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Subject File, 1969-73: [Administration Drug Bill] [4 of 5]
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Subject File, 1969-73: [Administration Drug Bill] [4 of 5]
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John W. Dean III's Files
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July 2, 1969
MEMORANDUM TO THE ATTORNEY GENERAL
I would like to urge that we move the Presidential
package on narcotics and dangerous drugs as quickly as
possible. I believe it is essential that it be the
subject of the leadership briefing next Tuesday, July 8.
The package is ready and awaiting your final review.
I believe we should move this package for the
following reasons:
1. This legislative session of Congress is
running short. This is a major piece of legislation
and will require extensive hearings in both the
House and Senate. If these hearings are not com-
pleted this session it will jeopardize the possi-
bility for enacting this measure in this Congress.
Delay, of course, is what our opponents want and
our delay will strengthen their ability to tie up
the legislation before the Congress.
2. The press is beginning to make inquiries
both at the Department and at the White House
regarding the status of this Presidential package.
We have been saying that it is imminent for several
weeks and will not be able to use that response
much longer.
3. In an effort to expedite the processing of
this legislation we were able to accomplish sub-
stantial compromises on the part of HEW and Treasury.
I am somewhat embarrassed that we have not been able
to submit this legislation to Congress sooner because
I was able to get real cooperation with the top
officials of HEW in resolving our differences in an
effort to get the bill before the Congress. I am now
concerned that further delay could result in the
resolved issues being reopened.
Reproduced at the Richard Nixon Presidential Library
-2-
4. Lou Nichols has told me he is willing and
anxious to get ABA support for this measure.
However, I did not want to release the bill to
Nichols prior to your discussion of it with the
leadership. Nichols wants to circulate a final
copy of the bill that will go to the executive
committee as soon as possible so that he may obtain
a resolution in support of it at the Dallas conven-
tion of the ABA.
5. Ken Cole of the White House staff called
today to ask if we were ready for a leadership
briefing. He indicated that next week would be a
good week for this message and accompanying
legislation to be processed through the White House
machinery.
John W. Dean
Reproduced at the Richard Nixon Presidential Library
Form DJ-150
(Ed. 4-26-65)
UNITED STATES GOVERNMENT
DEPARTMENT OF JUSTICE
Memorandum
TO
: The Attorney General
DATE:
MAR 1 3 1969
FROM
:
Will Wilson
WW:PW:emc
Assistant Attorney General
12-01
Criminal Division
SUBJECT: Controlled Dangerous Substances Act of 1969
The subject bill has been proposed by both the Criminal
Division and the Bureau of Narcotics and Dangerous Drugs to bring
together and to bring into harmony the various federal statutes re-
lating to narcotics, marihuana and other dangerous drugs. The bill
had the wholehearted support of the Criminal Division. However, it
does contain some controversial features which must be taken into
account.
I. The penalties provided in the bill are generally
lower with respect to narcotics and marihuana than
is presently the case
Under current statutes first offenses relating to traf-
ficking in narcotics and marihuana are punishable by a minimum
mandatory term of 5 years (maximum 20 years) without possibility
of probation (in the case of narcotics parole is also excluded).
While there are no simple possession offenses relating to narcotics
and marihuana, offenses attributable to simple possession are never-
theless felonies for which first offenses are punishable by imprison-
ment for from 2 to 10 years, subject to the usual probation and
parole provisions. Simple possession of other dangerous drugs is
a misdemeanor and offenses relating to traffic in such drugs are
subject to maximum 5 year terms -- again subject to the usual pro-
bation and parole provisions. The bill provides a maximum penalty
of 12 years for a first offense relating to traffic in narcotics
with no minimum and 5 year maximum for a first offense relating
to traffic in all other substances including marihuana. It also
provides that simple possession of any substance shall be a mis-
demeanor. The entire sentence structure is something of a novelty,
but it seems clear that the most controversial features are the
absence of mandatory minimum terms for first offenses relating to
traffic in narcotics and marihuana (which will be discussed sepa-
rately), the reduction of the penalties relating to marihuana and
the misdemeanor possession offenses as they relate to narcotics and
marihuana.
Reproduced at the Richard Nixon Presidential Library
- 2 -
As noted, the current maximum penalty for traffic in
dangerous drugs is 5 years. Included in the dangerous drug cate-
gory are LSD and STP, two of the most dangerous hallucinogenic drugs
now current among drug abusers. Marihuana is also an hallucinogenic.
In its natural state it is clearly less dangerous to the user and to
the community than either LSD or STP, and in its more refined stages
(THC or hashish) it is no more dangerous than those substances. These
facts underlie the current criticism that the marihuana penalties are
unrealistic and unnecessarily harsh. The marihuana statutes were en-
acted at a time when no other similar substances were under federal
control. Since then, similar and even more dangerous substances
have been brought under control and are subject to less severe penal-
ties. In terms of a bill of this nature there is no rational jus-
tification for treating marihuana differently from any other hal-
lucinogenic and we have not attempted to do so. Moreover, considering
the character of defendants usually apprehended in such cases and the
fact that organized crime seems rarely to be involved in marihuana
and dangerous drug offenses, as distinguished from narcotic offenses,
we think a maximum penalty of 5 years for a first offense and 10
years for subsequent offenses is in reasonable proportion to the
seriousness of the offenses involved.
With regard to simple possession, we note that this does
not make any change in the law insofar as the dangerous drugs are
concerned. It does make two changes insofar as narcotics and danger-
ous drugs are concerned. As a matter of legal fact simple possession
of narcotics or marihuana is not an offense under the federal laws.
Therefore, this provision creates an offense not previously found
in the federal law and can be said to represent a tightening of
federal strictures and a realignment of the narcotic and marihuana
controls with those applicable to other dangerous drugs. In point
of fact, however, simple possession of narcotics and marihuana raises,
in each case, a presumption that possession was acquired in violation
of the tax statutes and hence is punishable as a felony. To this ex-
tent it is apparent that the penalties assessable for simple possession
are being reduced. This can be justified, we think, for the following
reasons. (1) We are eliminating the tax features and, therefore,
there will be no offense to which the present presumption could at-
tach. (2) Since possession with intent to distribute is covered
elsewhere as a felony, the simple possession count is intended to
relate only to those in possession of such small amounts as to in-
dicate that possession was for personal consumption only. (3) With
Reproduced at the Richard Nixon Presidential Library
- 3 -
respect to possessor-users who are primarily the victims of the
traffic, the sanctions imposed should be calculated to deter drug
abuse and to make the user amenable to rehabilitative treatment.
Harsher treatment appears unwarranted and may tend to harden the
attitude of the drug abuser rather than incline him toward re-
habilitation.
II Elimination of mandatory minimum penalties for first
offenders
As noted previously, traffickers in narcotics and mari-
huana are now subject to mandatory minimum penalties of 5 years
for a first offense. Traffickers in other dangerous drugs are
subject to maximum penalties of 5 years, without any prescribed
minimum.
The bill provides a maximum term of 12 years for first
narcotic offenders and 5 years for all other offenders without
any minimum. The mandatory minimum sentences have been in contro-
versy since they were imposed in 1956. They were enacted in re-
sponse to an apparent reluctance on the part of some judges to
impose meaningful sentences on major narcotic law offenders. It
would be difficult to demonstrate that they have had any substan-
tial beneficial effect. No statistics are currently at hand but
even casual observation of the sentences imposed indicates that 90%
or more of all narcotic and marihuana sentences are the minimum
prescribed; the likelihood that they would tend to be less if the
law would permit is very great. On the other hand, we can easily
demonstrate that judges do sentence in excess of the minimum re-
quired where members of organized crime and other major traffickers
are involved. Also, the mandatory minimum sentences have created
some rather severe and uncomfortable problems. (1) They apply in-
discriminately to all offenders. Addict street peddlers and major
wholesalers and smugglers are subject to the same sentences. The
courts are naturally reluctant to sentence small-time addict-ped-
dlers and smugglers of infinitesimal quantities of narcotics and
marihuana to 5 year and longer terms and frequently strain to sup-
press evidence or find technical defects in otherwise valid prose-
cutions. United States Attorneys faced with similar considerations
frequently resort to subterfuges and legal fictions in order to
charge offenses to which the mandatory minimums are not applicable.
Defendants are, of course, aware that they are being charged and
are pleading guilty to offenses which they did not in fact commit
Reproduced at the Richard Nixon Presidential Library
- 4 -
in lieu of offenses properly applicable, and this, we think, is a
contributing factor in the growing lack of respect for law enforce-
ment. (2) Since most defendants are not in the organized crime or
major supplier categories, they are aware, or at least their at-
torneys are aware, that no advantage can accrue to the defendant by
entering a plea of guilty, no matter how strong the government's case.
Whether or not the average defendant goes to trial the minimum sen-
tence must be 5 years and for all practical purposes will not exceed
5 years. As a result the only real demonstrable result of the en-
actment of mandatory minimum penalties has been the tremendous in-
crease in the number of narcotic and marihuana cases which go to
trial. Most of the trials are short and most result in conviction,
but they manage to consume a considerable amount of court time which
might otherwise have been devoted to more meritorious litigations.
(3) Lastly, Bureau of Prison officials have consistently maintained
that persons sentenced to mandatory minimum terms present the hardest
disciplinary problems within the institution and are the prisoners
least likely to respond to rehabilitative efforts. The Bureau of
Prisons has stated on numerous occasions that such prisoners have no
incentive to cooperate and are devoid of any optimism regarding their
situation and are thus unresponsive to rehabilitative programs.
III Elimination of Death Penalty
Under current law (21 U.S.C. 176b) anyone over the age of
18 who provides heroin to a person under 18 is punishable for a term
of from 10 years to life and may at the discretion of the jury be put
to death. The statute was added in 1956 and has rarely, if ever, been
utilized.
Aside from the fact that under the recent case of United
States V. Jackson, 390 U.S. 570, the death penalty is probably un-
constitutional, the statute presents some practical difficulties.
Cases involving actual sales are usually cases in which the purchase
is accomplished by a government agent; therefore, we rarely come into
possession of actual evidence of a sale to a minor. In the rare in-
stances where there is such evidence the defendant is himself under
18 or, if older, is a peer of the purchaser. The bill would eliminate
this statute and substitute instead a provision which would authorize
double the usual penalty for any adult who sells any drug to a minor.
This would in each case of a sale of heroin to a minor provide a sen-
tence at least as severe as the minimum now provided (10 years) and
would add to the law an enhanced penalty for those who sell other
drugs to minors. On balance, we think this a more realistic provision
Reproduced at the Richard Nixon Presidential Library
- 5 -
and one which could be more widely implemented.
IV Apparent administrative discretion to legalize
substances such as heroin or marihuana
Following current international practice the bill sets up
four schedules of drugs:
1. Experimental drugs; those with a high degree of abuse
potential and no presently known medical value (heroin, LSD, mari-
huana).
2. High abuse potential drugs, with recognized medical
use (morphine, cocaine, methadone).
3. Moderate abuse potential drugs with recognized medical
use (amphetamine, barbituric acid, papaverine).
4. Law abuse potential drugs such as compounds containing
small proportions of codeine.
The bill proposes initially to identify the drugs in each
Schedule. Recognizing however that scientific advances may develop
new drugs or new insights into old drugs, the bill authorizes the
Attorney General, with the advice of a scientific board, to add
drugs to the Schedules, switch drugs from one Schedule to another
or to drop a drug from control.
This, of course, is subject to the objection that, in
theory at least, an Attorney General could legalize traffic in heroin
or marihuana. A short answer may be that to do so would be in vio-
lation of our treaty obligations under the Single Convention on
Narcotic Drugs, 1961. Alternatively Schedule I drugs could be
frozen or be made subject to a provision that they could not be
dropped below Schedule II without the assent of Congress.
V Grant of general arrest authority to Bureau of
Narcotics and Dangerous Drugs
Proposed Section 601 authorizes agents of BNDD to make
arrests, without a warrant, for any offense against the United
States. At present only U.S. Marshals and agents of the FBI have
such authority. All other agents possess such authority only with
Reproduced at the Richard Nixon Presidential Library
- 6 -
respect to offenses within their investigative jurisdiction.
While the Criminal Division has no objection to the pro-
posal, others may object to so broad a power on the basis that it
is unnecessary.
VI Professional Criminal Statute
Proposed Section 409 is a provision which enables the Court
to double the penalty otherwise authorized on a finding that the per-
son convicted has been involved in a continuing criminal enterprise
involving violations of the Act.
The provision calls for a post-trial hearing, to which the
rules of evidence are not applicable, on issues regarding whether
the defendant occupied a position of management with respect to the
offense involved, whether he played a substantial role in a con-
tinuing criminal enterprise or whether he has under his control sub-
stantial income or resources not demonstrated to have been derived
from lawful sources.
We have no quarrel with the provision in theory. Indeed
such a provision will aid immeasurably in countering attacks on
the bill as being "soft." However, we retain some reservation as
to whether the criteria established are sufficiently clear and cer-
tain so as to pass constitutional muster.
Reproduced at the Richard Nixon Presidential Library
MAR 13 1969
The Attorney General
Will Wilson
WW:PW:emc
Assistant Attorney General
12-01
Criminal Division
Controlled Dangerous Substances Act of 1969
The subject bill has been proposed by both the Criminal
Division and the Bureau of Narcotics and Dangerous Drugs to bring
together and to bring into harmony the various federal statutes re-
lating to narcotics, marihuana and other dangerous drugs. The bill
had the wholehearted support of the Criminal Division. However, it
does contain some controversial features which must be taken into
account.
I. The penalties provided in the bill are generally
lower with respect to narcotics and marihuana than
is presently the case
Under current statutes first offenses relating to traf-
ficking in narcotics and marihuana are punishable by a minimum
mandatory term of 5 years (maximum 20 years) without possibility
of probation (in the case of narcotics parole is also excluded).
