DEA Opens Hearing on Cannabis Federal Schedule III Status

ARLINGTON – The Drug Enforcement Administration began hearings Monday on a proposal to reclassify Cannabis from Schedule I to Schedule III under the Controlled Substances Act (CSA), a proceeding officials and advocates on both sides describe as among the most expected in the history of federal drug policy.

The hearing is scheduled to run through July 15, with a recess from July 3 to July 6 for the Independence Day holiday. It addresses what remains after an April order from Acting Attorney General Todd Blanche placed FDA-approved Cannabis drug products and state-licensed medical Cannabis into Schedule III, leaving recreational Cannabis classified alongside heroin. That order followed a December 2025 executive order from President Trump directing the attorney general to complete the rescheduling rulemaking the DEA first proposed in May 2024.

Since the agency itself proposed the rule, the DEA serves as its proponent in the hearing, which means only parties opposed to reclassification were granted standing to testify. Seven groups, including Smart Approaches to Marijuana (SAM) and the National Drug & Alcohol Screening Association, were selected to participate, while the DEA’s own witnesses include a pain medicine physician and an FDA official describing the science behind the agency’s recommendation.

That structure has drawn objections from reform organizations shut out of direct participation. NORML, which has represented Cannabis consumers for more than fifty years, was denied standing after DEA Administrator Terrance Cole determined the group did not meet the legal definition of an “interested person.” NORML counsel Joseph Bondy called the decision a risk to the completeness of the hearing record. The National Cannabis Industry Association (NCIA) raised similar concerns, while some advocates have suggested the narrower format could speed a resolution given the existing body of supportive scientific evidence.

DEA Chief Administrative Law Judge Derek Julius has also ruled the proceedings will not be livestreamed or televised, meaning the public must attend in person to observe. Marijuana Moment and several members of Congress have petitioned the agency to reconsider.

A rule placing Cannabis fully in Schedule III would not legalize adult-use Cannabis nationally, but it would lift Section 280E of the federal tax code, which bars businesses trafficking in Schedule I or II substances from deducting ordinary expenses. For MSOs currently absorbing some of the highest effective tax rates of any legal industry, that change alone could materially alter cash flow.

History argues against expecting a fast resolution. A comparable DEA scheduling hearing in the 1980s ended with a judge recommending reclassification, only for the agency to reject that finding, a decision the D.C. Circuit later upheld. The full arc from hearing to court ruling took close to a decade.

For an industry seeking federal recognition, the Arlington proceeding marks measurable progress without resolution, for now. With reform advocates absent from the witness list, the outcome will be argued largely between the government and its opponents rather than tested against the full range of public input. How the DEA and its administrative law judge weigh that record over the next two weeks will likely set the terms for how Congress, regulators, and capital markets treat federal Cannabis reform for the remainder of the year.

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