requirements in certain circumstances. The

statute permits the DEA to, "by regulation, waive the requirement

for registration of certain manufacturers, distributors, or

dispensers if [the agency] finds it consistent with the public

health and safety." 21 U.S.C. § 822(d). During the public comment

period, various commentors urged the DEA to exercise its authority

under section 822(d) to waive registration requirements for

growers who supply cannabis to researchers. In the Final Rule,

the DEA explained why it declined to do so. See 85 Fed. Reg. at

82,335–36.

The petitioners' primary argument appears to be that the

DEA erred by refusing to even consider the possibility that it

could grant waivers of the registration requirement for cannabis

growers who supply researchers. This characterization, however,

is belied by the fact that the agency did consider the issue in

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its rulemaking; it simply decided not to exercise its authority in

the way that the petitioners hoped it would. See id. And while

the petitioners suggest that the DEA's justifications in the Final

Rule for declining to so waive the registration requirements are

insufficient, they never explain how section 822(d) in any way

compels the DEA to exercise its waiver authority in this instance.

Take, for example, the petitioners' dissatisfaction with

the DEA's explanation that "waiving the requirement of

registration for marihuana growers who supply researchers would be

inconsistent with U.S. obligations under the Single Convention."

Id. at 82,336. To be sure, the petitioners are correct that it is

only section 823(a) -- the provision laying out the registration

requirements -- that instructs the DEA to consider compliance with

the Single Convention. But that does not mean the DEA was off-

base in determining that it would nonetheless be unwise to grant

a waiver of registration that would violate the United States'

treaty obligations. The petitioners' rejoinders at best establish

that the agency was not obliged to decline to so exercise its

authority; they do not demonstrate that the agency erred in making

a discretionary decision to not waive registration.

C.

The petitioners next argue that the DEA's definition of

the term "medicinal cannabis" in the Final Rule should be set

aside. To recap, the DEA's rule defines "medicinal cannabis" as

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"a drug product made from the cannabis plant, or derivatives

thereof, that can be legally marketed under the Federal Food, Drug,

and Cosmetic Act." 21 C.F.R. § 1318.02(b); see also Final Rule,

Fed. Reg. at 82,340. The petitioners contend that the agency's

definition is inconsistent with the plain meaning of "medicinal"

and contrary to both the structure and scheme of the Single

Convention and federal law.

To explain why the petitioners miss the mark, we begin

by tracing how the DEA arrived at its definition of medicinal

cannabis. In the Final Rule, the agency observed that "the Single

Convention does not define medicinal cannabis." 85 Fed. Reg. at

82,340. At the same time, the DEA did not reject the petitioners'

view that the Single Convention's understanding of "medicinal

cannabis" is informed by its definition of "medicinal opium." See,

e.g., id. at 82,344 n.17 (noting that the definition for "medicinal

opium" in the Single Convention "appl[ies] to cannabis through

Article 28"). Because the Single Convention defines "medicinal

opium" to mean "opium which has undergone the processes necessary

to adapt it for medicinal use," Single Convention, art. 1, § 1(o),

there is support for the petitioners' position that the Single

Convention would embrace a broader definition of "medicinal

cannabis" than what the DEA put forward.

However, rather than borrowing verbatim whatever

definition of "medicinal cannabis" could be gleaned from the Single

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Convention, the DEA chose instead to "adapt[] the Single

Convention's definition[] to reflect federal law, including the

[FDCA] and the CSA." Final Rule, 85 Fed. Reg. at 82,344 n.17.

That is, while the agency's definition of medicinal cannabis

"track[ed]" the Single Convention's definition, the DEA also

"adapted" that definition "to account for Federal law." Id. at

82,344. The question then is whether the DEA's decision to "adapt"

the definition in the Single Convention to include only products

approved for marketing under the FDCA was a reasonable exercise of

its rulemaking authority.

As an initial matter, there is no question that the DEA

has the authority to establish its own definition of "medicinal

cannabis" in the context of the federal registration scheme. The

CSA grants the DEA the power to "promulgate rules and

regulations . . . relating to the registration and control of the

manufacture, distribution, and dispensing of [cannabis]." 21

U.S.C. § 821. And it specifies that the DEA shall register

applicants to manufacture cannabis if the agency "determines that

such registration is consistent with the public interest and with

United States obligations under international treaties," including

the Single Convention. Id. § 823(a). Accordingly, it is well

within the DEA's statutory mandate to define a term that implicates

its control over stocks of cannabis and that relates to both the

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public interest and the United States' obligations under the Single

Convention.

As for whether the definition the DEA arrived at is

arbitrary or capricious, the petitioners point us to nothing that

demonstrates that the agency's understanding of "medicinal

cannabis" contravenes the CSA, violates the United States'

obligations under the Single Convention, or is otherwise contrary

to law. Beginning with the CSA, we observe that the statute has

no definition of "medicinal cannabis" of its own and never even

uses the term. The CSA classifies cannabis as a schedule I drug.

