[Federal Register Volume 63, Number 2 (Monday, January 5, 1998)]
[Notices]
[Pages 260-262]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-024]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration
[Docket No. 97-27]


Hemp Products Research Company; Denial of Applications

    On June 17, 1997, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration (DEA), issued two 
Orders to Show Cause to Hemp Products Research Company (Respondent), of 
Bellevue, Nebraska, notifying it of an opportunity to show cause as to 
why DEA should not deny its applications for DEA Certificates of 
Registration as a manufacturer of marijuana under 21 U.S.C. 823(a), and 
as a researcher in the cultivation of marijuana under 21 U.S.C. 823(f), 
for reason that its registration would be inconsistent with the public 
interest. Respondent requested a hearing on the issues raised by the 
Orders to Show Cause and the matter was docketed before Administrative 
Law Judge Gail A. Randall.
    On August 26, 1997, the Government filed a Motion for Summary 
Disposition seeking a recommendation from the Administrative Law Judge 
that the applications be denied without convening a hearing. 
Thereafter, on September 17, 1997, Respondent submitted a prehearing 
statement which included its response to the Government's motion. On 
October 8, 1997, Judge Randall issued her Opinion and Recommended 
Ruling, concluding that summary disposition is appropriate in this 
matter, and therefore granting the Government's motion and recommending 
that Respondent's applications for registration be denied. Neither 
party filed exceptions to her opinion, and on November 21, 1997, Judge 
Randall transmitted the record of these proceedings to the Acting 
Deputy Administrator.
    The Acting Deputy Administrator has considered the record in its 
entirety, and pursuant to 21 CFR 1316.67, hereby issues his final order 
based upon findings of fact and conclusions of law as hereinafter set 
forth. The Acting Deputy Administrator adopts, in full, the Opinion and 
Recommended Ruling of the Administrative Law Judge. his adoption is in 
no manner diminished by any recitation of facts, issues and conclusions 
herein, or of any failure to mention a matter of fact or law.
    The Acting Deputy Administrator finds that Respondent has two 
pending applications for registration with DEA. Respondent submitted an 
application dated March 14, 1995, for registration

[[Page 261]]

with DEA as a researcher in Schedule I, listing the Administrative Drug 
Code Number for marijuana. In addition, Respondent listed on its 
application an address in Bellevue, Nebraska. In Respondent's letter 
transmitting its prehearing statement, the President of Respondent 
indicated that this was his home address, but that he was moving to a 
new home in O'Neill, Nebraska. Respondent admitted in its prehearing 
statement that the address listed on its application is not the 
location where it intends to conduct research in the cultivation of 
marijuana. Further, in its research protocol, required pursuant to 21 
U.S.C. 823(f) and 21 CFR 1301.18, under the heading ``Location Where 
The Research Will Be Conducted,'' Respondent states that ``[t]his study 
is based on farms '' in 20 states, and that ``[b]iochemical and textile 
analysis will be performed by [Respondent] in contractual industrial 
laboratories.'' However, Respondent fails to specifically identify the 
location(s) where it intends to conduct its research.
    In its second application, dated May 18, 1995, Respondent seeks 
registration as a Schedule I manufacturer, also listing on this 
application the Administrative Code Number for marijuana. Respondent 
indicated on its application that it wants to manufacture marijuana for 
industrial purposes. Like with the researcher application, Respondent 
admitted that the address listed on the manufacturer application is not 
the location where Respondent intends to manufacture marijuana. 
Instead, Respondent has stated that it ``is seeking approval of 
approximately 360,000 acres for industrial hemp production in 18 states 
at this time.'' Respondent ``intends to cultivate itself, and to 
subcontract out, the cultivation, harvest and processing of low THC 
industrial varieties of Cannabis hemp stalk, seed, and waste materials 
* * *.'' Respondent intends, at harvest, to separate the leaf, flower, 
and other waste from the stalk and seed of the Cannabis sativa L. 
plant, and to use the hemp stalk for textile analysis. Respondent 
further intends to then use the hemp seeds to grow new Cannabis sativa 
L. plants.
    Correspondence between DEA and Respondent prior to the issuance of 
the Orders to Show Cause indicate that Respondent was advised that a 
separate registration is required for each location where marijuana 
will be manufactured and that there are certain security requirements 
for manufacturing locations which must be inspected prior to the 
issuance of any registration.
    The Government, in its Motion for Summary Disposition, argues that 
summary disposition is appropriate in this proceeding since there is no 
dispute that Respondent has failed to comply with the application 
requirements for registration with DEA as a manufacturer and as a 
researcher of a controlled substance. First, the Government argues that 
Respondent has failed to submit separate applications for each location 
where it intends to manufacturer marijuana as required by 21 U.S.C. 822 
and 21 CFR 1301.12. In its response, Respondent contends that feral 
industrial hemp is a ``non-drug'' with no potential for abuse and 
therefore it is unreasonable to require a separate registration for 
each location where it intends to manufacture. Next, the Government 
argues that Respondent has failed to disclose the location(s) where it 
intends to conduct research on marijuana and to submit separate 
applications for those locations as required by 21 U.S.C. 822 and 21 
CFR 1301.12 and 1301.18(a)(2)(v). Respondent argues that it has not yet 
acquired a research facility, and that it would be ``economically 
foolish'' to obtain laboratory space without first receiving a DEA 
registration. Finally, the Government asserts that Respondent has 
failed, or refused, to allow DEA to conduct on-site inspections of any 
location where it intends to manufacture or conduct research, thereby 
precluding DEA from determining whether Respondent is in compliance 
with security requirements. Respondent contends that it has provided 
DEA with a list of a number of manufacturing locations, but that DEA 
has never asked to conduct on-site inspections at any of these 
locations.
    The first question is whether Respondent intends to manufacture or 
conduct research on marijuana. Respondent states that it does not want 
``anything whatsoever to do with `marijuana' or `marihuana'. As stated 
in applications and communications, interest is based solely on the use 
of industrial hemp for the production of bioplastics, biofuels, cloth 
and paper.'' In addition, Respondent asserts that it is intending to 
deal with a ``non-drug'' since it has a very low concentration of 
delta-9-tetrahydrocannabinol (THC). As Judge Randall noted, marijuana 
is defined in 21 U.S.C. 802(16) as:

