throbber
No. 20-148
`
`In the
`Supreme Court of the United States
`
`MARVIN WASHINGTON, et al.,
`
`Petitioners,
`
`v.
`
`WILLIAM P. BARR, ATTORNEY GENERAL, et al.,
`
`Respondents.
`
`On PetitiOn fOr a Writ Of CertiOrari tO the United
`StateS COUrt Of aPPealS fOr the SeCOnd CirCUit
`
`BRIEF OF AMICI CURIAE THE NATIONAL
`CANNABIS INDUSTRY ASSOCIATION (NCIA)
`AND THE ARCVIEW GROUP IN SUPPORT
`OF PETITIONERS
`
`Ian a. Stewart
`MelISSa a. Murphy-petroS*
`neIl M. wIllner
`wIlSon elSer MoSkowItz edelMan
`& dIcker, llp
`55 West Monroe Street, Suite 3800
`Chicago, IL 60603-5001
`(312) 704-0550
`melissa.murphy-petros@wilsonelser.com
`
`Counsel for Amicus Curiae
`
`* Counsel of Record
`
`298428
`
`A
`
`(800) 274-3321 • (800) 359-6859
`
`

`

`i
`
`TABLE OF CONTENTS. . . . . . . . . . . . . . . . . . . . . . . . . . i
`
`TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . . ii
`
`INTERESTS OF THE AMICI CURIAE . . . . . . . . . . . .1
`
`SUMMARY OF ARGUMENT . . . . . . . . . . . . . . . . . . . . .2
`
`ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
`
`I. Exhaustion of Administrative Remedies Is
`Futile Because the Administrative Agency
`Is Unwilling and Incapable of Providing the
`Legal Remedy Sought by the Petitioners . . . . . .3
`
`
`
`A. Prejudice from Agency Delay . . . . . . . . . . . .4
`
`B. DEA Is Incapable of Providing the
`
`Remedy Sought by the Petitioners . . . . . . . .5
`
`II. DEA’s Limited Authority to Reclassify
`Marijuana as a Schedule II Controlled
`Substance Could Cripple the Burgeoning
`Legal Cannabis Industry . . . . . . . . . . . . . . . . . . . .9
`
`
`
`CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
`
`TABLE OF CONTENTS
`
`Page
`
`

`

`ii
`
`CASES
`
`Abbey v. Sullivan,
`
`978 F.2d 37 (2d Cir. 1992) . . . . . . . . . . . . . . . . . . . . . . .4
`
`Alliance for Cannabis Therapeutics v. DEA,
`
`15 F.3d 1131 (D.C. Cir. 1994). . . . . . . . . . . . . . . . . . . . .5
`
`Ams. for Safe Access v. DEA,
`
`706 F.3d 438 (D.C. Cir. 2013). . . . . . . . . . . . . . . . . . . . .5
`
`Barry v. Barchi,
`
`443 U. S. 55 (1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
`
`Colorado River Water Conservation Dist. v.
`United States,
`424 U.S. 800 (1976). . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
`
`
`
`Gibson v. Berryhill,
`
`411 U.S. 564 (1973) . . . . . . . . . . . . . . . . . . . . . . . . . . .4, 9
`
`Green Earth Wellness Center, LLC v.
`Atain Specialty Ins. Co.,
`163 F. Supp. 3d 821 (D. Colo. 2016). . . . . . . . . . . . . . .11
`
`
`
`Mathews v. Diaz,
`
`426 U.S. 67 (1976) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
`
`McCarthy v. Madigan,
`
`503 U.S. 140 (1992) . . . . . . . . . . . . . . . . . . . . . .2, 3, 9, 15
`
`TABLE OF CITED AUTHORITIES
`
`Page
`
`

