Summary

On December 18, 2020, the DEA finalized this rule which amends 21 Code of Federal Regulations 1318 to facilitate the cultivation of marihuana for research purpose and other licit purposes to ensure compliance with the Controlled Substances Act (CSA) and treaty obligations. The regulations govern applications by persons seeking to become registered with DEA to grow marihuana as bulk manufacturers, and regulations related to the purchase and sale of this marihuana by DEA.

Marihuana Memorandum of Agreements Sample (PDF)

Final Rule: Controls To Enhance the Cultivation of Marihuana for Research in the United States (PDF) (December 18, 2020)

Proposed Rule: Controls To Enhance the Cultivation of Marihuana for Research in the United States (PDF) (March 23, 2020)

Marihuana Growers Q&A

Registration

Cultivation or purchase of marihuana for research or other licit purposes requires a DEA registration. You may apply for a DEA registration as a manufacturer (grower) or a researcher by submitting the application form for the desired activity. The application forms and corresponding instructions can be found at Registration (usdoj.gov).

Administrative Fee

The administrative fee has been calculated in accordance with 21 CFR 1318.06(a) for the calendar year 2023. The administrative fee for calendar year 2023 is $212 per kg. This fee was calculated by dividing the estimated cost of operating the program to cultivate cannabis in fiscal year 2022 of $679,000 by the by current (calendar year 2022) year’s aggregate production quota of 3,200 kgs. The administrative fee per kg shall be added to the sale price of cannabis purchased from the Administration.

In accordance with 21 CFR 1318.06(b), the administrative fee will be added to the sale price negotiated between the bulk grower and the purchaser; the administrative fee shall not be recoverable in the event that delivery is rejected by the buyer; and in instances where the grower of the cannabis is the same entity as the buyer, the entity may establish a nominal price, and DEA will then purchase and sell the cannabis back to the entity at the same price with the addition of the administrative fee.

---

General Transaction Process

There are three stages in the general transaction process:

1. Bona Fide Supply Agreement and Quota
2. Advance Notification and Invoicing
3. Harvest and Transfer of Ownership

A. Bona Fide Supply Agreement and Quota

As stated in the sample memorandum of agreement (MOA), on or before May 1 of the year preceding the year in which marihuana is to be grown, the grower¹ will furnish an individual manufacturing quota (IMQ) application utilizing DEA Form 189. (Numbers correspond with the diagram below.)

1. Grower enters into bona fide supply agreement(s) with buyer(s).²
2. Grower will include in their IMQ application copies of documents that constitute the bona fide supply agreement(s) (BFSA) that justifies their quota application request. For purposes of calculating Grower’s IMQ, DEA will only consider BFSA from existing DEA registrants.
3. Upon receipt of quota, the grower may grow marihuana within the terms and conditions of the quota and memorandum of agreement.³

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

¹ For the purposes of describing the general transaction process, "grower" means a DEA-registered bulk manufacturer of marihuana with BFSA(s) to supply to researchers of any (or all) of the following schedule I controlled substances: marihuana (7360); marihuana extract (7350); and tetrahydrocannabinols (THC) (7370).

² A BFSA must include the name, address, and DEA registration number of the buyer, along with the negotiated purchase price that the buyer will pay along with the administrative fee to be paid to DEA. Additionally, a unique identification number (i.e., supply agreement number) is needed for tracking purposes. For the purposes of describing the general transaction process, "buyer" means DEA-registered researcher or manufacturer who has a BFSA to purchase "manicured plant material" from grower. "Manicured plant material" means the dried leaves, flowering tops, and seeds of marihuana that are deliverable to DEA within four months of harvest. (See 65 FR 69574-01)

³ Grower may at any time abandon its right to manufacture all or any part of such quota by filing with the UN Reporting and Quota Section a written notice (email preferred) of such abandonment in accordance with the provisions of 21 CF.R. § 1303.27. Grower will identify which Buyer’s bona fide supply agreement resulted in the request to abandon any portion of its IMQ. If DEA has collected payment and an administrative fee from the Buyer, DEA will return the negotiated rate payment back to the Buyer, but not the administrative fee paid to DEA.

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

B. Advance Notification and Invoicing

In accordance with the MOA, the grower will provide DEA with a 15-day advance written notification of its intent to harvest marihuana, including the date/time in which harvesting will begin.

