Decision and Order: Medpharm Research, LLC

Issuing agencies

Full Text

<html>
<head>
<title>Federal Register, Volume 91 Issue 193 (Wednesday, October 7, 2026)</title>
</head>
<body><pre>
[Federal Register Volume 91, Number 193 (Wednesday, October 7, 2026)]
[Notices]
[Pages 64176-64178]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-20553]


-----------------------------------------------------------------------

DEPARTMENT OF JUSTICE

Drug Enforcement Administration


Decision and Order: Medpharm Research, LLC

    On September 17, 2025, the Drug Enforcement Administration (DEA or 
Government) issued an Order to Show Cause (OSC) to MedPharm Research, 
LLC, of Denver, Colorado (Applicant). Request for Final Agency Action 
(RFAA), Exhibit (RFAAX) 1, at 1, 6. The OSC proposed the denial of 
Applicant's application for DEA registration as a bulk manufacturer of 
marijuana in its Schedule I form,\1\ Control No. W16089931E, alleging 
that Applicant's registration would be inconsistent with the public 
interest. Id. at 1 (citing 21 U.S.C. 823(a)).
---------------------------------------------------------------------------

    \1\ The CSA and DEA regulations refer to the substance as 
``marijuana'' and ``marihuana'' interchangeably. See, e.g., 21 
U.S.C. 802(16)(A) (providing that ``the terms `marihuana' and 
`marijuana' mean all parts of the plant Cannabis sativa L.,'' 
subject to applicable exceptions); 21 U.S.C. 812(c), Schedule 
I(c)(10) (listing ``marihuana'' in Schedule I); 21 CFR 1301.13(k) 
(setting forth provisions for medical ``marijuana'' registrations); 
21 CFR 1301.33(d) (discussing applications for registration to 
manufacture ``marihuana''). This Decision will refer to the 
substance as ``marijuana,'' unless quoting language that uses the 
alternate spelling. 21 U.S.C. 802(16)(A), 812(c), Schedule I(c)(10); 
21 CFR 1308.11(d)(23), (58).
---------------------------------------------------------------------------

    More specifically, the OSC alleged that Applicant's sibling and 
parent entities have been handling marijuana for years without DEA 
registration and its sibling entity has engaged in diversion by 
manufacturing marijuana for the recreational market. RFAAX 1, at 4 
(citing 21 U.S.C. 823(a)(6), 824(a)(4); 21 CFR 1318.05(b)(1)); RFAA, at 
5. On July 21, 2026, the Government submitted an RFAA requesting that 
the Agency issue a default final order denying Applicant's application 
for registration. RFAA, at 1, 6.
    After carefully reviewing the entire record and conducting the 
analysis as set forth in detail below, the Agency \2\ grants the 
Government's RFAA and denies Applicant's application for registration.
---------------------------------------------------------------------------

    \2\ The CSA delegates authority to the Attorney General, who has 
delegated it to the Administrator of DEA (the Agency). 28 CFR 0.100.
---------------------------------------------------------------------------

I. Default Determination

    Under 21 CFR 1301.43, a registrant entitled to a hearing who fails 
to file a timely hearing request ``within 30 days after the date of 
receipt of the [OSC] . . . shall be deemed to have waived their right 
to a hearing and to be in default'' unless ``good cause'' is 
established for the failure. 21 CFR 1301.43(a), (c)(1). In the absence 
of a demonstration of good cause, a registrant who fails to timely file 
an answer also is ``deemed to have waived their right to a hearing and 
to be in default.'' 21 CFR 1301.43(c)(2). Unless excused, a default is 
deemed to constitute ``an admission of the factual allegations of the 
[OSC].'' 21 CFR 1301.43(e).
    Based on the Government's submissions in its RFAA, the Agency finds 
that service of the OSC on Applicant was adequate. Specifically, the 
Declaration from a DEA Diversion Investigator (DI) indicates that on 
September 19, 2025, the DI personally served a copy of the OSC on 
Applicant at its proposed registered address. RFAAX 2, at 1. At the 
time of service, Applicant's Director of Pharmacology, Mr. D.M., signed 
a DEA-12, Receipt for Cash or Other Items, acknowledging receipt of the 
OSC. RFAAX 2 and Exhibit A.
    The OSC notified Applicant of its right to file a written request 
for hearing and answer, and that if it failed to file such a request 
and answer, it would be deemed to have waived its right to a hearing 
and be in default. RFAAX 1, at 5 (citing 21 CFR 1301.43). Here, 
Applicant did not request a hearing, file an answer, or respond to the 
OSC in any way. RFAA, at 1, 3, 5-6. Thus, the Agency finds that 
Applicant is in default and therefore has admitted to the factual 
allegations in the OSC. 21 CFR 1301.43(c)(1), (e), (f)(1).