`

`iii
`
`Moore v. East Cleveland,
`
`431 U.S. 494 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
`
`NORML v. DEA,
`
`559 F.2d 735, 751 (D.C. Cir. 1977) . . . . . . . . . .5, 6, 7, 8
`
`U.S. v McIntosh,
`
`833 F.3d 1163 (9th Cir. 2016). . . . . . . . . . . . . . . . . .7, 11
`
`United States v. Kiffer,
`
`477 F.2d 349 (2d Cir. 1973) . . . . . . . . . . . . . . . . . . . . . .7
`
`Walker v. Southern R. Co.,
`
`385 U.S. 196 (1966). . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
`
`West v. Bergland,
`611 F. 2d 710 (CA8 1979), cert. denied,
`
`
`449 U.S. 821 (1980). . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
`
`STATUTES AND OTHER AUTHORITIES
`
`21 U.S.C. § 331(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
`
`21 U.S.C. § 355(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
`
`21 U.S.C. § 812 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
`
`21 U.S.C. § 822 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
`
`21 U.S.C. § 829(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
`
`Cited Authorities
`
`Page
`
`

`

`iv
`
`31 U.S.C. § 5312 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
`
`21 C.F.R. § 312.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
`
`21 C.F.R. § 1301.12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
`
`66 Fed. Reg. 20,038 (April 18, 2001) . . . . . . . . . . . . . . . . .5
`
`76 Fed. Reg. 40,552 (July 8, 2011) . . . . . . . . . . . . . . . . . . .5
`
`Califor nia Depar tment of Tax and Fee
`Administration, S tat e of ca l I f or n I a
`(June 2020) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
`
`
`
`Cannabis Jobs Report: Legal cannabis now
`supports 243,700 full-time American Jobs,
` leafly (February 7, 2020) . . . . . . . . . . . . . . . . . . . . .12
`
`Colorado Department of Revenue, State of
` colorado (February 2020) . . . . . . . . . . . . . . . . . . . . .12
`
`Cost of Clinical Trials for New Drug FDA
`Approval Are Fraction of Total Tab,
`Joh n S ho p k I n S Bl o oM Ber g S c ho ol of
` puBlIc health (September 24, 2018) . . . . . . . . . . . .14
`
`FinCEN Guidance on BSA Expectations
`Regarding Marijuana-Related Businesses
`(February 14, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . .11
`
`
`
`Cited Authorities
`
`Page
`
`

`

`v
`
`Jav ie r H a s s e , Eve n A s O ve r a l l De a l s
`Declined, VC Investments in Cannabis
`Ne a r l y D o u b l e d O v e r 2 019, f o r B e S
`(January 28, 2020) . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
`
`
`
`Me di c a l Ma r iju a n a Pa ti e n t Num be r s,
` MarIJuana polIcy proJect (July 6, 2020). . . . . . . . .10
`
`Washington State Liquor and Cannabis
`Board, annual report fIScal year 2019
`(June 2019). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
`
`
`
`Cited Authorities
`
`Page
`
`

`

`1
`
`INTERESTS OF THE AMICI CURIAE1
`
`The National Cannabis Industry Association (NCIA)
`is the largest cannabis trade association in the United
`States and the only organization that broadly represents
`cannabis-related businesses at the national level.
`Representing well over 1,000 member businesses and tens
`of thousands of cannabis professionals, NCIA promotes
`the growth of a responsible and legitimate cannabis
`industry and works toward a favorable social, economic,
`and legal environment for that industry.
`
`The Arcview Group is the cannabis industry’s oldest
`and largest investor network. Since 2010, more than 1,000
`individual investors have invested $300 million into over
`one hundred cannabis startups in the United States.
`Founded with the purpose of leveraging business as a
`vehicle for political and social change, The Arcview Group
`is dedicated to destigmatizing the cannabis industry by
`investing in credible, scalable, and profitable cannabis
`businesses.
`
`Amici have an interest in the responsible and legal
`development of a sustainable cannabis industry in the
`United States, as well as in protecting the constitutional
`rights of their member constituents, patients and
`consumers.
`
`1. All parties have consented to the filing of this brief. Amici
`timely provided notice of intent to file this brief to all parties. NCIA
`and The Arcview Group state that no counsel for a party to this
`case authored this brief in whole or in part; and no counsel or party,
`other than Amici and its counsel, made a monetary contribution
`intended to fund the preparation and submission of this brief.
`
`

