The Anti-Marijuana Gravy Train Is on Life Support

Background

The federal fight over marijuana's legal status just passed a milestone. On August 17, the parties in the DEA's rescheduling hearing filed their final briefs. The evidentiary record is now closed. Chief Administrative Law Judge Derek Julius will review that record and issue a recommendation. The final decision belongs to DEA Administrator Terrance Cole.

Some context. In August 2023, the Department of Health and Human Services finished a ten-month scientific review. It recommended moving marijuana from Schedule I to Schedule III. In April 2026, Attorney General Todd Blanche issued an order that immediately reclassified state-licensed medical cannabis and FDA-approved cannabis products to Schedule III. A separate proceeding was opened to consider the broader move covering all marijuana. That is the hearing that just concluded, with testimony running from June 29 through July 15 at DEA headquarters in Arlington, Virginia.

It was a strange proceeding by design. The DEA, the agency that defended Schedule I for five decades, served as the proponent of rescheduling. The Administrator invited only opponents as designated participants: Smart Approaches to Marijuana, the National Drug and Alcohol Screening Association, the Tennessee Bureau of Investigation, DUID Victim Voices, physician Kenneth Finn, pharmacist Phillip Drum, and the states of Idaho, Indiana and Nebraska.

Nine designated opponents. One job: prove marijuana still belongs in Schedule I. The final briefs show how badly that went.

The Government's Brief

DEA's filing, first reported by Marijuana Moment, is blunt. The statute requires three findings to keep a drug in Schedule I: a high potential for abuse, no currently accepted medical use, and no accepted safety for use under medical supervision. DEA told the tribunal the second and third findings no longer hold. More than 30,000 practitioners now treat over six million patients across 43 U.S. jurisdictions. The agency argued it owes significant deference to the HHS scientific review. It argued marijuana's abuse and dependency profile aligns with Schedule III substances, not Schedule I or Schedule II. And it closed by asking Judge Julius to recommend the transfer without delay.

That last part matters. The proponent agency is not slow-walking its own proceeding. It asked its own tribunal to hurry.

The Case Prohibition Made Against Itself

Schedule I has one load-bearing wall: no currently accepted medical use. Remove that wall and the entire structure collapses. The opposition removed it themselves, on the record, under oath.

Start with SAM. Smart Approaches to Marijuana arrived with its hand-picked addiction expert, Dr. Bertha Madras. On the stand, she testified that scientific evidence exists for marijuana's efficacy in neuropathic pain patients. She called that science weak. The qualifier does not rescue the position. Weak evidence of efficacy is still evidence of efficacy. You cannot argue a substance has no accepted medical use while your own expert concedes documented efficacy for a recognized pain condition. SAM's witness handed the government its central element.

Dr. Kenneth Finn, a pain management physician among the designated opponents, went further. He admitted he previously recommended marijuana to his own pain patients. He testified he currently believes a therapeutic benefit likely exists. His stated concern is dosing and quality control. Read that carefully. Concerns about dosing and quality control are not Schedule I arguments. They are arguments for regulation. Regulation is precisely what Schedule III provides. The witness invited to bury rescheduling described its rationale instead.

DEA's brief pressed the credibility point even harder. It argued several opposition witnesses deserve no evidentiary weight at all. It alleged some ignored the judge's sequestration instructions by reading transcripts of earlier testimony before taking the stand, rendering their testimony, in the agency's words, "irreparably tainted." A party that needs to cheat the sequestration rules to keep its story straight is not a party confident in its evidence.

The pattern held across the hearing. When Judge Julius pressed a Tennessee Bureau of Investigation witness to define the deregulation she blamed for rising trafficking, she said she meant rescheduling, as documented in Vicente LLP's hearing recap. That is not analysis. That is a conclusion in search of a definition. NDASA, the drug-testing industry's trade association, warned the tribunal that rescheduling would end federal authority to test for marijuana. Strip away the framing and the argument is simple: an industry that sells drug tests fears losing customers.

And that is the tell. Prohibition is not just a policy. It is a business. Testing revenue, compliance consulting, grant-funded enforcement programs, speaking fees for professional alarmists. All of it depends on marijuana staying exactly where it has been since 1970. The briefs read less like scientific advocacy and more like an industry defending its invoice. The Controlled Substances Act asks about abuse potential, medical use, and safety. It does not ask who loses revenue when the science moves on.

A Retreat to Procedure

SAM's own brief confirms the collapse. Filed jointly with Idaho, Indiana and Nebraska, it barely contests the science at all. Its lead argument is that the government used the wrong test. Prior rescheduling petitions were denied under a five-part medical-use standard, and the current review used a two-part standard the brief calls newly invented. Set aside that the Justice Department's Office of Legal Counsel found the old five-part test impermissibly narrow back in 2024, and that the two-part framework has since been applied to other substances. Notice what the argument concedes. When a party stops arguing the evidence and starts arguing the yardstick, it is telling you what the evidence shows.

That brief was not written to persuade Judge Julius. It was written for the D.C. Circuit. It is an appellate insurance policy, drafted by parties who watched their own experts concede the merits in a hearing room in Arlington.

What Comes Next

Judge Julius will issue a recommended decision on his own timeline. No deadline binds him, though the record is closed and the proponent has asked for speed. After the recommendation is served, parties have 20 days to file exceptions. The full record then moves to Administrator Cole for a final order. Litigation is already pending. Challenges to the April order have been consolidated in a federal appeals court, and the procedural arguments previewed in these briefs will resurface there. Nothing is finished. But the record is closed, and it is lopsided. The gravy train has not derailed yet. It is on life support, and its own doctors just testified against it.

Market Implications

For cannabis equities, the variable is timing. The April order already delivered Schedule III treatment, and the associated 280E tax relief, to the state-licensed medical channel. The broader rule at issue in this hearing would extend that treatment across adult-use, which is where the majority of multi-state operator revenue sits. Companies like Trulieve $TRLV Curaleaf $CURLF and GreenThumb $GTBIF could re-rate on treasury guidance. A recommendation could plausibly land this fall. If it does, it would arrive just as year-end institutional catalysts converge on the sector, from index reviews to tax-planning flows. The operators with major-exchange listings and clean U.S. domicile stand first in line for institutional capital when the federal overhang lifts. Watch the DEA docket. The next document it produces may be the most consequential in the industry's history.