Craker v. Drug Enforcement Admin.

• Decision Date: 15 April 2013
• Docket Number: No. 09–1220.,09–1220.
• Citation: 714 F.3d 17
• Parties: Lyle E. CRAKER, Petitioner, v. DRUG ENFORCEMENT ADMINISTRATION, Respondent.
• Court: U.S. Court of Appeals — First Circuit

714 F.3d 17

Lyle E. CRAKER, Petitioner,

v.DRUG ENFORCEMENT ADMINISTRATION, Respondent.

No. 09–1220.

United States Court of Appeals,First Circuit.

April 15, 2013.

Theodore P. Metzler, with whom Eugene Gulland, Covington & Burling LLP, M. Allen Hopper, ACLU Foundation of Northern California, Sarah R. Wunsch and ACLU of Massachusetts were on brief, for petitioner.

Mark T. Quinlivan, Assistant United States Attorney, with whom Carmen M. Ortiz, United States Attorney, was on brief, for respondent.

Before TORRUELLA, LIPEZ and HOWARD, Circuit Judges.

HOWARD, Circuit Judge.

Petitioner Lyle E. Craker, a professor at the University of Massachusetts, seeks review of an order from the Drug Enforcement Administration (“DEA”) denying his application for registration to cultivate marijuana for medical research. After reviewof the administrative record, we deny the petition.

I. Statutory Landscape

In an effort to consolidate the nation's drug laws and increase federal enforcement capabilities, Congress enacted the Comprehensive Drug Abuse and Prevention and Control Act in 1970. See Gonzales v. Raich, 545 U.S. 1, 11–12, 125 S.Ct. 2195, 162 L.Ed.2d 1 (2005). Included within that Act was the Controlled Substances Act (“CSA”), “a comprehensive regime to combat the international and interstate traffic in illegal drugs.” Id. at 12, 125 S.Ct. 2195. While observing that many drugs within the purview of the CSA “have a useful and legitimate medical purpose and are necessary to maintain the health and general welfare of the American people,” 21 U.S.C. § 801(1), Congress also determined that the health and welfare of Americans were detrimentally affected by “[t]he illegal importation, manufacture, distribution, and possession and improper use of controlled substances.” Id. § 801(2).

Consonant with these concerns, “Congress devised a closed regulatory scheme making it unlawful to manufacture, distribute, dispense, or possess any controlled substance except in a manner authorized by the CSA.” Raich, 545 U.S. at 13, 125 S.Ct. 2195 (citing 21 U.S.C. §§ 841(a)(1), 844(a)). Under this regime, controlled substances were organized into five schedules, reflective of their accepted medical uses, their potential for abuse, and their psychological and physical effects. Id. at 13–14, 125 S.Ct. 2195; 21 U.S.C. § 812. Congress placed marijuana in schedule I, the most stringently controlled group. 21 U.S.C. § 812(c).¹ A schedule I drug “has a high potential for abuse ... [,] has no currently accepted medical use in treatment in the United States[, and] ... [lacks] accepted safety for use ... under medical supervision.” Id. § 812(b)(1).

The manufacture of a schedule I substance is a criminal offense unless the manufacturer has registered with the Attorney General. Id. § 822(a)(1). ² The CSA provides that the Attorney General ³ “shall register an applicant to manufacture substances in schedule I or II if he 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.” Id. § 823(a). The “public interest” determination must be based on the following statutory factors:

(1) maintenance of effective controls against diversion of particular controlled substances and any controlled substance in schedule I or II compounded therefrom into other than legitimate medical, scientific, research, or industrial channels, 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;

(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 dispensation of such substances;

(5) past experience in the manufacture of controlled substances, and the existence in the establishment of effective control against diversion;

(6) such other factors as may be relevant to and consistent with the public health and safety.

Id. § 823(a)(1)–(6). The applicant carries the burden of proof at any administrative hearing on a registration application. 21 C.F.R. § 1301.44(a).

Since 1968, the National Center for Natural Products Research (“NCNPR”) at the University of Mississippi has held the necessary registration and a government contract to grow marijuana for research purposes.⁴Lyle E. Craker, 74 Fed. Reg. 2101, 2104 (Drug Enforcement Admin. Jan. 7, 2009) (Denial of Application) (“ Craker II ”). The contract is administered by the National Institute on Drug Abuse (“NIDA”), a component of the National Institutes of Health (“NIH”), which, in turn, is a component of the Department of Health and Human Services (“HHS”). Id. The contract is opened for competitive bidding every five years. Id. The NCNPR is the only entity registered by the DEA to manufacture marijuana. Lyle E. Craker, Ph.D., No. 05–16 (Drug Enforcement Admin. Feb. 12, 2007) (opinion, recommended ruling and decision) (“ Craker I ”).