`

`2
`
`SUMMARY OF ARGUMENT
`
`Amici join the Petitioners’ argument that the lower
`courts erred in requiring exhaustion of administrative
`remedies as a prerequisite to the Petitioners’ request
`for a declaration that the classification of cannabis
`under the Controlled Substances Act2 (CSA) violates
`the Due Process Clause of the Fifth Amendment to the
`U.S. Constitution. Amici further submit that requiring
`exhaustion would result in the Petitioners facing
`substantial prejudice from an unreasonable and indefinite
`time frame for administrative action by the Drug
`Enforcement Administration (DEA), which continues
`to maintain an irrational and archaic position on the
`scheduling of cannabis that is out of step with sweeping
`medical, scientific, legal and social advances. Although
`the Second Circuit expressed its concern over agency
`delay, the Court failed to recognize that DEA is not only
`unwilling but also incapable of providing the remedy
`sought by the Petitioners, making exhaustion futile and
`inappropriate. As recently as 2016, DEA reiterated its
`long-standing but flawed position that it cannot legally
`classify cannabis anywhere but Schedule I of the CSA,
`or potentially Schedule II. Reclassification of cannabis
`to Schedule II does not represent a viable remedy for
`the Petitioners, who have not requested reclassification
`in any event. It appears that the Second Circuit fails to
`recognize these critical points. Pursuant to McCarthy
`v. Madigan, 503 U.S. 140 (1992), a reasonable balancing
`of the individual and institutional interests here should
`lead only to the rational conclusion that exhaustion is
`not necessary and that the matter should be allowed to
`proceed in the district court.
`
`2. 21 U.S.C. § 812 et. seq.
`
`

`

`3
`
`ARGUMENT
`
`I. Exhaustion of Administrative Remedies Is Futile
`Because the Administrative Agency Is Unwilling
`and Incapable of Providing the Legal Remedy
`Sought by the Petitioners
`
`This Court’s longstanding precedent obligated
`the lower courts to use sound judicial discretion in
`determining whether to require exhaustion “by balancing
`the individual’s interest in retaining prompt access to a
`federal judicial forum against countervailing institutional
`interests favoring exhaustion.” McCarthy, at 140. In
`making this determination, “[i]ndividual interests have
`weighed heavily where resort to the administrative
`remedy would occasion undue prejudice to subsequent
`assertion of a court action, where there is some doubt as
`to whether the agency is empowered to grant effective
`relief, or where the administrative body is shown to be
`biased or has otherwise predetermined the issue before
`it.” Id. at 140-141.
`
`The Court in McCarthy held that “federal courts are
`vested with a ‘virtually unflagging obligation’ to exercise
`the jurisdiction given them,” notwithstanding substantial
`institutional interests. Id. at 146, citing Colorado River
`Water Conservation Dist. v. United States, 424 U.S.
`800, 817–818 (1976). In addition, the Court cautioned
`that “administrative remedies need not be pursued
`if the litigant’s interests in immediate judicial review
`outweigh the government’s interests in the efficiency or
`administrative autonomy that the exhaustion doctrine is
`designed to further.” Id., citing West v. Bergland, 611 F.
`2d 710, 715 (CA8 1979), cert. denied, 449 U.S. 821 (1980).
`
`