    [A]ll parts of the plant Cannabis sativa L., whether growing or 
not; the seeds thereof; the resin extracted from any part of such 
plant; and every compound, manufacture, salt, derivative, mixture, 
or preparation of such plant, its seeds or resin. Such term does not 
include the mature stalks of such plant, fiber produced from such 
stalks, oil and cake made from the seeds of such plant, any other 
compound, manufacture, salt, derivative, mixture, or preparation of 
such mature stalks (except the resin extracted therefrom), fiber, 
oil, or cake, or the sterilized seed of such plant which is 
incapable of germination.

Further, 21 U.S.C. 802(15) defines manufacture as ``the production, 
preparation, propagation, compounding, or processing of a drug or other 
substance, either directly or indirectly or by extraction from 
substances of natural origin * * *.''
    As noted previously, Respondent intends to process a substance that 
originates from the Cannabis sativa L. plant, by separating at harvest, 
the stalk and seed materials from the leaf, flower and other waste 
material, and then using the seeds to grow new Cannabis sativa L. 
plants. The Acting Deputy Administrator agrees with Judge Randall that 
``[s]ince the definition of marihuana specifically includes all parts 
of the plant, except the mature stalks, the Respondent proposes to 
`process' the Cannabis sativa L. plant to reach the hemp component of 
that plant.'' In addition, Respondent's use of the seeds to grow new 
Cannabis sativa L. plants also falls within the statutory definitions 
of the manufacture of marijuana. Therefore, the Acting Deputy 
Administrator concludes that Respondent is proposing to engage in the 
manufacture and research of marijuana. As to Respondent's assertion 
that the substance that it intends to be involved with is a ``non-
drug'' due to its low concentration of THC, the Acting Deputy 
Administrator concludes that the statutory definition of marijuana does 
not address the degree of THC concentration. Therefore, regardless of 
the level of THC concentration of the plants, Respondent's proposed 
activities fall within the statutory definitions of the manufacture of 
marijuana.
    Pursuant to 21 U.S.C. 822(a), ``[e]very person who manufactures or 
distributes any controlled substance * * * or who proposes to engage in 
the manufacture or distribution of any controlled substance * * * shall 
obtain annually a registration issued by the Attorney General * * *.''
    Since Respondent intends to manufacture marijuana, a Schedule I 
controlled substance, it is required to obtain a DEA registration. 
Further, 21 U.S.C. 822(e) states that ``[a] separate registration shall 
be required at each principal place of business or professional 
practice where the applicant manufactures, distributes, or dispenses 
controlled substances. . . .'' Respondent has submitted only one 
application for registration to manufacture marijuana, and Respondent 
has admitted that it does not intend to manufacture marijuana at the 
address

[[Page 262]]

listed on the application. Instead, Respondent has indicated that it 
intends to manufacture marijuana on farms in a number of different 
states, however it has not submitted applications for registration for 
these locations. Therefore, since Respondent's manufacturer application 
fails to identify the principal place(s) of business where it intends 
to manufacture marijuana, it does not comply with 21 U.S.C. 822.
    Regarding Respondent's application to conduct research, pursuant to 
21 U.S.C. 823(f), DEA is authorized to register ``practitioners'' to 
conduct research with controlled substances. ``Practitioner'' is 
defined in 21 U.S.C. 802(21) as:

    [A] physician, dentist, veterinarian, scientific investigator, 
pharmacy, hospital, or other person licensed, registered, or 
otherwise permitted, by the United States or the jurisdiction in 
which he practices or does research, to distribute, dispense, 
conduct research with respect to, administer, or use in teaching or 
chemical analysis, a controlled substance in the course of 
professional practice or research.

