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Genesis 1:29 Corporation; Denial of Application

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On December 13, 2001, the Deputy Assistant Administrator, Office of Diversion Control, Drug Enforcement Administration (DEA), issued an Order to Show Cause to Genesis 1:29 Corporation (Respondent) of Petaluma, California, proposing to deny its application for DEA Certificate of Registration as a manufacturer of marijuana and tetrahydrocannaboinois (“THC”), both Schedule I controlled substances. The statutory basis for the Order to Show Cause was Respondent's lack of state authorization to manufacture controlled substances in the State of California. 21 U.S.C. 824(a)(3). In addition, the Order to Show Cause alleged that Respondent's registration would be inconsistent with the public interest, as the term is used in 21 U.S.C. 823(a) and 824(a)(4).

By letter dated January 9, 2002, the Respondent, acting pro se through its CEO Robert G. Schmidt (Mr. Schmidt), requested a hearing on the issues raised by the Order to Show Cause. The matter was then docketed before Administrative Law Judge Gail A. Randall (Judge Randall). In its request for hearing, Mr. Schmidt on behalf of the Respondent indicated that with respect to medical grade cannabis, the Respondent's interest in the instant proceeding was “to develop a federally approved and federally regulated dispensary model and research facility.” The Respondent further indicated that its position on the pending DEA application was “flexible since there are no federally established guidelines for dispensing medical cannabis to patients other than for research purposes.”

On January 25, 2002, Judge Randall issued an Order for Prehearing Statements. Following the filing of Prehearing Statements by the respective parties, on April 30, 2002, the Government filed its Request for Stay of Proceedings and Motion for Summary Judgment (“motion”). On May 23, 2002, Respondent filed its response to the Government's motion. On June 26, 2002, Judge Randall issued her Opinion and Recommended Ruling, granting the Government's motion, and recommending that Respondent's application for registration as a manufacturer be denied. Neither party filed exceptions to Judge Randall's Opinion and Recommended Ruling and on August 8, 2002, Judge Randall transmitted the record of these proceedings to the Deputy Administrator. The 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.

In its motion, the Government asserted that on November 11, 2001, DEA transmitted a series of written questions to the Respondent regarding its method of operations and intended customers. The Government attached to its motion a copy of the Respondent's November 26, 2001 response letter to DEA's questionnaire. In the attached response letter, Respondent indicated that the intended purpose of its bulk manufacture of marijuana was to “supply clinical cannabis to physician's patients operating within California state laws and guidelines established by California Public Health and Safety Code 11362.5 including 11362.7 and 11362.9 * * *” The letter further Start Printed Page 15226outlined that Respondent's intended customers were “Medical Patients” referred under California's Compassionate Use Act of 1996.

The Government argued, inter alia, that California law requires the Respondent to obtain state licenses to manufacture marijuana or THC for human consumption, pursuant to the Consumer Product Safety Section, California Department of Health Services, and from the State Board of Pharmacy. In support of its argument, the Government attached to its motion a declaration from Susan Bond, Section Chief of the Consumer Product Safety Section, Department of Health Services, Food and Drug Branch for the State of California. Ms. Bond stated that a state license to manufacture marijuana and THC was required under California Health and Safety Code Section 111615, and according to state records, the Respondent neither held such license, nor submitted an application to obtain such license. Ms. Bond concluded that the Respondent did not possess valid state authority in California to manufacture marijuana or THC for medical use in that state. The Government also attached eight Certifications of Non-Licensure, in which the Executive Officer for the California Board of Pharmacy certified that Respondent was not currently licensed with the California Board of Pharmacy.

In response to the Government's motion, the Respondent highlight its participation in various research projects, specifically in the area of whole plant utilization. However, the Respondent did not dispute that it currently lacks state authorization to manufacture marijuana and THC. The Respondent further argued that the granting of the Government's motion would be premature, impede future research, deny the Respondent the right to a fair trial, and cause irreparable injury to the Respondent's patients and associates.

Pursuant to 21 U.S.C. 823(a), DEA shall register an applicant to manufacture controlled substances in Schedule I or II if it determines that such registration is consistent with the public interest. Included among the six public interest factors is “compliance with applicable State and local law.” 21 U.S.C. 823(a)(2). In addition 21 CFR 1307.02 provides that DEA will not authorize any person “to do any act which such person is not authorized or permitted to do under * * * the law of the State in which he/she desires to do such act.”

Section 823(a) contains no express threshold requirement of state authorization. Nonetheless, DEA has previously determined that where as here state law requires manufacturers of controlled substances to obtain a state license, it would be pointless to grant a Federal registration when the Respondent lacked state authority. Michael Schumacher, 60 FR 13171 (1995); see also Church of the Living Tree, 63 FR 69,674 (1998).

In her Opinion and Recommended Ruling, Judge Randall agreed with the Government that state licenses are required in California prior to manufacturing marijuana or THC. Judge Randall found that consistent with DEA regulations, as well as the agency's discussions in Michael Schumacher and Church of the Living Tree, DEA will not authorize the Respondent to engage in the manufacture of a Schedule I controlled substance in California since the Respondent lacks authority from that state to conduct such an activity. Therefore, Judge Randall concluded that summary disposition was proper.

The Deputy Administrator concurs with the Administrative Law Judge's grant of the Government's Motion for Summary Judgement. It is well settled, that when no question of material fact is involved, or when the material facts are agreed upon, a plenary, adversary administrative proceeding involving evidence and cross-examination of witnesses is not obligatory. See Gilbert Ross, M.D., 61 FR 8664 (1996); Philip E. Kirk, M.D., 48 FR 32,887 (1983), aff'd sub nom Kirk v. Mullen, 749 F.2d 297 (6th Cir. 1984); NLRB v. International Association of Bridge, Structural and Ornamental Ironworkers, AFL-CIO, 549 F.2d 634 (9th Cir. 1977).

The Deputy Administrator also finds, and the parties do not dispute, that the State of California requires a manufacturer of marijuana or THC to obtain state licenses before engaging in such activity. It is clear from the record in this proceeding that the Respondent is not licensed as a manufacturer of Schedule I controlled substances in California. Thus, as Judge Randall noted, there is no material question of fact in dispute concerning this aspect of the case. Because the Respondent does not meet a necessary precondition for DEA registration, a hearing in this matter is unnecessary. Therefore, Respondent's pending application for DEA Certificate of Registration must be denied.

In its motion, the Government further argued that the Respondent's application should be denied because marijuana and THC have no accepted medical use under the Controlled Substances Act. However, as noted above, DEA has indicated in previous final orders that an application to manufacture marijuana would be denied if the Respondent lacked state authority for such activity. Because the Respondent is not entitled to a DEA registration due to its lack of state authorization to manufacture Schedule I controlled substances in California, the Deputy Administrator concludes that it is unnecessary to address whether Respondent's application for DEA registration should be denied based upon the other grounds asserted in the Order to Show Cause and the Government's Motion for Summary Judgement. See Samuel Silas Jackson, D.D.S., 67 FR 65145 (2002); Nathaniel-Aikens-Afful, M.D., 62 FR 16871 (1997).

Accordingly, the 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 application for DEA Certificate of Registration submitted by Genesis 1:29 Corporation, be, and it hereby is, denied. This order is effective April 28, 2003.

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Dated: March 13, 2003.

John B. Brown III,

Deputy Administrator.

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[FR Doc. 03-7389 Filed 3-27-03; 8:45 am]

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