Those who hoped a rule to reschedule marijuana to Schedule III would be finalized by the end of the year now realize that won’t happen. Delays by a judge and a lawsuit challenging the process thus far have already assured that. But President-Elect Donald Trump’s nomination of Rep. Matt Gaetz as attorney general gives industry leaders new hope that federal cannabis policy will change.
National Cannabis Industry Association Chief Executive Aaron Smith said in an email, “I’m quite optimistic that Donald Trump’s administration will not impede this process. Mr. Trump has stated support for cannabis rescheduling and other incremental reform in the past.” He called Gaetz “one of the most vocal proponents of legalization in Congress.”
In September, Trump said he supported rescheduling. “As President, we will continue to focus on research to unlock the medical uses of marijuana to a Schedule 3 drug, and work with Congress to pass common sense laws, including safe banking for state authorized companies, and supporting states rights to pass marijuana laws, like in Florida, that work so well for their citizens,” he said in a post on his Truth Social site, according to Marijuana Moment.
On Nov. 13, Trump announced he’s nominating Gaetz, R-Fla., to replace Merrick Garland as attorney general. Gaetz has supported rescheduling or descheduling marijuana in the past, although he has taken less action lately.
He co-sponsored the MORE Act to remove marijuana from the list of scheduled substances in 2021, which passed the House of Representatives but not the Senate. However, he hasn’t co-sponsored the same bill in this Congressional session. He is also not a co-sponsor of the House version of the SAFE Banking bill. And, unlike Trump, he opposed Florida’s Amendment 3 because he reportedly felt a state constitutional amendment wasn’t the way to legalize cannabis.
However, David Culver, senior vice president of government affairs for the U.S. Cannabis Council, believes Gaetz’s nomination and other staffing moves by Trump offer hope that both rescheduling and passage of the SAFER Banking Act will happen.
“Rep. Matt Gaetz is one of the most pro-cannabis Republicans on Capitol Hill,” Culver said in a statement. “By tapping him to serve as the nation’s top law enforcement officer, President-elect Trump is signaling his commitment to make good on his campaign promises around cannabis reform.”
But first Gaetz would need to be confirmed by the Senate, which isn’t looking like a slam-dunk, especially after the Senate elected marijuana opponent Sen. John Thune, R-S.D., as majority leader. Some senators were reportedly stunned that Gaetz, who was facing a House Ethics Committee investigation, was nominated to head the entire Department of Justice. Although re-elected this month, Gaetz resigned his House seat Wednesday.
Attorney Adrian Snead, a partner at Porter Wright Morris & Arthur who specializes in government affairs, said on LinkedIn that Gaetz may be a “sacrificial” nominee.
“It’s crucial to remember that the President-Elect sees himself as a skilled negotiator, and every move should be taken as a calculated step in a potentially larger strategy,” he said. “One negotiation tactic involves creating dispensable options that can be sacrificed, as they may not align with one’s ultimate goals but provide leverage during bargaining.”
While Garland was the one who introduced the proposed rule in May, it’s DEA Administrator Anne Milgram’s job to push it through. But Milgram hasn’t voiced support for the initiative, and her actions thus far have not sped up the process.
Culver doesn’t expect her to stay. “New presidents have been consistent in replacing the DEA head during the first year of their administration,” he said in an email.
Meanwhile, the whole rescheduling proceeding will likely be delayed further because each new presidential administration, including Trump’s first, usually puts a freeze on current rulemaking until they can review and decide on the pending regulations.
Administrative law judge delays hearing
As part of the formal rulemaking process for drug scheduling, interested parties can request a hearing before an administrative law judge (ALJ). The DEA administrator gets to decide if there will be a hearing, set the initial date and assign the judge.
Proponents of rescheduling were disheartened when Milgram in August decided a hearing would be held Dec. 2, after the general election. She assigned John J. Mulrooney II, chief administrative law judge, to hear the case.
She also selected 25 witnesses including supporters such as the National Cannabis Industry Association and opponents such as Smart Approaches to Marijuana. There are representatives from the Connecticut and Massachusetts state cannabis regulatory agencies, as well as law enforcement including Nebraska Attorney General Mike Hilgers, the International Association of Chiefs of Police and the National Sheriff’s Association.
But on Halloween, Mulrooney spooked the industry by delaying the hearing into the new year because the DEA didn’t follow the rules.