`

`4
`
`A. Prejudice from Agency Delay
`
`Here, the Petitioners face substantial prejudice
`from an unreasonable and indefinite time frame for
`administrative action by DEA. See Id. at 147, citing Gibson
`v. Berryhill, 411 U.S. 564, 575, n. 14 (1973) (administrative
`remedy deemed inadequate “[m]ost often … because
`of delay by the agency”). The Second Circuit expressly
`acknowledged this concern in the decision under appeal
`here:
`
`Plaintiffs argue that the administrative process
`will prolong their ordeal intolerably. And
`their argument is not without force. Plaintiffs
`document that the average delay in deciding
`petitions to reclassify drugs under the CSA
`is approximately 9 years. Such long delays
`cast doubt on the appropriateness of requiring
`exhaustion. Accord Gibson v. Berryhill, 411
`U.S. 564, 575 n.14 (1973). And where, as here,
`health is involved, delay can be even more
`problematic. See Abbey v. Sullivan, 978 F.2d 37,
`46 (2d Cir. 1992) (observing that, “if the delay
`attending exhaustion would subject claimants
`to deteriorating health … then waiver [of
`exhaustion] may be appropriate”).
`
`(App.20a.) See also Walker v. Southern R. Co., 385 U.S.
`196, 198 (1966) (possible delay of 10 years in administrative
`proceedings makes exhaustion unnecessary).
`
`In the face of sweeping medical, scientific, legal and
`social advances on cannabis, DEA has unfalteringly and
`irrationally remained entrenched in the same archaic
`
`

`

`5
`
`position on cannabis for nearly 50 years. Indeed, the
`Second Circuit was so concerned over agency foot-
`dragging that it took the extraordinary step of agreeing
`to retain jurisdiction “to take whatever action may become
`appropriate if Plaintiffs seek administrative review and
`the DEA fails to act promptly.” (App.21a.) This half-step
`is inadequate. Notwithstanding the Second Circuit’s
`concerns over agency delay, the Court fails to recognize
`that DEA is not only unwilling but also incapable of
`providing the remedy sought by the Petitioners, making
`exhaustion futile and inappropriate.
`
`B. DEA Is Incapable of Providing the Remedy
`Sought by the Petitioners
`
`DEA has had multiple opportunities since the
`early 1970s to determine the proper classification for
`cannabis under the CSA, including whether it should
`have any classification under the statute.3 The evidence
`nevertheless leads to the inescapable conclusion that the
`agency has for decades consistently devalued or ignored
`advances in cannabinoid science. Indeed, the Second
`Circuit acknowledged that based on our current state of
`knowledge, “[i]t is possible that the current law, though
`rational once, is now heading toward irrationality; it may
`even conceivably be that it has gotten there already.”
`(App.14a.). This is precisely the point. DEA cannot
`reasonably be expected to determine whether its own
`entrenched position has become so irrational that it now
`
`3. See, e.g., NORML v. DEA, 559 F.2d 735, 751 (D.C. Cir. 1977);
`Alliance for Cannabis Therapeutics v. DEA, 15 F.3d 1131 (D.C.
`Cir. 1994); Notice of Denial of Petition, 66 Fed. Reg. 20,038 (April
`18, 2001); Denial of Petition To Initiate Proceedings To Reschedule
`Marijuana, 76 Fed. Reg. 40,552 (July 8, 2011); Ams. for Safe Access
`v. DEA, 706 F.3d 438 (D.C. Cir. 2013)
`
`

