What just happened in the marijuana rescheduling hearing On September 28, 2026, three participants in the ALJ marijuana rescheduling hearing filed a “Joint Motion for Leave to File Supplemental Briefing, for Admission of Supplemental Exhibit, and for Stay of Proceedings.” The motion was submitted by DUID Victim Voices, Kenneth Finn, M.D., and the National Drug and Alcohol Association (collectively, the “Interested Parties”). The motion asks the ALJ to “allow the admission of the U.S. Government Accountability Office’s (“GAO”) report entitled “Drug Scheduling: While DEA Decisions Have Aligned with Recent HHS Recommendations, Both Need Comprehensive Policies” (the GAO Report), published on September 23, 2026, into the record. . .”. It also “requests an additional briefing period on the contents of the GAO Report and how it impacts these proceedings, if at all.” Finally, the Interested Parties requested a brief stay while those issues are resolved. On September 29, the ALJ granted the stay. The order does not grant the request to admit the GAO Report or authorize supplemental briefing. Instead, it stays the proceeding while the ALJ considers those requests. Based on where we are in the ALJ hearing, the practical effect of the stay could be significant. We were at the end of this process, awaiting the ALJ’s certified recommendation to DEA as to the Schedule 3 rule. Instead, the Interested Parties asked the ALJ to “'hold its recommended decision and certification of the record’ if and until briefing is completed on the GAO Report.” The ALJ found sufficient merit to stay the proceeding while the motion is resolved. DEA has been ordered to respond no later than October 13, 2026. The remaining interested parties (those that participated in the ALJ hearing) may also file responses by that deadline. All of this means that a proceeding that appeared to be approaching its conclusion is now on hold. How long it remains on hold, and whether the GAO Report ultimately has any impact on the ALJ's recommendation, are entirely different questions. What is the GAO Report? On September 23, 2026, GAO published the GAO Report. I have not yet had time to read all 31 pages, but I have reviewed GAO’s summary and recommendations. The report basically concludes that both DEA and FDA have gaps in their policies and procedures governing controlled substance scheduling. GAO found that DEA lacks comprehensive policies identifying roles, responsibilities, and procedures for scheduling decisions. It similarly found that FDA lacks policies specifying how staff should conduct evaluations and develop scheduling recommendations. For DEA, GAO recommended that DEA “develop policies and procedures that identify DEA’s roles, responsibilities, and procedures for evaluating and scheduling substances through administrative scheduling, new drug application scheduling, temporary scheduling, and international treaty scheduling under relevant statutes.” For FDA, GAO recommended that FDA “develop policies and procedures that Center for Drug Evaluation and Research staff are to use to when completing eight-factor evaluations and developing scheduling recommendations, including the criteria and process for determining a substance's "potential for abuse," including abuse potential relative to other substances.” GAO made a third recommendation concerning the FDA and NIH memorandum of understanding governing drug scheduling recommendations, but I won’t get into that right now. One important point is that the GAO Report does not conclude that marijuana should remain in Schedule I or that Schedule II is more appropriate than Schedule III. Nor does it conclude that HHA or DEA's prior scheduling recommendations were incorrect. In fact, GAO found that DEA's final scheduling decisions aligned with HHS recommendations in all 84 applicable cases it reviewed for which DEA had published a final rule. The report identifies deficiencies in agency procedures. Whether those deficiencies have any meaningful bearing on the marijuana rescheduling proceeding remains to be seen. Why this ALJ proceeding matters so much Before discussing what the stay could mean, it is important to understand why I believe the outcome of this particular proceeding is so consequential for the cannabis industry. There are currently two separate paths that could result in marijuana being moved to Schedule III. One is the medical marijuana final order, which established a separate regulatory framework for certain state-licensed medical marijuana activities. The other is the ALJ proceeding, which concerns the broader rescheduling of marijuana under the Controlled Substances Act. The separate medical marijuana Schedule III final order is already being challenged in the D.C. Circuit. As I have discussed many times before, I believe that order faces serious legal vulnerabilities and that it is more likely than not that the D.C. Circuit will overturn it. My concerns center on the statutory authority relied upon to issue the