DEA Enforcement, Marijuana Rescheduling, and Hemp Reform. Your Webinar Questions Answered: Part 1

We recently hosted a webinar titled “DEA Enforcement in a Changing Cannabis Landscape, Rescheduling Hemp, and What Comes Next”. We had just one hour to cover topics that could easily fill several hours of discussion. Unsurprisingly, the chat was buzzing with questions, and we were unable to get to all of them.

This post addresses some of those unanswered questions and provides additional insight into the evolving federal cannabis landscape.

Before diving in, an important disclaimer. The answers below reflect my own views, interpretations, and understanding of the law. They do not necessarily represent the views of the other webinar panelists unless expressly noted.

We received so many questions that we are splitting our responses into multiple blog posts. Be sure to subscribe to the Canna Law Blog to receive updates when the next installment is published.

Is homegrown medical marijuana now Schedule III?

It depends on whether the home grow is specifically licensed under a state’s medical marijuana program. The Final Order placed “marijuana subject to a state medical marijuana license” into Schedule III. If a home grower holds a license under a state’s medical marijuana program, such as a caretaker license, the marijuana grown under that license qualifies as Schedule III marijuana.

However, marijuana grown under a state’s adult-use program, or even its medical program without a specific license, likely remains Schedule I marijuana. The critical distinction is whether the marijuana is subject to a qualifying state medical marijuana license.

Is homegrown medical marijuana now federally legal?

Potentially, but only under limited circumstances.

As explained above, a home grow must be licensed under a state’s medical marijuana program to qualify for Schedule III treatment under the Final Order. But Schedule III classification alone does not make the activity federally lawful. For a licensed home grow to operate lawfully under the Final Order’s framework, the licensee also needed to apply for DEA registration during the expedited application window that closed in June.

This distinction is important because rescheduling does not automatically bring state-licensed cannabis operators into compliance with federal law. Under the traditional Schedule III regulatory framework, state-legal cannabis operators generally cannot achieve federal compliance without making significant changes to their operations, including pursuing the applicable federal drug approval and clinical trial processes.

The Final Order created a separate pathway for state-licensed medical marijuana operators. However, only licensees that submitted applications during the 60-day expedited window are treated as lawfully operating under their state licenses while DEA reviews their registrations.

Operators that failed to apply, as well as those that submitted applications after the expedited window closed, remain in violation of federal law.

In other words, Schedule III status and federal legality are not the same thing.

How could the November 3 midterm elections affect Schedule III and cannabis reform?

We intentionally avoided this question during the webinar because our focus was on policy and enforcement rather than electoral politics. However, the midterms could have significant implications for cannabis reform, particularly the future of hemp.

I do not expect the election results to materially affect the ongoing rescheduling proceedings before the D.C. Circuit or the DEA administrative law judge. Those proceedings are part of the executive and judicial processes and are not directly controlled by Congress.

Hemp reform, however, is another story. Vince Sliwoski recently addressed this issue in his post, “Cannabis and the Midterm Elections”, which provides an excellent overview of what the election results could mean for broader cannabis reform.

My view is that even a substantial Democratic wave resulting in control of both the House and Senate would be unlikely to produce meaningful hemp reform before the new Congress convenes in January. That leaves the December 11 deadline as the immediate concern for hemp operators. At best, I believe Congress would extend the deadline through another continuing resolution rather than standalone legislation. I have heard March discussed as a possible extension date.

Even with Democrats controlling Congress, meaningful hemp reform would be far from guaranteed. Senate leadership could become a significant obstacle. If Senator Chuck Schumer remains the Democratic leader, I would not be surprised to see him prioritize his Cannabis Administration and Opportunity Act (“CAOA”), over more targeted hemp legislation. We have seen this playbook before. Senator Schumer previously declined to advance narrower cannabis banking reform while pursuing the broader CAOA, which ultimately failed to pass.

I see little reason to assume hemp reform would receive different treatment. Schumer has demonstrated that proposing ambitious cannabis legislation can generate political support and fundraising opportunities even when that legislation has little realistic chance of passing. In my view, that creates an incentive to prioritize sweeping proposals over narrower reforms that might actually become law.

What happens if Republicans retain control of the Senate? I believe the prospects for hemp reform would remain similarly limited. President Trump’s political influence will also be an important factor. Depending on the magnitude of Republican losses in the House and what happens in the Senate, that influence could weaken considerably.

Without White House involvement, I do not believe the December extension would have happened in the first place. A weakened White House would make another legislative compromise even more difficult.