`

`6
`
`violates the Petitioners’ constitutional rights. That is
`an issue squarely within the domain of the courts, not a
`federal law enforcement agency. See, e.g., Moore v. East
`Cleveland, 431 U.S. 494, 497, n. 5 (An agency may be
`unable to consider whether to grant relief because it lacks
`institutional competence to resolve the particular type of
`issue presented, such as the constitutionality of a statute);
`Mathews v. Diaz, 426 U.S. 67, 76 (1976).
`
`Moreover, it would be futile to administratively
`petition DEA to remove cannabis from scheduled control
`under the CSA (de-scheduling). As recently as 2016, DEA
`reaffirmed its long-standing position that marijuana
`cannot be placed in a schedule less restrictive than
`Schedule II due to U.S. obligations under international
`drug control treaties. DEA states:
`
`It has been established in prior marijuana
`rescheduling proceedings that placement of
`marijuana in either schedule I or schedule II
`of the CSA is “necessary as well as sufficient to
`satisfy our international obligations” under the
`Single Convention. NORML v. DEA, 559 F.2d
`735, 751 (D.C. Cir. 1977). As the United States
`Court of Appeals for the DC Circuit has stated,
`“several requirements imposed by the Single
`Convention would not be met if cannabis and
`cannabis resin were placed in CSA schedule III,
`IV, or V.” 2 Id. Therefore, in accordance with
`section 811(d)(1), DEA must place marijuana in
`either schedule I or schedule II.4
`
`4. Denial of Petition to Initiate Proceedings to Reschedule
`Marijuana, CFR Chapter II and Part 1301, Fed. Register, Vol.
`156, 53688 (Aug. 12, 2016)
`
`

`

`7
`
`In its decision under appeal, the Second Circuit briefly
`addressed this issue in the context of distinguishing
`the case of United States v. Kiffer, 477 F.2d 349 (2d Cir.
`1973). In Kiffer, the Second Circuit considered a challenge
`to the scheduling of marijuana under the CSA without
`requiring exhaustion. In declining to follow Kiffer, the
`Second Circuit explains:
`
`[The court in Kiffer] waived the normal
`requirement only because of two factors that do
`not obtain in the instant case: first, because the
`“application of the … doctrine [of exhaustion]
`to criminal cases is generally not favored,”
`id. at 352, and, second and more significantly,
`because, at the time Kiffer was heard, the federal
`government had taken the position that it did not
`have the power to re‐ or de-schedule marijuana
`at all, as a result of foreign treaty commitments,
`id. at 351. Under those circumstances, where
`“there [was] some doubt whether appellants
`in fact [had] an administrative remedy,” the
`Court declined to require exhaustion. Id.
`The instant case is different. It is, of course,
`civil. And, as the D.C. Circuit has since held,
`foreign treaty commitments have not divested
`the Attorney General of the power to re‐ or
`de-schedule marijuana. See Nat’l Org. for
`Reform of Marijuana Law (NORML) v. Drug
`Enforcement Admin., 559 F.2d 735 (D.C. Cir.
`1977). Kiffer’s result is therefore not controlling.
`
`(App.18-19a.)
`
`

`

`8
`
`Despite the Second Circuit’s naked assertion that
`NORML long ago put to rest the idea that foreign treaty
`commitments preclude the de-scheduling of marijuana,
`DEA continues to stand behind that legal theory in
`refusing to consider placing marijuana anywhere but
`Schedule I, or potentially Schedule II. The Second Circuit
`nevertheless appears to have glossed over this critical
`point. In its decision under appeal here, the Court writes:
`
`Although Plaintiffs style their claims in many
`different ways, the gravamen of their argument
`is that marijuana should not be classified as a
`Schedule I substance under the CSA. Were a
`court to agree, the remedy would be to re‐ or
`de-schedule cannabis. It cannot be seriously
`argued that this remedy is not available
`through the administrative process.
`
`(App.16a) (emphasis added).
`
`Yet Petitioners make precisely the argument that the
`Second Circuit so casually dismisses. Indeed, Amici assert
`that it is unreasonable to believe that the Petitioners would
`be able to achieve anything other than reclassification to
`Schedule II – a remedy that has never been sought – by
`exhausting administrative remedies with DEA.
`
`The Second Circuit apparently believes that the
`Petitioners’ constitutional challenge equates to a request
`for the de-scheduling of cannabis. Even if true, which
`Amici dispute, is it reasonable to believe that filing yet
`another petition with DEA would cause the agency to
`reverse an entrenched legal position that has become
`irrational over time, and particularly when the agency
`
`