order and the procedural approach used to establish its regulatory framework. That leaves the ALJ proceeding as what I consider the industry's most important remaining opportunity to achieve Schedule III. There is an important distinction between the two approaches. A successful outcome in the ALJ rescheduling effort would not create or preserve the special regulatory framework created by the medical marijuana final order. State-licensed operators would not receive the same federal regulatory treatment contemplated under that separate framework merely because marijuana was moved to Schedule III. But broader rescheduling would still accomplish something enormously important. The immediate and primary benefit would be Section 280E relief. That alone makes this proceeding critically important, even though Schedule III would not resolve the numerous other federal legal problems facing state-licensed cannabis operators. As I believe the industry is facing the possibility that the medical marijuana order will be overturned, which leaves the ALJ proceeding as the remaining path to obtaining the tax relief associated with Schedule III. Which brings us back to the stay. What the stay could mean I have two main takeaways from this ruling, although I want to emphasize that the stay could ultimately mean very little. First, the ALJ recommendation is going to be delayed. We had been expecting the ALJ certified recommendation any day. Now, the proceeding is stayed pending resolution of the motion, and DEA has until October 13 to respond. If the ALJ denies the motion after reviewing the responses, the proceeding could resume relatively quickly. If supplemental briefing is allowed, however, the delay could extend well beyond October. Depending on the briefing schedule, I would not be surprised if the certified recommendation were pushed until after the midterm elections. That timing could matter. We do not know what the political landscape will look like after the midterms. Significant Republican losses could change the Administration's political priorities, its relationship with Congress, and its influence over agency actions. There is also the broader question of how much attention Trump will devote to marijuana rescheduling once the final midterm elections of his presidency are behind him. Will marijuana rescheduling remain something the Administration cares enough about to actively pursue? Or will DEA largely be left to run the process on its own? We saw what happened when the Biden Administration left DEA to control the administrative process. The result of that strategy is what lead us to where we are now with the ALJ. Of course, the midterms could have absolutely no effect on this proceeding. DEA may still have a mandate to publish a final rule moving marijuana into schedule III. And there is no reason to assume that the GAO will necessarily influence the ALJ's recommendation. My concern is that an extended delay introduces additional uncertainty into a process that has already experienced more than its share. This leads me to my second takeaway. I do not view the stay as a particularly encouraging development for Schedule III through the ALJ hearing process. But I also recognize that I may be reading too much into what is, at least for now, a procedural order. The ALJ has not admitted the GAO Report into evidence. He has not authorized supplemental briefing. He has not indicated that the report undermines HHS's recommendation or DEA’s proposed order. He has simply stayed the proceeding while deciding whether the report should become part of the record. In fact, the ALJ's explanation for the stay is relatively straightforward. The stay may simply reflect nothing more than an effort to preserve the integrity of the administrative record and avoid future procedural and judicial complications. The ALJ could deny the motion, lift the stay and issue the same recommendation he was already preparing to issue. Even if he allows supplemental briefing, there is no reason to assume that the additional submissions will change his ultimate recommendation. The GAO Report itself may also prove largely irrelevant to the substantive scheduling determination. Its focus is on agency policies and procedures, not on whether marijuana satisfies the statutory criteria for Schedule III. Nevertheless, given the history of this proceeding, I find it difficult to dismiss the development entirely. As I have discussed before (here and here), the structure of this hearing has concerned me from the beginning. Schedule III proponents, other than DEA, were absent from the hearing, while opponents were given the opportunity to build a record against rescheduling. For all of the industry experts who thought this was a foregone conclusion because the industry paid $11.5 million for rescheduling, I counter once again with a simple point: procedure matters. As I have said time and time again, I question why the Administration chose to proceed with the ALJ hearing at