While there are no simple possession offenses relating to narcotics
and marihuana, offenses attributable to simple possession are never-
theless felonies for which first offenses are punishable by imprison-
ment for from 2 to 10 years, subject to the usual probation and
parole provisions. Simple possession of other dangerous drugs is
a misdemeanor and offenses relating to traffic in such drugs are
subject to maximum 5 year terms -- again subject to the usual pro-
bation and parole provisions. The bill provides a maximum penalty
of 12 years for a first offense relating to traffic in narcotics
with no minimum and 5 year maximum for a first offense relating
to traffic in all other substances including marihuana. It also
provides that simple possession of any substance shall be a mis-
demeanor. The entire sentence structure is something of a novelty,
but it seems clear that the most controversial features are the
absence of mandatory minimum terms for first offenses relating to
traffic in narcotics and marihuana (which will be discussed sepa-
rately), the reduction of the penalties relating to marihuana and
the misdemeanor possession offenses as they relate to narcotics and
marihuana.
Reproduced at the Richard Nixon Presidential Library
- 2 -
As noted, the current maximum penalty for traffic in
dangerous drugs is 5 years. Included in the dangerous drug cate-
gory are LSD and STP, two of the most dangerous hallucinogenic drugs
now current among drug abusers. Marihuana is also an hallucinogenic.
In its natural state it is clearly less dangerous to the user and to
the community than either LSD or STP, and in its more refined stages
(THC or hashish) it is no more dangerous than those substances. These
facts underlie the current criticism that the marihuana penalties are
unrealistic and unnecessarily harsh. The marihuana statutes were en-
acted at a time when no other similar substances were under federal
control. Since then, similar and even more dangerous substances
have been brought under control and are subject to less severe penal-
ties. In terms of a bill of this nature there is no rational jus-
tification for treating marihuana differently from any other hal-
lucinogenic and we have not attempted to do so. Moreover, considering
the character of defendants usually apprehended in such cases and the
fact that organized crime seems rarely to be involved in marihuana
and dangerous drug offenses, as distinguished from narcotic offenses,
we think a maximum penalty of 5 years for a first offense and 10
years for subsequent offenses is in reasonable proportion to the
seriousness of the offenses involved.
With regard to simple possession, we note that this does
not make any change in the law insofar as the dangerous drugs are
concerned. It does make two changes insofar as narcotics and danger-
ous drugs are concerned. As a matter of legal fact simple possession
of narcotics or marihuana is not an offense under the federal laws.
Therefore, this provision creates an offense not previously found
in the federal law and can be said to represent a tightening of
federal strictures and a realignment of the narcotic and marihuana
controls with those applicable to other dangerous drugs. In point
of fact, however, simple possession of narcotics and marihuana raises,
in each case, a presumption that possession was acquired in violation
of the tax statutes and hence is punishable as a felony. To this ex-
tent it is apparent that the penalties assessable for simple possession
are being reduced. This can be justified, we think, for the following
reasons. (1) We are eliminating the tax features and, therefore,
there will be no offense to which the present presumption could at-
tach. (2) Since possession with intent to distribute is covered
elsewhere as a felony, the simple possession count is intended to
relate only to those in possession of such small amounts as to in-
dicate that possession was for personal consumption only. (3) With
Reproduced at the Richard Nixon Presidential Library
- 3 -
respect to possessor-users who are primarily the victims of the
traffic, the sanctions imposed should be calculated to deter drug
abuse and to make the user amenable to rehabilitative treatment.
Harsher treatment appears unwarranted and may tend to harden the
attitude of the drug abuser rather than incline him toward re-
habilitation.
II Elimination of mandatory minimum penalties for first
offenders
As noted previously, traffickers in narcotics and mari-
huana are now subject to mandatory minimum penalties of 5 years
for a first offense. Traffickers in other dangerous drugs are
subject to maximum penalties of 5 years, without any prescribed
minimum.
The bill provides a maximum term of 12 years for first
narcotic offenders and 5 years for all other offenders without
any minimum. The mandatory minimum sentences have been in contro-
versy since they were imposed in 1956. They were enacted in re-
sponse to an apparent reluctance on the part of some judges to
impose meaningful sentences on major narcotic law offenders. It
would be difficult to demonstrate that they have had any substan-
tial beneficial effect. No statistics are currently at hand but
even casual observation of the sentences imposed indicates that 90%
or more of all narcotic and marihuana sentences are the minimum
prescribed; the likelihood that they would tend to be less if the
law would permit is very great. On the other hand, we can easily
demonstrate that judges do sentence in excess of the minimum re-
quired where members of organized crime and other major traffickers
are involved. Also, the mandatory minimum sentences have created
some rather severe and uncomfortable problems. (1) They apply in-
discriminately to all offenders. Addict street peddlers and major
wholesalers and smugglers are subject to the same sentences. The
courts are naturally reluctant to sentence small-time addict-ped-
dlers and smugglers of infinitesimal quantities of narcotics and
marihuana to 5 year and longer terms and frequently strain to sup-
press evidence or find technical defects in otherwise valid prose-
cutions. United States Attorneys faced with similar considerations
frequently resort to subterfuges and legal fictions in order to
charge offenses to which the mandatory minimums are not applicable.
Defendants are, of course, aware that they are being charged and
are pleading guilty to offenses which they did not in fact commit
Reproduced at the Richard Nixon Presidential Library
- 4 -
in lieu of offenses properly applicable, and this, we think, is a
contributing factor in the growing lack of respect for law enforce-
ment. (2) Since most defendants are not in the organized crime or
major supplier categories, they are aware, or at least their at-
torneys are aware, that no advantage can accrue to the defendant by
entering a plea of guilty, no matter how strong the government's case.
Whether or not the average defendant goes to trial the minimum sen-
tence must be 5 years and for all practical purposes will not exceed
5 years. As a result the only real demonstrable result of the en-
actment of mandatory minimum penalties has been the tremendous in-
crease in the number of narcotic and marihuana cases which go to
trial. Most of the trials are short and most result in conviction,
but they manage to consume a considerable amount of court time which
might otherwise have been devoted to more meritorious litigations.
(3) Lastly, Bureau of Prison officials have consistently maintained
that persons sentenced to mandatory minimum terms present the hardest
disciplinary problems within the institution and are the prisoners
least likely to respond to rehabilitative efforts. The Bureau of
Prisons has stated on numerous occasions that such prisoners have no
incentive to cooperate and are devoid of any optimism regarding their
situation and are thus unresponsive to rehabilitative programs.
III Elimination of Death Penalty
Under current law (21 U.S.C. 176b) anyone over the age of
18 who provides heroin to a person under 18 is punishable for a term
of from 10 years to life and may at the discretion of the jury be put
utilized. to death. The statute was added in 1956 and has rarely, if ever, been
Aside from the fact that under the recent case of United
States V. Jackson, 390 U.S. 570, the death penalty is probably un-
constitutional, the statute presents some practical difficulties.
Cases involving actual sales are usually cases in which the purchase
is accomplished by a government agent; therefore, we rarely come into
possession of actual evidence of a sale to a minor. In the rare in-
stances where there is such evidence the defendant is himself under
18 or, if older, is a peer of the purchaser. The bill would eliminate
this statute and substitute instead a provision which would authorize
double the usual penalty for any adult who sells any drug to a minor.
This would in each case of a sale of heroin to a minor provide a sen-
tence at least as severe as the minimum now provided (10 years) and
would add to the law an enhanced penalty for those who sell other
drugs to minors. On balance, we think this a more realistic provision
Reproduced at the Richard Nixon Presidential Library
- 5 -
and one which could be more widely implemented.
IV Apparent administrative discretion to legalize
substances such as heroin or marihuana
Following current international practice the bill sets up
four schedules of drugs:
1. Experimental drugs; those with a high degree of abuse
potential and no presently known medical value (heroin, LSD, mari-
huana).
2. High abuse potential drugs, with recognized medical
use (morphine, cocaine, methadone).
3. Moderate abuse potential drugs with recognized medical
use (amphetamine, barbituric acid, papaverine).
4. Law abuse potential drugs such as compounds containing
small proportions of codeine.
The bill proposes initially to identify the drugs in each
Schedule. Recognizing however that scientific advances may develop
new drugs or new insights into old drugs, the bill authorizes the
Attorney General, with the advice of a scientific board, to add
drugs to the Schedules, switch drugs from one Schedule to another
or to drop a drug from control.
This, of course, is subject to the objection that, in
theory at least, an Attorney General could legalize traffic in heroin
or marihuana. A short answer may be that to do so would be in vio-
lation of our treaty obligations under the Single Convention on
Narcotic Drugs, 1961. Alternatively Schedule I drugs could be
frozen or be made subject to a provision that they could not be
dropped below Schedule II without the assent of Congress.
V Grant of general arrest authority to Bureau of
Narcotics and Dangerous Drugs
Proposed Section 601 authorizes agents of BNDD to make
arrests, without a warrant, for any offense against the United
States. At present only U.S. Marshals and agents of the FBI have
such authority. All other agents possess such authority only with
Reproduced at the Richard Nixon Presidential Library
- 6 -
respect to offenses within their investigative jurisdiction.
While the Criminal Division has no objection to the pro-
posal, others may object to so broad a power on the basis that it
is unnecessary.
VI Professional Criminal Statute
Proposed Section 409 is a provision which enables the Court
to double the penalty otherwise authorized on a finding that the per-
son convicted has been involved in a continuing criminal enterprise
involving violations of the Act.
The provision calls for a post-trial hearing, to which the
rules of evidence are not applicable, on issues regarding whether
the defendant occupied a position of management with respect to the
offense involved, whether he played a substantial role in a con-
tinuing criminal enterprise or whether he has under his control sub-
stantial income or resources not demonstrated to have been derived
from lawful sources.
We have no quarrel with the provision in theory. Indeed
such a provision will aid immeasurably in countering attacks on
the bill as being "soft." However, we retain some reservation as
to whether the criteria established are sufficiently clear and cer-
tain so as to pass constitutional muster.
Reproduced at the Richard Nixon Presidential Library
The Attorney General
Will Wilson
WW:PW:emc
Assistant Attorney General
12-01
Criminal Division
Controlled Dangerous Substances Act of 1969
The subject bill has been proposed by both the Criminal
Division and the Bureau of Narcotics and Dangerous Drugs to bring
together and to bring into harmony the various federal statutes re-
lating to narcotics, marihuana and other dangerous drugs. The bill
had the wholehearted support of the Criminal Division. However, it
does contain some controversial features which must be taken into
account.
I. The penalties provided in the bill are generally
lower with respect to narcotics and marihuana than
is presently the case
Under current statutes first offenses relating to traf-
ficking in narcotics and marihuana are punishable by a minimum
mandatory term of 5 years (maximum 20 years) without possibility
of probation (in the case of narcotics parole is also excluded).
While there are no simple possession offenses relating to narcotics
and marihuana, offenses attributable to simple possession are never-
theless felonies for which first offenses are punishable by imprison-
ment for from 2 to 10 years, subject to the usual probation and
parole provisions. Simple possession of other dangerous drugs is
a misdemeanor and offenses relating to traffic in such drugs are
subject to maximum 5 year terms -- again subject to the usual pro-
bation and parole provisions. The bill provides a maximum penalty
of 12 years for a first offense relating to traffic in narcotics
with no minimum and 5 year maximum for a first offense relating
to traffic in all other substances including marihuana. It also
provides that simple possession of any substance shall be at mis-
demeanor. The entire sentence structure is something of a novelty,
but it seems clear that the most controversial features are the
absence of mandatory minimum terms for first offenses relating to
traffic in narcotics and marihuana (which will be discussed sepa-
rately), the reduction of the penalties relating to marihuana and
the misdemeanor possession offenses as they relate to narcotics and
marihuana.
Reproduced at the Richard Nixon Presidential Library
- 2 -
As noted, the current maximum penalty for traffic in
dangerous drugs is 5 years. Included in the dangerous drug cate-
gory are LSD and STP, two of the most dangerous hallucinogenic drugs
now current among drug abusers. Marihuana is also an hallucinogenic.
In its natural state it is clearly less dangerous to the user and to
the community than either LSD or STP, and in its more refined stages
(THC or hashish) it is no more dangerous than those substances. These
facts underlie the current criticism that the marihuana penalties are
unrealistic and unnecessarily harsh. The marihuana statutes were en-
acted at a time when no other similar substances were under federal
control. Since then, similar and even more dangerous substances
have been brought under control and are subject to less severe penal-
ties. In terms of a bill of this nature there is no rational jus-
tification for treating marihuana differently from any other hal-
lucinogenic and we have not attempted to do SO. Moreover, considering
the character of defendants usually apprehended in such cases and the
fact that organized crime seems rarely to be involved in marihuana
and dangerous drug offenses, as distinguished from narcotic offenses,
we think a maximum penalty of 5 years for a first offense and 10
years for subsequent offenses is in reasonable proportion to the
seriousness of the offenses involved.
With regard to simple possession, we note that this does
not make any change in the law insofar as the dangerous drugs are
concerned. It does make two changes insofar as narcotics and danger-
ous drugs are concerned. As a matter of legal fact simple possession
of narcotics or marihuana is not an offense under the federal laws.
Therefore, this provision creates an offense not previously found
in the federal law and can be said to represent a tightening of
federal strictures and a realignment of the narcotic and marihuana
controls with those applicable to other dangerous drugs. In point
of fact, however, simple possession of narcotics and marihuana raises,
in each case, a presumption that possession was acquired in violation
of the tax statutes and hence is punishable as a felony. To this ex-
tent it is apparent that the penalties assessable for simple possession
are being reduced. This can be justified, we think, for the following
reasons. (1) We are eliminating the tax features and, therefore,
there will be no offense to which the present presumption could at-
tach. (2) Since possession with intent to distribute is covered
elsewhere as a felony, the simple possession count is intended to
relate only to those in possession of such small amounts as to in-
dicate that possession was for personal consumption only. (3) With
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- 3 -
respect to possessor-users who are primarily the victims of the
traffic, the sanctions imposed should be calculated to deter drug
abuse and to make the user amenable to rehabilitative treatment.
Harsher treatment appears unwarranted and may tend to harden the
attitude of the drug abuser rather than incline him toward re-
habilitation.