`

`9
`
`has vigorously defended that position since as long ago
`as 1972 and as recently as 2016? Exhaustion has not
`been required where the challenge is to the adequacy
`of the agency procedure itself, such that “the question
`of the adequacy of the administrative remedy … [is] for
`all practical purposes identical with the merits of [the
`plaintiff’s] lawsuit.” McCarthy, 503 U.S. at 148, citing
`Barry v. Barchi, 443 U. S. 55, 63, n. 10 (1979) (quoting
`Gibson v. Berryhill, 411 U. S. 564, 575). Here, the central
`legal remedy requested by the Petitioners in this lawsuit
`is the very thing that the agency procedure cannot give.
`Exhaustion is futile.
`
`II. DEA’s Limited Authority to Reclassify Marijuana
`as a Schedule II Controlled Substance Could
`Cripple the Burgeoning Legal Cannabis Industry
`
`The sole administrative remedy that DEA states it can
`provide – reclassifying marijuana to Schedule II – has not
`been requested by the Petitioners because the creation of
`a prescription drug model could have devastating financial
`implications on the nascent cannabis industry and could be
`far worse than the troublesome status quo under Schedule
`I. Reclassifying exposes the cannabis industry to costly
`regulatory hurdles, including expensive and arduous
`clinical trials, that could result in the destruction of all
`state medical cannabis and adult-use programs, including
`state-created social equity licensing programs that
`address the disparate harms imposed on communities of
`color from decades of state and local cannabis prohibition.
`The resulting harmful social costs include removing
`access to medicine for millions of medicinal marijuana
`
`

`

`10
`
`patients,5 loss of hundreds of thousands of jobs, the
`evisceration of billions of dollars in needed tax revenue
`and the resurgence of the illicit marijuana market. These
`harmful consequences would be felt directly by individuals
`such as Petitioners Bortell and Cotte, who in the words of
`the Second Circuit, are “children with dreadful medical
`problems” and Petitioner Belen, a veteran of the Iraq
`war who turned to medical cannabis after conventional
`therapies were unsuccessful in treating his post-traumatic
`stress disorder. (App.5a-6a.) In addition to the human
`cost, there could be very significant economic costs to the
`industry that serves these Americans—to say nothing
`of the states that rely on the industry for tax revenue.
`Reclassification to Schedule II also would put at risk the
`$2.62 billion in venture capital infused into the marijuana
`industry in 2019 alone.6
`
`Current federal policy regarding enforcement of the
`CSA has shown ambivalence where the possession and
`distribution of marijuana is consistent with well-regulated
`state law. Congress’s position that taxpayer funds may not
`be used to prosecute state-compliant medical cannabis
`operators (as codified in successive federal appropriations
`acts), despite marijuana’s Schedule I status, has created
`
`5. As of July 6, 2020, approximately 4,375,822 patients are
`registered to use medical cannabis across the country. Medical
`Marijuana Patient Numbers, MarIJuana polIcy proJect (July
`6, 2020), https://www.mpp.org/issues/medical-marijuana/state-
`by-state-medical-marijuana-laws/medical-marijuana-patient-
`numbers/.
`
`6. Javier Hasse, Even As Overall Deals Declined,
`VC Investments in Cannabis Nearly Doubled Over 2019,
`forBeS (January 28, 2020), https://www.forbes.com/sites/
`javierhasse/2020/01/28/vc-in-cannabis/#70ba8335a8c9.
`
`

