High Time for a Change? Post–DEA Hearing, Broader Marijuana Rescheduling Questions Remain

Following the 2025 executive order on rescheduling medical marijuana, and subsequent rescheduling of certain medical marijuana from Schedule I to Schedule III, the Drug Enforcement Administration held an 11-day evidentiary hearing across June and July on the broader rescheduling proposal. With the hearing concluded and post-hearing briefs submitted, the parties await a recommended decision from the ALJ and the later final determination by the DEA administrator. 

On April 22, 2026, the US Drug Enforcement Administration issued a final rule rescheduling certain medical marijuana products from Schedule I to Schedule III of the Controlled Substances Act (CSA).

The rule, published in the Federal Register on April 28, applies to marijuana that is either included in a US Food and Drug Administration–approved drug product or subject to a state-issued license authorizing the manufacture, distribution, and/or dispensing of marijuana or marijuana-containing products for medical purposes. The final rule also establishes an expedited federal registration process for entities holding qualifying state medical marijuana licenses. 

The final rule did not resolve the broader question of whether marijuana generally should be transferred from Schedule I to Schedule III. On that front, DEA issued two separate Federal Register notices the same day as the final rule: one to initiate a new evidentiary hearing on a broader marijuana Schedule III proposal and another to terminate the prior administrative hearing initiated under the Biden administration.

DEA explained that restarting the hearing process was intended to implement President Trump’s December 2025 Executive Order 14370 on Increasing Medical Marijuana and Cannabidiol Research directing the attorney general to complete the Schedule III rulemaking as expeditiously as federal law permits.

That hearing has now concluded. From June 29 through July 15, DEA Chief Administrative Law Judge (ALJ) Derek C. Julius heard 11 days of testimony from the federal government and seven designated interested parties. The parties subsequently submitted post-hearing briefs. The government has asked the ALJ to recommend transfer of the remaining marijuana from Schedule I to Schedule III.

The ALJ’s recommended decision is still forthcoming but will not by itself determine marijuana’s final scheduling status; the DEA administrator will ultimately issue the agency’s final determination after an opportunity for the parties to take exceptions to the ALJ’s recommendation.

BACKGROUND

Since the CSA’s enactment in 1970, marijuana has been classified as a Schedule I controlled substance, a category reserved for substances with a high potential for abuse and no accepted medical use in the United States. As described in our prior As Prescribed post, the DEA previously initiated rescheduling efforts for marijuana under the Biden administration, which efforts eventually stalled.

The DEA’s latest action represented a clean break from the prior rescheduling effort and took a new approach: immediate rescheduling of certain medical marijuana products while pursuing broader rescheduling in accordance with EO 14370.

The order cited FDA’s finding of credible scientific support for marijuana use in treating pain, anorexia associated with certain medical conditions, and chemotherapy-induced nausea and vomiting, as well as the widespread use of marijuana under state medical programs.

MARIJUANA COVERED BY THE FINAL RULE

The April 2026 final rule covers marijuana as defined by the CSA, marijuana extracts, and delta-9-tetrahydrocannabinol and other marijuana-derived compounds falling outside the statutory definition of hemp, to the extent those substances are

• included in an FDA-approved drug product; or
• subject to a state-issued license authorizing the manufacture, distribution, and/or dispensing of marijuana or marijuana-containing products for medical purposes.

Products outside the covered medical categories remain subject to the applicable Schedule I restrictions. The separate, broader rescheduling proceeding discussed further below addresses whether the remaining marijuana covered by the CSA should also be transferred to Schedule III. Even if that proposal is finalized, marijuana would remain a federally controlled substance subject to applicable CSA requirements.

NEW PROCESS FOR STATE LICENSED ENTITIES UNDER THE FINAL RULE

The April final rule creates a new DEA registration pathway for entities holding qualifying state medical marijuana licenses to manufacture, distribute, and/or dispense marijuana for medical purposes. Applicants may submit their existing state credentials as proof of state-law authority to engage in medical marijuana activities.

DEA must grant registration unless it determines that registration would be inconsistent with the public-interest factors in 21 USC § 823 or US treaty obligations. A DEA registration may not exceed the scope of the underlying state license and will be automatically suspended if that license is suspended, revoked, or expires.

The framework is designed to rely heavily on existing state regulatory systems rather than duplicate them. DEA expressly recognized that state programs already impose controls addressing diversion, product safety, recordkeeping, inventory, and facility inspection.

Accordingly, federal reporting and recordkeeping requirements for state-licensed registrants are limited to those necessary to satisfy federal statutory and treaty obligations, and DEA is directed to accept state-required records and forms to the maximum extent permissible. Compliance with state requirements also may satisfy certain federal requirements relating to labeling, packaging, disposal, and physical security, subject to specified federal conditions.

Notably, manufacturers have additional treaty-compliance obligations that dispensers and distributors do not. The new rule requires registered manufacturers to establish a nominal crop-purchase price, permits DEA to purchase and resell the crop back to the manufacturer for the same price with an administrative fee, requires DEA access to stored crops pending that transaction, and requires manufacturer registrations to identify authorized cultivation area.

For applications submitted within the initial 60-day period, DEA must make every effort to process such applications within six months, and qualifying early applicants may continue operating under their state-issued licenses while their federal applications remain pending. DEA has also established a medical marijuana dispensary registration portal.

KEY TAKEAWAYS FROM THE BROADER RESCHEDULING HEARING

The hearing held in June and July addressed DEA’s broader proposal to reschedule the remaining marijuana from Schedule I to Schedule III.

Key insights from that hearing include the following:

• The government continues to support placing marijuana in Schedule III. FDA testified that marijuana has a currently accepted medical use (CAMU) for pain, certain forms of anorexia, and chemotherapy-associated nausea and vomiting and its abuse and dependence profile supports placement in Schedule III.
• The standard for CAMU was a central issue. HHS relied on a newer two-part test that considers widespread medical use under state-regulated programs together with credible scientific support. DOJ has concluded that this test is legally sufficient and binding on DEA.
• Opponents challenged the scientific basis for the change. Opponents argued that HHS reached a different result largely because it changed the medical-use test, while portions of the underlying evidence for pain, anorexia, and nausea remained mixed or inconclusive.
• Product variability emerged as a significant issue. FDA acknowledged that marijuana does not have a single consistent and reproducible chemical profile and that its CAMU analysis did not impose standardized composition requirements on marijuana available through state medical programs.
• Opponents also emphasized public-health and enforcement concerns. Testimony addressed impaired driving, mental health risks, diversion from state-licensed markets, illicit interstate distribution, and the potential effects of rescheduling on law enforcement resources.
• The hearing did not resolve the broader rescheduling question. The ALJ will issue a recommended decision after considering the evidentiary record and post-hearing briefs. The parties may then file exceptions, with the DEA administrator ultimately responsible for the final agency determination.

LOOKING AHEAD

The next major event will be Chief ALJ Julius’s recommended decision. After the recommendation issues, designated parties may file exceptions for consideration by the DEA administrator, who will ultimately determine whether the proposed broader Schedule III rule should become final.

HOW WE CAN HELP

If you have questions about how this development may affect your business, please contact your Morgan Lewis lawyer.