Two Months Out: Continuing Developments After Challenges to Rescheduling Order are Ongoing

Since the Monday, May 4, 2026, filing of the Smart Approaches to Marijuana, Inc. v. Department of Justice petition challenging the legality of the Department of Justice’s (“DOJ”) order rescheduling medical marijuana to Schedule III(the “Rescheduling Order”), two more petitions have similarly challenged the validity of the order.

First, on Friday May 22, 2026, the states of Nebraska, Indiana, and Louisiana filed a joint petition for review of the Rescheduling Order. Filed in the U.S. Court of Appeals for the District of Columbia Circuit, the petition asks the court to declare the DOJ’s order unlawful on the bases that it:

(i) violates the Administrative Procedure Act (“APA”) “because it was improperly promulgated and was otherwise procedurally improper;”

(ii) “exceeds or is inconsistent with pertinent authority, including the Controlled Substances Act… and the Single Convention on Narcotic Drugs;” and

(iii) “is arbitrary, capricious, an abuse of discretion, and not in accordance with law.”

One week later, on Friday, May 29, the State of Louisiana requested its dismissal as a party to the motion. The court granted this request, dismissing Louisiana as a party, but petitioners Indiana and Nebraska remain parties to the proceedings.

Second, on Thursday, May 28, 2026, a coalition consisting of a substance abuse treatment provider, two physicians, a marijuana industry victim advocacy organization, and MMJ International Holdings, Inc. and its subsidiaries petitioned for review of the Rescheduling Order. The petitioners generally allege that the order violated the Administrative Procedure Act and the Controlled Substances Act (“CSA”) by bypassing required administrative procedures, infringed their constitutional rights, and, in MMJ’s case, created an unlawful competitive advantage for state-licensed marijuana businesses over federally compliant pharmaceutical developers.

All challenges against the Rescheduling Order have been consolidated into one proceeding.

DEA Administrative Hearing on Broader Rescheduling Begins Today

Separate from the pending judicial challenges to the Rescheduling Order, the DEA begins a formal administrative hearing today (Monday, June 29, 2026) to consider whether all marijuana should be transferred from Schedule I to Schedule III under the CSA. The hearing stems from the Department’s May 2024 notice of proposed rulemaking but follows the Acting Attorney General’s April 2026 withdrawal of the prior hearing process and issuance of a new notice of hearing designed to restart the administrative record. The hearing is scheduled to run from Monday, June 29 through no later than Wednesday, July 15, 2026, before DEA Chief Administrative Law Judge (“ALJ”) Derek C. Julius. Although several organizations requested that the hearing be livestreamed or otherwise made available for remote public viewing, ALJ Julius ordered, “The hearing will not be televised, livestreamed, or broadcasted in any way.” Members of the public wishing to observe the proceedings must, therefore, attend in person.

Unlike the Rescheduling Order—which immediately rescheduled FDA-approved marijuana products and marijuana regulated under state medical marijuana programs—the administrative hearing concerns whether broader categories of marijuana, including adult-use marijuana, should likewise be placed in Schedule III. Designated participants include several organizations and state governments opposed to broader rescheduling, including Smart Approaches to Marijuana (SAM), the National Drug & Alcohol Screening Association, the Tennessee Bureau of Investigation, and the States of Nebraska, Idaho, Indiana, and Louisiana, among others.

Following the presentation of evidence and expert testimony, the ALJ is expected to issue findings and a recommended decision for consideration by the DEA Administrator. Although the hearing represents a significant milestone in the federal rescheduling process, it is not expected to produce an immediate final rule, and any ultimate agency action will likely face additional judicial review.

Early Agency Responses Diverge

Since the rescheduling order, government agency and representative responses have trickled out for the public, showing both a need for further guidance and inconsistency where it is given.

Congress Urges Treasury and IRS to Act

On Thursday, May 28, 2026, seven members of the U.S. House of Representatives sent a letter to IRS Chief Executive Officer Frank Bisignano and Department of Treasury Secretary Scott Bessent requesting that the IRS issue “prompt guidance” for state cannabis businesses affected by the removal of section 280E tax penalties as a result of the Rescheduling Order. On Thursday, April 23, 2026, nearly one month prior to the letter’s publication, the IRS and Treasury published a joint statement announcing that tax guidance clarifying the DOJ’s rescheduling order was forthcoming. Acknowledging this announcement, the letter “urge[s] swift and clear action” and emphasizes the “vital” need for unambiguous guidance to “promote uniform compliance, reduce potential tax disputes, and support efficient tax administration.” The letter highlights two specific areas needing “unambiguous” guidance:

(1) “Businesses that operate state-issued cannabis licenses which cover both adult-use (recreational) and medicinal purposes. E.g., one store which sells both adult-use and medicinal cannabis;” and

(2) “Businesses that operate separate state-issued cannabis licenses for adult-use and medicinal purposes.”

US Army Affirms Cannabis Ban for Soldiers

On Thursday, May 14, 2026, the U.S. Army’s Directorate of Prevention, Resilience, and Readiness (DPRR) published an article titled “Breaking Down Cannabinoids: How They Compromise Readiness” to the U.S. Army’s website. In it, the authors reaffirm the Army’s prohibitionist stance on soldier’s use of “marijuana, hemp, and all cannabinoid-containing products—including CBD—regardless of how they are marketed or consumed,” even if permitted by state law, and reminds readers that soldiers who test positive for these prohibited substances violate the Uniform Code of Military Justice and will be subject to disciplinary action irrespective of the source of the cannabis, e.g. state-compliant, DEA-registered cannabis operator(s). This stance is consistent with rules put forth in Army Regulation 600-85.