See 21 U.S.C. § 812, sched. I(c)(10); see also Gonzales v. Raich,

545 U.S. 1, 14 (2005). And it mandates that the DEA in registering

cultivators consider the "maintenance of effective controls

against diversion." 21 U.S.C. § 823(a)(1). Given this regulatory

scheme, it is hardly arbitrary or capricious for the DEA to define

"medicinal cannabis" -- as that term is used by the DEA in its own

rule -- in a way that keeps stocks of cannabis produced by

registered growers within the agency's exclusive control, at least

until any such cannabis intended for medicinal use can be legally

marketed under federal law.

As for the Single Convention, all parties agree that the

DEA's definition of "medicinal cannabis" is no broader than the

treaty's definition of the term. For that reason, we see no

conflict between the DEA's chosen definition and the United States'

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obligations under the Single Convention. The Single Convention

allows the United States to forego asserting exclusive control

over "medicinal cannabis" as that term is used in the treaty. See

Single Convention, art. 23, § 2(e) ("Parties need not extend this

exclusive right to medicinal [cannabis]."). But nothing in the

Single Convention requires a signatory to forego that control over

any stock of cannabis, including medicinal cannabis. And for the

reasons already explained, the DEA's justification for retaining

its exclusive rights over a broader stock of cannabis than the

Single Convention arguably requires -- "to ensure compliance with

the CSA," Final Rule, 85 Fed. Reg. at 82,340 -- is neither

arbitrary nor capricious.

Trying an alternative approach, the petitioners also

argue that the DEA's definition of "medicinal cannabis" is contrary

to our prior decision in Grinspoon v. DEA, 828 F.2d 881 (1st. Cir.

1987). In Grinspoon, we had occasion to examine the CSA's

statutory requirements for classification of schedule I

substances, specifically the condition that the substance "has no

currently accepted medical use in treatment in the United States,"

21 U.S.C. § 812(b)(1)(B). The DEA promulgated a rule that

essentially sought to interpret the statutory phrase "accepted

medical use in treatment in the United States" in the CSA to mean

"approved for interstate marketing by the [Food and Drug

Administration (FDA)] under the FDCA." See Grinspoon, 828 F.2d at

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884. We concluded that the DEA's limiting construction was

contrary to congressional intent because it was "plainly possible

that a substance may fail to obtain interstate marketing approval

even if it has an accepted medical use." Id. at 887–88.

Here, though, the DEA was not engaged with defining a

statutory term. And the statutory direction was simply to register

prospective cannabis cultivators based on the public interest and

the need to comply with the nation's treaty obligations, see 21

U.S.C. § 823(a), and to promulgate rules "relating to the

registration and control of [cannabis]," id. § 821. And as we

have discussed, nothing in the definition exceeded the agency's

statutory authority or put the United States in breach of its

treaty obligations.

The petitioners also assert that the DEA's definition of

"medicinal cannabis" conflicts with various FDA regulations

indicating the FDA's endorsement of research and medical

treatments involving federally regulated substances that have not

been approved for interstate marketing under the FDCA. This

supposedly demonstrates that the FDA understands that such

substances may be "medicinal" even if they have not undergone the

relevant approval process. But here we are not weighing the wisdom

of competing interpretations by different federal agencies over

the same statutory provisions. Just because the FDA might

reasonably construe the statutes it administers to provide for a

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broader definition of "medicinal cannabis" does not mean that the

DEA acts arbitrarily or capriciously when it defines "medicinal

cannabis" more narrowly for its own purposes. It is no surprise

-- and no mark of unreasonableness -- that the FDA might have a

different definition of "medicinal cannabis" in one context than

the DEA does for its work in other contexts.3

In sum, the DEA has for its purposes crafted its own

definition of medicinal cannabis that is based on, but not wholly

equivalent to, that in the Single Convention. That definition

neither breaches any treaty obligation of the United States nor

violates federal law. And the DEA did not act arbitrarily or

capriciously in concluding that it must maintain exclusive control

over stocks of a schedule I drug produced under federal law until

medicinal products containing that substance are approved for

marketing by the FDA. For these simple reasons, we reject the

petitioners' challenge to the DEA's definition of "medicinal

cannabis."

3 The above reasoning also explains why the petitioners are
incorrect to assert that the DEA's definition of "medicinal
cannabis" in the context of interpreting its authority under the
CSA impermissibly regulates medical practice. The DEA's
definition relates to what subset of cannabis must be exclusively
controlled by the DEA -- something the CSA and the Single
Convention requires the agency to consider. It does not concern
what activities are or are not permissible aspects of medical
practice. Accordingly, we do not view the agency's actions as
exceeding its congressionally delegated authority in this way.

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 V.

Finally, the petitioners argue that the DEA's new

regulatory framework for registrations, even if it is within the

agency's rulemaking authority, must be set aside as arbitrary,

capricious, or otherwise contrary to law. The petitioners begin

by contending that the DEA failed to consider relevant

alternatives. When promulgating new regulations, an agency must

consider alternatives "within the ambit of the existing [policy],"

but it need not "consider all policy alternatives in reaching [its]

decision." Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm

Mut. Auto. Ins. Co., 463 U.S. 29, 51 (1983); see also DHS v.