II Elimination of mandatory minimum penalties for first
offenders
As noted previously, traffickers in narcotics and mari-
huana are now subject to mandatory minimum penalties of 5 years
for a first offense. Traffickers in other dangerous drugs are
subject to maximum penalties of 5 years, without any prescribed
minimum.
The bill provides a maximum term of 12 years for first
narcotic offenders and 5 years for all other offenders without
any minimum. The mandatory minimum sentences have been in contro-
versy since they were imposed in 1956. They were enacted in re-
sponse to an apparent reluctance on the part of some judges to
impose meaningful sentences on major narcotic law offenders. It
would be difficult to demonstrate that they have had any substan-
tial beneficial effect. No statistics are currently at hand but
even casual observation of the sentences imposed indicates that 90%
or more of all narcotic and marihuana sentences are the minimum
prescribed; the likelihood that they would tend to be less if the
law would permit is very great. On the other hand, we can easily
demonstrate that judges do sentence in excess of the minimum re-
quired where members of organized crime and other major traffickers
are involved. Also, the mandatory minimum sentences have created
some rather severe and uncomfortable problems. (1) They apply in-
discriminately to all offenders. Addict street peddlers and major
wholesalers and smugglers are subject to the same sentences. The
courts are naturally reluctant to sentence small-time addict-ped-
dlers and smugglers of infinitesimal quantities of narcotics and
marihuana to 5 year and longer terms and frequently strain to sup-
press evidence or find technical defects in otherwise valid prose-
cutions. United States Attorneys faced with similar considerations
frequently resort to subterfuges and legal fictions in order to
charge offenses to which the mandatory minimums are not applicable.
Defendants are, of course, aware that they are being charged and
are pleading guilty to offenses which they did not in fact commit
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in lieu of offenses properly applicable, and this, we think, is a
contributing factor in the growing lack of respect for law enforce-
ment. (2) Since most defendants are not in the organized crime or
major supplier categories, they are aware, or at least their at-
torneys are aware, that no advantage can accrue to the defendant by
entering a plea of guilty, no matter how strong the government's case.
Whether or not the average defendant goes to trial the minimum sen-
tence must be 5 years and for all practical purposes will not exceed
5 years. As a result the only real demonstrable result of the en-
actment of mandatory minimum penalties has been the tremendous in-
crease in the number of narcotic and marihuana cases which go to
trial. Most of the trials are short and most result in conviction,
but they manage to consume a considerable amount of court time which
might otherwise have been devoted to more meritorious litigations.
(3) Lastly, Bureau of Prison officials have consistently maintained
that persons sentenced to mandatory minimum terms present the hardest
disciplinary problems within the institution and are the prisoners
least likely to respond to rehabilitative efforts. The Bureau of
Prisons has stated on numerous occasions that such prisoners have no
incentive to cooperate and are devoid of any optimism regarding their
situation and are thus unresponsive to rehabilitative programs.
III Elimination of Death Penalty
Under current law (21 U.S.C. 176b) anyone over the age of
18 who provides heroin to a person under 18 is punishable for a term
of from 10 years to life and may at the discretion of the jury be put
to death. The statute was added in 1956 and has rarely, if ever, been
utilized.
Aside from the fact that under the recent case of United
States v. Jackson, 390 U.S. 570, the death penalty is probably un-
constitutional, the statute presents some practical difficulties.
Cases involving actual sales are usually cases in which the purchase
is accomplished by a government agent; therefore, we rarely come into
possession of actual evidence of a sale to a minor. In the rare in-
stances where there is such evidence the defendant is himself under
18 or, if older, is a peer of the purchaser. The bill would eliminate
this statute and substitute instead a provision which would authorize
double the usual penalty for any adult who sells any drug to a minor.
This would in each case of a sale of heroin to a minor provide a sen-
tence at least as severe as the minimum now provided (10 years) and
would add to the law an enhanced penalty for those who sell other
drugs to minors. On balance, we think this a more realistic provision
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and one which could be more widely implemented.
IV Apparent administrative discretion to legalize
substances such as heroin or marihuana
Following current international practice the bill sets up
four schedules of drugs:
1. Experimental drugs; those with a high degree of abuse
potential and no presently known medical value (heroin, LSD, mari-
huana).
2. High abuse potential drugs, with recognized medical
use (morphine, cocaine, methadone).
3. Moderate abuse potential drugs with recognized medical
use (amphetamine, barbituric acid, papaverine).
4. Law abuse potential drugs such as compounds containing
small proportions of codeine.
The bill proposes initially to identify the drugs in each
Schedule. Recognizing however that scientific advances may develop
new drugs or new insights into old drugs, the bill authorizes the
Attorney General, with the advice of a scientific board, to add
drugs to the Schedules, switch drugs from one Schedule to another
or to drop a drug from control.
This, of course, is subject to the objection that, in
theory at least, an Attorney General could legalize traffic in heroin
or marihuana. A short answer may be that to do so would be in vio-
lation of our treaty obligations under the Single Convention on
Narcotic Drugs, 1961. Alternatively Schedule I drugs could be
frozen or be made subject to a provision that they could not be
dropped below Schedule II without the assent of Congress.
V Grant of general arrest authority to Bureau of
Narcotics and Dangerous Drugs
Proposed Section 601 authorizes agents of BNDD to make
arrests, without a warrant, for any offense against the United
States. At present only U.S. Marshals and agents of the FBI have
such authority. All other agents possess such authority only with
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respect to offenses within their investigative jurisdiction.
While the Criminal Division has no objection to the pro-
posal, others may object to SO broad a power on the basis that it
is unnecessary.
VI Professional Criminal Statute
Proposed Section 409 is a provision which enables the Court
to double the penalty otherwise authorized on a finding that the per-
son convicted has been involved in a continuing criminal enterprise
involving violations of the Act.
The provision calls for a post-trial hearing, to which the
rules of evidence are not applicable, on issues regarding whether
the defendant occupied a position of management with respect to the
offense involved, whether he played a substantial role in a con-
tinuing criminal enterprise or whether he has under his control sub-
stantial income or resources not demonstrated to have been derived
from lawful sources.
We have no quarrel with the provision in theory. Indeed
such a provision will aid immeasurably in countering attacks on
the bill as being "soft." However, we retain some reservation as
to whether the criteria established are sufficiently clear and cer-
tain so as to pass constitutional muster.
Reproduced at the Richard Nixon Presidential Library
Form DJ-150
(Ed 4-26-65)
UNITED STATES GOVERNMENT
DEPARTMENT OF JUSTICE
Memorandum
TO
: The Honorable John W. Dean III
DATE: May 7, 1969
Associate Deputy Attorney General
FROM
Michael R. Sonnenreich
Deputy Chief Counsel
Bureau of Narcotics and Dangerous Drugs
SUBJECT: Department of Health, Education, and Welfare's staff
papers regarding the "Controlled Dangerous Substances
Act of 1969"
The arguments expressed in the staff papers by Mr. Theordore
Ellenbogen on May 1, 1969, are quite similar to the proposal
made, in draft form, by the law firm of Royall, Koegel, and
Wells on April 17, 1969. I direct your attention to my
memorandum to you of April 23, 1969, regarding that draft.
In reviewing the arguments contained in the draft letter to
Mr. Mayo, the tenor of that draft apparently is based on four
erroneous assumptions:
(1) The control of dangerous drugs under the proposed
"Controlled Dangerous Substances Act" is a scientific
matter and can only be adequately performed by the
Department of Health, Education, and Welfare.
(2) The regulatory and licensing controls over manufacturers,
distributors, and dispensers is not a part of a law
enforcement function and is separable from other law
enforcement efforts.
(3) Specifically, physicians and researchers should not
be licensed or monitored by the Department of Justice as
this somehow creates a control over their actual medical
practice or research.
(4) The Department of Health, Education, and Welfare is
being pre-empted by the Department of Justice from its
rightful education and research functions.
These appear to be the major bones of contention expressed in the
proposed letter to Mr. Mayo from the Secretary of Health, Education,
and Welfare. These points have been discussed with staff members
of HEW time and time again. These generalized assumptions have
been made again and again in response. In an effort to examine
these assumptions logically, a brief discussion of each one follows.
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It is my personal belief that these assumptions have become a
rallying cry, with little thought given as to what they really
mean. The truth of the matter is that under the old system
prior to Reorganization Plan No. 1 of 1968, effective law
enforcement was being hampered by constant bifurcation of
authority and conflicting goals and purposes among the
different Departments. The arguments advanced in the proposed
letter regarding the Reorganization Plan No. 1 of 1968 are
purely conjecture and at this point really should not be
considered a necessary item for discussion. The proposed
legislation is not a vehicle for reorganizing the Bureau of
Narcotics and Dangerous Drugs. The proposed bill will expand
the Attorney General's powers but not change the existing
organizational structure (save for eliminating the tax provisions).
Comments should be limited to substantive discussions making the
proposal more effective and meaningful. It should not be used
as a vehicle for reopening organizational changes and interdepart-
mental squabbles. It is important to focus on the bill itself
and not raise bygone battles already lost.
A. Control of drugs under the proposed act
The constantly reiterated statement that the control of dangerous
drugs under the proposed bill is purely a scientific and medical
determination is not necessarily a true one. While no one would
question that a preliminary determination of abuse potential is
the necessary trigger that places in motion any decision for
subsequent control, it is, however, only a trigger. It is a
determination made by the Scientific Advisory Committee, a group
of qualified scientists drawn from a list prepared by the National
Academy of Sciences. It is the function of this Committee to
evaluate scientific data concerning a particular dangerous drug
and determine its potential for abuse. The input at this level
comes in not only from the Department of Health, Education, and
Welfare but from the academic community and from other agencies,
State and local. In addition, actual street abuse of the drugs
in question comes from agent investigations which are conducted
and carried out by this Bureau. In short, all the basic information,
medical, scientific, and actual abuse itself flows to the Committee
from many diverse sources. The Committee itself, as an independent
body, makes its recommendations. Once such recommendations are
made, it is a policy determination as to whether or not a drug
should be controlled. At that point in time, since the control
of the drug will require enforcement, it is necessary to evaluate
that recommendation, along with practical problems of enforcement,
to determine whether the drug should be placed under control.
This is not something that the Secretary of Health, Education,
and Welfare is as qualified to perform as is the Attorney General.
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The Department of Health, Education, and Welfare is not enforcement
oriented as has been clearly pointed out in the staff papers.
Yet the control of a dangerous drug is an enforcement matter
since such control results in investigations and regulations to
insure against illicit diversion and illicit trafficking. The
control of a particular drug also can raise antitrust considerations,
as well as international questions. All these factors must be
brought together and decided upon. The Attorney General is best
able to make such a judgment and in point of fact, has been doing
so at the present time. 1/
The Secretary of Health, Education, and Welfare has an important
role to play in making available the expertise of his Department
to the Scientific Advisory Committee so that it can make better
informed, scientific judgments. It is for this reason that two
consultants to the Committee are appointed by the Secretary. So
too, the Secretary of State has an important role to play in
advising the Attorney General of the effect the control of a
given drug might have on our international obligations and relations.
Other Departments, such as the Departments of Treasury and Defense,
will also on occasion have some input for the Attorney General
before he makes a decision for control. However, since the
ultimate effect of control is enforcement or nonenforcement, the
ultimate policy decision should be the Attorney General's.
B. Licensing of the legitimate industry
The major controls established by this Act over the legitimate
industry are essentially as follows:
(1) The requirement that all persons involved with drug
manufacture, distribution, and dispensing obtain a license
from the Attorney General.
(2) Records be kept as to the flow of these drugs.
1/ The following drugs have been brought under control since
Reorganization Plan No. 1 of 1968 went into effect:
Tetrahydrocannabinols (September 21, 1968), Bezitramide
(January 14, 1969), Phencyclidine and Methylphenidate
(April 7, 1969).
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(3) Manufacturing quotas be established as to Schedules I
and II drugs to insure an adequate supply for medical,
scientific, and industrial purposes, while deterring over-
supplying which might create potential diversion.
(4) Control over the importation and exportation of these
substances.
As you are well aware of the provisions of this Act, it is
unnecessary to explain in detail what each provision accomplishes.
Suffice to say that the regulation of the industry is one of
identifying the persons engaged in the legitimate traffic of
these drugs and requiring some form of recordkeeping so that we
know where the drugs are going, where they came from, and who
received them. The licensing provisions and the import and
export provisions of this bill do not control the manufacturing
practices or the health standards required by the Food and Drug
Administration. These provisions in the proposed legislation are
directed at identifying potential diversion and preventing such
diversion. Such provisions are buttressed further by stronger
administrative inspection authority. This scheme is nothing less
than preventative law enforcement; the keeping of legitimate
drugs out of the hands of illicit traffickers and the policing
of the industry to insure that there are adequate safeguards to
prevent such diversion. The existing registration system for
the Drug Abuse Control Amendments is not adequate and is not
working. Although no industry likes more Federal regulation,
if we are to have effective law enforcement, we must close the
loopholes and require a better accounting, with the ability to
revoke and suspend the licenses of those who violate the law.
The enforcement aspects with regard to the import and export
provisions is not only of concern to the Bureau but also of
concern to the Antitrust Division of the Department of Justice.
The existing quota system as it exists raises antitrust problems
and the Attorney General is the most proper official to render
decisions in this area. Necessarily, he must be able to control
the quotas as an enforcement tool. There is apparently a
misunderstanding on the part of the Department of Health, Education,
and Welfare as to the establishment of these quotas. The
determination of this country's medical needs will, of course,
be made by the Department of Health, Education, and Welfare as
the proposed legislation intends. However, the ultimate establish-
ment of these quotas shall be made by the Attorney General.
The existing regulatory structure as to depressant and stimulant
drugs has not stopped diversion and has not given us the ability
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to identify all handlers of drugs in a meaningful way. To
effectively protect the public and to effectively and efficiently
wage a campaign against illicit traffic and illicit diversion of
these drugs, the basic enforcement decisions and ability to control
dangerous drugs must remain together within the Department of
Justice. The Attorney General should make the policy determinations
for controlling drugs which principally involves a law enforcement
decision as well as a scientific decision, and he must have the
ability to exercise effective controls over the legitimate industry
to insure against diversion.
