WeedPress: The Paper Trail

Marijuana Moment reports that DEA has moved to deny a Minneapolis dispensary federal registration over Minnesota’s dual licensing, a veterans’ attestation path and “synthetic” products. The order is a proposed denial, not a final one. Here is how each ground lines up with SDCL 34-20G and ARSD 44:90.

By Jason Karimi, Publisher

Marijuana Moment reported that the Drug Enforcement Administration told a Minneapolis medical cannabis dispensary that it intends to deny the business federal registration. The reported reasons are in an order to show cause sent to In-Dispensary and described by Marijuana Moment, which cited the Minnesota Star Tribune as first reporting it.¹,² As Marijuana Moment reported, the order gives three main grounds: DEA said Minnesota allows medical and non-medical dispensing “under the same state license”; that the state lets some veterans enroll without a practitioner’s certification; and that Minnesota lets dispensaries sell what DEA called “synthetic marijuana products.”¹

The order is a proposed denial, not a final one. Marijuana Moment reported that the order gives In-Dispensary 30 days to request a hearing or to submit a “corrective action plan.”¹ WeedPress could not open the posted copy of the order. Every quote from it here comes from Marijuana Moment’s report and has not been checked against the document.

The Justice Department announced on Oct. 30 that it had registered “more than 900 dispensaries across Alabama, Florida, Mississippi, South Dakota, Texas, Virginia, and West Virginia.” It named no businesses and gave no count by state. It also said “State licensure alone does not automatically grant federal registration.”³ This article does not suggest that any South Dakota business was denied, applied late or failed to apply. It sets DEA’s reported Minnesota grounds beside South Dakota’s statutes and rules so operators can see where the two states differ, and where questions remain.

The federal test

For an applicant holding a state medical marijuana license, the federal registration rule says DEA “shall register” the applicant unless registration “is inconsistent with the public interest.”⁴ It adds that, in general, registering an applicant that complies with a state regime with “robust protections against diversion, requirements for record-keeping and reporting, and safety and inspection measures will not be inconsistent with the public interest so long as registration is consistent with the Single Convention.”⁴

The federal rules define a “State medical marijuana license” as a state license “authorizing the licensee to manufacture, distribute, and/or dispense marijuana or products that contain marijuana for medical purposes.”⁵ The rule also says registrations “do not authorize the manufacture, distribution, dispensing, or use of marijuana or products containing marijuana for non-medical purposes.”⁶ A registration also cannot exceed the scope of the state license and is automatically suspended if the state license is suspended, revoked or expires.⁷

Side by side

The “robust protections” factors

The rule’s general test names diversion controls, record-keeping and reporting, and safety and inspection.⁴ South Dakota’s law and rules include the following cited provisions in those areas:

• Inventory tracking. Each establishment must use an inventory tracking system prescribed by the department for all inventory, transfer, testing-sample and transaction records. It must reconcile all on-premises and in-transit inventory in that system “each day by midnight.”²⁰
• Dispensing checks. Before dispensing, a dispensary agent must verify the card, the person’s photo ID and, “Through the department’s inventory tracking system,” that the patient hasn’t exceeded the 14-day limit. A dispensary may not dispense more than three ounces of cannabis or a cannabis product to a registered patient or nonresident cardholder in any 14-day period.²¹
• Inspection. An establishment “is subject to inspection by the department during business hours.”²²
• Record-keeping. Each establishment must have operating documents with oversight procedures and “procedures to ensure accurate record keeping.”²³

WeedPress analysis. On paper, the South Dakota provisions cited here do not include the dual medical and adult-use license DEA reportedly objected to in Minnesota, and they differ from the veteran-attestation and synthetic-product features DEA reportedly described. That is not a prediction of how DEA would treat any South Dakota applicant. The rule’s test is applied case by case, and the reported order is a proposed denial aimed at one Minnesota business under Minnesota law.⁴,¹

Questions South Dakota operators can review

• Product categories. Operators can review whether any inventory includes an industrial hemp product with chemically derived cannabinoids, which the cited state law bars.¹⁸
• Nonresident sales. How nonresident patients’ documents compare with the federal certification elements.¹⁶,¹⁷
• The broader hearing. DEA’s separate hearing on rescheduling marijuana generally, which WeedPress covered on Nov. 2.²⁴
• State-license status. A federal registration is automatically suspended if the state license is suspended, revoked or expires.⁷
• Supply chain. DEA’s Nov. 29 supply-chain guidance date, which WeedPress covered on Nov. 8.²⁵ The Oct. 31 WeedPress report covered DEA’s timely-applicant list and what the list can and cannot show.²⁶

According to Marijuana Moment, the Minnesota Office of Cannabis Management told the Star Tribune that the order “does not impact the state law that authorizes Minnesota’s medical cannabis and adult-use cannabis programs.”¹