Village Farms International and Hemp for Victory File Request for Reconsideration of Prior Motion to Disqualify DEA from Participation in Rescheduling Hearings

Rhea-AI Summary

Village Farms International (NASDAQ: VFF) and Hemp for Victory have jointly filed a Request for Reconsideration to disqualify the Drug Enforcement Administration (DEA) from its role in marijuana rescheduling hearings. Following their initial motion filed on November 18, 2024, new evidence has emerged suggesting DEA wrongdoing.

The renewed Request highlights undisclosed conflicts of interest and improper ex parte communications by the DEA. The filing argues that the DEA has shown hostility toward the proposal to reschedule marijuana from Schedule I to Schedule III, provided preferential treatment to anti-rescheduling participants, and undermined pro-rescheduling participants' procedural rights.

Village Farms plans to submit a good faith affidavit to the DEA and Department of Justice alleging DEA bias. The company's legal counsel emphasizes the need for a special evidentiary hearing to ensure fairness and transparency in the proceedings.

Positive

• None.

Negative

• Legal challenges and potential delays in marijuana rescheduling process
• Alleged DEA bias and procedural obstacles could impact industry development
• Regulatory uncertainty affecting business operations

Insights

Legal Expert

<p>The renewed motion to disqualify the DEA from cannabis rescheduling hearings represents a <b>significant legal challenge</b> with potential industry-wide implications. The filing alleges serious procedural irregularities, including undisclosed conflicts of interest and improper ex parte communications, which could substantially impact the rescheduling process. The request for a special evidentiary hearing could delay the rescheduling timeline by several months.</p><p>From a procedural standpoint, the submission of a good faith affidavit to both the DEA and DOJ alleging bias creates a compelling legal basis for a continuance. If successful, this motion could force the appointment of an alternative agency to oversee the rescheduling process, potentially accelerating the path to Schedule III status.</p>

Cannabis Industry Analyst

<p>The rescheduling outcome holds <b>massive economic implications</b> for Village Farms and the broader cannabis sector. A Schedule III designation would enable cannabis companies to access traditional banking services, claim tax deductions under Section 280E and potentially list on major exchanges without regulatory concerns. For Village Farms specifically, with its <money>95.1 million</money> market cap, successful rescheduling could unlock significant value through reduced operational costs and expanded market opportunities.</p><p>The allegations of DEA bias and procedural manipulation suggest potential regulatory capture favoring pharmaceutical interests, which could materially impact the competitive landscape of the medical cannabis market. Think of this as a high-stakes chess match where the rules of the game themselves are being contested.</p>

Policy Research Analyst

<p>This legal challenge illuminates the <b>deep-rooted institutional resistance</b> to cannabis reform within federal agencies. The allegations of DEA favoring anti-rescheduling participants while hindering pro-rescheduling parties suggest a concerning pattern of administrative bias that could undermine the objective evaluation process mandated by the Controlled Substances Act.</p><p>The timing of this filing is strategically significant, as it coincides with growing bipartisan support for cannabis reform and increasing pressure from state-level markets. Success in this motion could fundamentally reshape the federal approach to cannabis regulation and accelerate the industry's legitimization process.</p>

– Parties urge the court to take immediate corrective action in response to renewed Request –

– Filing asserts that DEA is using authority in these proceedings to thwart a proposal it vehemently opposes –

– New evidence of widespread DEA wrongdoing necessitates Agency’s removal from participation in proceedings –

ORLANDO, Fla. and VANCOUVER, British Columbia, Jan. 06, 2025 (GLOBE NEWSWIRE) -- Village Farms International, Inc. (“Village Farms” or the “Company”) (NASDAQ: VFF) and Hemp for Victory (collectively, “The Parties”), today announced that they jointly filed a Request for Reconsideration (the “Request”) of their prior motion to disqualify and remove the Drug Enforcement Administration (“DEA” or the “Agency”) from its role as proponent of the Proposed Role to reschedule marijuana from a Schedule I to a Schedule III drug. The initial motion to disqualify was filed on November 18, 2024 and subsequently denied, but since then new evidence has emerged that The Parties believe reflect widespread DEA wrongdoing which necessitates the Agency’s disqualification from participation in these proceedings and its removal as the proponent of the Proposed Rule.

The Parties’ renewed Request contains additional evidence of undisclosed conflicts of interest and extensive improper ex parte communications by the DEA which must be disclosed and made part of the public record. It also asserts that the DEA’s hostility toward the Proposed Rule has prejudiced pro-rescheduling Designated Participants (“DPs”), that the DEA extended off-the-record assistance to anti-rescheduling DPs that was not offered to seemingly qualified pro-rescheduling DPs, and that the DEA has undermined the pro-rescheduling DPs’ significant procedural rights. The Parties have urged the court to take immediate corrective action in response to this renewed Request. Village Farms will also take further procedural action by submitting a good faith affidavit to the DEA and Department of Justice (“DOJ”) alleging DEA bias, which provides an independent basis for a continuance of the hearing and thus good cause for the filing of the renewed Request.