C. The regulation of research
The proposed "Controlled Dangerous Substances Act of 1969" would
require the licensing of practitioners which include physicans
and researchers. Such licensing is tied directly to whether or
not such persons are authorized or permitted to engage in such
activities by their respective states. The Bureau, from experience,
feels that such a license is needed as it is well known that
doctors have abused drugs and have abused their privilege of
dispensing narcotic and dangerous drugs. With regard to
researchers, the existing Drug Abuse Control Amendments exempts
these people from the registration requirements. This is a
glaring loophole in the law and an obvious potential source of
diversion. It is necessary to require that these people be
licensed so that, from a law enforcement point of view, an
effective monitoring capability over the total flow of these
drugs can be achieved. 2/
Persons licensed generally under Schedules II through IV under
our proposed legislation can conduct research without any further
filing. As to Schedule I substances, which are the most dangerous
and/or most subject to abuse, a separate research license is
required. Such a license would be granted by the Attorney General
if the Secretary of Health, Education, and Welfare adjudged the
individual to be a legitimate researcher.
2/ The existing system for the filing of a researcher's
qualifications with the Food and Drug Administration under
its investigational new drug procedures is insufficient
from a law enforcement point of view. While such a
procedure might be useful for determining whether or not
a given researcher can experiment on a given drug, it is in
no way restrictive or required as the researcher, intrastate,
need never file his qualifications with FDA.
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Our greatest concern in this area, of course, is the nonprofessional
researcher or young "experimenter." These drugs are far too
dangerous to allow such persons to conduct research with them,
even at the animal or in vitro stages of experimentation. To
insure against diversion we must control who shall be permitted
to conduct research with these substances. It is not just a
scientific question but, again, one involving enforcement.
D. The Department of Health, Education, and Welfare's role
in drug education and research
There is an apparent misconception on the part of the Department
of Health, Education, and Welfare that there is an intent to
preempt the drug abuse education and research conducted by the
Federal government and vest it with the Attorney General.
Categorically, the Bureau of Narcotics and Dangerous Drugs has
always maintained that the primary responsibility of these
programs rest within the Department of Health, Education, and
Welfare, generally, and the National Institute of Mental Health
in particular. Theirs is the major effort in drug education and
research, along with the function of receiving and distributing
Federal grant and research money for such studies. Nothing in
the proposed bill is intended to change this role.
The Department of Justice, through the Bureau of Narcotics and
Dangerous Drugs, has a minor, but important, role to play
regarding research and education. The Bureau, as part of its
preventive enforcement program, conducts education programs of
a limited nature. As to education, the Bureau sees its role as
that of a catalyst to prompt State and local drug abuse control
programs. The Bureau further makes speeches, conducts seminars,
and provides information to Federal, State, and local agencies as
well as the population in general on the dangers of drug abuse.
As for research, the Bureau maintains its own laboratories and
conducts necessary research and evaluation of drugs found to be
abused on the street. Through its limited contract funds, it
authorizes outside research efforts directly pertaining to drug
abuse information or findings which are considered immediately
necessary to augment its law enforcement goals. The identification
of the unknown abuse substances on the street or a short term
studies in a particular geographic area to determine why and how
abuse is growing are naturally functions necessary to effective
law enforcement and must be retained by the Bureau. Such short
term programs can best be handled by the Bureau, leaving to the
National Institute of Mental Health the broader, bigger, and more
long term projects in this area. There is no intent in the proposed
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legislation to down grade the predominant role of the
National Institute of Medical Health in the area of drug abuse
research or is there any intent to down grade the general
educational functions of the Department of Health, Education,
and Welfare.
Conclusion
In summation, I feel that the re-examination of Reorganization
Plan Number 1 undertaken by the staff of the Department of
Health, Education, and Welfare is neither necessary nor
understandable as a concomitant result of commenting on the
proposed "Controlled Dangerous Substances Act of 1969.' The
control of dangerous drugs and the licensing of the manufacturers,
distributors and dispensers of such drugs should remain with the
Attorney General and not be transferred. The role of the Department
of Health, Education, and Welfare in the area of education and
research has never been questioned and it is felt perhaps that
the staff persons examining the proposed legislation have over-
reacted, fearing what is, in reality, a nonexistent erosion of
their Department's role in this area.
Reproduced at the Richard Nixon Presidential Library
Form DJ-150
(Ed. 4-26-65)
UNITED STATES GOVERNMENT
DEPARTMENT OF JUSTICE
Memorandum
TO
:
Honorable John W. Dean, III
DATE: April 23, 1969
Associate Deputy Attorney General
FROM
Mr. Michael R. Sonnenreich
Deputy Chief Counsel
Bureau of Narcotics and
Dangerous Drugs
SUBJECT:
Proposed "Controlled Substances Act
of 1969" submitted by Royall, Koegel
and Wells.
I have examined the draft of April 17, 1969, of a proposed
"Controlled Substances Act of 1969" submitted by the law firm of
Royall, Koegel and Wells to the Attorney General. Mr. John A.
Wells of that firm has discussed with the Office of Chief Counsel,
Bureau of Narcotics and Dangerous Drugs, the concern of his client,
Hoffmann-LaRoche, Inc., over the inclusion in the Department's
proposed "Controlled Dangerous Substances Act of 1969" the drugs
librium and valium.
I feel this proposal is unacceptable and deficient for the
reasons mentioned below:
The draft is an attempt at maintaining the status quo ante
of the organizational structure prior to the Reorganization Plan
No. 1 of 1968 and seeks to maintain and carry forward the Drug
Abuse Control Amendments of 1965 as they relate to the control
of the legitimate industry. This proposal would bifurcate
enforcement authority by placing the methods for controlling
dangerous drugs and narcotics under the Secretary of Health,
Education, and Welfare and would also place all research func-
tions within the Department of Health, Education, and Welfare.
Further, the Advisory Committee would be responsive to the
Secretary of Health, Education, and Welfare and not to the
Attorney General. Such a system is unacceptable in that the
controlling of these drugs is an enforcement and not solely a
scientific function. The scientific function is performed by
the Scientific Advisory Committee and would perform the identi-
cally same function whether it be under the Attorney General or
the Secretary of H.E.W. However, street abuse information and
collection of information from such places as Poison Control
Centers, Coroners' offices, and police records are all supplied
1/
He has also expressed concern about control over meprobamate,
although his law firm does not represent Carter-Wallace, Inc.,
which manufactures meprobamate.
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- 2 -
by agents of the Bureau. By having it under the Attorney General,
this "street" information can be gathered quickly and submitted to
the Scientific Advisory Committee, which will also gather scientific
information and consult with the Department of H.E.W. This flow of
information controlled by one Department (that being Justice) will
insure that these substances will be controlled swiftly when there
is a need for such control. A bifurcation of this authority would
render the control of these drugs purely a matter of scientific
inquiry, which it is not. Enforcement policy also plays a sub-
stantial role in determining whether drugs should be controlled
once the scientific determination is made that there is a potential
for abuse. Control is a policy decision drawing upon scientific
and enforcement information.
As to research, the Bureau has an important, albeit secondary,
role to play in the area of drug abuse research. We have the
laboratories and we have the support personnel. The research
efforts of the Bureau are directed within a very narrow channel
of inquiry and are basically aimed at short-range, fact-finding
studies that will be useful to law enforcment and to provide
background for specific problems confronting the Bureau itself
in terms of specific drugs under control or intended for control.
There is no question that the Department of Health, Education,
and Welfare has the primary role in this area, but the majority
report for the Reorganization Plan No. 1 of 1968 specifically
transferred research functions to the Bureau, recognizing the
need for this capability, and these functions should remain
under the Attorney General (Appendix D of that report). The
argument that this research capability would overlap and dupli-
cate manpower requirements and scientific efforts is not correct;
a better analysis would show that this research is complimentary
rather than duplicative of the work performed by H.E.W. The
Bureau many times needs quick responses to research questions.
H.E.W. many times is unable to adjust quickly to meet such needs.
As to the regulatory and record keeping requirements in this
proposal, they are entirely unsatisfactory and would merely
perpetuate one of the glaring loopholes in the existing Drug Abuse
Control Amendments. There is no question that the Department's
proposed "Controlled Dangerous Substances Act of 1969" is much
tougher in this area, requiring a licensing of persons dealing
in hallucinogenic, depressant, and stimulant drugs, as well as
further permitting a prelicensing inspection and more careful
and complete records. We do know that over 90 percent of these
drugs on the illicit market were legitimately manufactured and
distributed, but diverted, and the Bureau feels that both from
an enforcement and policy point of view our legislative scheme
is more necessary, realistic, and workable.
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The schedules of drugs as listed in this proposal is equally
unacceptable, especially as they exclude from control librium,
valium, and meprobmate. The Scientific Advisory Committee has
recommended control of these drugs and the Bureau favors control
of these drugs (see memorandum of March 13, 1969, from Director
John E. Ingersoll to the Attorney General). The evidence we
have recently obtained plus the hearings carried out to deter-
mine whether these drugs should be controlled indicate a real
need for control. Further, the recommendation in this proposal
that the administrative hearing procedure as set out in section
701 of the Food, Drug, and Cosmetic Act be retained is not
acceptable to the Bureau and the Department in that our proposed
legislation permits appeals from rulings controlling drugs under
the Administrative Procedures Act of 1948. The Department has
uniformly supported the provisions of the Administrative Proce-
dures Act of 1948, both as to its rule making and adjudicative
provisions. Section 701 is a cumbersome, elaborate procedure
that is highly advantageous to the drug companies in that it
can delay and effectively stay any recommendations for control
for a long period of time. The Administrative Procedures Act
guarantees the discontented party the right to appeal and ade-
quately protects the industry against capricious and erroneous
determinations for control.
In summation, I feel that the bifurcation of authority
between the Department of Justice and the Department of Health,
Education, and Welfare, along with some regulation of the industry
as presently exists under the Drug Abuse Control Amendments (with
the concomitant record keeping provisions), and the exclusion of
librium, valium, and meprobamate from control, make this proposal
unacceptable in the light of our discussions carried on within
the Department of Justice. It is important that the Attorney
General have authority to control these drugs and to effectively
regulate the industry to prevent diversion, a law enforcement
function. Unless there is a desire to destroy the concept and
rationale of the Reorganization Plan No. 1 of 1968, I personally
feel that this proposal submitted by Royall, Koegel, and Wells,
cannot be accepted by the Department of Justic. There is no
question that the Congress will discuss in great detail the
Department of Justice's role in education and research. I
firmly believe that the Department can adequately explain the
need for its role in these areas. As to the need for the Attorney
General to make the final decision for controlling a substance, I
feel that there has been a mistaken pigeonholing of this concept
as a medical and scientific determination, without recognizing
that this is in fact a law enforcement decision which draws upon
science, medicine, and law enforcement to reach the decision for
control. I feel the Attorney General can make this policy deci-
sion for control more effectively than the Secretary of Health,
Reproduced at the Richard Nixon Presidential Library
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Education, and Welfare. I have not submitted a section-by-
section comparison of this proposal with ours, as I felt it
would not be considered necessary.
Reproduced at the Richard Nixon Presidential Library
Honorable John W. Dean, III
April 23, 1969
Associate Deputy Attorney General
Mr. Michael R. Sonnenreich
Deputy Chief Counsel
Bureau of Narcotics and
Dangerous Drugs
Proposed "Controlled Substances Act
of 1969" submitted by Royall, Koegel
and Wells.
I have examined the draft of April 17, 1969, of a proposed
"Controlled Substances Act of 1969" submitted by the law firm of
Royall, Koegel and Wells to the Attorney General. Mr. John A.
Wells of that firm has discussed with the Office of Chief Counsel,
Bureau of Narcotics and Dangerous Drugs, the concern of his client,
Hoffmann-LaRoche, Inc., over the inclusion in the Department's
proposed "Controlled Dangerous Substances Act of 1969" the drugs
librium and valium.
I feel this proposal is unacceptable and deficient for the
reasons mentioned below:
The draft is an attempt at maintaining the status quo ante
of the organizational structure prior to the Reorganization Plan
No. 1 of 1968 and seeks to maintain and carry forward the Drug
Abuse Control Amendments of 1965 as they relate to the control
of the legitimate industry. This proposal would bifurcate
enforcement authority by placing the methods for controlling
dangerous drugs and narcotics under the Secretary of Health,
Education, and Welfare and would also place all research func-
tions within the Department of Health, Education, and Welfare.
Further, the Advisory Committee would be responsive to the
Secretary of Health, Education, and Welfare and not to the
Attorney General. Such a system is unacceptable in that the
controlling of these drugs is an enforcement and not solely a
scientific function. The scientific function is performed by
the Scientific Advisory Committee and would perform the identi-
cally same function whether it be under the Attorney General or
the Secretary of H.E.W. However, street abuse information and
collection of information from such places as Poison Control
Centers, Coroners' offices, and police records are all supplied
1/
He has also expressed concern about control over meprobamate,
although his law firm does not represent Carter-Wallace, Inc.,
which manufactures meprobamate.
Reproduced at the Richard Nixon Presidential Library
- 2 -
by agents of the Bureau. By having it under the Attorney General,
this "street" information can be gathered quickly and submitted to
the Scientific Advisory Committee, which will also gather scientific
information and consult with the Department of H.E.W. This flow of
information controlled by one Department (that being Justice) will
insure that these substances will be controlled swiftly when there
is a need for such control. A bifurcation of this authority would
render the control of these drugs purely a matter of scientific
inquiry, which it is not. Enforcement policy also plays a sub-
stantial role in determining whether drugs should be controlled
once the scientific determination is made that there is a potential
for abuse. Control is a policy decision drawing upon scientific
and enforcement information.
As to research, the Bureau has an important, albeit secondary,
role to play in the area of drug abuse research. We have the
laboratories and we have the support personnel. The research
efforts of the Bureau are directed within a very narrow channel
of inquiry and are basically aimed at short-range, fact-finding
studies that will be useful to law enforcment and to provide
background for specific problems confronting the Bureau itself
in terms of specific drugs under control or intended for control.