Ultimately, I believe the most realistic December outcome is either another extension of the hemp provisions or it gets stripped out and the ban goes into place on December 11^th.

Perhaps Congress can make meaningful progress in 2027. But as I have argued previously, the only sensible long-term solution is a unified, one-plant approach that regulates THC rather than continuing to distinguish between hemp and marijuana. Congress needs to stop treating this as a hemp problem and start treating it as a THC policy problem.

Can medical marijuana patients now legally travel across state lines with their cannabis?

This remains an open question, and patients should proceed cautiously.

First, state law still matters. The Final Order was issued through executive and administrative action. It does not override state laws governing marijuana possession, transportation, or use. Even if federal law permits a patient to possess or transport qualifying medical marijuana, an individual state may prohibit that activity. For example, I would strongly discourage anyone from traveling to or through a state like Idaho with medical marijuana, regardless of whether they have a valid medical recommendation from another state.

There is another important complication. The Final Order does not directly address patients. It addresses those dispensing to patients but not the patients themselves.  During the webinar, a participant pointed to 21 CFR 1301.13(k)(5), which discusses prescriptions. However, that provision addresses the dispensing of medical marijuana by registered entities. It does not expressly establish patient rights or protections.

That leaves considerable uncertainty about how federal law applies to patients possessing medical marijuana obtained through the Final Order’s registration framework.

In my view, if a patient possesses marijuana obtained from a DEA registrant, or an applicant that timely applied during the expedited registration process, there is a reasonable argument that the patient’s possession should not constitute a federal offense, assuming the patient possesses no more than the amount authorized under their medical recommendation.

However, the Final Order does not expressly resolve that question. The laws of every state involved in the patient’s travel, including the state of departure, destination, and any states traveled through, must also be considered.

Until federal agencies provide additional guidance, my recommendation is that medical marijuana patients continue treating interstate travel the same way they did before the Final Order was issued.

How does the Final Order affect medical marijuana reciprocity, and is medical marijuana now a prescription?

These are two separate questions, and both deserve clarification.

Medical marijuana reciprocity

State law will continue to play the central role in determining whether a medical marijuana patient from one state can obtain or possess medical marijuana in another. We have heard reports that DEA will not permit medical marijuana reciprocity. However, the Final Order contains no such prohibition.

Unless DEA issues an additional rule, order, or other binding guidance (i.e. through a MOA) addressing reciprocity, I do not believe those reported statements reflect an enforceable federal restriction.

Is medical marijuana now prescribed?

No.

State-legal medical marijuana is not automatically a prescription drug under the Federal Food, Drug, and Cosmetic Act (“FDCA”), simply because it has been placed in Schedule III. Although 21 CFR 1301.13(k)(5) uses the heading “Prescriptions,” the provision expressly discusses certifications and other documents, including electronic records, that state law recognizes as sufficient to obtain medical marijuana.

Importantly, DEA did not require medical marijuana to be dispensed pursuant to a traditional prescription. That distinction matters. If DEA had required prescriptions in the conventional federal sense, medical marijuana products would need to comply with the applicable FDCA requirements. State-legal medical marijuana products do not satisfy those requirements. This is one reason why the cannabis industry has historically used terms such as “recommendation” and “certification” rather than “prescription”.

The Final Order preserves that distinction.

Must DEA wait for the D.C. Circuit to rule before issuing registrations?

No. DEA is not legally required to wait, although doing so may be the more prudent approach. Matthew Strait addressed this question during the webinar. If DEA begins issuing registrations and the D.C. Circuit subsequently invalidates the Final Order, the agency could be forced to initiate Order to Show Cause proceedings to revoke those registrations.

Although the ultimate revocations might be relatively straightforward, the process could still be administratively burdensome for an agency already facing significant resource constraints. This possibility may also help explain why the Attorney General stated that expedited applicants complying with their state laws would be treated as complying with federal law while their registration applications remain pending.

That approach allows qualifying operators to continue functioning during DEA’s review without requiring the agency to immediately issue registrations that could later need to be revoked.

It is possible that the Attorney General anticipated precisely this scenario.

Has the White House indicated whether it supports another extension of the hemp restrictions?

I have not heard any new information since the White House reportedly indicated that it would not support another extension and did not intend to become further involved in the hemp debate. Unless that position changes, I would not assume the administration will intervene to secure another extension.

What is the likely future for cannabis breeders and traditional nursery businesses, including home grow and commercial operations?

