A drug testing industry association and a pharmaceutical company are asking a federal court to block the Trump administration from moving forward with federal cannabis rescheduling while ongoing litigation challenging the reform is considered—arguing that “marijuana abuse has dangerous, lifelong consequences—especially for adolescents and pregnant women.”
The new filing claims that “by cutting taxes on cannabis companies,” federal rescheduling “will stimulate the industry and increase marijuana abuse.”
The brief, filed on Thursday, comes in response to the Department of Justice’s opposition to the drug testing group and pharma company’s motion to pause the rescheduling move.
The government, in its brief earlier this month, noted that the entities challenging cannabis rescheduling have “pocketbook interests served by keeping all marijuana in schedule I” and are not suitable challengers to the reform because they are not the “intended beneficiaries” of the Controlled Substances Act (CSA).
The filing this week from opponents, however, claims that DOJ’s arguments on standing are “meritless diversions from its indefensible position on the merits.”
“Movants need not be ‘intended beneficiaries of the CSA,’” it says. “Nor does it matter that movants have ‘pocketbook interests’ at stake while the CSA has broader objectives aimed at the general welfare. ”
The U.S. Court of Appeals for the District of Columbia is currently weighing three separate lawsuits against moving cannabis from Schedule I of the CSA to Schedule III that have since been consolidated.
One suit is led by prohibitionist organization Smart Approaches to Marijuana (SAM) and the National Drug and Alcohol Screening Association (NDASA), who claim they are “aggrieved” by the reform. Another comes from a coalition of anti-marijuana activists, substance misuse professionals, doctors and a cannabis-focused biopharmaceutical corporation. A third challenge was filed by the attorneys general of Indiana, Nebraska and Louisiana—though the latter state later withdrew from the suit.
Two of the entities involved in the litigation—NDASA and MMJ International Holdings and its subsidiaries—filed a separate motion asking the court to place a stay on marijuana rescheduling while the broader challenge is considered.
In the latest filing, their attorneys argue they would “suffer irreparable harm” from the federal cannabis reform.
Expected new costs related to medical review officer (MRO) practices that will be imposed on NDASA members in the drug testing industry “will force some to go out of business,” it says.
“Because the Order renders marijuana legal for state ‘medical’ use, MROs will need to perform time-intensive checks to determine whether positive THC tests are attributable to licit uses. That causes unrecoverable losses—irreparable harm—in two ways. First, NDASA’s MRO members will absorb some of the new costs themselves, incurring unrecoverable losses that cannot be dismissed as mere ‘voluntary billing decision[s].’ Second, whatever they do not absorb themselves will be passed on through higher prices, which will cause some clients to drop marijuana testing. It is not ‘speculative’ that some clients will drop more expensive testing; it is the inevitable result of the ‘commonsense economic realit[y]’—often relied on by courts—that demand falls as prices rise.”
The brief also argues that rescheduling “compels the many NDASA members that require employee drug testing either to (1) drop marijuana testing and live with the substantial risk of impaired-employee accidents and diminished productivity, or (2) pay substantially more to test for marijuana and risk Americans With Disabilities Act (ADA) or state-law liability for acting on positive tests.”
In response to the government’s argument that NDASA isn’t an appropriate entity to challenge rescheduling because it isn’t an intended beneficiary of the CSA, the brief says that the group’s members “translate CSA prohibitions into concrete practices that protect the public.”
“Drug testing creates a deterrent that is essential to the CSA’s ‘main objective[] of combating drug abuse.’ Thus, NDASA members’ interests in marketing drug-testing devices and services—and their clients’ interests in safe, drug-free workplaces—are certainly ‘consistent with the purposes of the statute.’”
Additionally, “NDASA’s members who test their employees have a strong interest in ensuring safety for both their employees and members of the public who may be affected by their work,” it says. “That interest is self-evidently congruent with the purposes of the CSA. Rescheduling marijuana harms that interest by necessitating costly revisions to drug-testing policies; by making marijuana testing itself more expensive; and by exposing NDASA members who act on positive marijuana test results to substantial risk of ADA and state-law liability.”
MMJ, for its part, will also see harm to its “competitive position in the market for federally lawful cannabis-based pharmaceuticals,” the filing claims.
“Until the Rescheduling Order, MMJ enjoyed a strong first-mover advantage because of its unbroken track record of federal compliance and significant progress toward an FDA-approved cannabis-based product. The Order destroys that competitive advantage—which reflects eight years of hard work and $10 million of investment—by making federally lawful the products of competitors who have long spurned federal law to capitalize on state medical marijuana programs.”
“These harms cannot be dismissed on the theory that MMJ” has thus far failed to bring any cannabis drugs to market, as the government pointed out in its brief, the company’s attorneys wrote. “MMJ has jumped through countless hoops over eight years to seek DEA registration and FDA approval, while its competitors ‘have taken few steps’—indeed, no steps—toward seeking federal drug approval.”
“MMJ has spent nearly eight years and $10 million to comply with federal law in developing a cannabis therapeutic,” the filing says. “The Rescheduling Order suddenly creates federally licit competition from state-legal cannabis drugmakers—which, to date, have made no effort to comply with federal drug laws.”
NDASA and MMJ also argue that the overall litigation challenging rescheduling is likely to ultimately succeed on the merits, saying that the proposed rule is “unlawful” because the government failed to undergo formal rulemaking procedures in an “egregious violation” of federal statute.
“The public interest plainly supports a stay,” it concludes.
The latest filing in the legal dispute comes as a Drug Enforcement Administration (DEA) hearing on the marijuana rescheduling proposal concluded testimony and the judge overseeing the proceedings laid out next steps for filings that will lead to his own recommendation on whether the reform should be adopted.
Acting Attorney General Todd Blanche in April issued an order that immediately reclassified state-licensed medical cannabis, as well as marijuana products approved by the Food and Drug Administration (FDA) from Schedule I of the Controlled Substances Act (CSA) to Schedule III. Under a separate order the acting attorney general signed, the hearing is considering more comprehensively moving marijuana to Schedule III.
Meanwhile, two medical marijuana companies filed a motion to intervene in the rescheduling lawsuit by joining the side of the government and opposing the litigation from prohibitionists. Lawyers for NDASA and SAM, however, filed a brief arguing that the cannabis businesses should not be allowed to join the suit.
The suit from SAM and NDASA challenging rescheduling was signed by attorneys at Torridon Law PLCC, where former U.S. Attorney General William Barr, led DOJ during Trump’s first term in office, is a partner.
SAM had announced in January that it was hiring Barr’s firm to legally combat cannabis rescheduling after Tump signed an executive order directing officials to complete the process expeditiously.
Meanwhile, the House Appropriations Committee voted to block federal officials from taking further steps to carry out cannabis rescheduling. Bipartisan lawmakers told Marijuana Moment, however, that they don’t expect the legislative effort to block rescheduling to succeed.
Separately, SAM, MMJ and other plaintiffs filed a lawsuit seeking to block a Trump administration program to cover certain hemp-derived products through Medicare. That case was dismissed by a federal judge in May, but that decision is being appealed.
Read marijuana rescheduling opponents’ full brief in the lawsuit below:
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