While most attention has focused on the recently concluded marijuana rescheduling hearing, an equally significant legal battle has unfolded in the D.C. Circuit over the final rescheduling order (“Final Order”). Petitioners, the Department of Justice, newly intervening parties, and amici participants have exchanged a series of briefs over the past month. Those filings may ultimately determine whether the rescheduling effort survives judicial review.
At this stage, however, the court is not deciding whether moving marijuana to Schedule III was lawful. Instead, the parties are litigating several threshold issues. The court must resolve those questions before it can reach the merits. Most importantly, it must decide whether any petitioner has standing to challenge the Final Order, whether implementation of that order should be stayed while the litigation proceeds, and whether additional parties may intervene in support of rescheduling.
How the court answers these procedural questions may prove just as important as the merits of the Final Order.
(All briefs discussed can be found on PACER, D.C. Circuit Court of Appeals Docket #: 26-1136)
Standing comes first
As I have discussed previously, the fate of the Final Order may turn less on marijuana policy than on a fundamental question of administrative law: standing. Before the D.C. Circuit can consider whether the Department of Justice lawfully moved marijuana to Schedule III, it must determine whether any petitioner has suffered the type of concrete injury required to challenge the Final Order.
The Department of Justice argues that neither petitioner has standing. DOJ contends that the National Drug and Alcohol Screening Association (NDASA) relies on speculative predictions about employer behavior rather than concrete injury. It also argues that another petitioner, MMJ BioPharma, has failed to establish competitor standing or a cognizable injury. Finally, DOJ maintains that neither petitioner has shown an injury within the Controlled Substances Act’s “zone of interests.”
NDASA responds that its members would face immediate compliance costs upon rescheduling. They supplemented the record with additional declarations describing concrete injuries. MMJ likewise refined its competitor standing theory. It argues that the Final Order benefits state-regulated operators while diminishing the value of the traditional FDA and DEA pharmaceutical pathway. It argues that state-legal products from Trulieve Cannabis Corp., Cresco Labs Inc., Verano Holdings Corp., Green Thumb Industries Inc., and TerrAscend Corp. directly compete with MMJ’s pharmaceutical product.
I continue to believe NDASA is likely to establish standing. DOJ presented a very strong opening brief (surprisingly so), but NDASA substantially strengthened its position in reply. I remain less convinced that MMJ can establish standing on its own, although it also improved its argument in the reply. If NDASA establishes standing, however, MMJ’s standing becomes largely irrelevant because the court can proceed to the merits.
Whether Petitioners should receive a stay
If the petitioners establish standing, the court must next decide whether to stay the Final Order pending review. A stay is extraordinary relief, as it would freeze the Final Order (at least temporarily). It requires a likelihood of success on the merits, irreparable injury, minimal harm to others, and consistency with the public interest.
DOJ argues that the Acting Attorney General acted within the authority granted by 21 U.S.C. § 811(d)(1). It also argues that the petitioners’ alleged injuries remain speculative. NDASA and MMJ respond that they face present, unrecoverable economic harms. They also argue that the Final Order immediately changes both compliance obligations and the competitive landscape.
The parties also disagree about the public interest. DOJ argues that the Final Order should remain in effect while the litigation proceeds. The petitioners argue there is no public interest in allowing an allegedly unlawful agency action to take effect.
In my view, the petitioners’ strongest argument is not a legal one but a practical one. Marijuana has remained prohibited for more than 50 years. Preserving the status quo for a few additional months while the court reviews the Final Order’s legality is hardly an extraordinary burden.
What does § 811(d)(1) actually authorize?
Assuming the petitioners establish standing, the central statutory question is whether DOJ exceeded its authority under § 811(d)(1).
DOJ argues that the statute authorized the Attorney General to issue the Final Order without following the traditional scheduling procedures. It relies on NORML v. DEA and a 2024 Office of Legal Counsel opinion (cited to in the Attorney General’s “Questions Related to the Potential Rescheduling of Marijuana”) supporting rescheduling.
The petitioners disagree. They argue that § 811(d)(1) authorizes only an expedited scheduling determination, not an expedited process for adopting an entirely new regulatory framework.
That disagreement naturally leads to the Administrative Procedure Act (“APA”).
The APA question may be even more important
The petitioners argue that DOJ did far more than simply reschedule marijuana. According to their briefing, the Final Order also adopts substantive regulations needed to satisfy treaty obligations. They argue those regulations required notice-and-comment rulemaking under the APA and the CSA.
DOJ responds that treaty-based scheduling occurs by “order,” not by “rule.” It also argues that any problematic regulatory provisions are severable from the scheduling determination.
The petitioners reject that position. Using DOJ’s own words, they argue the regulations are indispensable to treaty compliance and therefore cannot be severed while leaving the scheduling decision intact.
Treaty obligations remain at the center of the case
Nearly every issue in the case traces back to a U.N. treaty known as the Single Convention on Narcotic Drugs. DOJ argues that § 811(d)(1) permits the Attorney General to place marijuana in Schedule III while imposing whatever restrictions are necessary to maintain treaty compliance.
The petitioners respond that DOJ has effectively conceded their point by acknowledging that rescheduling alone would not satisfy treaty obligations. If additional regulations are essential, they argue, those regulations require ordinary rulemaking procedures.
In my view, the more significant question is not whether state-legal medical marijuana may be placed in Schedule III. The better question is whether Congress intended § 811(d)(1) to authorize an entirely new regulatory framework for dozens of state medical marijuana programs and thousands of marijuana products.
Motions to intervene reflect the broader stakes
Two medical marijuana operators have moved to intervene in support of DOJ. They argue that the litigation directly affects their businesses and that DOJ is not equipped to adequately represent their commercial interests. The petitioners respond that DOJ is fully capable of defending its own Final Order. Although procedurally distinct, these motions underscore the litigation’s broader economic significance.
Looking ahead
This litigation is ultimately about administrative law as much as marijuana policy. Before the court reaches the merits, it must resolve standing, the stay request, and the motions to intervene. Because the petitioners argue that a stay is necessary to prevent ongoing harm while the case proceeds, the court is likely to address those threshold issues rather quickly. I expect a decision within the next week or two. The coming rulings will not decide whether DOJ ultimately acted lawfully. They will, however, provide the first meaningful indication of how the court views each side’s case. If the court grants both standing and a stay, I believe that will signal the end of state-legal medical marijuana in Schedule III.
For more on marijuana rescheduling and the DEA rulemaking process, please check out these recent posts:
- The Quietest Fight of DEA’s Life: Reflections on the Marijuana Rescheduling Hearing
- Law and Politics: Why Marijuana Rescheduling’s One-Sided Hearing Matters
- Would Cannabis Rescheduling Help Businesses in Unified Markets? Washington Weighs In
- The Motion to Stay DEA’s Schedule III Rule: Strong Enough to Stick?
- Standing Is Everything: Three States Join the Medical Marijuana Rescheduling Fight
- Medical Marijuana Rescheduling Q&A: Cutting Through the Noise
- A Calculated Bet: DEA Registration is Open, and the Clock is Ticking
- Marijuana Rescheduling and Income Tax
- The U.S. Opens Its Medical Marijuana Market to Global Trade (For Now); Broader Marijuana Rescheduling on Deck
The post Medical Marijuana Schedule III Litigation: The D.C. Circuit’s First Major Test appeared first on Harris Sliwoski LLP.
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