There is no question that the Department of Health, Education,
and Welfare has the primary role in this area, but the majority
report for the Reorganization Plan No. 1 of 1968 specifically
transferred research functions to the Bureau, recognizing the
need for this capability, and these functions should remain
under the Attorney General (Appendix D of that report). The
argument that this research capability would overlap and dupli-
cate manpower requirements and scientific efforts is not correct;
a better analysis would show that this research is complimentary
rather than duplicative of the work performed by H.E.W. The
Bureau many times needs quick responses to research questions.
H.E.W. many times is unable to adjust quickly to meet such needs.
As to the regulatory and record keeping requirements in this
proposal, they are entirely unsatisfactory and would merely
perpetuate one of the glaring loopholes in the existing Drug Abuse
Control Amendments. There is no question that the Department's
proposed "Controlled Dangerous Substances Act of 1969" is much
tougher in this area, requiring a licensing of persons dealing
in hallucinogenic, depressant, and stimulant drugs, as well as
further permitting a prelicensing inspection and more careful
and complete records. We do know that over 90 percent of these
drugs on the illicit market were legitimately manufactured and
distributed, but diverted, and the Bureau feels that both from
an enforcement and policy point of view our legislative scheme
is more necessary, realistic, and workable.
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- 3 -
The schedules of drugs as listed in this proposal is equally
unacceptable, especially as they exclude from control librium,
valium, and meprobmate. The Scientific Advisory Committee has
recommended control of these drugs and the Bureau favors control
of these drugs (see memorandum of March 13, 1969, from Director
John E. Ingersoll to the Attorney General). The evidence we
have recently obtained plus the hearings carried out to deter-
mine whether these drugs should be controlled indicate a real
need for control. Further, the recommendation in this proposal
that the administrative hearing procedure as set out in section
701 of the Food, Drug, and Cosmetic Act be retained is not
acceptable to the Bureau and the Department in that our proposed
legislation permits appeals from rulings controlling drugs under
the Administrative Procedures Act of 1948. The Department has
uniformly supported the provisions of the Administrative Proce-
dures Act of 1948, both as to its rule making and adjudicative
provisions. Section 701 is a cumbersome, elaborate procedure
that is highly advantageous to the drug companies in that it
can delay and effectively stay any recommendations for control
for a long period of time. The Administrative Procedures Act
guarantees the discontented party the right to appeal and ade-
quately protects the industry against capricious and erroneous
determinations for control.
In summation, I feel that the bifurcation of authority
between the Department of Justice and the Department of Health,
Education, and Welfare, along with some regulation of the industry
as presently exists under the Drug Abuse Control Amendments (with
the concomitant record keeping provisions), and the exclusion of
librium, valium, and meprobamate from control, make this proposal
unacceptable in the light of our discussions carried on within
the Department of Justice. It is important that the Attorney
General have authority to control these drugs and to effectively
regulate the industry to prevent diversion, a law enforcement
function. Unless there is a desire to destroy the concept and
rationale of the Reorganization Plan No. 1 of 1968, I personally
feel that this proposal submitted by Royall, Koegel, and Wells,
cannot be accepted by the Department of Justic. There is no
question that the Congress will discuss in great detail the
Department of Justice's role in education and research. I
firmly believe that the Department can adequately explain the
need for its role in these areas. As to the need for the Attorney
General to make the final decision for controlling a substance, I
feel that there has been a mistaken pigeonholing of this concept
as a medical and scientific determination, without recognizing
that this is in fact a law enforcement decision which draws upon
science, medicine, and law enforcement to reach the decision for
control. I feel the Attorney General can make this policy deci-
sion for control. more effectively than the Secretary of Health,
Reproduced at the Richard Nixon Presidential Library
4 I I
Education, and Welfare. I have not submitted a section-by-
section comparison of this proposal with ours, as I felt it
would not be considered necessary.
Reproduced at the Richard Nixon Presidential Library
The Honorable John W. Dean III
May 7, 1969
Associate Deputy Attorney General
Michael R. Sonnenreich
Deputy Chief Counsel
Bureau of Narcotics and Dangerous Drugs
Department of Health, Education, and Welfare's staff
papers regarding the "Controlled Dangerous Substances
Act of 1969"
The arguments expressed in the staff papers by Mr. Theordore
Ellenbogen on May 1, 1969, are quite similar to the proposal
made, in draft form, by the law firm of Royall, Koegel, and
Wells on April 17, 1969. I direct your attention to my
memorandum to you of April 23, 1969, regarding that draft.
In reviewing the arguments contained in the draft letter to
Mr. Mayo, the tenor of that draft apparently is based on four
erroneous assumptions:
(1) The control of dangerous drugs under the proposed
"Controlled Dangerous Substances Act" is a scientific
ma
matter and can only be adequately performed by the
Department of Health, Education, and Welfare.
(2) The regulatory and licensing controls over manufacturers,
distributors, and dispensers is not a part of a law
enforcement function and is separable from other law
enforcement efforts.
(3) Specifically, physicians and researchers should not
be licensed or monitored by the Department of Justice as
this somehow creates a control over their actual medical
practice or research.
(4) The Department of Health, Education, and Welfare is
being pre-empted by the Department of Justice from its
rightful education and research functions.
These appear to be the major bones of contention expressed in the
proposed letter to Mr. Mayo from the Secretary of Health, Education,
and Welfare. These points have been discussed with staff members
of HEW time and time again. These generalized assumptions have
been made again and again in response. In an effort to examine
these assumptions logically, a brief discussion of each one follows.
Reproduced at the Richard Nixon Presidential Library
- 2 -
It is my personal belief that these assumptions have become a
rallying cry, with little thought given as to what they really
mean. The truth of the matter is that under the old system
prior to Reorganization Plan No. 1 of 1968, effective law
enforcement was being hampered by constant bifurcation of
authority and conflicting goals and purposes among the
different Departments. The arguments advanced in the proposed
letter regarding the Reorganization Plan No. 1 of 1968 are
purely conjecture and at this point really should not be
considered a necessary item for discussion. The proposed
legislation is not a vehicle for reorganizing the Bureau of
Narcotics and Dangerous Drugs. The proposed bill will expand
the Attorney General's powers but not change the existing
organizational structure (save for eliminating the tax provisions).
Comments should be limited to substantive discussions making the
proposal more effective and meaningful. It should not be used
as a. vehicle for reopening organizational changes and interdepart-
mental squabbles. It is important to focus on the bill itself
and not raise bygone battles already lost.
A. Control of drugs under the proposed act
The constantly reiterated statement that the control of dangerous
drugs under the proposed bill is purely a scientific and medical
determination is not necessarily a true one. While no one would
question that a preliminary determination of abuse potential is
the necessary trigger that places in motion any decision for
subsequent control, it is, however, only a trigger. It is a
determination made by the Scientific Advisory Committee, a group
of qualified scientists drawn from a list prepared by the National
Academy of Sciences. It is the function of this Committee to
evaluate scientific data concerning a particular dangerous drugs
and determine its potential for abuse. The input at this level
comes in not only from the Department of Health, Education, and
Welfare but from the academic community and from other agencies,
State and local. In addition, actual street abuse of the drugs
in question comes from agent investigations which are conducted
and carried out by this Bureau. In short, all the basic information,
medical, scientific, and actual abuse itself flows to the Committee
from many diverse sources. The Committee itself, as an independent
body, makes its recommendations. Once such recommendations are
made, it is a policy determination as to whether or not a drug
should be controlled. At that point in time, since the control
of the drug will require enforcement, it is necessary to evaluate
that recommendation, along with practical problems of enforcement,
to determine whether the drug should be placed under control.
This is not something that the Secretary of Health, Education,
and Welfare is as qualified to perform as is the Attorney General.
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- 3 -
The Department of Health, Education, and Welfare is not enforcement
oriented as has been clearly pointed out in the staff papers.
Yet the control of a dangerous drug is an enforcement matter
since such control results in investigations and regulations to
insure against illicit diversion and illicit trafficking. The
control of a particular drug also can raise antitrust considerations,
as well as international questions. All these factors must be
brought together and decided upon. The Attorney General is best
able to make such a judgment and in point of fact, has been doing
so at the present time. 1/
The Secretary of Health, Education, and Welfare has an important
role to play in making available the expertise of his Department
to the Scientific Advisory Committee so that it can make better
informed, scientific judgments. It is for this reason that two
consultants to the Committee are appointed by the Secretary. So
too, the Secretary of State has an important role to play in
advising the Attorney General of the effect the control of a.
given drug might have on our international obligations and relations.
Other Departments, such as the Departments of Treasury and Defense,
will also on occasion have some input for the Attorney General
before he makes a decision for control. However, since the
ultimate effect of control is enforcement or nonenforcement, the
ultimate policy decision should be the Attorney General's.
B. Licensing of the legitimate industry
The major controls established by this Act over the legitimate
industry are essentially as follows:
(1) The requirement that all persoNs involved with drug
manufacture, distribution, and dispensing obtain a license
from the Attorney General.
(2) Records be kept as to the flow of these drugs.
1/ The following drugs have been brought under control since
Reorganization Plan No. 1 of 1968 went into effect:
Tetrahydracannabinols (September 21, 1968), Bezitramide
(January 14, 1969), Phencyclidine and Methylphenidate
(April 7, 1969).
Reproduced at the Richard Nixon Presidential Library
- 4 -
(3) Manufacturing quotas be established as to Schedules I
and II drugs to insure an adequate supply for medical,
scientific, and industrial purposes, while deterring over-
supplying which might create potential diversion.
(4) Control over the importation and exportation of these
substances.
As you are well aware of the provisions of this Act, it is
unnecessary to explain in detail what each provision accomplishes.
Suffice to say that the regulation of the industry is one of
identifying the persons engaged in the legitimate traffic of
these drugs and requiring some form of recordkeeping so that we
know where the drugs are going, where they came from, and who
received them. The licensing provisions and the import and
export provisions of this bill do not control the manufacturing
practices or the health standards required by the Food and Drug
Administration. These provisions in the proposed legislation are
directed at identifying potential diversion and preventing such
diversion. Such provisions are buttressed further by stronger
administrative inspection authority. This scheme is nothing less
than preventative law enforcement; the keeping of legitimate
drugs out of the hands of illicit traffickers and the policing
of the industry to insure that there are adequate safeguards to
prevent such divession. The existing registration system for
the Drug Abuse Control Amendments is not adequate and is not
working. Although no industry likes more Federal regulation,
if we are to have effective law enforcement, we must close the
loopholes and require a better accounting, with the ability to
revoke and suspend the licenses of those who violate the law.
The enforcement aspects with regard to the import and export
provisions is not only of concern to the Bureau but also of
concern to the Antitrust Division of the Department of Justice.
The existing quota system as it exists raises antitrust problems
and the Attorney General is the most proper official to render
decisions in this area. Necessarily, he must be able to control
the quotas as an enforcement fool. There is apparently a
misunderstanding on the part of the Department of Health, Education,
and Welfare as to the establishment of these quotas. The
determination of this country's medical needs will, of course,
be made by the Department of Health, Education, and Welfare as
the proposed legislation intends. However, the ultimate establish-
ment of these quotas shall be made by the Attorney General.
The existing regulatory structure as to depressant and stimulant
drugs has not stopped diversion and has not given us the ability
Reproduced at the Richard Nixon Presidential Library
- 5 -
to identify all handlers of drugs in a meaningful way. To
effectively protect the public and to effectively and efficiently
wage a campaign against illicit traffic and illicit diversion of
these drugs, the basic enforcement decisions and ability to control
dangerous drugs must remain together within the Department of
Justice. The Attorney General should make the policy determinations
for controlling drugs which principally involves a law enforcement
decision as well as a scientific decision, and he must have the
ability to exercise effective controls over the legitimate industry
to insure against diversion.
C. The regulation of research
The proposed "Controlled Dangerous Substances Act of 1969" would
require the licensing of practitioners which include physicans
and researchers. Such licensing is tied directly to whether or
not such persons are authorized or permitted to engage in such
activities by their respective states. The Bureau, from experience,
feels that such a license is needed as it is well known that
doctors have abused drugs and have abused their privilege of
dispensing narcotic and dangerous drugs. With regard to
researchers, the existing Drug Abuse Control Amendments exempts
these people from the registration requirements. This is a
glaring loophole in the law and an obvious potential source of
diversion. It is necessary to require that these people be
licensed so that, from a law enforcement point of view, an
effective monitoring capability over the total flow of these
drugs can be achieved.
Persons licensed generally under Schedules II through IV under
our proposed legislation can conduct research without any further
filing. As to Schedule I substances, which are the most dangerous
and/or most subject to abuse, a separate research license is
required. Such a license would be granted by the Attorney General
if the Secretary of Health, Education, and Welfare adjudged the
individual to be a legitimate researcher.
The existing system for the filing of a researchers
qualifications with the Food and Drug Administration under
its investigational new drug procedures is insufficient
from a law enforcement point of view. While such a
procedure might be useful for determining whether or not
a given researcher can experiment on a given drug, it is in
no way restrictive or required as the researcher, intrastate,
need never file his qualifications with FDA.
Reproduced at the Richard Nixon Presidential Library
- 6 -
Our greatest concern in this area, of course, is the nonprofessional
researcher or young "experimenter." These drugs are far too
dangerous to allow such persons to conduct research with them,
even at the animal or in vitro stages of experimentation. To
insure against diversion we must control who shall be permitted
to conduct research with these substances. It is not just a
scientific question but, again, one involving enforcement.
D. The Department of Health, Education, and Welfare's role
in drug education and research
There is an apparent misconception on the part of the Department
of Health, Education, and Welfare that there is an intent to
preempt the drug abuse education and research conducted by the
Federal government and vest it with the Attorney General.
Categorically, the Bureau of Narcotics and Dangerous Drugs has
always maintained that the primary responsibility of these
programs rest within the Department of Health, Education, and
Welfare, generally, and the National Institute of Mental Health
in particular. Theirs is the major effort in drug education and
research, along with the function of receiving and distributing
Federal grant and research money for such studies. Nothing in
the proposed bill is intended to change this role.
