DEA Marijuana Rescheduling: April Order, Hearing, and Lawsuits

Federal marijuana policy is now on two tracks. Under an April 22, 2026 order from the Justice Department, FDA-approved marijuana products and marijuana covered by a state medical marijuana license have already been moved from Schedule I to Schedule III of the Controlled Substances Act.¹ The broader question of whether to reschedule all marijuana, including adult-use cannabis, is the subject of a formal DEA hearing running June 29 through July 15, 2026, and the April order itself is being challenged in three consolidated lawsuits before the D.C. Circuit. The DEA marijuana rescheduling process is moving, but it is not finished, and much of what has happened so far is being litigated.

What the April 2026 Order Actually Did

On April 22, 2026, Acting Attorney General Todd Blanche signed an order placing FDA-approved marijuana products and state-licensed medical marijuana into Schedule III.¹ Instead of waiting for the full administrative hearing process, Blanche invoked 21 U.S.C. § 811(d)(1), which lets the Attorney General bypass standard scheduling procedures to fulfill U.S. obligations under the Single Convention on Narcotic Drugs. Blanche stated he was not required to rely on the August 2023 HHS recommendation to reschedule but chose to align his action with it.² The DEA published the final rule in the Federal Register on April 28, 2026.³

The order followed a December 18, 2025 executive order from President Trump directing the Attorney General to complete rescheduling “in the most expeditious manner in accordance with Federal law.”⁴ The scientific foundation was laid earlier: in August 2023, HHS formally recommended moving marijuana from Schedule I to Schedule III, finding that cannabis has a currently accepted medical use, a lower abuse potential than Schedule I and II drugs, and dependence liability that ranges from moderate/low physical to high psychological.⁵ The FDA’s underlying review cited credible scientific support for cannabis in treating anorexia, nausea and vomiting, and pain.

What Schedule III Does Not Change

Rescheduling is not legalization. Marijuana remains a federally controlled substance. Its manufacture, distribution, and possession are still regulated under the Controlled Substances Act, and recreational or adult-use cannabis remains on Schedule I. The order does not alter congressional appropriations protections that already bar the DOJ from using federal funds to prosecute state-legal medical marijuana activity.⁶

What Changes for Medical Cannabis Businesses

The most immediate real-world impact is tax. Under Internal Revenue Code Section 280E, businesses that traffic in Schedule I or II controlled substances cannot deduct ordinary business expenses such as wages, rent, and utilities on their federal returns. With medical marijuana now on Schedule III, state-licensed medical cannabis businesses are no longer subject to that restriction.⁷ Treasury transition rules make the relief effective for the full taxable year that includes the April 22, 2026 effective date, so calendar-year taxpayers can claim deductions retroactive to January 1, 2026. Owners of pass-through entities may also qualify for the Section 199A qualified business income deduction.⁸

Whether businesses can amend prior-year returns to recover previously disallowed deductions has not been resolved. The final rule encouraged Treasury to consider retroactive relief but did not guarantee it.⁷ Recreational operations are not eligible for any of this relief and remain subject to 280E in full. Mixed-use businesses selling both medical and recreational marijuana will need additional Treasury guidance, potentially involving apportionment of expenses between the two categories.⁸

On banking, the reclassification may make financial institutions more willing to serve cannabis clients, since much of their hesitation has centered on Schedule I status. On June 25, 2026, Senator Jeff Merkley and Representative Dave Joyce reintroduced the SAFE Banking Act, which would create a federal safe harbor for banks serving state-legal cannabis businesses and clarify that proceeds from those businesses are not considered proceeds from unlawful activity under anti-money laundering laws. The bill has passed the House multiple times before without becoming law.⁹

Research access should also loosen. Schedule III subjects marijuana to less burdensome DEA requirements than Schedule I, opening room for clinical investigation. Rescheduling alone will not, however, let researchers source high-THC products directly from state-legal businesses.⁶

The June–July 2026 Rescheduling Hearing

The broader question of whether to reschedule all marijuana is running through formal rulemaking under 21 U.S.C. § 811, which requires an on-the-record hearing.¹⁰ The DEA scheduled that hearing to begin June 29, 2026, and conclude by July 15, 2026, at the agency’s offices in Arlington, Virginia. Administrative Law Judge Derek Julius denied requests to livestream; the hearing is in-person only.¹¹

The participant list, published June 18, 2026, sparked immediate controversy: every approved participant opposes rescheduling. Smart Approaches to Marijuana (SAM) and the National Drug and Alcohol Screening Association are the two organizations set to testify.¹² No pro-reform organizations, whether industry groups or advocacy organizations, were permitted to participate, reversing the earlier 2024 proceedings where proponents had successfully argued they qualified as interested persons. The DEA has not publicly explained the shift.¹³

The DEA, as proponent of its own proposed rule, plans to call witnesses in support. Dr. Corey Burchman, a pain management physician, is set to testify about the clinical benefits of medical marijuana and his experience transitioning patients from opioids to cannabis. Dominic Chiapperino, Director of the Controlled Substance Staff at the FDA’s Center for Drug Evaluation and Research, will present the scientific findings behind the FDA’s Schedule III recommendation, including the eight-factor analysis.¹¹ SAM filed a prehearing statement arguing that marijuana meets the legal standard to remain on Schedule I, plans to call two expert witnesses, and has sought a subpoena for a DEA pharmacologist.¹⁴ Opponents are expected to argue the FDA improperly departed from a prior analytical test and to focus on alleged harms including links between cannabis use and psychosis, depression, and impaired cognitive functioning. SAM’s arguments are scheduled for July 6–7.

