DC Circuit Denies Stay, Cannabis Remains Schedule III
The US Court of Appeals for the District of Columbia Circuit has denied a request to halt the federal government's reclassification of cannabis, allowing it to remain a Schedule III substance while litigation challenging the move proceeds.
The U.S. Court of Appeals for the D.C. Circuit has declined to stay the Drug Enforcement Administration's final rule rescheduling cannabis from Schedule I to Schedule III under the Controlled Substances Act. The ruling means cannabis will retain its new, less-restrictive classification while a legal challenge brought by anti-legalization groups proceeds on the merits. This decision provides a measure of temporary certainty for the cannabis industry. The move to Schedule III has major implications for state-licensed cannabis businesses, most notably by potentially offering relief from IRC Section 280E, which currently prohibits them from deducting standard business expenses. While the denial of a stay is a positive development for the industry, the ultimate fate of the rescheduling rule remains subject to the court's final decision. The parties have been instructed to propose a briefing schedule within 30 days, signaling that the substantive legal battle is now set to begin. A reversal on the merits would have significant negative consequences for the industry's financial and operational landscape.