DOT Affirms Prohibition on Marijuana Use for Employees

On Friday, May 15, 2026, the Department of Transportation (“DOT”) Office of Drug and Alcohol Policy & Compliance published guidance concerning employee drug testing for marijuana post-rescheduling in an article titled “DOT Rule 49 CFR Part 40 Section 40.137 Q&A.” It states, “[T]here is no instance when the [Medical Review Officer] could verify a laboratory-confirmed marijuana positive drug test result as ‘negative’ when an employee claims the positive was caused by a State licensed marijuana product.” The DOT further clarified that state-dispensed medical marijuana remains unacceptable for DOT-regulated employees because marijuana is not an FDA-approved drug that may be prescribed under federal law. Accordingly, despite the Rescheduling Order, state medical marijuana cards, physician recommendations, and similar authorizations do not qualify as a “legitimate medical explanation” for a positive drug test under DOT regulations.

DEA-Led Inspections of Medical Marijuana Registration Applicants Reported to Have Begun

Recent reporting indicates the DEA has begun onsite inspections for registration applicants. Advocacy group Mississippi Medical Marijuana Association (“3MA”) informed news outlet Marijuana Moment that two of the advocacy group’s members were recently visited by DEA representatives for inspections related to their previously completed applications to register with the agency. Members of 3MA identified the following documents requested during DEA visits:

• documentation on any license transfers/ownership changes since the license was issued
• any communication to/from regulators regarding fines, violations, etc.
• list of all owners of the license, their contact information, SSN, and any other businesses that the owners have interest in, regardless of medical marijuana affiliation
• narrative of the business history (how the business was started, what motivated owners to start the business)
• list of ALL products in inventory (must provide a complete list of inventory to DEA every 2 years)
• list of all vendors from which purchases are made
• description of ordering process
• narrative of how the dispensary determines what products to buy
• narrative of the patient dispensary process (intake, purchasing, tracking)
• METRC purchase history
• narrative of how sales records are stored
• training documents
• documentation of all employee records
• complete security plan, including the names/version of hardware and software used within the dispensary
• a sign must be displayed outside of the dispensary stating that the facility is under 24-hour surveillance

ATF to Update Guidance Following Supreme Court Decision Bolstered by Rescheduling

On Friday, June 19, 2026, the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”) posted an announcement on X stating that it will be providing additional guidance soon in response to the Supreme Court’s decision in United States v. Hemani, which held that automatically stripping an individual of their right to own a firearm for the mere use of marijuana “a few times a week” without further inquiry is inconsistent with the Second Amendment. In the Supreme Court’s opinion, which was unanimously in favor of Ali Hemani, federal actions including the Rescheduling Order issued after the Court’s oral arguments had concluded “undercut” the government’s argument that individuals “who now regularly use marijuana are categorically and unusually dangerous.” The ruling follows a notice of proposed rulemaking issued by the ATF on May 8, which proposed changing the language of its form 4473 (Firearms Transaction Record), used to determine whether an individual is legally prohibited from receiving a firearm, to read: “I am not an unlawful user of, or addicted to, marijuana or any depressant, stimulant, narcotic drug, or any other controlled substance. (Warning: You can be an unlawful user under federal law, even if your possession is legal under state law. Federal law does not permit the use or possession of marijuana for recreational purposes.)” No timeline was provided for when ATF guidance was to be expected.

Trulieve Announces Uplist to New York Stock Exchange

Trulieve, a Florida-based multistate cannabis operator, uplisted to the New York Stock Exchange (“NYSE”) and began trading on Wednesday, June 10, 2026. This move makes Trulieve the first cannabis company to uplist to the NYSE. Notably, prior to the uplist, Trulieve operated in both medical and adult-use markets, including markets that extend beyond the scope of the activities authorized under the Rescheduling Order. In a June 2026 investor presentation detailing the transition and uplist, Trulieve reported reorganizing its operations to “[create] clear separation between Trulieve medical only operations and… mixed medical and adult use operations,” the latter of which are governed by agreements between Trulieve and third party investor-controlled “Harvest” to facilitate listing its stock on the NYSE. Trulieve further reported “register[ing] 100% of state licensed medical marijuana facilities with Drug Enforcement Agency.” According to Trulieve, the mixed-use markets under Harvest’s purview are completely controlled by “an independent third-party investor,” subject to regulatory approval of transfer of the business to Harvest. Despite maintaining no operational control in Harvest-controlled markets, Trulieve does have 90% economic interest in these markets. This restructuring was completed on Wednesday, June 3, 2026, with Trulieve’s listing on the NYSE completed shortly thereafter. The details of how this transition meets post-rescheduling legal requirements of the NYSE is unknown. Whether the uplisting will be affected if the Rescheduling Order is vacated or otherwise modified also remains to be seen.

Although the Rescheduling Order has already begun reshaping federal policy toward medical marijuana, litigation challenging the order, the ongoing DEA administrative hearing, and expected agency guidance from multiple federal regulators demonstrate that the legal landscape remains in flux. Cannabis businesses should continue to monitor these developments closely.

Frantz Ward cannabis attorneys Mia Garcia, Jean Smith-Gonnell, Tom Haren, Jim Ickes, and Keenan Jones are ready to answer any questions you may have about marijuana rescheduling, how it impacts your business, and how to navigate any regulatory changes. Special thanks to Summer Associate Diana Rosales for her research and drafting assistance on this client update.

This post is for general information and does not constitute legal or tax advice. If you have questions about how these recent rescheduling developments affect your business, please do not hesitate to reach out to one of the members of the Frantz Ward Cannabis Law and Policy team.