The Department of Justice, through the Bureau of Narcotics and
Dangerous Drugs, has a minor, but important, role to play
regarding research and education. The Bureau, as part of its
preventive enforcement program, conducts education programs of
a limited nature. As to education, the Bureau sees its role as
that of a catalyst to prompt state and local drug abuse control
programs. The Bureau further makes speeches, conducts seminars,
and provides information to Federal, State, and local agencies as
well as the population in general on the dangers of drug abuse.
As for research, the Bureau maintains its own laboratories and
conducts necessary research and evaluation of drugs found to be
abused on the street. Through its limited contract funds, it
authorizes outside research efforts directly pertaining to drug
abuse information or findings which are considered immediately
necessary to augment its law enforcement goals. The identification
of the unknown abuse substances on the street or a short term
studies in a particular geographic area to determine why and how
abuse is growing are naturally functions necessary to effective
law enforcement and must be retained by the Bureau. Such short
term programs can best be handled by the Bureau, leaving to the
National Institute of Mental Health the broader, bigger, and more
long term projects in this area. There is no intent in the proposed
Reproduced at the Richard Nixon Presidential Library
7. I I
legislation to down grade the predominant role of the
National Institute of Medical Health in the area of drug abuse
research or is there any intent to down grade the general
educational functions of the Department of Health, Education,
and Welfare.
Conclusion
In summation, I feel that the re-examination of Reorganization
Plan Number 1 undertaken by the staff of the Department of
Health, Education, and Welfare is neither necessary nor
understandable as a concomitant result of commenting on the
proposed "Controlled Dangerous Substances Act of 1969." The
control of dangerous drugs and the licensing of the manufacturers,
distributors and dispensers of such drugs should remain with the
Attorney General and not be transferred. The role of the Department
of Health, Education, and Welfare in the area of education and
research has never been questioned and it is felt perhaps that
the staff persons examining the proposed legislation have over-
reacted, fearing what is, in reality, a nonexistent erosion of
their Department's role in this area.
Reproduced at the Richard Nixon Presidential Library
Mr. John W. Dean, III
June 24, 1969
Associate Deputy Attorney General
Michael R. Sonnenreich
Deputy Chief Counsel
Recommendations by the Treasury Department concerning
the Attorney General's authority under the proposed
"Controlled Dangerous Substances Act of 1969.'
As per your request, attached is a listing of those
recommendations made by the Treasury Department that would
limit the Attorney General's authority under the new proposed
Controlled Dangerous Substances Act. Many of these matters
were resolved by compromise; however, some of them have
remained in the bill as a result of compromises. Please note
that the first point in the attachment, relating to 26 U.S.C.
7607, now raises some difficult policy decisions for the
Attorney General which are outside the scope of this bill
and affect the existing memorandum of understanding between
the Bureau of Customs and the Bureau of Narcotics and
Dangerous Drugs which was transferred under the Reorganization
Plan No. 1 of 1968.
Attachment
Reproduced at the Richard Nixon Presidential Library
Changes Recommended by the Treasury Department
Affecting the Powers of the Attorney General
1. 26 U.S.C. 7607 was retained in Title VIII of the new bill
(subsection (r)), to allow the Bureau of Customs to make arrests
without warrants as to any offenses under the laws of the
United States relating to narcotic drugs and marihuana. That
portion of section 7607 that relates to the Bureau of Narcotics
and Dangerous Drugs was repealed and replaced by section 701 of
the new bill. This sweeping authority was continued for the
Bureau of Customs on the understanding that the Memorandum of
Understanding between the two Bureaus would be maintained in
force and enforced. Without a clear delineation of functions,
such a repealer would never have been contemplated from the
view point of the Attorney General since, without a restrictive
Memorandum of Understanding, such authority would give the
Secretary of Treasury theoretical co-equal powers with the
Attorney General in the field of narcotic drug and marihuana
enforcement. This theoretical equality was never contemplated
by the drafters of the bill, and the removal of existing
guidelines now creates the possibility of parity.
2. In the preamble to the bill, the Treasury Department wanted
a statement as to its role in the enforcement of those laws
"affecting all importations" and the laws against smuggling.
Such a statement would tend to freeze the Attorney General out
of this area which is somewhat illogical since, as chief law
enforcement officer, there would be times when the Attorney
General would want to supervise investigations, not only
internationally and domestically, but also at the ports and
borders of the United States. This language was deleted and
a compromise was made (see point 3 below).
3. The Treasury Department was insistent about including in
the bill the following statement: "Nothing in this Act shall
derogate from the authority of the Secretary of the Treasury
under the customs and related laws." With great reluctance
the term "and related laws" was inserted in the bill as a
compromise measure. This phraseology is nebulous and does not
carefully delineate the authority of the Secretary of the
Treasury. The intent of the Treasury Department was clear as
they suggested other language which would limit the Attorney
General's authority by subtracting from his general law enforcement
Reproduced at the Richard Nixon Presidential Library
- 2 -
authority those activities handled by the Secretary of
Treasury under the customs and related laws (emphasis supplied).
This language was included as a compromise only with the
understanding that the Attorney General could direct investigations
of the narcotic and dangerous drug laws wherever they occur
within and without the jurisdiction of the United States
including ports and borders, when, in his judgement, such
investigations were necessary.
4. The Treasury Department would not accept a recommendation
that their authority be limited to the ports and borders of
the United States. They insist on the authority to conduct
international and internal investigations if they relateto
smuggling. This would detract from the Attorney General's
authority in that there would exist two organizations involved
in international intelligence gathering and domestic investigations,
one of which is not controlled by the Attorney General. This
situation is far different from the Memorandums of Understanding
which were promulgated by the Federal Bureau of Investigations.
In those understandings the authority of the Attorney General
was paramount and other investigative agencies were given a
sphere of investigation, not as a matter of right, but rather
as a. matter of comity.
5. The Treasury Department has also recommended that the
Secretary be given equal authority with the Attorney General
to conduct conferences with law enforcement executives from
the various states regarding the drug abuse problem. This
recommendation was stricken from the President's message as it
would usurp the traditional role of the Attorney General as
the principal Federal law enforcement officer. This does not
mean that the Treasury Department as well as other departments
such as Health, Education and Welfare, and Defense would not
be consulted by the Attorney General. However, the focus and
the initiative must center on the Attorney General.
6. The Treasury Department recommended an expansion of its law
enforcement school to service law enforcement personnel other
than the Bureau of Customs agents in the narcotics and
dangerous drug area. This recommendation was also deleted from
the message as it would be duplicative of the training schools
being conducted by the Bureau of Narcotics and Dangerous Drugs
and would create unnecessary competition at the State level.
Reproduced at the Richard Nixon Presidential Library
- 3 -
7. The Treasury Department's redraft of the President's message
would have restricted the Attorney General's drug strike forces
to internal operations only. This recommendation was deleted
from the message as the Attorney General has the authority
to use such strike forces anywhere in the United States, as
well as overseas when appropriate. In this regard, the
Treasury Department also sought to establish its own strike
forces. This was deleted also from the message as there is
no apparent need, given the role of the Bureau of Customs, for
such a specialized force. It is superfluous to the major
work of that Bureau and would duplicate the Attorney General's
efferts. Further, the Bureau of Customs does actively
participate on the Organized Crime Task Forces which are under
the supervision of the Attorney General.
8. The Treasury Department's redraft sought to include the
Secretary of Treasury with the Secretary of State and the
Attorney General in the area of international cooperation and
liaison. The rubric used by Treasury in justifying its
inclusion into this area was its enforcement of the smuggling
laws. This recommendation was rejected on the basis that the
Secretary of State, as our principal liaison with foreign
governments, and the Attorney General, as our principal
law enforcement official sufficiently cover our needs in this
delicate area and the roles should not be muddied by the
interjection of a third party in any negotiations.
Reproduced at the Richard Nixon Presidential Library
Form DJ-96a
(Rev. 6-22-66)
DEPARTMENT OF JUSTICE
ROUTING SLIP
TO:
NAME
DIVISION
BUILDING
ROOM
1.
Main
Mr. Jack Pearce
Antitrust
Justice
3117
2.
Star
Mr. Durham
DAG
MAIN
4119
3.
4.
SIGNATURE
COMMENT
PER CONVERSATION
APPROVAL
NECESSARY ACTION
AS REQUESTED
SEE ME
NOTE AND RETURN
NOTE AND FILE
RECOMMENDATION
CALL ME
YOUR INFORMATION
ANSWER OR ACKNOWL-
EDGE ON OR BEFORE
prepare REPLY FOR
THE SIGNATURE OF
REMARKS
Forwarded in accordance with our
telephone conversation.
Hugh Him Durham
Held this up hoping to get a) view from
Peul Owins, whose opinions / respect and whose
contribution / would have been glod to have. But
he IS ned up- of / don't want to hold this longer
FROM:
NAME
BUILDING & ROOM
EXT.
DATE
Mr. Hugh Durham
Rm. 4119
2114
5/22
Jenro
Reproduced at the Richard Nixon Presidential Library
Although the comments are ostensibly addressed to weakening
of drug control safeguards, their thrust is to preserve for a
few domestic manufacturers exclusive rights to manufacture useful
drugs, without any check on the price consequences of such action.
There is no reason to assume that the Department of Justice
will allow importation of drugs on any basis permitting signifi-
cant risk of diversion to illicit channels. The terms and con-
ditions of any importation allowed will be controlled by the
Attorney General. If stringent measures are needed to prevent
diversion of imported drugs with legitimate uses, he can take
such measures. He will not allow importation on terms likely to
lead to diversion of drugs.
Nor is there substance to the proposition that foreign pro-
duction would increase by more than the amount which might be
allowed into the United States under proper controls, with con-
sequent diversion to illicit channels. The amount to be imported
would represent the addition to the legitimate market for foreign
firms. There is no substantial reason to suppose that foreign
manufacturers would be led to overproduce for the legitimate
market available to them by an increase in the size of that market.
Producers would not normally behave so. If any special care were
needed to prevent a scramble for the market, leading to over-
production -- which we doubt -- this could be prevented by the
Reproduced at the Richard Nixon Presidential Library
terms on which imports were allowed. Finally, as to limitation on
international production, it is obvious that if some foreign pro-
duction is allowed into the United States, it will to that extent
replace domestic production, with the result that total world pro-
duction will be no higher than it otherwise would be.
The comments as to domestic licensing seem to reflect a mis-
understanding of the purpose of the bill. The primary responsibility
of the Bureau of Narcotics, under the Attorney General, is drug
control. The Bureau will not undertake direct price regulation.
It may, however, take cognizance of evidence showing that prices
are too high. The criteria for determining reasonableness of price
relate to reasonable costs and reasonable profits. No explicit
statement of criteria is needed. If evidence indicates that
additional licensing will result in more-reasonable prices with no
significant diminution in the effectiveness of drug control, the
Bureau should be able to license the additional manufacturers.
There is no reason to suppose that the Bureau will prejudice its
primary objective of effective drug control by excessive licensing.
Since the Bureau will not undertake direct price regulation,
there is no occasion for judicial review of the reasonableness of
price controls. Nor is there good cause for judicial review of
the Attorney General's determination to license additional manu-
facturers -- we do not think persons subject to license have a
2
Reproduced at the Richard Nixon Presidential Library
right to enhanced prices resulting from limitations on entry into
their field which requires routine judicial review of decisions to
allow new entrants. The Attorney General, like other heads of
Executive Agencies, can be restrained from arbitrary and capricious
action, by a suit in equity or a petition for mandamus. This is a
sufficient and appropriate control over the licensing function, in
our view.
As to the amount of commerce involved, Government action
should not unnecessarily lead to enhanced prices in either small
or large revenue flows. Many of the substances involved are
needed by numerous users: often they are needed when financial
pressures on these users are very great. Government restrictions
on manufacture and import of these substances should not burden
these users and their families beyond the necessities of effective
drug control. The provisions of the bill would give the Attorney
General sufficient flexibility in his administration of drug
controls to avoid imposing unnecessary financial burdens on
persons requiring medication.
Reproduced at the Richard Nixon Presidential Library
PROPOSED OMNIBUS DRUG LEGISLATION
The Department of Justice has prepared a draft bill,
entitled the Controlled Dangerous Substances Act of 1969,
which would codify and revise all Federal laws regulating
narcotics and dangerous drugs. The proposed bill unfor-
tunately would weaken some of the safeguards that now
prevent the diversion of narcotics from the legal trade
into illicit channels.
The Existing Law
Federal statutes now absolutely prohibit the
importation into the United States (for other than
scientific purposes only) of any narcotic drugs, in-
cluding such opium derivatives as morphine and codeine,
with the single exception that crude opium (and coca
leaves, although they are not relevant to this discus-
sion) can be imported under strict licensing controls
for medical and scientific use, The statutes also pro-
vide for a system of licensing US manufacture of usable
derivatives from the imported crude materials. Thus,
narcotics on the US market are all domestically manu-
factured.
Reproduced at the Richard Nixon Presidential Library
- 2 -
Supervision of the importation and manufacture of
narcotics is now in the hands of the Attorney General,
through the Bureau of Narcotics and Dangerous Drugs, as
the result of a 1968 reorganization that transferred
those functions from the Treasury Department.
Manufacture of useful derivatives from opium is
conducted under provisions of the Narcotics Manufacturing
Act of 1960 requiring that licenses be issued only to the
"smallest number of establishments which will produce
an adequate and uninterrupted supply of narcotic drugs
for medical and scientific purposes, consistent
with the public interest." Other criteria for granting
a manufacturing license are set forth in the statute,
including due consideration of the applicant's education,
moral character and reputation, the applicant's past drug
manufacturing experience and the quality of his products,
his technical competence and the existence in his establish-
ment of adequate safeguards against diversion of narcotics
into other than legitimate channels. In the words of the
Senate Committee Report on the 1960 Act:
Considering the importance of exercising
close control of the production of these
potentially dangerous drugs, it is the
intention that the manufacture thereof
be restricted not only to persons having
the requisite technical competence, drug-
manufacturing experience, and safeguards
Reproduced at the Richard Nixon Presidential Library
- 3 -
against diversion, but also to the
smallest number of establishments
that will produce an adequate and
continuous supply of narcotic drugs
for medical and scientific purposes.
