June 17, 2026
A drug-testing trade group and a pharmaceutical company have asked a federal appeals court to pause the government's marijuana rescheduling, the most serious legal threat yet to the move that promised operators relief from punishing federal taxes. The petitioners filed their joint motion for a stay in the U.S. Court of Appeals for the D.C. Circuit on June 9, 2026. For licensed operators counting on Schedule III, the filing is a reminder that the marijuana rescheduling lawsuit 2026 is far from settled.
The National Drug and Alcohol Screening Association (NDASA), MMJ International Holdings, and other petitioners filed a motion for a stay pending review in the D.C. Circuit, case number 26-1136. A stay would freeze the rescheduling order while the court weighs whether it was lawful.
The petitioners make three core arguments. First, they say the order violates the Controlled Substances Act. Second, they argue it ignores binding D.C. Circuit precedent, pointing to the court's 1977 ruling in NORML v. DEA. Third, they contend the government skipped required steps, including formal notice-and-comment rulemaking and a recommendation from the Department of Health and Human Services, and that the Acting Attorney General lacked authority to act as he did.
The challengers also filed supporting declarations. One exhibit, submitted by a Harvard Medical School professor and former White House drug-policy official, warns that loosening federal controls poses what the declaration calls "unacceptably high" public-health risks, particularly for adolescents.
The order under challenge dates to April 24, 2026, when Acting Attorney General Todd Blanche placed FDA-approved marijuana products and marijuana sold under a qualifying state medical license into Schedule III. Cannabis outside those categories, including adult-use products in recreational states, remains in Schedule I.
The stakes are concrete. Schedule I status is what triggers Section 280E of the tax code, which bars cannabis businesses from deducting ordinary expenses and produces effective tax rates that can exceed 70%. Moving to Schedule III would lift 280E for covered businesses. A stay would keep that relief on hold.
Two things remain unsettled even for businesses that appear to qualify. The first is whether 280E relief is secure or could be clawed back if the order is later vacated. The second is the timing of DEA registration and other compliance mechanics that a Schedule III framework would require. Until the court rules, neither is locked in.
The stay motion is not the only proceeding that matters. The DEA has scheduled a separate hearing on broader rescheduling that begins June 29, 2026, at 9 a.m. ET at its hearing facility in Arlington, Virginia. That hearing is expected to run through mid-July, with a recess in early July. The agency has said it will notify selected participants on June 22.
So operators face parallel tracks: a litigation track in the D.C. Circuit that could stay the April order, and an administrative track at the DEA that could expand or refine rescheduling. The court has not set an oral-argument date on the stay motion, so the near-term signal to watch is whether the judges grant or deny the freeze.
A related development worth noting: three states have moved to join the rescheduling fight, a sign that the litigation is drawing in governments as well as industry groups.
Until there is a ruling, the conservative posture is to avoid betting the business on either outcome.
Keep 280E reserves intact. Operators who qualify under the April order may have a basis to change their tax treatment, but a pending stay motion means that position carries litigation risk. Document the legal basis for any position taken, and keep the supporting analysis on file. Coordinate DEA-registration planning so the business is ready to move quickly if Schedule III holds, without committing resources that are wasted if it does not. And because the tax and registration questions here are genuinely unsettled, talk to your counsel and tax advisor before changing filings.
Three dates anchor the next month. June 22 is when the DEA says it will notify hearing participants. June 29 is when the DEA's broader rescheduling hearing begins. And the D.C. Circuit could rule on the stay motion at any point; a decision either way will tell operators whether the April rescheduling order stays in force while the case proceeds. This post will be updated as the court acts.
This article is for general information and is not legal advice. Consult qualified counsel about your specific situation.
A drug-testing trade group and a pharmaceutical company have asked a federal appeals court to pause the government's marijuana rescheduling, the most serious legal threat yet to the move that promised operators relief from punishing federal taxes. The petitioners filed their joint motion for a stay in the U.S. Court of Appeals for the D.C. Circuit on June 9, 2026. For licensed operators counting on Schedule III, the filing is a reminder that the marijuana rescheduling lawsuit 2026 is far from settled.
The National Drug and Alcohol Screening Association (NDASA), MMJ International Holdings, and other petitioners filed a motion for a stay pending review in the D.C. Circuit, case number 26-1136. A stay would freeze the rescheduling order while the court weighs whether it was lawful.
The petitioners make three core arguments. First, they say the order violates the Controlled Substances Act. Second, they argue it ignores binding D.C. Circuit precedent, pointing to the court's 1977 ruling in NORML v. DEA. Third, they contend the government skipped required steps, including formal notice-and-comment rulemaking and a recommendation from the Department of Health and Human Services, and that the Acting Attorney General lacked authority to act as he did.
The challengers also filed supporting declarations. One exhibit, submitted by a Harvard Medical School professor and former White House drug-policy official, warns that loosening federal controls poses what the declaration calls "unacceptably high" public-health risks, particularly for adolescents.
The order under challenge dates to April 24, 2026, when Acting Attorney General Todd Blanche placed FDA-approved marijuana products and marijuana sold under a qualifying state medical license into Schedule III. Cannabis outside those categories, including adult-use products in recreational states, remains in Schedule I.
The stakes are concrete. Schedule I status is what triggers Section 280E of the tax code, which bars cannabis businesses from deducting ordinary expenses and produces effective tax rates that can exceed 70%. Moving to Schedule III would lift 280E for covered businesses. A stay would keep that relief on hold.
Two things remain unsettled even for businesses that appear to qualify. The first is whether 280E relief is secure or could be clawed back if the order is later vacated. The second is the timing of DEA registration and other compliance mechanics that a Schedule III framework would require. Until the court rules, neither is locked in.
The stay motion is not the only proceeding that matters. The DEA has scheduled a separate hearing on broader rescheduling that begins June 29, 2026, at 9 a.m. ET at its hearing facility in Arlington, Virginia. That hearing is expected to run through mid-July, with a recess in early July. The agency has said it will notify selected participants on June 22.
So operators face parallel tracks: a litigation track in the D.C. Circuit that could stay the April order, and an administrative track at the DEA that could expand or refine rescheduling. The court has not set an oral-argument date on the stay motion, so the near-term signal to watch is whether the judges grant or deny the freeze.
A related development worth noting: three states have moved to join the rescheduling fight, a sign that the litigation is drawing in governments as well as industry groups.
Until there is a ruling, the conservative posture is to avoid betting the business on either outcome.
Keep 280E reserves intact. Operators who qualify under the April order may have a basis to change their tax treatment, but a pending stay motion means that position carries litigation risk. Document the legal basis for any position taken, and keep the supporting analysis on file. Coordinate DEA-registration planning so the business is ready to move quickly if Schedule III holds, without committing resources that are wasted if it does not. And because the tax and registration questions here are genuinely unsettled, talk to your counsel and tax advisor before changing filings.
Three dates anchor the next month. June 22 is when the DEA says it will notify hearing participants. June 29 is when the DEA's broader rescheduling hearing begins. And the D.C. Circuit could rule on the stay motion at any point; a decision either way will tell operators whether the April rescheduling order stays in force while the case proceeds. This post will be updated as the court acts.
This article is for general information and is not legal advice. Consult qualified counsel about your specific situation.