II. Applicable Law

    Marijuana, as defined in the CSA, as well as marijuana extract and 
tetrahydrocannabinols \3\ (hereinafter collectively referred to as 
marijuana), are Schedule I controlled substances, unless they are in a 
U.S. Food and Drug Administration approved product or subject to a 
state medical marijuana license under 21 CFR 1308.13(g) as Schedule III 
controlled substances. 21 U.S.C. 812(c), Schedule I(c)(10); 21 CFR 
1308.11(d)(23), (31), (58); RFAAX 1, at 1.
---------------------------------------------------------------------------

    \3\ Marijuana extract and tetrahydrocannabinols are defined in 
21 CFR 1308.11(d). Tetrahydrocannabinols do not include any 
material, compound, mixture, or preparation that falls within the 
definition of hemp set forth in 7 U.S.C. 1639o.
---------------------------------------------------------------------------

    Congress enacted the CSA ``to conquer drug abuse and control the 
legitimate and illegitimate traffic in controlled substances.'' 
Gonzales v. Raich, 545 U.S. 1, 12 (2005). A particular concern of 
Congress was ``the need to prevent the diversion of drugs from 
legitimate to illicit channels,'' and it ``devised a closed regulatory 
system making it unlawful to manufacture, distribute, dispense, or 
possess any

[[Page 64177]]

controlled substance except in a manner authorized by the CSA.'' Id. at 
12-13; see, e.g., 21 CFR 1301.71(a), .72-.76, 1318.04(a), 
1318.05(a)(1), (5) (establishing various requirements to prevent 
diversion); RFAAX 1, at 3.
    The CSA's requirements under this closed regulatory system include 
that ``[e]very person who manufactures . . . any controlled substance . 
. . , or who proposes to engage in the manufacture . . . of any 
controlled substance . . . , shall obtain annually a registration 
issued by the Attorney General in accordance with the rules and 
regulations promulgated by him.'' 21 U.S.C. 822(a)(1); see Raich, 545 
U.S. at 12-13, 27-28; RFAAX 1, at 2; see also 21 U.S.C. 823(a) 
(establishing requirements for the registration of manufacturers); 21 
CFR 1301.11(a) (``Every person who manufactures . . . any controlled 
substance or who proposes to engage in the manufacture . . . of any 
controlled substance shall obtain a registration unless exempted . . . 
.''). ``[I]t shall be unlawful for any person knowingly or 
intentionally . . . to manufacture . . . or possess with intent to 
manufacture . . . a controlled substance'' except as authorized by the 
CSA. 21 U.S.C. 841(a)(1); RFAAX 1, at 2.
    The CSA provides that the Agency shall register an applicant to 
manufacture controlled substances in Schedule I or II if such 
registration is determined to be ``consistent with the public interest 
and with United States obligations under international treaties, 
conventions, or protocols in effect on May 1, 1971.'' 21 U.S.C. 823(a); 
RFAAX 1, at 2. Further, DEA regulations provide that ``the 
Administrator may grant an application for a registration to 
manufacture marihuana, including the cultivation of cannabis, only if 
he determines that such registration is consistent with the public 
interest and with United States obligations under the Single 
Convention.'' 21 CFR 1318.03(a); RFAAX 1, at 2.
    In April 2026, the Acting Attorney General issued a Final Rule 
which, in part, established ``an expedited registration process . . . 
for entities holding state medical marijuana licenses, enabling such 
entities to engage in the manufacture, distribution, and/or dispensing 
of marijuana for medical purposes under federal law,'' subject to 
applicable requirements. Schedules of Controlled Substances: 
Rescheduling of Food and Drug Administration Approved Products 
Containing Marijuana From Schedule I to Schedule III; Corresponding 
Change to Permit Requirements, 91 FR 22714, 22715 (2026). Applicant's 
2016 application will be reviewed under the application requirements 
for Schedule I bulk manufacturers of marijuana, as set forth in the 
OSC. 21 U.S.C. 823(a); 21 CFR 1318.05(a), (b); but see infra n.8.
    The CSA establishes six factors for the Administrator to consider 
in determining whether a registration to manufacture controlled 
substances is in the public interest. 21 U.S.C. 823(a); see 21 CFR 
1318.05(a) (DEA regulations implementing the same six factors); MCRGC, 
LLC, 90 FR 48431, 48431-32 (2025); RFAAX 1, at 2-3. Those six public 
interest factors for manufacturers are:
    ``(1) maintenance of effective controls against diversion of 
particular controlled substances and any controlled substance in 
schedule I or II compounded therefrom into other than legitimate 
medical, scientific, research, or industrial channels, by limiting the 
importation and bulk manufacture of such controlled substances to a 
number of establishments which can produce an adequate and 
uninterrupted supply of these substances under adequately competitive 
conditions for legitimate medical, scientific, research, and industrial 
purposes;
    (2) compliance with applicable State and local law;
    (3) promotion of technical advances in the art of manufacturing 
these substances and the development of new substances;
    (4) prior conviction record of applicant under Federal and State 
laws relating to the manufacture, distribution, or dispensing of such 
substances;
    (5) past experience in the manufacture of controlled substances, 
and the existence in the establishment of effective control against 
diversion; and
    (6) such other factors as may be relevant to and consistent with 
the public health and safety.''
    21 U.S.C. 823(a)(1)-(6); see 21 CFR 1318.05(a)(1)-(6); RFAAX 1, at 
2-3.
    Further, in determining which manufacturer applications are in the 
public interest, the Administrator must place ``particular emphasis'' 
on ``[w]hether the applicant has demonstrated prior compliance with the 
[CSA] and [DEA regulations].'' 21 CFR 1318.05(b)(1); RFAAX 1, at 3.
    A DEA registration to manufacture marijuana does ``not authorize 
the manufacture, distribution, dispensing, or use of marijuana or 
products containing marijuana for non-medical purposes.'' 21 CFR 
1301.13(k)(1)(iv); RFAA, at 5 n.2.
    The burden is on Applicant to establish that granting its 
application for registration to manufacture marijuana is in the public 
interest. 21 CFR 1318.03(b); see 21 CFR 1301.44(a).

