The Drug Enforcement Administration has filed an opposition to rescheduling opponents' motion to reopen the ongoing marijuana hearing, rejecting calls for additional testimony and document discovery tied to a recent federal watchdog report.
Opponents of the Trump administration's proposal to move cannabis from Schedule I to Schedule III had sought to introduce new evidence after a Government Accountability Office report identified "gaps" in how federal agencies evaluate controlled substances for scheduling decisions. The DEA argues the report does not warrant reopening proceedings that have been underway for months.
The dispute marks the latest procedural battle in the high-stakes administrative hearing that will ultimately determine whether marijuana gets rescheduled. The Department of Health and Human Services recommended the shift to Schedule III in August 2023, but opponents including Smart Approaches to Marijuana have challenged the scientific basis for the move.
The Watchdog Report
The GAO report, released in recent weeks, examined the federal government's scheduling evaluation process and found inconsistencies in how agencies assess drugs for placement under the Controlled Substances Act. Critics of rescheduling seized on the findings as evidence the cannabis review may have been flawed.
But the DEA maintains the report does not reveal any deficiencies specific to the marijuana evaluation. The agency's filing argues that allowing new rounds of testimony and discovery at this stage would unnecessarily delay proceedings that have already generated thousands of pages of evidence and expert testimony.
Administrative Law Judge John Mulrooney has yet to rule on the motion. His eventual recommendation will go to the DEA Administrator for a final decision on whether to implement the schedule change.
Industry Impact
The outcome carries massive implications for cannabis businesses. Schedule III status would allow state-licensed operators to claim standard business tax deductions under Section 280E of the tax code, potentially saving the industry hundreds of millions of dollars annually. Companies currently cannot deduct ordinary expenses like payroll and rent because marijuana remains federally illegal.
Rescheduling would also ease some research restrictions and could influence banking access, though it would not legalize marijuana or resolve the fundamental conflict between state and federal law. The plant would remain a controlled substance requiring DEA oversight.
Major multi-state operators have been preparing for the potential tax benefits, with some companies projecting effective tax rate drops from over 70% to the mid-20% range. But smaller operators worry rescheduling could trigger new federal regulations that favor large, well-capitalized firms.
What Happens Next
The administrative hearing process has no set timeline for completion. Judge Mulrooney must review all submitted evidence and testimony before issuing his recommendation, which the DEA Administrator can accept, reject, or modify.
Even after a final DEA decision, the change would face a mandatory public comment period and potential legal challenges. Some advocates worry the Trump administration could reverse course entirely, though the process has continued without major disruption since the transition.
The hearing has drawn participation from medical researchers, law enforcement groups, patient advocates, and industry representatives. Both sides have submitted extensive scientific evidence on marijuana's abuse potential, medical value, and public health effects.
This article is based on original reporting by www.marijuanamoment.net.