NORML formally protested its exclusion, with board chair Joseph A. Bondy calling Schedule III “at most, an interim correction” and arguing cannabis should be removed from the Controlled Substances Act entirely.¹²¹⁵ The National Cannabis Industry Association argued state-licensed businesses have a unique perspective that deserves representation.¹³

Lawsuits Challenging the April Order

Three petitions filed in the U.S. Court of Appeals for the D.C. Circuit have been consolidated into a single proceeding challenging the April 2026 rule.

Smart Approaches to Marijuana v. Department of Justice, filed May 4, 2026, by SAM and the National Drug and Alcohol Screening Association. The petition argues the rescheduling order violates the Administrative Procedure Act’s rulemaking requirements, exceeds authority under the Controlled Substances Act, and is arbitrary and capricious. It was signed by attorneys at Torridon Law PLCC, a firm where former U.S. Attorney General William Barr is a partner.¹⁶
A state challenge filed May 22, 2026, by the attorneys general of Nebraska and Indiana. Louisiana originally joined but was dismissed on May 29, 2026. The states make similar procedural arguments and add that the order exceeds authority under both the CSA and the Single Convention on Narcotic Drugs. The D.C. Circuit consolidated this challenge with the SAM petition on May 27, 2026.²
A coalition petition filed May 28, 2026, by a substance abuse treatment provider, two physicians, a marijuana-industry victim advocacy organization, and MMJ International Holdings and its subsidiaries. This group argues the order bypassed required administrative procedures, infringed constitutional rights, and created an unlawful competitive advantage for state-licensed marijuana businesses over federally compliant pharmaceutical developers.¹⁷

Separately, a House appropriations subcommittee voted in late May 2026 to block federal officials from further implementing the rescheduling, though the ultimate fate of that legislative provision is uncertain.¹⁶

The Treaty Question at the Core of the Litigation

A central legal fight is whether treaty-based authority actually supports moving marijuana to Schedule III. The United States is a party to the Single Convention on Narcotic Drugs of 1961, which requires parties to limit cannabis production, distribution, and possession to medical and scientific purposes.¹⁸ Section 811(d)(1) of the CSA lets the Attorney General schedule a drug as needed to carry out treaty obligations without going through normal procedures, and that is the authority Blanche used.²

Challengers point to NORML v. DEA, a 1977 D.C. Circuit decision holding that placing marijuana in Schedule I or II is “necessary as well as sufficient” to meet U.S. treaty obligations, and that placement in Schedule III, IV, or V would fail to satisfy several convention requirements, including those governing import/export permits, recordkeeping, and production quotas.¹⁹ That precedent is a core basis for the argument that the April order exceeds the Attorney General’s authority.

What Comes Next

After the July hearing concludes, the Administrative Law Judge will issue a recommended decision, and the DEA Administrator will make the final call on rescheduling all marijuana. That final determination will itself be subject to judicial review. In the meantime, the April order rescheduling medical marijuana remains in force while the D.C. Circuit weighs the consolidated challenges, and the appropriations rider that could block implementation is still working through Congress. State-licensed medical cannabis businesses can plan around Schedule III treatment for the 2026 tax year, but the durability of that treatment depends on how the courts rule.

1
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2
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3
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Moritz College of Law, Ohio State University. Federal Marijuana Rescheduling
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KMK Law. From Schedule I to III: A Partial Tax Reset for Cannabis Businesses
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ESAP LLC. Rescheduling Tax and Estate Planning for Marijuana
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American Bankers Association Banking Journal. ABA-Backed SAFE Banking Act Re-Introduced in Congress
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13
Harris Sliwoski. Law and Politics: Why Marijuana Rescheduling’s One-Sided Hearing Matters
14
Smart Approaches to Marijuana. SAM News
15
Law360. NORML Fights Exclusion From DEA Pot Rescheduling Hearing
16
Marijuana Moment. Marijuana Opponents File Lawsuit to Block Trump Administration’s Federal Rescheduling Move
17
Frantz Ward. Two Months Out: Continuing Developments After Challenges to Rescheduling Order Are Ongoing
18
United Nations Office on Drugs and Crime. Single Convention on Narcotic Drugs
19
Drug Enforcement Administration. Preliminary Note Regarding Treaty Considerations