On June 29, 2026, one of the most consequential hearings in the history of US cannabis policy, the crucial DEA Administrative Law Judge (ALJ) hearing that could determine whether adult-use cannabis joins state-licensed medical cannabis on Schedule III of the Controlled Substances Act, begins proceedings.
The hearing, set to take place in Arlington, Virginia and run until July 15, will address ‘whether the remainder of marijuana, as defined in the CSA, should be transferred from its current place on Schedule I of the list of controlled substances to Schedule III.’
Six weeks have passed since the April order reclassified state-licensed medical cannabis and FDA-approved cannabis drug products under Schedule III. In that time, Trulieve became the first US cannabis company to list on a major American exchange, Glass House Brands has applied to follow onto the NYSE, the DEA has opened a registration process for state-licensed operators, and a bipartisan group of senators filed a new iteration of the SAFE Banking Act. The Food and Drug Administration (FDA), by contrast, has been relatively quiet.
Jonathan Havens, a former FDA regulator and partner at Saul Ewing who has advised cannabis clients for more than a decade, told Business of Cannabis: “I would say the activity has definitely been more on the DEA, DOJ side of the house than the FDA. FDA is doing less time-sensitive work than DEA is doing right now.”
But, he is clear that this is not because there is nothing for the FDA to do ‘vis-à-vis the final order’, but because of how the process has been bifurcated. The April order created relative clarity on the FDA-approved drug products side. The complexity and unanswered questions sit largely on the state-regulated side.
What has changed since April
The clearest commercial consequence of rescheduling so far is capital markets access. As we reported last week, Trulieve listed on the NYSE on 10 June, becoming the first US ‘plant-touching’ cannabis company to list on a major American exchange, but only after fully deconsolidating its adult-use operations.
Glass House Brands has since announced plans to follow in its footsteps, while another dozen or so companies are preparing to uplist, but are waiting for the outcome of next week’s ALJ hearing.
On the regulatory side, the DEA opened a registration process initially limited to dispensaries, subsequently extended to growers and processors. That process has generated significant interest and significant confusion in equal measure.
States are responding very differently, Havens explained: “You have certain regulators out there like California, and I commend them, who are actively engaged with licensees and saying let’s see how we can bifurcate medical and adult-use licences so that you can take advantage of these registration opportunities.
“And then you have other states who are saying, ‘we’re dual use, we’re not going to issue separate licences… We don’t know what to do, so we can’t do much to help you right now.”‘
What hasn’t changed
Meanwhile, for pharmaceutical drug developers seeking FDA approval, Havens suggests that the FDA is likely continuing stakeholder discussions and considering whether new guidance is necessary, but noted that ‘the FDA’s drug approval requirements don’t change just because we’re talking about cannabis as opposed to opioids or cancer therapeutics’.
What it does change, however, is the path to conducting the research necessary for these approvals to be possible.
The Schedule I designation before April’s order made it exceptionally difficult to generate the clinical data the FDA requires. Epidiolex, currently the only FDA-approved cannabis-derived medicine, sourced its clinical trial material from the United Kingdom because obtaining compliant source material in the United States was so difficult.
The Medical Marijuana and Cannabidiol Research Expansion Act, signed during the Biden administration, was intended to solve this issue, but Havens questions whether it has met those goals.
“I was one of the people who was enthusiastic about it, but when you drill down, you kind of wonder whether this made it easier or harder to study.”
Questions around whether state-licensed growers can now supply FDA-supervised research programmes, and how the agency treats botanical products versus synthetically derived cannabis compounds, remain open.
“It’s not always been the case that the FDA would say, sure, you can research cannabis from this grower that’s licensed by the state of Illinois or Maryland or New Jersey. While I think a lot of us would like to say post the final order, it’s very easy now to develop a drug product, there are still a number of challenges, less so perhaps than there were pre-April, but there are still a number of challenges.”
For example, the FDA has been reluctant to sanction state-licensed growers as clinical research suppliers because of federal illegality concerns. Havens suggests this could now begin to gradually ease, ‘particularly as you get more DEA registrations.’
Crucially, Havens believes that ‘further reforms from the DEA or Congress’ may be necessary to meaningfully shift the legislative and regulatory and architectural research access issues.
Another key point of contention for cannabis operators that may yet need input from the DEA or Congress to fully solve is banking.
On June 25, a bipartisan group of senators refiled the SAFE Banking Act, which has repeatedly failed to pass into law despite years of attempts.
“I have not heard of any big banks that have said, post this rescheduling, this is enough for us to get off the sidelines,” Havens said. The operators that have historically banked cannabis businesses have been state and local credit unions, and that has not yet changed.
“There are still obstructions along the path, open access to capital, bankruptcy protection, intellectual property protection, real estate landlords.”
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More unanswered questions
For operators holding dual-use licences, the only permitted structure in states such as Maryland, following Trulieve’s bifurcation template, is not an option.
“Is part of the business Schedule III and part of it Schedule I? Can it all be Schedule III? How do you deal with handling of money and being paid from those businesses?” The wall, as Havens put it, has not come down.
This dynamic is a core example of the remaining tension between state and federal regulation. States have been regulating cannabis markets for up to 15 years, unlike the federal agencies.
“I don’t think the feds are in a position to be the active day-to-day regulators of the state cannabis markets. The states at this point know much more about cannabis operations and markets than I would say the federal regulators do, which is to be expected given how long states have been leading the cannabis charge.”
He compared the challenge now facing federal regulators to the early years of regulating tobacco, when the FDA ‘created a new era of regulatory law out of whole cloth’, a steep learning curve that may now once again be necessary.
The hearing and what it can actually change
The ALJ Julius’s ruling, whenever it arrives, is non-binding, and the DEA and Justice Department are free to follow it or ignore it.
What’s more, moving adult-use cannabis to Schedule III is a much more complex and nuanced proposition than April’s medical final order.
“Adult use is a lot different than medical for a number of different reasons. Not the least of which is the Controlled Substances Act. The FDA and DEA deal with medical products, not with adult-use products.”
If Julius recommends extending Schedule III to adult-use, the more likely route forward is a full notice-and-comment rulemaking, slower than the mechanism used in April, but more resilient to legal challenge.
Whatever follows will be contested, Havens concedes: “This will be challenged by somebody. As we’ve seen at every turn.”
Despite growing protests from industry groups like NORML that not one pro-rescheduling or pro-cannabis party has been called as a witness for the ALJ hearing, it appears unlikely this will change before it commences.
That said, Havens remained optimistic about the current momentum: “I’d like to be transparent, I didn’t see this final order, at least in the framework it was presented in, coming. Dusting off the Single Convention and the provision under the Controlled Substances Act to do this, it was an out-of-the-box idea. I think it still is an out-of-the-box idea, and that’s what’s needed in this space.”
“Cannabis has been regulated in the same way officially since the 1970s,’ he said. ‘It’s like a giant ship with a rusty rudder. It is very difficult to move that ship in any other direction. And we are starting to move it.”
Next week’s hearing, what is ultimately recommended, and whether the DEA acts on it, will determine whether the ship keeps moving, and how far.