`

`11
`
`a “de facto” quasi-legal status for the plant when used for
`medicinal purposes.7 Indeed, federal agencies have issued
`guidance to industries that seek to work with marijuana.
`The Department of the Treasury, through FinCEN,
`issued guidelines in 2014 to financial institutions seeking
`to provide services to marijuana-related businesses by
`clarifying the financial institutions’ obligations under
`the Bank Secrecy Act8 and relevant federal anti–money
`laundering statutes. The stated purpose of those
`guidelines, which remain in place today, is to “enhance
`the availability of financial services for, and the financial
`transparency of, marijuana-related businesses.”9
`
`Marijuana’s “de facto” legal status has facilitated the
`growth for an industry worth an estimated $10.73 billion
`in early 2020 and that currently supports more than
`
`7. See generally Rohrabacher-Farr Amendment, which
`prevents the Department of Justice from spending funds to
`interfere with the implementation of state medical cannabis
`laws. The Ninth Circuit has interpreted the Rohrabacher-
`Farr Amendment as prohibiting the Department of Justice
`from spending funds from relevant appropriations acts for the
`prosecution of individuals engaged in conduct permitted by state
`medical cannabis laws and who fully complied with such laws.
`See U.S. v McIntosh, 833 F.3d 1163, 1178 (9th Cir. 2016); See also,
`Green Earth Wellness Center, LLC v. Atain Specialty Ins. Co.,
`163 F. Supp.3d 821 (D. Colo. 2016) (rendering an insurance policy’s
`“Contraband” exclusion “ambiguous by the difference between the
`federal government’s de jure and de facto public policies regarding
`state-regulated medical marijuana.”).
`
`8. 31 USC 5312 et seq.
`
`9. FinCEN Guidance on BSA Expectations Regarding
`Marijuana-Related Businesses (February 14, 2014), https://www.
`fincen.gov/sites/default/files/guidance/FIN-2014-G001.pdf.
`
`

`

`12
`
`243,000 full-time jobs, even in states with historically
`high unemployment rates caused by COVID-19.10 Sales in
`Colorado, for example, reached $1.77 billion in 2019 while
`the market supported more than 34,700 cannabis-related
`jobs.11 Florida maintained its more than 15,498 cannabis
`industry jobs in the first half of 2020 with sales in 2019
`that approached $800 million.12 Arizona’s medical cannabis
`program supports 15,059 jobs and posted an estimated
`$709 million in total market value in 2019.13 Oklahoma
`saw an unprecedented growth rate of 221 percent in 2019,
`which continues to support in excess of 9,400 jobs in 2020.14
`
`States also have reaped significant tax revenue. In
`2019, Colorado collected more than $302 million in tax
`revenue from cannabis-related activity,15 while California
`earned $629.3 million in 2019.16 Washington collected
`$395.5 million in cannabis tax revenue in 2019, which was
`
`10. Cannabis Jobs Report: Legal cannabis now supports
`243,700 full-time American Jobs, le a fly (February 7,
`2020), https://leafly-cms-production.imgix.net/wp-content/
`uploads/2020/02/06145710/Leafly-2020-Jobs-Report.pdf.
`
`11. Id. at 8
`
`12. Id.
`
`13. Id.
`
`14. Id. at 9
`
`15. Colorado Department of Revenue, State of colorado,
`(February 2020), https://www.colorado.gov/pacific/sites/default/
`files/0120_MJTaxCalendarReport_PUBLISH.pdf
`
`16. California Department of Tax and Fee Administration,
`State of calIfornIa (June 2020), https://www.cdtfa.ca.gov/
`dataportal/dataset.htm?url=CannabisTaxRevenues
`
`

`

`13
`
`$170 million more than the state collected for beer, wine
`and liquor sales combined.17
`
`No other industry in the history of this country has been
`able to survive and grow to this extent in the face of such
`a legal quagmire. DEA’s self-asserted sole administrative
`remedy of reclassification to Schedule II, however, could
`result in the destruction of all state cannabis programs and
`a further resurgence of the unregulated illicit marijuana
`market. Under the CSA and accompanying regulations,
`every person who manufactures, distributes, dispenses,
`imports or exports any controlled substance must register
`with the DEA18 for each principal place of business or
`professional practice where controlled substances are
`manufactured, distributed or disposed.19 Every operator
`in the country would be subject immediately to these
`requirements if marijuana is reclassified to Schedule
`II. Because the refilling of prescriptions for Schedule II
`substances is prohibited,20 patients would require new
`prescriptions from their medical provider whenever they
`run out of their life-saving medicine. These requirements
`are incompatible with current state medical and adult-use
`cannabis programs.
`
`17. Washington State Liquor and Cannabis Board, annual
`report fIScal year 2019 (June 2019) https://lcb.wa.gov/sites/
`default/files/publications/annual_report/2019-annual-report-
`final2.pdf
`
`18. 21 U.S.C. § 822
`19. 21 C.F.R. § 1301.12
`20. 21 U.S.C § 829(a)
`
`