    Therefore, state authorization to conduct research is a 
prerequisite to DEA registration. See also 21 U.S.C. 823(f). Like with 
its manufacturer application, Respondent's researcher application lists 
an address where Respondent has conceded that it has no intention of 
conducting research. Instead, in its research protocol, Respondent 
merely lists 20 states from which it intends to obtain hemp, and 
acknowledges that it has not yet obtained laboratory space. Because 
Respondent has not identified the specific location(s) where it intends 
to conduct its research on marijuana, DEA cannot determine whether 
Respondent is authorized to do so in the jurisdiction(s) where the 
proposed research will take place. Therefore, the Acting Deputy 
Administrator concurs with Judge Randall's conclusion that ``DEA lacks 
the authority under 21 U.S.C. 823(f) to register the Respondent as a 
researcher.''
    It is well settled that where there is no material question of fact 
involved, or when the facts are agreed upon, there is no need for a 
plenary, administrative hearing. Congress did not intend for 
administrative agencies to perform meaningless tasks. Gilbert Ross, 
M.D., 61 FR 8664 (1996); Dominick A. Ricci, M.D., 58 FR 51,104 (1993); 
Philip E. Kirk, M.D., 48 FR 32,887 (1983), aff'd sub nom Kirk v. 
Mullen, 749 F.2d 297 (6th Cir. 1984).
    In this case, there does appear to be some dispute as to whether or 
not Respondent refused to allow DEA to conduct on-site inspections of 
the locations where it is proposing to manufacture or conduct research 
on marijuana. However, the Acting Deputy Administrator finds it 
unnecessary to reach this issue, since as Judge Randall found, it is 
undisputed that ``(1) the Respondent has failed to submit separate 
manufacturing [applications] for each proposed manufacturing site; (2) 
the address on the pending manufacturing application is not a proposed 
manufacturing site; and (3) the Respondent has failed to identify the 
location where it intends to do research with a controlled substance.'' 
Therefore, Judge Randall concluded that Respondent ``has not complied 
with the statutory and regulatory requirements pertaining to the 
content of its applications[,] * * * that there are no relevant factual 
matters in dispute concerning the information lacking in the 
Respondent's applications[,] * * * [and] that the DEA lacks the 
authority to grant the Respondent's currently pending, incomplete 
applications for DEA Certificates of Registration.''
    As a result, Judge Randall granted the Government's Motion for 
Summary Disposition and recommended that Respondent's applications for 
registration be denied. The Acting Deputy Administrator concurs with 
Judge Randall's conclusions. DEA is precluded by statute to issue 
Respondent a manufacturer registration at a location where Respondent 
does not intend to manufacture a controlled substance which would 
authorize Respondent to manufacture marijuana at different locations in 
a number of states. Further, since Respondent has failed to 
specifically identify the state(s) where it intends to conduct its 
research on marijuana, DEA cannot determine whether Respondent is 
properly authorized by the state(s) to conduct such research, and 
therefore, DEA is precluded by statute from issuing Respondent a 
researcher registration.
    Consequently, the Acting Deputy Administrator concludes that 
Respondent's applications for registration cannot be granted. The 
Acting Deputy Administrator agrees with Judge Randall that since ``the 
current applications [are] so defective that the DEA lack[s] authority 
to grant them in their current state . . . it [is] unnecessary to make 
any further findings or conclusions concerning any of the other issues 
raised by the parties about the propriety of granting or denying the 
Respondent's applications.''
    In her November 21, 1997 letter transmitting the record to the 
Acting Deputy Administrator, Judge Randall noted that Respondent had 
filed with her office several exhibits including ``hemp paper, fiber, 
hurds and stalks (whole and chipped).'' Judge Randall asked to be 
advised whether the Acting Deputy Administrator ``would like for these 
items to be destroyed or retrieved for [his] viewing.'' In light of the 
conclusions made in this matter, the Acting Deputy Administrator finds 
it unnecessary to view these exhibits.
    Accordingly, the Acting Deputy Administrator of the Drug 
Enforcement Administration, pursuant to the authority vested in him by 
21 U.S.C. 823 and 824, and 28 CFR 0.100(b) and 0.104, hereby orders 
that the applications dated March 14, 1995, and May 18, 1995, submitted 
by Hemp Products Research Company, for DEA Certificates of Registration 
as a researcher and as a manufacturer, be, and they hereby are, denied. 
This order is effective February 4, 1998.

    Dated: December 22, 1997.
James S. Milford,
Acting Deputy Administrator.
[FR Doc. 98-024 Filed 1-2-98; 8:45 am]
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