The existing system of controlling importation and
manufacture has worked. There have been no known inci-
dents of diversion of narcotic drugs during the legitimate
import or manufacturing stages. This is primarily due to
the thoroughness of inspection and regulation that is
possible with only a small number of establishments in-
volved in the traffic, as well as the elaborate and costly
security precautions taken by the licensees themselves.
Department of Justice Proposals
The Department of Justice proposals would weaken
the present system of control in at least two respects
- first, by opening the door to importation of finished
narcotic drugs, and second, by creating the possibility
of an increase in the number of licensed manufacturers.
Importation. Whereas existing law forbids any
importation of finished narcotic drugs, the new proposals
would permit importation of narcotic drugs under regula-
tions issued by the Attorney General. There is no point
in making these changes unless it is contemplated that
the power will be used and such importation permitted.
Reproduced at the Richard Nixon Presidential Library
- 4 -
The security risks of expanded importation are clear.
While crude opium, for example, is a relatively bulky
substance, its morphine and codeine derivatives are
concentrated, extremely valuable and far more subject
to diversion enroute. Only limited security measures
could be taken to protect them prior to their arrival
at customs warehouses in this country. While crude
opium arrives in a very few shipments originating at
only two sources (the governments of Turkey and India,
the two producing countries), private shipments would
be many and would emanate from multiple sources abroad
in response to the newly created demand in the United
States.
If importation of finished narcotic drugs were
permitted, the initial point of vulnerability to theft
and diversion would be moved back up the line and could
occur even before the drugs entered the U. S. For
example, it would be much more difficult to protect
morphine concentrates from diversion in the import trade
than it is to protect bulky or crude opium. Competition
for the new market here could spur an increase in the
production of finished narcotics abroad, and much of
the resulting production could eventually find its way
into the illicit trade. To prevent that happening, the
Reproduced at the Richard Nixon Presidential Library
- 5 -
U.S. would have to rely on greatly improved smuggling
control and increased diligence of other countries'
enforcement and security measures.
The proposed laws are directly opposed to our
longtime policy of seeking limitation on the inter-
national production and manufacture of narcotics,
evidenced by our State Department's recent expenditures
to help reduce opium production in Turkey, and our
participation in programs of the U. N. and other inter-
national agencies.
Manufacture. The new proposals would establish
an additional criterion which the Attorney General must
consider in licensing manufacturing establishments.
Instead of issuing licenses to the "smallest number"
of establishments that can supply the demand, as under
the present law, the Attorney General would be required
to issue licenses to a number of establishments "small
enough" to avoid diversion while supplying demand for
the finished narcotics "at reasonable prices." By intro-
ducing price considerations into the determination, the
new proposals would force a compromise between economic
and security considerations which can only weaken the
security and control features of the present law.
Reproduced at the Richard Nixon Presidential Library
- 6 -
Besides, the proposed law contemplates a poorly
conceived price control device at best. It contains
no standards whatsoever for determining what prices
are reasonable or no method of judicial review under
which a manufacturer could test his contention that
the standards had not been complied with. Excessive
price reductions with respect to these drugs could put
pressure on costs and on the ability of a manufacturer
to provide maximum security for his products.
The weakening of security which could result from
an increase in a number of manufacturers could not be
offset by any significant and meaningful economic gains.
This is so because the industry is small with an annual
volume of less than $15 million and remains at that size
because the products are not promoted or advertised.
There is no public interest behind increasing this volume
through price reductions, and furthermore reductions in
the cost of finished narcotic drugs would have little,
if any, significance on the costs of the drugs and
medicines which the consumer buys. An increase in the
number of manufacturers in this small industry of more
or less finite size would only serve to divide the limited
production among a greater number.
Reproduced at the Richard Nixon Presidential Library
- 7 -
Conclusion
The present system operated under the present law
works well for narcotic drugs. It should not be changed
solely for the purpose of bringing the law more into
line with doctrinaire anti trust concepts in the face
of the clear probability that more harm to the public
interest would be accomplished than good.
Reproduced at the Richard Nixon Presidential Library
John Dean -
what. in status ? In
STEPTOE & JOHNSON
my opinion private
LOUIS A.JOHNSON (1891-1966)
WILLIAM E. MILLER
ATTORNEYS AT LAW
I.MARTIN LEAVITT
STEPHEN AILES
lawyer make a
PAUL F. MICKEY
1250 CONNECTICUT AVENUE
FREDERICK S. HILL
HENRY C.IKENBERRY
WASHINGTON, D.C. 20036
LAIDLER B. MACKALL
good JEREMIAH HUBERT care. OF COUNSEL A. C.WATERMAN SCHNEIDER Reo.K.
WILLIAM B.DEVANEY
(202) 223-4800
RICHARD A.WHITING
ROBERT J. CORBER
STANLEY C. MORRIS, JR.
GEORGE B.MICKUM, III
MONROE LEIGH
RICHARD TAYLOR
JOHN .NOLAN, JR.
ROBERT D. WALLICK
WEST VIRGINIA OFFICES
N.THOMPSON POWERS
CLARKSBURG
WILLIAM K. CONDRELL
UNION BANK BUILDING
ROBERT M. GOOLRICK
JAMES P. HOLDEN
CHARLESTON
HERBERT E. FORREST
June 13, 1969
KANAWHA VALLEY BUILDING
JAMES V. DOLAN
GEORGE C. COCHRAN
JAMES H. PIPKIN, JR.
JAMES L. McHUGH, JR.
JAMES M. PROCTOR, III
JAMES R. OFFUTT
LAURENCE HOFFMAN
RICHARD O. CUNNINGHAM
The Honorable George Revercomb
Associate Deputy Attorney General
Room 4206
Department of Justice
Tenth and Constitution Avenue, N. W.
Washington, D. C. 20053
Dear George:
In accordance with our telephone conver-
sation the other day, I am enclosing a copy of the
material which was left with the Anti-Trust Divi-
sion in regard to the legislation affecting imports
of narcotics. Your attention to this is deeply
appreciated.
With best regards,
Sincerely,
Jack Robert J. Corber
RJC/rm
Enclosure
Reproduced at the Richard Nixon Presidential Library
STEPTOE & JOHNSON
LOUIS A.JOHNSON (1891-1966)
ATTORNEYS AT LAW
WILLIAM E. MILLER
I.MARTIN LEAVITT
STEPHEN AILES
PAUL F. MICKEY
1250 CONNECTICUT AVENUE
FREDERICK S. HILL
HUBERT A. SCHNEIDER
HENRY C.IKENBERRY
WASHINGTON, D.C. 20036
JEREMIAH C.WATERMAN
LAIDLER B. MACKALL
(202) 223-4800
OF COUNSEL
WILLIAM B. DEVANEY
RICHARD A.WHITING
ROBERT J. CORBER
STANLEY C. MORRIS, JR.
GEORGE B.MICKUM, III
MONROE LEIGH
RICHARD P.TAYLOR
June 13, 1969
JOHN E. NOLAN, JR.
WEST VIRGINIA OFFICES
ROBERT D. WALLICK
N. THOMPSON POWERS
CLARKSBURG
WILLIAM K. CONDRELL
UNION BANK BUILDING
ROBERT M. GOOLRICK
CHARLESTON
JAMES P. HOLDEN
HERBERT E. FORREST
KANAWHA VALLEY BUILDING
JAMES V. DOLAN
GEORGE C.COCHRAN
JAMES H. PIPKIN, JR.
JAMES L.McHUGH, JR.
JAMES M. PROCTOR, III
JAMES R. OFFUTT
LAURENCE HOFFMAN
RICHARD O. CUNNINGHAM
Lewis Bernstein, Esquire
Chief, Special Litigation Section
Antitrust Division
Department of Justice
Washington, D. C.
Re: Controlled Dangerous Substances Act
Dear Lew:
Following our talk with you and Jack Pearce we have
prepared the enclosed to further explain our position on
the antitrust aspects on the proposed price control and
importation provisions that would affect the domestic
manufacturers of opium derivatives.
We are also delivering a copy to George Revercomb,
as we talked with him initially on the general question.
Sincerely yours,
Sther ail
Stephen Ailes
Enclosure
cc: George H. Revercomb, Esquire
Jack Pearce, Esquire
Reproduced at the Richard Nixon Presidential Library
June 12, 1969
NARCOTICS LEGISLATION: ANTITRUST ASPECTS
The draft Controlled Dangerous Substances Act, in
response to antitrust considerations, would eliminate the
existing ban on importation of finished narcotic drugs
and would authorize the Attorney General to license addi-
tional manufacturers of narcotics until prices of finished
narcotics became "reasonable." The difficulties with
the proposed changes are discussed below.
1. Control of narcotics traffic is weakened by the proposals.
The manner in which control is weakened is outlined
in a separate memorandum recently submitted to the Department
of Justice. We submit that the importance of adequate
control far outweighs whatever economic benefits could
result in the small, stable business of extracting opium
derivates, from the antitrust modifications that have
been proposed.
2. The proposed provision for price control does not
contain adequate standards to guide the Attorney
General in his determination of what is a "reasonable"
price, or provisions for judicial review.
That the proposed law gives price control power to the
Attorney General is quite clear. The Director of the Bureau
of Narcotics and Dangerous Drugs could, and perhaps should
Reproduced at the Richard Nixon Presidential Library
-2-
under this provision, determine what he considers to be
reasonable prices for the products involved and order the
industry to that level under threat of new competitors.
He would make such a determination unfettered by any legis-
lative instructions whatsoever.
An example of the guidelines and provisions for judicial
review that should accompany a system of price control, in
order to avoid the possibility of arbitrary action, is the
Emergency Price Control Act of 1942. That legislation
set forth standards to "control the Controllers" and a
system of judicial review. Even in time of national
emergency, nothing less was deemed satisfactory, or even
in accordance with the constitution.
1. Writing of the necessity of standards to govern OPA
in setting price controls, David F. Cavers wrote in
1947:
Whenever a legislature determines thus to direct
the action of officials, it is confronted by
the problem of how far to limit or channel the
exercise of the authority it seeks to confer.
If the legislature were to do no more than
state a broad policy goal and empower the official
to take whatever action he deemed appropriate to
attain it, then the legislature would have so
far abdicated its authority with respect to the
problem as to have defeated, in the particular
situation, the functioning of the constitutional
scheme of government. Its failure to assume
responsibility would in effect have transferred
to the executive branch of the government
authority which the Federal and State constitutions
vest in the legislative. Moreover, this failure
would vitiate the grant of authority, and persons
adversely affected by its purported exercise
could challenge the authority in the courts.
[Footnote 1 continued on page 3.]
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-3-
Under existing legislation the Attorney General may
consider in licensing new manufacturers certain specific
criteria and "such other factors as may be relevant to
and consistent with the public interest." 21 U.S.C.A.
§506 (a) (5). Antitrust considerations are certainly among
those factors and should continue to be considered among
all relevant public interest factors. In that manner
specific antitrust abuses could be investigated if and
when they arise.
3. No real benefits are to be derived from increased
domestic or foreign competition in the manufacture
of finished narcotics.
A. The industry is small, with total annual volume
of about $13,000,000. Codeine is the principal product,
accounting for over 90 percent of volume. It is sold
principally to formulators of prescription drugs and
cough preparations, ultimately appearing in such pain-
relieving (analgesic) compounds as Empirin Compound with codeine
and such cough preparations (antitussives) as Robitussin
and Cheracol. Amounts are also sold to hospitals, pharma-
cists and physicians. It is estimated that about 30 percent
of the bulk codeine is now used in cough preparations and
70 percent in analgesics. Far smaller amounts of morphine
Footnote 1, continued from page 2]
Cavers cites Schechter Poultry Co. V. U.S.
495. Price Control: Pricing
Nixon Presidential Library
Standards, 2-3. Office of Temporary Controls,
affical
-4-
and medicinal opium are manufactured, as well as other less-
known narcotics. Based on the last annual report of the
Bureau of Narcotics and prices taken from the Drug Prices
Red Book, the size of the industry for 1966 was as follows:
Codeine
31,400 kg*
at
$360/kg
$11,300,000
Morphine
691
350
241,850
Med. Opium
3,976
50
198,800
Ethylmorphine
262
420
110,040
Hydocodone
486
750
364,500
Papaverine**
14,046
80
1,120,000
$13,335,190
*(The average figure for 1960-67 is lower, 25,575 kg,
and the figure was 22,257 for 1967. 1966 figures
were used because 1967 not available for some drugs.)
** (The papaverine shown is principally synthetically
produced by firms other than those licensed to extract
opium and only small amounts are extracted from opium.)
B. The industry faces competition from synthetic
substitutes, and is only part of a larger market. Increasingly,
synthetic drugs can be and are substituted for opium
derivatives in their medical uses. The opium derivative
manufacturers supply only a part, and a diminishing part,
of the relevant market for analgesics and cough preparations.
A striking example of the competition from synthetics
is the case of pethidine (Demerol), an effective substitute
for morphine. Introduced in the 1940's, pethidine has
grown in use from 1,320 kg in 1945 to 12,884 kg in 1967,
nearly a tenfold increase, at the expense of morphine.
The use of morphine now is only about one-fifth of what it
was immediately following World War II. Even in the 1960's,
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-5-
long after the introduction of Demerol, the use of pethidine
continues to grow from year to year, while sales of
morphine further dwindle.
Codeine also faces strong competition from synthetics
in both its analgesic and antitussive end uses.
In cough syrups, the principal synthetic is "dextro-
methorphan," manufactured under patent by Hoffman-LaRoche
and found in such preparations as Vicks "Formula 44."
The recommended single dosage of the codeine and dextro-
methorphan syrups is approximately the same, about 10-15
milligrams. Therefore, relative production figures for the
two substances are an indication of market share.
Dextromethorphan has been on the market about five years,
and marketing personnel in the industry estimate that its
consumption has risen from perhaps 10,000 kg in 1964
to 25,000 kg in 1968. Since the total use of codeine in
2/
cough syrup is estimated at only about 10,000 kg for 1968,
dextromethorphan appears to now have over two-thirds of
that market and has accounted for all of the growth in
the market since its introduction.
