By: Irina Dashevsky, Esq. and Nick Richards, Esq.
On Monday, June 29, the U.S. Drug Enforcement Administration (DEA) will begin a long‑anticipated administrative hearing that could significantly reshape the federal treatment of cannabis. The proceeding focuses on whether cannabis should be moved from Schedule I of the Controlled Substances Act (CSA) to Schedule III (where medical cannabis currently sits), aligning it more closely with state‑licensed medical cannabis and other regulated substances.
This hearing follows years of scientific review and policy debate. While the federal government has already reclassified certain FDA‑approved and state‑licensed medical cannabis activity under Schedule III, adult‑use cannabis remains a federally prohibited Schedule I substance. The June 29 hearing is intended to address that gap.
What Will Happen at the Hearing
The hearing will be overseen by a DEA Administrative Law Judge, who will evaluate evidence related to cannabis’s medical utility, potential for abuse, and overall risk profile under federal law. Federal agencies, along with approved opposing parties, will present testimony and scientific data. After the hearing concludes, the judge will issue a recommendation to the DEA Administrator, who will ultimately decide whether to finalize a new scheduling rule.
The process may take months, or longer, to reach a final resolution, particularly if appeals or litigation follow.
Business Implications if the Outcome Advances Rescheduling
If cannabis generally is rescheduled to Schedule III, the impact on cannabis operators could be substantial. Most notably, businesses would likely gain relief from Internal Revenue Code Section 280E, allowing deductions for ordinary and necessary business expenses. This change alone could dramatically improve cash flow, profitability, and access to capital.
A unified federal scheduling framework would also likely reduce regulatory friction for multi‑state operators and businesses that serve both medical and adult‑use markets, creating greater operational clarity.
What It Means if the Status Quo Remains
If the hearing results in a recommendation against rescheduling or if the process stalls due to legal challenges, the industry will continue operating under a divided federal structure. Medical cannabis would move forward under a more flexible federal regime, while adult‑use businesses would remain subject to Schedule I limitations, including ongoing tax burdens and heightened risk.
Looking Ahead
Regardless of the outcome, the June 29 hearing represents a pivotal moment for federal cannabis policy. While rescheduling would not equal full legalization, it would mark a meaningful shift toward normalization and could serve as a catalyst for future congressional action.
Greenspoon Marder’s Cannabis Law practice group is closely monitoring these developments and stands ready to help businesses assess risk, plan strategically, and adapt to a changing regulatory landscape.