`

`14
`
`Furthermore, FDA would have jurisdiction to regulate
`marijuana as a Schedule II drug under the Federal Food
`Drug & Cosmetic Act (FDCA) and would almost certainly
`qualify medical cannabis as a “new drug,” subjecting it
`to myriad regulations including the requirement that
`companies file an investigational new drug application
`for clinical trials to study the safety and efficacy of any
`new drug.21 New drugs may not be introduced legally
`or delivered for introduction into interstate commerce
`without prior approval from FDA.22 This requirement
`alone could cripple the industry due to its cost, and at a
`minimum could create a product bottleneck preventing
`many Americans from accessing these products on which
`they rely from a regulated and taxed source. In 2018,
`a study led by a research team from Johns Hopkins
`Bloomberg School of Public Health found that the median
`cost for a clinical trial was $19 million, representing less
`than one percent of the average total costs of developing
`a new drug.23 This would cause the financial ruin of even
`the best-capitalized operators, let alone the hundreds of
`small businesses that won licenses via state-created social
`equity programs to assist historically disenfranchised
`communities. Those costs and delays will fall directly on
`average Americans such as Petitioners.
`
`21. 21 C.F.R § 312.2
`22. 21 U.S.C. § 331(d) and § 355(a)
`
`23. Cost of Clinical Trials for New Drug FDA Approval
`Are Fraction of Total Tab, JohnS hopkInS BlooMBerg School
`of puBlIc health (September 24, 2018), https://www.jhsph.edu/
`news/news-releases/2018/cost-of-clinical-trials-for-new-drug-
`FDA-approval-are-fraction-of-total-tab.html.
`
`

`

`15
`
`CONCLUSION
`
`The decision of the lower courts to require the
`exhaustion of administrative remedies as a prerequisite
`to the Petitioners’ constitutional claim constituted error.
`DEA continues to defend its irrational position on the
`scheduling of cannabis and continues to state that de-
`scheduling cannabis is not an available administrative
`remedy. Likewise, reclassification of cannabis to Schedule
`II does not represent a viable remedy for the Petitioners,
`who have not requested reclassification in any event.
`In dismissing the Petitioners’ constitutional claim, the
`Second Circuit’s casual conclusion that “it cannot be
`seriously argued” that reclassification or de-scheduling
`cannabis is not available through the administrative
`process is not only a gross over-simplification that fails to
`account for an entrenched and irrational agency mindset,
`it is simply wrong on the legal merits. Pursuant to this
`Court’s holding in McCarthy, a reasonable balancing of
`the individual and institutional interests is required here
`and should lead only to the reasonable conclusion that
`exhaustion is not necessary and that the matter should
`be allowed to proceed in the district court.
`
`For the foregoing reasons, Amici NCIA and The
`Arcview Group respectfully request that the Court grant
`the petition for a writ of certiorari.
`
`

`

`16
`
`
`
`
`
`Respectfully submitted,
`
`Ian a. Stewart
`MelISSa a. Murphy-petroS*
`neIl M. wIllner
`wIlSon elSer MoSkowItz edelMan
`& dIcker, llp
`55 West Monroe Street, Suite 3800
`Chicago, IL 60603-5001
`(312) 704-0550
`melissa.murphy-petros@wilsonelser.com
`
`
`
`Counsel for Amicus Curiae
`* Counsel of Record
`
`

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