Among the “international treaties, conventions or protocols” referred to in section 823(a), the CSA implements the provisions of the Single Convention on Narcotic Drugs, 18 U.S.T. 1407 (“Single Convention”), in an effort “to establish effective control over international and domestic traffic in controlled substances.” 21 U.S.C. § 801(7). As relevant to this proceeding, Article 28 of the Single Convention addresses cultivation of marijuana—referred to therein by its taxonomic genus, cannabis—with reference to “the system of controls as provided in article 23 respecting the control of the opium poppy.” Pursuant to article 23, any signatory nation that “permits the cultivation of [marijuana or opium]” must designate one or more agencies to: license cultivators and designate where plants may be grown; purchase and take physical possession of each year's crops; and have the exclusive right of importing, exporting, wholesale trading and maintaining stocks other than those held by manufacturers of opium alkaloids, medicinal opium or opium preparations.

II. Adjudication of Dr. Craker's Application

Dr. Craker, a professor in the University of Massachusetts' Department of Plant, Soil and Insect Sciences, applied to the DEA for registration to manufacture marijuana for clinical research in 2001. At the DEA's request, he supplemented his application in August 2002. He stated that “a second source of plant material is needed to facilitate privately funded [Food and Drug Administration (“FDA”) ]-approved research into medical uses of marijuana, ensuring a choice of sources and an adequate supply of quality, research-grade marijuana for medicinal applications.” Craker II, 74 Fed. Reg. at 2107. Dr. Craker indicated that his production costs would be underwritten by a grant from the Multidisciplinary Association for Psychedelic Studies (“MAPS”), a non-profit, tax-exempt research and education organization seeking to develop marijuana into an FDA-approved prescription medicine. Id. at 2106.

In December 2004, a DEA official issued an order to show cause, proposing the denial of Dr. Craker's registration application. Id. at 2101;see21 U.S.C. § 824(c); 21 C.F.R. § 1301.37(a), (c). The order first concluded that Dr. Craker's registration “would not be consistent with the public interest as that term is used in 21 U.S.C. § 823(a).” Craker II, 74 Fed. Reg. at 2101. The order also concluded that registration would be inconsistent with the United States' obligations under the Single Convention. Id. Dr. Craker timely requested a hearing, see21 C.F.R. § 1301.37(d), which was conducted by an administrative law judge (“ALJ”) over nine days in August and December 2005. See generally21 C.F.R. § 1316.41–.67 (outlining hearing procedures).

In February 2007, the ALJ issued an eighty-seven page opinion, recommending that the DEA grant Dr. Craker's application. Craker I. The ALJ first concluded that the Single Convention was not a bar to Dr. Craker's registration, noting that it appeared that marijuana grown by the NCNPR or any other registrant for use in research would qualify as either “medicinal” or “special stocks” under the treaty, and thus not be prohibited by a government monopoly requirement. See Craker I at 82; Craker II, 74 Fed. Reg. at 2102.

The ALJ also found that Dr. Craker's application satisfied the “public interest” requirements of 21 U.S.C. § 823(a). The ALJ first noted a dispute that we will revisit: whether, as Dr. Craker asserts, the “adequately competitive conditions” requirement of section 823(a)(1) must be disregarded if there has been a finding that the applicant can maintain effective controls against diversion. Craker I at 85; Craker II, 74 Fed. Reg. at 2102–03;see Noramco of Del., Inc. v. Drug Enforcement Agency, 375 F.3d 1148, 1152–54, 1157 n. 8 (D.C.Cir.2004) (noting DEA's position that supply and competition can be disregarded if registration does not increase risk of diversion).

The government's position with respect to Dr. Craker's application was and is that both the diversion and supply/competition criteria must be satisfied. Without resolving the issue, the ALJ considered both factors, concluding that Dr. Craker had adequately proven that there is minimal risk that any marijuana he cultivated would be diverted. With respect to supply, the ALJ found that NIDA-approved researchers had not experienced difficulty obtaining marijuana from NCNPR when it was needed. Nevertheless, the ALJ found the supply to be inadequate because NIDA refused to supply some researchers who held DEA registrations and approvals from HHS. Finally, the ALJ concluded that the competitive bidding process for renewing the single extant NIDA...