III. Findings of Fact

    In light of Applicant's default, the factual allegations in the OSC 
are deemed admitted.\4\ 21 CFR 1301.43(e). Accordingly, Applicant 
admits that on or about September 12, 2016, Mr. A.G., the Chief 
Executive Officer (CEO) of Applicant's parent company, submitted an 
application on behalf of Applicant for a DEA registration (control No. 
WI6089931E) as a bulk manufacturer of marijuana.\5\ RFAAX 1, at 4.
---------------------------------------------------------------------------

    \4\ According to the CSA, ``[f]indings of fact by the [DEA 
Administrator], if supported by substantial evidence, shall be 
conclusive.'' 21 U.S.C. 877. Here, where Applicant is found to be in 
default, all the factual allegations in the OSC are deemed to be 
admitted. These uncontested and deemed admitted facts constitute 
evidence that exceeds the ``substantial evidence'' standard of 21 
U.S.C. 877.
    \5\ A Notice of Applicant's application was published in the 
Federal Register on August 27, 2019. Bulk Manufacturer of Controlled 
Substances Applications: Bulk Manufacturers of Marihuana, 84 FR 
44920, 44922 (2019).
---------------------------------------------------------------------------

    Applicant is a wholly-owned subsidiary of MedPharm Holdings, LLC 
(d/b/a ``Bud & Mary's Cannabis''). RFAAX 1, at 4. MedPharm Holdings 
also owns a second subsidiary known as MX, LLC. RFAAX 1, at 4. Mr. A.G. 
is the CEO of MedPharm Holdings and, in that position of responsibility 
over the parent company, oversees both Applicant and MX as subsidiaries 
and sister entities. RFAAX 1, at 4. Neither Applicant, its parent 
company MedPharm Holdings, nor its sister company MX is registered or 
has ever been registered by DEA to manufacture marijuana. RFAAX 1, at 
4.
    Applicant's sister company, MX, currently has numerous licenses 
from the State of Colorado and from the consolidated city-county of 
Denver to research, grow, manufacture, and sell marijuana in the 
Colorado state recreational and medicinal marijuana markets. RFAAX 1, 
at 4. MX has been growing and selling marijuana in Colorado since 2016. 
RFAAX 1, at 4.
    On December 22, 2023, DEA requested additional information from 
Applicant, including documentation of Applicant's authority to 
manufacture marijuana under state law. RFAAX 1, at 4. Applicant 
provided DEA with a copy of a State of Colorado marijuana research and 
development license (MMJ R&D Cultivation No. 408C-00001) that had been 
issued to Applicant's parent company, MedPharm Holdings. RFAAX 1, at 4.
    Applicant proposed to conduct its operations at the same facility 
where its sister company MX operates under the control of parent 
company MedPharm

[[Page 64178]]

Holdings. RFAAX 1, at 4. That location has been operating, and 
continues to operate, as a marijuana cultivation facility, growing both 
medical and recreational marijuana, which is sold to third-party 
marijuana dispensaries operating within Colorado's marijuana market. 
RFAAX 1, at 4.

