Indiana AG Rokita Files Brief to Block DEA Marijuana Rescheduling

The Filing and Its Immediate Target

Rokita's brief challenges the DEA's August 2024 Notice of Proposed Rulemaking (NPRM) that would move cannabis to Schedule III, a category reserved for drugs with accepted medical use and lower abuse potential. The filing, submitted to the U.S. Court of Appeals for the D.C. Circuit, joins pending litigation initiated by cannabis opponents and law-enforcement groups who argue the rescheduling lacks evidentiary support. Indiana's brief specifically contests the DEA's reliance on a Health and Human Services recommendation that Rokita describes as procedurally flawed.

The coalition includes attorneys general from Nebraska, Kansas, Idaho, and South Dakota—states with no legal adult-use or medical cannabis programs. Under a strict reading of the Administrative Procedure Act, the brief contends the DEA failed to provide adequate notice-and-comment periods. It didn't sufficiently address conflicting scientific evidence on cannabis dependency and withdrawal, the states argue.

The 280E Tax Implications Driving Industry Attention

Rescheduling to Schedule III would allow state-licensed cannabis operators to deduct ordinary business expenses under Internal Revenue Code §280E, a change that could save the industry an estimated $1.5 billion annually in federal tax liability. Right now, §280E prohibits businesses trafficking in Schedule I or II substances from deducting expenses other than cost of goods sold. Multi-state operators including Curaleaf, Green Thumb Industries, and Trulieve have disclosed in SEC filings that effective tax rates exceed 70 percent due to §280E disallowances.

If the court sides with Rokita and blocks rescheduling, those tax burdens remain. If rescheduling proceeds, operators gain immediate deductibility for rent, payroll, marketing, and compliance costs—expenses that currently inflate adjusted gross income and drive cash-flow strain.

State Enforcement and Preemption Concerns

Rokita's brief argues that Schedule III classification would undermine state-level prosecution of unlicensed cannabis activity by creating a perception that marijuana is federally sanctioned. Indiana law classifies possession of any amount of marijuana as a Class B misdemeanor, with enhanced penalties for distribution. Rescheduling could complicate jury instructions and reduce deterrent effect in states that maintain prohibition, the brief warns.

The brief warns that federal rescheduling could complicate state prosecutions by muddying jury instructions and reducing the deterrent effect of criminal penalties in prohibition states.

This argument mirrors concerns raised by the National Sheriffs' Association and the National Narcotics Officers' Associations' Coalition, both of which filed separate amicus briefs in the same docket. Those groups cite increased youth access and impaired-driving incidents in states with legal markets as evidence that rescheduling poses public-safety risks.

Procedural Posture and Timeline

The DEA's rescheduling NPRM is currently in the final stages of administrative review, with a final rule expected by September 2026 absent judicial intervention. Rokita's brief requests that the court issue a preliminary injunction halting implementation until the underlying litigation is resolved. The D.C. Circuit hasn't yet set a hearing date. Procedural motions are due by June 20, 2026.

If the court denies the injunction, the DEA can proceed. If granted, the rulemaking process pauses indefinitely, and the industry remains under Schedule I restrictions—including full §280E exposure and continued federal-state legal conflicts.

What Operators and Tax Counsel Should Watch

The next procedural signal is the court's decision on the preliminary injunction motion, expected by late June or early July 2026. Operators with multi-year tax disputes or pending IRS audits should model both scenarios: Schedule III effective by Q4 2026, or Schedule I status maintained through 2027 or beyond. Tax counsel are advising clients to preserve all expense documentation and consider amended-return strategies if rescheduling proceeds mid-year.

For full background on the DEA's rescheduling timeline and the August 2024 NPRM, see the CannIntel topic hub on DEA rescheduling. The coalition opposing rescheduling now includes seven state attorneys general, the National Sheriffs' Association, and at least three medical-research groups that argue the HHS recommendation overstated cannabis's therapeutic profile.