Codeine's synthetic competitors for analgesic use are
Lilly's Darvon and Sterling's Talwin. The common dosage
form of Darvon contains one grain of its effective ingredient,
2. Use of codeine in exempted preparations, i.e., cough
syrups, was 8,084 kg in 1967, according to BNDD figures.
Reproduced at the Richard Nixon Presidential Library
-6-
propoxyphene hydrochloride. The comparable dosage of
codeine is one-half grain. It is estimated that 60,000
3/
kg of propoxyphene hydrochloride was used for Darvon in
1968, compared with approximately 20,000 kg of codeine used
for all analgesics. Since one kilogram of codeine does
the work of two kilograms of the synthetic, in terms of
dosage units sold Darvon has a greater market share than
codeine by a ratio of about three-to-two (i.e., one and
one-half times as many Darvon doses are sold).
Talwin is manufactured by Sterling Drug Company. For
1968 its sales are estimated at $8,000,000 to $10,000,000.
The common dosage is one-half grain of the analgesic in-
gredient, which is directly comparable to codeine. About
1,500 kg of Talwin's analgesic ingredient were used in
1968. Although these figures alone would portray Talwin
as a minor factor in the market, a new 50 milligram tablet
has recently been approved by FDA (all previous sales
have been in injectible form) and trade publications estimate
that 1969 sales for Talwin will be in the area of $40,000,000,
indicating the use of 5,000 to 7,000 kg of the analgesic
ingredient, or roughly one-quarter to one-third the amount
of codeine used for analgesics.
3. Drug publications indicate a dollar volume of $60,000,000
for Darvon, which is sold in capsules containing 65
mg of propoxyphene hydrochloride, for $7.00 a hundred.
This is the basis for the 60,000 kg figure.
Reproduced at the Richard Nixon Presidential Library
-7-
Taken together, Darvon and Talwin can reasonably be
expected to account for more than twice the market share
of codeine in the prescription analgesics in 1969.
A major factor in the market growth of the competitive
synthetics is that, unlike codeine, they may be advertised
and promoted. Dextromethorphan cough syrups are promoted
directly to the public, and Darvon and Talwin (being
prescription drugs) are promoted to doctors. For many
years the Bureau of Narcotics has prohibited promotion
of codeine and other narcotic preparations. (Memorandum
of Commissioner of Narcotics, November 12, 1946.) Federal
policy has been to discourage the use of the opium deriva-
tives; and it has been determined that intense promotion
and price competition would not further that policy.
C. The industry is stable in size. Additional manu-
facturers or importers will simply redivide the existing
market. The competition from synthetics and the public
interest factors prohibiting promotion of its products,
are two strong factors that keep the industry stable in
size. Any growth has been due primarily to increases in
population and the availability of medical care. As noted,
the use of morphine is sharply down over the last 20
years. The use of medicinal opium is at best holding its
own. Average use of codeine for the period 1946-53 was
20,120 kg per year; while from 1960-67 the average figure
Reproduced at the Richard Nixon Presidential Library
-8-
was 25,575 kg. This is an average annual increase of only
2%, over the 14 years separating the midpoints of the two
periods of comparison.
Because of high fixed costs, the market will only
support a small number of manufacturers economically.
If the number becomes too large, and certainly if there
were unlimited supplies of imported finished narcotics,
one or more of the presently licensed manufacturers would
probably be forced to leave the market. Further, economic
pressure to cut costs, would make the important security
measures that now require substantial outlays of both
capital and operating funds more and more difficult to
maintain. Finally, new applicants for licenses would in
all likelihood be limited to firms with a special interest,
since no others would be attracted to a small, tightly
regulated industry with little growth prospect. Specifically,
only drug companies that now purchase large amounts of bulk
codeine could be expected to apply. The antitrust problems
resulting from their vertical integration and distribution
of codeine to their competitors could be far more serious
than any potential problems under the present system.
Notwithstanding that the total industry has not grown
appreciably, there have been significant shifts in the
market shares of the three manufacturers during the past
30 years. Manufacturing quota figures published by the
Reproduced at the Richard Nixon Presidential Library
-9-
Bureau of Narcotics and Dangerous Drugs are not broken
down by company, but the Bureau's files contain information
necessary to determine the relative market shares over the
years. Changes in market share result not only from
purchasers changing suppliers, but also from the success
or failure of particular end product lines and the
impact of federal regulation. In addition, the intro-
duction of a new end product by one of the principal
customers can create demand for bulk narcotics of precise
specifications, which the existing supplier may not produce.
D. Prices charged by the industry have been stable
for 20 to 30 years despite inflation. Based on industry-
wide price information, found in the Drug Topics Red Book
and elsewhere, prices for the major finished narcotics,
codeine, morphine and medicinal opium, have remained more
or less level since the end of World War II and have in-
creased only in the order of 10% since as long ago as
1933. The price of crude opium fluctuates widely, and
manufacturers have not been aided by a general reduction
in the cost of raw material, in holding the price line
during this period. It has been made possible by increased
efficiency and absorption of large increases in labor and
capital costs. In terms of the general purchasing power
4. When dihydrocodeinone was banned from use in cough
preparations some years ago, its use declined and with
it the sales of its manufacturers.
Reproduced at the Richard Nixon Presidential Library
-10-
of the dollar, the price of finished narcotics sold by
the industry today is perhaps half of the World War II
price.
E. Even if prices of bulk narcotics could be reduced,
the consumer would not benefit. The value of the narcotic
component represents a small part of the retail price of
prescription drugs and cough preparations. Any reduction
in the price of finished narcotics would benefit only the
other drug firms and pharmacists who formulate and retail
the end products, and would not be passed on to the public.
A clear example of this is the cough preparation
Robitussin. Marketing personnel in the industry surveyed
drugstores selected at random in eight U.S. cities and
found that the retail price of the 4-ounce size varied
from $1.49 to $1.50. The cost to the formulator of the
5/
codeine contained in each 4-ounce bottle is only 9.2 cents.
The ratio of the cost of the codeine to the price of the
cough syrup therefore varies between 3.7% and 6.1%. Even
a substantial reduction of 25% in the cost of the codeine
would make only a 2.3-cent difference in the formulator's
costs. By no stretch of the imagination will this be
passed on to the public, since the prices at retail
vary by over $1.00 from store to store and are influenced
not by the cost of codeine but by other factors, such as
5. Each bottle contains one grain of codeine per fluid
ounce, at 2.3 cents per grain.
Reproduced at the Richard Nixon Presidential Library
-11-
distribution costs and markup, that are of far greater
magnitude. Robitussin is typical of the cough preparations
in this regard.
The ratio of the cost of codeine to the total retail
price of analgesic compounds averages approximately the
same as the ratio for cough preparations. However, dif-
ferent dosage units are available among analgesics, ranging
from one-fourt grain to one grain. The stronger the dosage,
the greater the relative cost of the codeine; but the codeine
cost is very rarely above 10% of the total, and is as low
as 2% in some compounds. The price variations among
different pharmacists are narrower with analgesics than
with cough syrups, but prices at retail are still deter-
mined independently of the cost of codeine. For example,
the typical retail price of 12 tablets of the one-eighth
grain dosage of Burroughs-Wellcome's empirin compound with
codeine is about $1.80, the same as the price of the one-
fourth grain dosage, notwithstanding that one has double
the amount of codeine. The retail price of the same
number of tablets of the one grain dosage costs only $2.00,
and contains eight times the codeine of the $1.80 prescription.
Other compounds show a different pattern, equally
independent of the cost of codeine. The one-eighth grain
dosage of Robins' phenaphen with codeine has a typical
price of $1.60 for 12 capsules, while the one grain dosage
Reproduced at the Richard Nixon Presidential Library
-12-
typically sells for $2.60. The difference in retail
price is $1.00, but the difference in the cost of codeine
is only 22.5 cents.
4. Conclusion
It follows from the above that any weakening of the
system of control is too great a price to pay for economic
benefits which are theoretical at best in the present
situation.
Reproduced at the Richard Nixon Presidential Library
PROPOSED OMNIBUS DRUG LEGISLATION
The Department of Justice has prepared a draft bill,
entitled the Controlled Dangerous Substances Act of 1969,
which would codify and revise all Federal laws regulating
narcotics and dangerous drugs. The proposed bill unfor-
tunately would weaken some of the safeguards that now
prevent the diversion of narcotics from the legal trade
into illicit channels.
The Existing Law
Federal statutes now absolutely prohibit the
importation into the United States (for other than
scientific purposes only) of any narcotic drugs, in-
cluding such opium derivatives as morphine and codeine,
with the single exception that crude opium (and coca
leaves, although they are not relevant to this discus-
sion) can be imported under strict licensing controls
for medical and scientific use. The statutes also pro-
vide for a system of licensing US manufacture of usable
derivatives from the imported crude materials. Thus,
narcotics on the US market are all domestically manu-
factured.
Reproduced at the Richard Nixon Presidential Library
- 2 -
Supervision of the importation and manufacture of
narcotics is now in the hands of the Attorney General,
through the Bureau of Narcotics and Dangerous Drugs, as
the result of a 1968 reorganization that transferred
those functions from the Treasury Department.
Manufacture of useful derivatives from opium is
conducted under provisions of the Narcotics Manufacturing
Act of 1960 requiring that licenses be issued only to the
"smallest number of establishments which will produce
an adequate and uninterrupted supply of narcotic drugs
for medical and scientific purposes, consistent
with the public interest." Other criteria for granting
a manufacturing license are set forth in the statute,
including due consideration of the applicant's education,
moral character and reputation, the applicant's past drug
manufacturing experience and the quality of his products,
his technical competence and the existence in his establish-
ment of adequate safeguards against diversion of narcotics
into other than legitimate channels. In the words of the
Senate Committee Report on the 1960 Act:
Considering the importance of exercising
close control of the production of these
potentially dangerous drugs, it is the
intention that the manufacture thereof
be restricted not only to persons having
the requisite technical competence, drug-
manufacturing experience, and safeguards
Reproduced at the Richard Nixón Presidential Library
- 3 -
against diversion, but also to the
smallest number of establishments
that will produce an adequate and
continuous supply of narcotic drugs
for medical and scientific purposes.
The existing system of controlling importation and
manufacture has worked. There have been no known inci-
dents of diversion of narcotic drugs during the legitimate
import or manufacturing stages. This is primarily due to
the thoroughness of inspection and regulation that is
possible with only a small number of establishments in-
volved in the traffic, as well as the elaborate and costly
security precautions taken by the licensees themselves.
Department of Justice Proposals
The Department of Justice proposals would weaken
the present system of control in at least two respects
-- first, by opening the door to importation of finished
narcotic drugs, and second, by creating the possibility
of an increase in the number of licensed manufacturers.
Importation. Whereas existing law forbids any
importation of finished narcotic drugs, the new proposals
would permit importation of narcotic drugs under regula-
tions issued by the Attorney General. There is no point
in making these changes unless it is contemplated that
the power will be used and such importation permitted.
Reproduced at the Richard Nixon Presidential Library
- 4 -
The security risks of expanded importation are clear.
While crude opium, for example, is a relatively bulky
substance, its morphine and codeine derivatives are
concentrated, extremely valuable and far more subject
to diversion enroute. Only limited security measures
could be taken to protect them prior to their arrival
at customs warehouses in this country. While crude
opium arrives in a very few shipments originating at
only two sources (the governments of Turkey and India,
the two producing countries), private shipments would
be many and would emanate from multiple sources abroad
in response to the newly created demand in the United
States.
If importation of finished narcotic drugs were
permitted, the initial point of vulnerability to theft
and diversion would be moved back up the line and could
occur even before the drugs entered the U. S. For
example, it would be much more difficult to protect
morphine concentrates from diversion in the import trade
than it is to protect bulky or crude opium. Competition
for the new market here could spur an increase in the
production of finished narcotics abroad, and much of
the resulting production could eventually find its way
into the illicit trade. To prevent that happening, the
Reproduced at the Richard Nixon Presidential Library
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U.S. would have to rely on greatly improved smuggling
control and increased diligence of other countries'
enforcement and security measures.
The proposed laws are directly opposed to our
longtime policy of seeking limitation on the inter-
national production and manufacture of narcotics,
evidenced by our State Department's recent expenditures
to help reduce opium production in Turkey, and our
participation in programs of the U. N. and other inter-
national agencies.
Manufacture. The new proposals would establish
an additional criterion which the Attorney General must
consider in licensing manufacturing establishments.
Instead of issuing licenses to the "smallest number"
of establishments that can supply the demand, as under
the present law, the Attorney General would be required
to issue licenses to a number of establishments "small
enough" to avoid diversion while supplying demand for
the finished narcotics "at reasonable prices." By intro-
ducing price considerations into the determination, the
new proposals would force a compromise between economic
and security considerations which can only weaken the
security and control features of the present law.
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Besides, the proposed law contemplates a poorly
conceived price control device at best. It contains
no standards whatsoever for determining what prices
are reasonable or no method of judicial review under
which a manufacturer could test his contention that
the standards had not been complied with. Excessive
price reductions with respect to these drugs could put
pressure on costs and on the ability of a manufacturer
to provide maximum security for his products.
The weakening of security which could result from
an increase in a number of manufacturers could not be
offset by any significant and meaningful economic gains.
This is so because the industry is small with an annual
volume of less than $15 million and remains at that size
because the products are not promoted or advertised.
There is no public interest behind increasing this volume
through price reductions, and furthermore reductions in
the cost of finished narcotic drugs would have little,
if any, significance on the costs of the drugs and
medicines which the consumer buys. An increase in the
number of manufacturers in this small industry of more
or less finite size would only serve to divide the limited
production among a greater number.
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Conclusion
The present system operated under the present law
works well for narcotic drugs. It should not be changed
solely for the purpose of bringing the law more into
line with doctrinaire anti trust concepts in the face
of the clear probability that more harm to the public
interest would be accomplished than good.
Reproduced at the Richard Nixon Presidential Library