Regents of the Univ. of Cal., 140 S. Ct. 1891, 1914–15 (2020)

("Agencies are not compelled to explore 'every alternative device

and thought conceivable by the mind of man.'" (quoting Vt. Yankee

Nuclear Power Corp. v. NRDC, 435 U.S. 519, 551 (1978)). The key

question is whether the agency "entirely failed to consider an

important aspect of the problem." State Farm, 463 U.S. at 43.

The petitioners devote all of three sentences in their

opening brief to this argument. They do not identify any specific

aspect of the problem that the DEA missed and make no argument for

why the DEA's supposed failure to consider the alternatives the

petitioners point to should doom the entire rule. Instead, the

petitioners vaguely gesture towards two documents -- the OLC's

Marijuana Cultivation Opinion and SRI's comments to the agency

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during the notice-and-comment period -- as sources for the

purported alternatives the DEA declined to consider. And in so

doing, the petitioners make no attempt to explain why these records

indicate that the agency "entirely failed to consider an important

aspect of the problem." Id. We therefore treat this argument as

waived. United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990)

("[I]ssues adverted to in a perfunctory manner, unaccompanied by

some effort at developed argumentation, are deemed waived.").

The petitioners also argue that the Final Rule

arbitrarily discriminates between cannabis supplied by the

National Center -- the only federally registered cannabis grower

at the time the rule was promulgated -- and cannabis supplied from

other sources, including cannabis grown in states that allow it

under their laws. During the notice-and-comment period, various

commentors suggested that federally registered researchers should

be allowed to obtain cannabis from state-authorized dispensaries.

See Final Rule, 85 Fed. Reg. at 82,338. The DEA rejected this

proposal, explaining that "[s]tate licenses to manufacture

marijuana do not satisfy the requirements of Federal law," and,

therefore, allowing researchers to use state-authorized cannabis

would violate the CSA. Id. The petitioners assert that this

decision is arbitrary and capricious because it fails to treat

"like cases alike." Namely, it permits researchers to obtain

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cannabis from the National Center but not from state-permitted

dispensaries.

But this argument misses a crucial detail: the National

Center and state dispensaries are not "like cases." As the DEA

explains, the National Center is a federally registered grower

under the CSA, while state dispensaries are not. And federal law

requires that "[e]very person who manufactures or distributes

[cannabis] . . . shall obtain annually a registration issued by

the [DEA]." 21 U.S.C. § 822(a)(1). It is hardly arbitrary and

capricious for the DEA to allow federally registered growers to

supply cannabis while precluding non-federally registered growers

from doing the same.

The petitioners point out that, under the OLC's and the

DEA's reading of the CSA, all of the National Center's historic

growing activity was also in violation of federal law and the

Single Convention. But the petitioners never explain why that

makes the National Center somehow equivalent to the proposed state

dispensaries. Nor do they establish that, after the Final Rule's

implementation, the National Center's activities would continue to

be contrary to federal law.

Lastly, Craker, not joined by fellow petitioner SRI,

argues that the Final Rule is impermissibly retroactive because it

applies to pending applications before the DEA. He explains that

because he (and 30-some-odd others) had already sent in

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applications in response to the DEA's call for applications for

the 2016 program, it is unfair to pull the rug out from under him

by applying the new rule to the application he prepared in reliance

on the prior regime.

While we have acknowledged generally that "the

retroactive application of an agency rule is disfavored," we have

also explained that "the mere filing of an application is not the

kind of completed transaction in which a party could fairly expect

stability of the relevant laws as of the transaction date." Pine

Tree Med. Assocs. v. Sec'y of Health and Hum. Servs., 127 F.3d

118, 121 (1st Cir. 1997). Particularly where a change involves

"the substantive standards for granting the application on the

merits," it does not typically raise the kind of "fair notice and

retroactivity concerns" that Craker complains of. Id. at 122.

Previously, we found "no support . . . for the proposition that

filing an application with an agency essentially fixes an

entitlement to the application of those substantive regulations in

force on the filing date." Id. (emphasis omitted). Craker musters

up no such support now. And while Craker points to factual

differences between his case and Pine Tree, he makes no argument

as to why those distinctions demand a different legal rule be

applied. Thus, Craker has not identified any notice or

retroactivity problem that would render the application of the

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Final Rule to his application arbitrary, capricious, or otherwise

contrary to law.4

VI.

For the foregoing reasons, we deny the petitioners'

petitions for review.

4 Craker also argues that the rule suddenly changed the
status of pending applications from "complete" to "incomplete"
because of a requirement to submit a new form. But this too does
not render the rule impermissibly retroactive. Although we have
noted that "rejecting an application because it fails to meet a
new regulation governing the proper format or preparation of
applications that was promulgated after that application was
filed" could raise notice and retroactivity concerns, Pine Tree,
127 F.3d at 122, changing an application's status to "incomplete"
to account for a new filing requirement is not equivalent to a
denial, at least without some evidence that the new filing
requirement essentially effects a rejection. Here, Craker has
raised no claim of prejudice from the requirement except that a
new form must be submitted.

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