1. When the grower provides this notification, the grower will invoice⁴ DEA for the harvested marihuana it intends to sell to DEA.
2. Additionally, the buyer is expected to submit an order form (DEA Form 222), expressing all quantities in kilograms, to DEA for the purchase of marihuana to be harvested.
3. DEA, in turn, will invoice⁵ the buyer identified in the grower’s invoice. The buyer’s order form number will be referenced in DEA’s invoice to the buyer; therefore, the order form must be received by DEA before DEA can invoice the buyer.
4. Upon receipt of payment, DEA will authorize the grower to ship.

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

⁴ As stated in the MOA, the invoice from the grower to DEA will state the quantity and negotiated price for each buyer and the DEA registration number of the buyer with which grower has a BFSA. Additionally, a unique identification number (i.e., supply agreement number) is needed for tracking purposes.

⁵ DEA will issue a separate invoice to the buyer that contains date, invoice number, supply agreement number; the growers name, DEA registration number, address, phone number, Tax ID number, DEA vendor code; buyer’s DEA registration number, address, phone number, Tax ID number; DEA field office name, DEA-222 order form number, payment terms; and quantity, price, DEA administrative fee, subtotal dollar amount, sales tax (if any), and total dollar amount. See Sample DEA Invoice

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

C. Harvest and Transfer of Ownership

DEA personnel will arrive at the grower’s registered location to take physical possession of the crop. While DEA will make every effort to arrive on the day of harvest, DEA will take possession within four months of the harvest.⁶

1. DEA will take ownership of the crop by executing a DEA Form 222. Grower may need to store marihuana in a pre-approved secure location on behalf of DEA.
2. DEA will authorize the grower to make distributions from DEA’s stocks of marihuana to those buyers who entered into BFSAs with the grower once DEA has confirmed that the buyer has made payment to DEA for both the negotiated rate and the administrative fee. The grower shall bear the cost of shipping marihuana to the buyer.⁷
3. DEA will pay the grower within 30 days of taking ownership of the crop.

A grower may at any time abandon its right to manufacture all or any part of such quota. Grower will identify which buyer’s BFSA resulted in the request to abandon any portion of its IMQ. If DEA has collected payment and an administrative fee from the buyer, DEA will return the negotiated rate payment back to the buyer, but not the administrative fee paid to DEA.

The United States assumes no liability with respect to the performance of any contractual terms agreed to by a grower and a buyer of bulk marihuana, including but not limited to the quantity or quality of any marihuana delivered to a Buyer. If a buyer deems the delivered marihuana to be defective, the Buyer's sole remedy for damages will be against Grower and not the United States.

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

⁶ If a buyer(s) has not paid the negotiated purchase price and administrative fee to DEA at the time in which DEA and grower are prepared to transfer ownership, then DEA will not accept title to that corresponding quantity of marihuana. If payment from the buyer has not been received within four months of harvest, and if grower fails to provide a substitute BFSA from a new buyer, DEA will direct the grower to destroy that corresponding quantity of marihuana.

⁷ In accordance with the MOA, the grower may also distribute from grower’s existing stock. The grower will provide DEA with 15-day advance notification of its intent to distribute from its existing inventory and include the name of the buyer(s), their DEA registration number, and the quantity to be distributed. DEA will provide a written authorization or objection to grower’s proposed distribution. In the event of written objection from DEA to the proposed distribution, the grower agrees not to make the proposed distribution. This 15-day advance notification process does not apply to distributions of marihuana preparations (including marihuana extracts that contain alcohol or other non-cannabis-derived solvents) in Grower’s possession.

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

---

List of the DEA approved Bulk Manufacturer Marihuana Growers:

Biopharmaceutical Research Company LLC

Groff NA Hemplex LLC

Irvine Labs, Inc.

Maridose, LLC

National Center for Development of Natural Products

Royal Emerald Pharmaceuticals Research and Develop

Scottsdale Research Institute

Hemp/USDA

The U.S. Department of Agriculture regulates hemp production in the U.S. For more information on hemp production, click Hemp Production | Agricultural Marketing Service (usda.gov).

Contact Us

Please email us at DRG@dea.gov if you have any questions regarding cultivation or purchase of marihuana for research or other licit purposes or any content on this page.