all if it believed there was another legally defensible path to achieving its stated objective. If the result was predetermined, why expose the process to additional procedural challenges? And why pursue a separate medical marijuana framework under 21 U.S.C. § 811(d)(1)--an approach I have been discussing for years--rather than focus on completing broader rescheduling? Instead, the Attorney General used § 811(d)(1) to create the separate medical marijuana framework, which is now being challenged in the D.C. Circuit, while DEA proceeded with an ALJ hearing in which the participating Interested Parties were opponents of rescheduling. In my view, those decisions created unnecessary procedural vulnerabilities in the Administration's efforts to move marijuana to Schedule III. Recently, I became more optimistic that the ALJ hearing would ultimately produce a Schedule III recommendation. I had discussions about the ALJ being a young up-and-comer who was unlikely to go against the direction of the President and, by extension, DEA. Under that theory, the anticipated outcome was either a recommendation for Schedule III or a recommendation simply concluding that marijuana should not remain in Schedule I. To be fair, that still could be the outcome. And nothing in this stay order necessarily suggests otherwise. Nevertheless, the fact that the proceeding has been interrupted by a report addressing agency scheduling procedures, rather than marijuana's medical efficacy or potential for abuse, raises additional questions about how and when this process will conclude. The Schedule II problem Schedule II remains the alternative outcome that concerns me most. As I discussed during the hearing, the evidence presented made Schedule I difficult to reconcile with marijuana's accepted medical use. But that does not mean the ALJ must recommend Schedule III. Schedule II remains a legally available and realistic alternative. For state-legal operators, Schedule II would be particularly damaging from a tax perspective because it would not eliminate Section 280E. This is precisely why I believe the ALJ proceeding is so important. If the separate medical marijuana final order is overturned and the ALJ recommends Schedule II, the industry's anticipated path to Schedule III becomes considerably more complicated. If the ALJ recommends Schedule II, but DEA nevertheless moves forward with Schedule III, opponents will use the ALJ's recommendation as part of a subsequent challenge to DEA's final order. That would not automatically invalidate a Schedule III determination. The ALJ's recommendation is not binding on DEA, and DEA has, and may, reach a different conclusion. Nevertheless, a Schedule II recommendation creates yet another issue for DEA to address and defend during judicial review. That is the scenario I am concerned about. None of those outcomes is inevitable. But the possibility illustrates why the procedural decisions being made now deserve attention. Is the Trump Administration still paying attention? Finally, this stay order raises a broader question about the Trump Administration's continued attention to marijuana rescheduling. There are plenty of other issues competing for the Administration's attention. And after the midterms, will the President still prioritize marijuana rescheduling? I do not assume that DEA, left entirely to its own institutional preferences, will aggressively push this process toward Schedule III. Nor would I assume that Administrator Terrance Cole necessarily shares the Administration's stated policy objective. If the Administration wants broader marijuana rescheduling to succeed, its continued attention to the administrative process matters. Several months ago, I wrote that I could envision a scenario in which the industry finds itself six months down the road with the medical marijuana Schedule III order rejected by the D.C. Circuit and the separate ALJ rescheduling proceeding ending with a recommendation for Schedule II. That scenario remains possible. Conclusion I want to end by returning to an important distinction. This stay order does not establish that the ALJ is against Schedule III, that the GAO Report will influence his recommendation, or that the Administration's rescheduling efforts are headed toward failure. It could mean absolutely nothing beyond a few additional weeks of procedural delay. My concern is not that the stay itself is particularly damaging. It is that the industry has two potential paths to Schedule III, one of which I believe faces serious problems in the D.C. Circuit, while the other continues to encounter procedural uncertainty. And if the ALJ proceeding is ultimately the industry's remaining opportunity to obtain meaningful federal tax relief through Schedule III, every additional complication deserves attention. The post "Marijuana" Rescheduling Delayed, Again. What It Could Mean, and What Comes Next appeared first on Harris Sliwoski LLP.
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