A federal court has declined to temporarily suspend the Trump administration’s decision to move state-legal medical cannabis from Schedule 1 to 3, allowing the reclassification to remain in place while a broader legal challenge continues.
A three-member bench of the U.S. Court of Appeals for the DC Circuit issued its ruling September 9, rejecting a request brought by MMJ International Holdings and the NDASA. The organizations had sought an emergency stay of an April 22 directive signed by Attorney General Todd Blanche.
The challengers argued that allowing the new classification to continue would cause them significant and potentially irreversible damage. They also warned that wider marijuana availability could produce serious consequences while the litigation was pending.
The court disagreed, concluding that the groups had not met the demanding legal standard required for a stay during judicial review.
The DOJ had previously disputed the challengers’ position, arguing that their financial interests were tied to maintaining marijuana prohibition and did not necessarily correspond with the broader interests of the public.
The panel also denied a bid by two medical cannabis companies, Tri-Mountain Pure LLC and MedPharm Iowa LLC, which operates as Bud and Mary’s, to intervene in the lawsuit on the government’s behalf. The companies said they had sought DEA registration under the new classification and could benefit from the ability to claim ordinary business deductions previously restricted by Section 280E of the federal tax code.
Although the court refused to make the businesses parties to the proceedings, it allowed them to submit amicus briefs. The same option was extended to lawyers representing interests within the cannabis sector, enabling them to present arguments without formally joining the litigation.
Industry group American Trade Association for Cannabis and Hemp welcomed the decision, describing it as an important step toward broader medical marijuana access.
The ruling does not settle the central dispute over whether Blanche’s rescheduling directive should ultimately stand. Nine petitioners have challenged the policy, asking the court to invalidate it.
Among those involved are NDASA, Smart Approaches to Marijuana, New Directions Addiction Recovery Services, physicians Elizabeth B. Stuyt and Kenneth Finn, and Cannabis Industry Victims Educating Litigators. Attorneys general from Indiana and Nebraska have also filed a separate challenge. The appeals court combined the cases into a single proceeding.
The judges directed the parties to submit proposed briefing arrangements in 30 days and encouraged them to coordinate their filings to prevent unnecessary duplication.
Meanwhile, the policy shift is already affecting the industry. Medical marijuana businesses have begun seeking DEA registration, while companies including Glass House and Trulieve have made corporate changes that enabled their shares to trade on the New York Stock Exchange.
Separately, a DEA administrative hearing examining whether marijuana broadly should be moved to Schedule 3 concluded July 15. A recommendation from the administrative law judge is expected as the federal review continues, and marijuana companies like Green Thumb Industries Inc. (CSE: GTII) (OTCQX: GTBIF) will be awaiting that ruling.
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