IV. Discussion

    Here, Applicant's parent company, MedPharm Holdings, and its sister 
company, MX, have been manufacturing marijuana without DEA registration 
for at least the past 10 years. RFAAX 1, at 4. Further, Applicant's 
parent company and sister company have been engaged in the manufacture 
of marijuana for sale in the recreational market. RFAAX 1, at 4. 
Manufacturing marijuana without a registration from DEA violates the 
CSA and DEA regulations. 21 U.S.C. 822(a)(1), 823(a), 841(a)(1); 21 CFR 
1301.11(a); Raich, 545 U.S. at 12-13. Further, manufacturing marijuana 
for the recreational market violates the CSA and DEA regulations, and 
it constitutes diversion of a Schedule I controlled substance. 21 CFR 
1301.13(k)(1)(iv), 1301.71(a), .72-.76, 1318.04(a); Raich, 545 U.S. at 
12-13.
    In sum, Applicant's corporate structure, acting through the company 
that owns and controls Applicant and its sister company, all of which 
are managed by the same CEO, Mr. A.G.,\6\ has engaged in the 
unregistered manufacture of marijuana for at least a decade and has 
diverted marijuana into the recreational market, in violation of 
federal law. See Sections III-IV. The unregistered manufacture of 
marijuana and the diversion of marijuana into recreational channels 
weigh against a finding of registration being consistent with the 
public interest and demonstrate a lack of ``prior compliance with the'' 
CSA and DEA regulations, which also weigh against a finding of 
registration being consistent with the public interest. 21 U.S.C. 
823(a)(6); 21 CFR 1318.05(b)(1).
---------------------------------------------------------------------------

    \6\ See Pharmboy Ventures Unlimited, Inc., 77 FR 33770, 33771 
n.2 (2012) (noting that ``DEA has long held that'' the Agency ``can 
look behind [an entity's] ownership structure'' to evaluate the 
conduct of the people making decisions regarding the controlled 
substance side of the business) (citing Carriage Apothecary, 52 FR 
27599, 27599 (1987)).
---------------------------------------------------------------------------

    Considering the unrebutted and substantial evidence of record 
establishing Applicant's unregistered manufacture of and diversion of a 
Schedule I controlled substance, the Agency determines that issuing 
Applicant a manufacturer registration (bulk) for marijuana would not be 
consistent with the public interest.\7\ 21 U.S.C. 823(a)(6); 21 CFR 
1318.05(b)(1). Accordingly, the Agency will order the denial of 
Applicant's application for registration.\8\
---------------------------------------------------------------------------

    \7\ The burden is on the applicant to establish that its 
registration is consistent with the public interest. 21 CFR 
1301.44(a); 21 CFR 1318.03(b); RFAAX 1, at 2. Here, by virtue of its 
default, Applicant has failed to present any evidence whatsoever to 
establish its registration is consistent with the public interest, 
and the deemed admitted facts (i.e., noncompliance with the CSA, 
violation of the registration requirement, and diversion of a 
Schedule I controlled substance), weigh against a finding in favor 
of registration. Although these are only factors, they are 
dispositive here because Applicant's default means it not only 
waived the right to present evidence regarding these factors, but it 
also waived the right to present any other evidence that its 
registration would be consistent with the public interest.
    \8\ Denial of Applicant's application in this Order does not 
prohibit Applicant from submitting an application through the new 
framework established for issuing registrations based on state 
licenses to handle marijuana for medical purposes, if applicable. 
See Schedules of Controlled Substances: Rescheduling of Food and 
Drug Administration Approved Products Containing Marijuana From 
Schedule I to Schedule III; Corresponding Change to Permit 
Requirements, 91 FR 22714, 22721 (2026) (adding paragraph (k) to 21 
CFR 1301.13 ``establish[ing] an expedited review process for 
entities holding state medical marijuana licenses who seek 
registration as a marijuana manufacturer''); see also id. at 22722 
(adding paragraphs (g)(2)-(4) to 21 CFR 1308.13 placing into 
Schedule III marijuana, marijuana extract, and delta-9-
tetrahydrocannabinols ``subject to a state medical marijuana 
license'').
---------------------------------------------------------------------------

Order

    Pursuant to 28 CFR 0.100(b) and the authority vested in me by 21 
U.S.C. 823(a), I hereby deny the pending application for a DEA 
Certificate of Registration, Control No. W16089931E, submitted by 
MedPharm Research, LLC, as well as any other pending application of 
MedPharm Research, LLC, to amend or modify this application, or for 
additional registration in Colorado. This Order is effective November 
6, 2026.

Signing Authority

    This document of the Drug Enforcement Administration was signed on 
October 2, 2026, by DEA Administrator Terrance C. Cole. That document 
with the original signature and date is maintained by DEA. For 
administrative purposes only, and in compliance with requirements of 
the Office of the Federal Register, the undersigned DEA Federal 
Register Liaison Officer has been authorized to sign and submit the 
document in electronic format for publication, as an official document 
of DEA. This administrative process in no way alters the legal effect 
of this document upon publication in the Federal Register.

Heather Achbach,
Federal Register Liaison Officer, Drug Enforcement Administration.
[FR Doc. 2026-20553 Filed 10-6-26; 8:45 am]
BILLING CODE 4410-09-P


</pre></body>
</html>