In his Oct. 31 order, he said, “There is no indication in the four corners of the document as to whether the ‘participants’ support or oppose the NPRM [Notice of Proposed Rulemaking] or how the ‘participants’ satisfy the ‘interested person’ definition set forth in the regulations.”
He ordered the listed designated participants to file a brief notice by Nov. 12 that included more contact information and details of who they represent, a date of when their request was filed with the DEA, how they would be sufficiently “adversely affected or aggrieved” by the proposed rule,” and whether they oppose or support the proposed rule.
While the definition of interested person appears to be narrow, attorneys said it could include rescheduling supporters.
“This would certainly include participants who oppose rescheduling (whether in favor of descheduling, the status quo, or otherwise),” explained attorney Agustin Rodriguez, partner at Troutman Pepper, in an email. “And this should not necessarily exclude participants who agree with rescheduling if they also have a substantive critique or desired change to the rule as written.”
Kelly Fair, a partner in Dentons’ cannabis practice, added, “The NPRM expresses the DEA’s uncertainty regarding whether a rescheduling to Schedule III is merited. Parties in favor of rescheduling to Schedule III or descheduling would be potentially aggrieved if rescheduling is unduly delayed, does not occur, or if the final rule reschedules ‘marijuana’ to Schedule II. The DEA has expressed a need for expert scientific and policy evidence, which the DPs in favor of cannabis reform can provide.”
When asked how NCIA would be adversely affected or aggrieved, Smith said, “While NCIA broadly supports the proposed rule to reschedule marijuana, we have narrow objections due to potential risks to the cannabis industry relating to the scheduling of cannabinoids that aren’t currently subject to the Controlled Substances Act. As one of the most impacted stakeholders, it’s vitally important that the cannabis industry have a seat at the table in the rescheduling process, and NCIA is proud to occupy that seat as we advocate for the best possible outcome for the regulated industry and the consumers who rely on it.”
Smith added that the timing doesn’t seem to be unreasonable given the number of interested parties and complexity. “I’m confident that the outcome of this process will result in an even more compelling case to move cannabis out of Schedule I, regardless of the timing,” he said.
A hearing will still be held on Dec. 2, but witness testimony won’t be taken. Instead, Mulrooney instructed the designated participants to “come prepared with January-February 2025 availability dates,” meaning the hearing may not begin until February.
Milgram also told the judge in an Oct. 28 letter that given the public’s interest and “DEA’s commitment to conducting a transparent proceeding,” she will allow the hearing to be livestreamed and a limited number of credentialed media to attend.
Drug researcher wants rulemaking process stopped
Meanwhile, David Heldreth, chief executive of Bellevue, Wash.-based drug research company Panacea Plant Sciences, filed a lawsuit on Nov. 4 in U.S. District Court, Western District of Washington, seeking to halt the rulemaking process.
Heldreth requested to speak at the ALJ hearing and was not selected. In his complaint, he claims Milgram is biased against him and “has now acted in ways that appear to punitively punish” him because of previous lawsuits he’s brought in other rulemaking proceedings.
Heldreth has also challenged the classification of two psychedelic drugs as Schedule I, and succeeded in delaying the hearing. An ALJ hearing for the psychedelic drugs started this week, months later than originally scheduled. But Heldreth told CRB Monitor News that his case on this matter is still pending in appellate court, and he plans to file an emergency injunction to stop the hearing again.
Heldreth would not provide his request to speak at the marijuana hearing because he doesn’t want to help others get approved. But in requests for a hearing filed with the DEA for him personally and for PPS in June, he claimed he has standing because moving marijuana to Schedule III will hurt his company by giving preferential treatment to those with DEA Schedule III or other licenses. He said that because marijuana is illegal, he has been working with hemp, and many other hemp businesses would also be similarly affected. Instead, he actually wants marijuana descheduled.
Heldreth, who is of Cherokee descent, also claims the government is required to consult with Native American tribes, per an executive order signed by President Bill Clinton. He is most passionate about challenging scheduling rulemaking unless Native Americans get a seat at the table.
“Tribal sovereignty, respect it,” he said.
He also claims the DEA incorrectly asserted that the rule would not impact small organizations under other federal regulations, and that those regulations need to be followed. Finally, he says the entire DEA’s ALJ appointment process is unconstitutional.
Heldreth said he doesn’t care if others are upset about him delaying rescheduling, and he plans on also filing an emergency injunction request.
“If the government followed the law, then I couldn’t fight it,” he said.