Shane Pennington, partner at Porter Wright Morris & Arthur, LLP and counsel to Village Farms and Hemp for Victory commented, “The new evidence presented in this filing strongly suggests the DEA is using its authority in these proceedings to subvert the process and thwart the Schedule III proposal which it vehemently opposes. We believe an immediate special evidentiary hearing into the nature, extent, source, and effect of all ex parte communications is essential, and until that process is unquestionably complete there will be no way to ensure fairness and transparency, preserve any meaningful opportunity for judicial review based on the whole record, or to salvage the public legitimacy of these proceedings.”

Michael DeGiglio, retired U.S. Navy captain, naval aviator and President, Chief Executive Officer and Founder of Village Farms concluded, “Our initial motion reflected a desire for a more transparent process consistent with the rule of law and precedent proceedings. However, since then our view has only strengthened that these proceedings are a sham orchestrated by the DEA to stonewall cannabis from being transferred to a Schedule III designation. This would be a disgraceful outcome that will continue to harm the health and safety of Americans and benefit Big Pharma and harmful addictive drugs like opioids. On behalf of our entire industry, we intend to do everything we can to support the rescheduling of cannabis and to prevent a failed outcome from occurring.”

A complete copy of The Parties’ renewed Request filed on January 6, 2025 is accessible in the FAQ section of Village Farms’ website at www.villagefarms.com/investors-faq.

About Hemp for Victory

Hemp for Victory is a non-profit dedicated to educating the public about why veterans are using cannabis over pills. Today, its Board of Directors has grown to almost half a dozen leaders with military, medical, and academic backgrounds. Hemp for Victory is on a mission to educate and bring awareness to the natural solution of cannabis as a way for veterans to manage mental and physical challenges as a result of their service. For more information, please visit www.hemp4victory.info.

About Village Farms International

Village Farms leverages decades of experience as a large-scale, Controlled Environment Agriculture-based, vertically integrated supplier for high-value, high-growth plant-based Consumer Packaged Goods. The Company has a strong foundation as the leading and longest-tenured leading fresh produce supplier to grocery and large-format retailers throughout the US and Canada and is capitalizing on new high-growth opportunities in the cannabis and CBD categories in North America, the Netherlands and selected markets internationally.

In Canada, the Company's wholly-owned Canadian subsidiary, Pure Sunfarms, is one of the single largest cannabis operations in the world, the lowest-cost greenhouse producer and one of Canada’s best-selling brands. The Company also owns 80% of Québec-based, Rose LifeScience, a leading third-party cannabis products commercialization expert in the Province of Québec.

Internationally, Village Farms is targeting selected, nascent, legal cannabis and CBD opportunities with significant medium- and long-term potential. The Company exports medical cannabis from its EU GMP certified facility in Canada to a growing list of international markets including Germany, the United Kingdom, Israel, and Australia. The Company is expanding its international presence with additional export contracts to new countries and customers in the Asia-Pacific and European regions, as well as select strategic investments in operating assets. In Europe, wholly-owned Leli Holland has one of 10 licences to grow and distribute recreational cannabis products.

In the US, wholly-owned Balanced Health Botanicals is one of the leading CBD brands and e-commerce platforms in the country. Subject to compliance with all applicable US federal and state laws and stock exchange rules, Village Farms plans to enter the US high-THC cannabis market via multiple strategies, leveraging one of the largest greenhouse operations in the country (more than 5.5 million square feet in West Texas), as well as the operational and product expertise gained through Pure Sunfarms' cannabis success in Canada.

Village Farms Clean Energy (VFCE), through a partnership with Atlanta-based Terreva Renewables, creates clean energy from landfill gas at its Delta RNG facility. VFCE receives royalties on all revenue generated. This partnership reduces Vancouver’s greenhouse gas emissions by 475,000 metric tons of CO2 per year, equivalent to removing more than 100,000 vehicles off the road or the energy use equivalent of powering 51,300 homes for one year.

Contact Information

Sam Gibbons Senior Vice President, Corporate Affairs Village Farms International Phone: (407) 936-1190 ext. 328 Email: sgibbons@villagefarms.com Robert Head   Board Chair Hemp for Victory Email: robert@bluecordfarms.com

FAQ

What is the purpose of Village Farms' (VFF) Request for Reconsideration against the DEA?

Village Farms and Hemp for Victory filed the Request to disqualify the DEA from marijuana rescheduling hearings due to alleged wrongdoing, conflicts of interest, and improper communications that show bias against rescheduling marijuana from Schedule I to Schedule III.

When did Village Farms (VFF) file its initial motion against the DEA?

Village Farms filed its initial motion to disqualify the DEA on November 18, 2024, which was subsequently denied.

What new evidence has Village Farms (VFF) presented in its renewed Request?

The renewed Request presents evidence of undisclosed conflicts of interest, improper ex parte communications by the DEA, preferential treatment to anti-rescheduling participants, and undermining of pro-rescheduling participants' procedural rights.

What actions is Village Farms (VFF) taking beyond the Request for Reconsideration?

Village Farms plans to submit a good faith affidavit to the DEA and Department of Justice alleging DEA bias, which provides basis for a continuance of the hearing.

What potential impact could the DEA's alleged bias have on VFF and the cannabis industry?

The alleged bias could potentially delay or prevent the rescheduling of cannabis to Schedule III, affecting industry development and continuing current restrictions on cannabis businesses.