Much of this will depend on state law and how Congress ultimately addresses the hemp restrictions. Even if Congress adopts a legislative fix, I have not heard any indication that the proposal would specifically protect cannabis seeds. As a result, I believe seeds will be classified as marijuana when the new restrictions take effect in December, absent further congressional action. That would create significant complications for breeders, nurseries, and other businesses that currently operate within the hemp framework.

Clones and tissue cultures present a somewhat different issue. Because these materials were not expressly included in the hemp restrictions, there is an argument that their federal legal status may actually be more favorable than it was before the restrictions were enacted. However, that does not mean they are free from legal risk.

One unresolved question is whether the “Source Rule” will be resurrected. The Source Rule is a legal interpretive principle, developed by Rod Kight, holding that the source of a cannabinoid determines its legal status under the federal CSA. A prosecutor or enforcement agency could attempt to rely on that rule, and the legal outcome is far from certain.

There are credible arguments on both sides. Rod Kight published an article arguing that the Source Rule remains valid, while Shane Pennington published a competing analysis concluding that the rule is no longer effective. Both articles were published in 2022 and address the competing interpretations. Until this issue is definitively resolved, cannabis breeders and nursery operators should understand that there remains some risk in that space as well.

Will cannabis seeds need to be tracked through METRC or another seed-to-sale system?

That will largely depend on state law. If cannabis seeds become classified as marijuana in December, the applicable state marijuana regulations will determine how those seeds must be tracked. Some states may require seeds to move through their existing cannabis inventory tracking systems. Others may establish different requirements. Because METRC is widely used by state cannabis regulatory agencies, I would expect many states to require seed tracking through METRC.

How might DEA enforcement affect cannabis testing laboratories that handle both medical and adult-use products?

Testing laboratories may not initially appear to be obvious DEA enforcement targets. However, there is a strong strategic argument for why DEA could prioritize them. In states that require cannabis testing, there are typically far fewer testing laboratories than cultivators, manufacturers, or retailers. By targeting a relatively small number of laboratories, DEA could potentially disrupt an entire state’s regulated cannabis supply chain. Viewed that way, testing laboratories could become attractive enforcement targets.

Whether DEA will actually pursue that strategy remains unknown. What is clear is that testing laboratories face many of the same federal compliance issues as other state-licensed cannabis businesses. DEA has opened its registration portal to state-licensed medical marijuana testing laboratories. There is no apparent reason to believe their registration process or enforcement exposure would be fundamentally different from that of other medical marijuana licensees.

A laboratory operating in compliance with state law and holding the appropriate DEA registration should be able to operate within the applicable federal framework. A laboratory operating without DEA registration, however, will be handling controlled substances in violation of federal law.

This becomes especially complicated for laboratories testing both medical and adult-use marijuana. I could certainly see DEA requiring testing facility to stop testing adult-use marijuana if they want to maintain their DEA medical marijuana registration. Testing laboratories therefore need to consider the federal legal status of each category of marijuana they receive, not merely whether their operations comply with state law.

How will DEA address marijuana production quotas?

This is an important issue to watch over the coming months. Before the end of the year, we should have a better indication of whether DEA intends to account for the state-legal medical marijuana market in the estimates it submits to the International Narcotics Control Board (“INCB”) in January. DEA’s proposed quota rule could be published at any time, with a final rule expected in January.

The agency’s current estimate, submitted in January and reaffirmed in its September update, is approximately 7,000 kilograms of cannabis, with no separate estimate for cannabis resin.

For perspective, other countries have submitted dramatically larger estimates.

These figures highlight just how significantly the United States would need to revise its estimates if DEA begins accounting for the broader state-licensed medical marijuana market.

However, DEA cannot simply select an arbitrary number. Its estimates must have a defensible factual basis. Otherwise, an interested party could challenge the proposed rule and require the agency to explain how it arrived at its figures. That presents a difficult problem.

We do not yet know the size of the federally recognized medical marijuana market under the Final Order. In fact, I expect that market to be substantially larger than current projections for state medical marijuana programs. Without reliable data, DEA may struggle to justify a meaningful increase in its estimate.

For that reason, I would not be surprised if DEA maintains its approximately 7,000-kilogram estimate for now, explaining that it intends to revisit the issue after the D.C. Circuit resolves the pending litigation. That approach would allow DEA to avoid making speculative projections while the legal status and ultimate scope of the medical marijuana market remain uncertain.

How can employers verify whether an employee has a valid medical marijuana recommendation?

Employers will need to review their existing verification procedures and applicable state employment laws. In general, employers that are legally entitled to request documentation concerning an employee’s use of a Schedule III controlled substance may be able to use similar verification procedures for medical marijuana recommendations.

