DEA Halts Marijuana Rescheduling Hearing Over GAO Report

Hearing Suspended Indefinitely

The administrative law judge overseeing the DEA's rescheduling proceeding issued a stay order on September 29, citing the pending GAO report as grounds for delay. The hearing was originally scheduled to begin in late 2026. It was expected to feature testimony from medical researchers, state regulators, and industry stakeholders on the scientific and policy justifications for rescheduling cannabis.

Members of Congress requested the GAO report earlier this year to evaluate the DEA's methodology in assessing cannabis's medical utility and abuse potential. According to the judge's order, the hearing will remain suspended until the GAO completes its review and the DEA has an opportunity to respond to any findings.

No new hearing date has been set. The stay order doesn't address whether the GAO report will ultimately support or challenge the DEA's proposed rescheduling, but the delay signals that unresolved procedural or substantive questions remain in play.

What the GAO Review Covers

The Government Accountability Office is examining whether the DEA followed proper protocols in evaluating cannabis under the eight-factor analysis required by the Controlled Substances Act. That analysis includes assessments of a drug's medical use, abuse potential, pharmacological effects, and risk of physical or psychological dependence.

The GAO's mandate is to determine whether the DEA's rescheduling recommendation aligns with the evidentiary standards set by federal law and whether the agency adequately consulted with the Department of Health and Human Services.

The DEA's proposal to move cannabis to Schedule III followed a 2022 directive from President Biden instructing the agency to review marijuana's classification. HHS recommended rescheduling in 2023, citing accepted medical use for conditions including chronic pain, nausea, and appetite stimulation in patients undergoing chemotherapy.

Schedule III drugs—such as ketamine, anabolic steroids, and certain codeine preparations—are recognized as having medical utility but still carry restrictions on prescribing and distribution. Rescheduling wouldn't federally legalize cannabis but would eliminate the Section 280E tax penalty that currently prohibits state-licensed cannabis businesses from deducting ordinary business expenses.

Industry and Enforcement Implications

If rescheduling proceeds, multistate operators stand to gain the most from 280E relief, which industry analysts estimate could improve effective tax rates by 30 to 50 percentage points. But the hearing delay injects fresh uncertainty into capital markets. Cannabis equities have priced in varying degrees of rescheduling probability over the past two years.

For hemp-derived THC products—particularly THCA flower and delta-8 THC—the rescheduling question is more complex. Schedule III classification would still prohibit non-prescription distribution. That means the current gray-market hemp loophole would remain in legal limbo. The DEA hasn't clarified whether rescheduling would trigger new enforcement priorities for hemp-derived intoxicants that exceed 0.3% delta-9 THC on a dry-weight basis but fall under the 2018 Farm Bill's definitional carve-out.

State regulators in markets like California, New York, and Ohio have signaled they'll continue enforcing state-specific THC limits regardless of federal scheduling changes. Enforcement will vary.

What Happens Next

The GAO report is expected in the fourth quarter of 2026, though no firm release date has been announced. Once published, the DEA will have an opportunity to file a formal response, and the administrative law judge will determine whether the hearing can proceed or whether additional procedural steps are required.

If the GAO identifies procedural deficiencies in the DEA's eight-factor analysis, the agency could be forced to re-evaluate portions of its rescheduling recommendation. That would delay any final rule even further. Alternatively, if the GAO report validates the DEA's methodology, the hearing could resume quickly, with a final decision possible in early 2027.

For now, the rescheduling timeline is on hold. The next signal to watch: the GAO report's release date and whether it raises substantive questions about the DEA's evidentiary basis for Schedule III classification. This is unsettled territory. The procedural pause underscores how far the process still has to go.

For full background on this story, see the CannIntel topic hub on DEA rescheduling.