Medical Marijuana in Schedule III Survives Its First Major Challenge

On September 9th, the United States Court of Appeals for the District of Columbia denied a motion to stay filed by SAM, Inc. and the National Drug and Alcohol Screening Association, Inc. (collectively, “SAM”). The motion sought to stay (pause) the Attorney General’s final order placing state legal medical marijuana into Schedule III of the Controlled Substances Act (“CSA”). While this ruling merely maintains the status quo, it is still a significant victory for state legal medical marijuana operators.

This decision does not mean that medical marijuana will ultimately survive the litigation. What it does show, however, is that the Attorney General is likely to receive a fair hearing before the D.C. Circuit. Had the stay been granted, it would have been a devastating blow to the industry and almost certainly would have signaled defeat following a full hearing. The court’s decision, at least, suggests that it is taking the case seriously and considering the issues without prejudice.

Quick note on standing

Apparently, in an earlier blog post, I got the process backwards. I assumed the court would address standing first and then determine whether a stay was warranted. Instead, the court addressed the stay first, while standing will be addressed through the parties’ briefs.

Based on the court’s decision, this makes sense. Since the court denied the stay, there was no need to determine standing at this stage. Had the court granted the stay, standing likely would have needed to be addressed first and, given the outcome, presumably would have been established.

As I have discussed in several blog posts, but primarily in this one, I believe that standing is everything in this litigation. Despite the court’s denial of petitioners’ motion for a stay, I still believe that if petitioners are found to have standing, the Schedule III final order will ultimately be overturned. I hope I am wrong but based on a plain reading of 21 U.S.C. 811(d)(1) and some poor drafting in the final order, I do not see how the final order survives.

Motion to Intervene and Amicus Curiae

In its order, the court also denied the motion of two medical marijuana companies to intervene in the litigation. MedPharma Iowa, LLC and TriMountain Pure, LLC, through their attorney Shane Pennington, sought to intervene on the grounds that the Attorney General could not adequately represent the interests of businesses affected by the final order. They argued that medical marijuana operators should therefore have the opportunity to represent their own interests in the litigation.

The court ultimately denied the motion but is allowing the medical marijuana operators to participate as amici curiae. This is important because it will still allow the operators (i.e. Shane Pennington) to present their arguments for the court’s consideration.

The court also granted attorneys David Sergi, David Holland, Robert Hoban, and Tyson Daniel leave to participate as amici curiae.

What’s next in the litigation

The court set a 30-day deadline for the parties to submit proposed formats for briefing the cases. The court strongly urged SAM et al. (which includes SAM, the National Drug and Alcohol Screening Association, the states of Nebraska and Indiana, New Directions Addition Recovery Services, Elizabeth Stuyt, Cannabis Industry Victims Educating Litigators, MMJ International Inc., MJ BioPharma Cultivation Inc., MJ Biopharma Labs, Inc., and Kenneth Finn) to submit joint proposals, reminding the parties that “the court looks with extreme disfavor on repetitious submissions.”

The court further stated that it “will, where appropriate, require a joint brief of aligned parties with total words not to exceed the standard allotment for a single brief.” If Sam et al. believe separate briefs are necessary, they “must provide detailed justifications for any request to file separate briefs or to exceed in the aggregate the standard word allotment.”

After reviewing the parties’ proposed briefing formats, the court will set a briefing schedule. D.C. Circuit Rule 31 provides that SAM et al. must then file and serve their initial brief within 40 days. The Justice Department will then have 30 days to file its response brief. Finally, Sam et al. will then have 21 days to file and serve their reply brief.

Importantly, all of these timeframes remain subject to the court’s discretion. The court can expedite or extend the filing deadlines as it deems appropriate. Assuming no changes to these timelines and that the court issues a briefing schedule quickly, the timeline could look something like this.

1. October 9, 2026 – The parties submit their proposed briefing formats.
2. October 16, 2026 – The court issues its briefing schedule. This is, of course, an estimate since we do not know how long the court will take to issue the schedule.
3. November 25, 2026 – SAM et al.’s initial brief is due. (I checked, as of now the court is open on the day before Thanksgiving.)
4. December 24, 2026 – The Justice Department’s response brief is due. (The court currently appears to be open Christmas Eve, but closed last year on the 24. So, filing could be pushed to the 28th.)
5. January 14, 2027 – SAM et al.’s reply brief is due.

Typically, the final brief, which in this case would be SAM’s reply brief, will be due at least 45 days before oral argument. Assuming the timeline above, oral argument could occur around late February or early March 2027.

That means we may not know whether medical marijuana survives this challenge until at least March 2027. Assuming DEA sticks to its six-month goal for processing applications submitted during the early application period, those registrations could start being issued next month. Once DEA registrations are issued, the program becomes operational, making a reversal that much more disruptive. That is not to say the court would consider those practical consequences dispositive, but they are important realities.

What this means for state medical marijuana licensees

Because it appears the DEA registration program will become operational before the litigation concludes, licensed operators should be very careful about how they proceed and what language they include in their contracts. If the final order is overturned next year, any agreement involving interstate or international trade under the new framework may need to cease immediately upon the court issuing its order. If the final order survives, however, operators that begin operations quickly could secure a meaningful first mover advantage.

If you are an operator that submitted a DEA registration and would like guidance on how best to proceed, our international attorneys are here to help. Please do not hesitate to reach out for a free consultation.

For more on marijuana rescheduling and the DEA rulemaking process, please check out these recent posts:

• Medical Marijuana Schedule III Litigation: The D.C. Circuit’s First Major Test
• 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

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