However, medical marijuana presents unique complications because, as discussed above, a state medical marijuana recommendation is not the same as a federally recognized prescription. This is an area where employers should proceed carefully.

More importantly, the Final Order should prompt employers to review and potentially revise their drug testing policies and standard operating procedures. With qualifying state-licensed medical marijuana now classified in Schedule III, there may be new arguments for federal protections for certain medical marijuana patients.

As noted earlier, the Final Order does not clearly establish how patients are treated under federal law. Nevertheless, it is possible that an employer’s policy of automatically terminating an employee solely because of a positive marijuana test could face new federal legal challenges when the employee is a qualifying medical marijuana patient.

That does not mean every medical marijuana patient is automatically protected from adverse employment action. The answer will depend on the applicable federal and state laws, the nature of the employment, and the circumstances involved. State employment protections will also continue to apply.

Employers should therefore reassess their policies rather than assume that longstanding marijuana testing and disciplinary practices remain appropriate.

Does adult-use marijuana legalization comply with international drug treaties?

Generally, no.

The international drug control treaties permit cannabis for medical, scientific, and certain industrial purposes. They do not authorize commercial adult-use marijuana programs. That creates a fundamental tension between international treaty obligations and domestic legalization. Canada and Uruguay addressed this issue by legalizing adult-use marijuana under broader principles of international law, including their governments’ obligations to protect the health and welfare of their citizens.

However, the INCB and many other international nations and observers continue to regard those programs as inconsistent with the countries’ drug treaty obligations.

There is another potential pathway.

Scientific pilot programs offer a different legal framework for adult-use cannabis access. Although the INCB has questioned whether certain adult-use pilot programs comply with international treaties, the treaties expressly permit cannabis use for scientific purposes. In my view, determining what constitutes legitimate scientific research within a country’s borders should be left exclusively to each country.

Switzerland and the Netherlands are currently conducting scientific pilot programs involving adult-use cannabis, providing examples of how countries can explore regulated access within a research framework.

The United States also presents another different legal issue. The international drug treaties contain provisions recognizing certain constitutional limitations on national governments. Those provisions help explain why the United States can maintain its treaty obligations even while nearly half of its states permit adult-use marijuana.

Under the U.S. Constitution, the federal government cannot compel or “commandeer” states to criminalize or prohibit marijuana activities. Although federal authorities may enforce federal marijuana laws directly, they cannot require state governments to administer federal prohibition. That constitutional limitation provides an argument for why state adult-use legalization does not necessarily place the United States in violation of its treaty obligations.

Federal enforcement discretion also matters. As illustrated by the Netherlands’ longstanding approach to cannabis coffee shops, countries retain discretion over how they allocate enforcement resources and implement domestic drug policies. In my view, a decision not to pursue every domestic marijuana violation does not automatically constitute a treaty violation, provided the country continues to fulfill its international obligations, including preventing unlawful exports.

However, the constitutional argument that may help justify state legalization would not apply if the federal government affirmatively authorized a nationwide commercial adult-use marijuana market. That would raise a substantially different treaty compliance question.

Do the Final Order’s home grow protections apply to patients operating outside adult-use programs?

The central question is whether the individual holds a qualifying license under a state’s medical marijuana program. If a home grower is licensed under that program, the marijuana cultivated pursuant to the license likely qualifies as Schedule III marijuana under the Final Order.

However, that classification does not automatically make the cultivation federally lawful. Federal legality depends on whether the home grower qualifies for the Final Order’s registration pathway, including whether they submitted a timely application during the expedited registration window or ultimately receive the necessary DEA registration.

A person growing marijuana under a state’s general home grow allowance, without a qualifying medical marijuana license, should not assume that the Final Order provides federal protection.

The key takeaway is that state authorization, Schedule III marijuana classification, and federal compliance are three distinct legal questions.

More questions to come

The Final Order represents a significant change in federal marijuana policy, but it has also created substantial uncertainty for state-licensed businesses, patients, employers, and regulators. Many of the most consequential questions remain unresolved, particularly those involving DEA registration, enforcement priorities, patient protections, interstate transportation, and the interaction between state and federal law.

At the same time, Congress faces important decisions about the future of hemp regulation, and the outcome of the pending litigation could substantially alter the regulatory landscape. We will continue tracking these developments and addressing the questions we could not cover during the webinar.

Subscribe to the Canna Law Blog for the next installment of our webinar Q&A series and ongoing analysis of federal cannabis policy, DEA enforcement, and hemp reform.

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