DEA Cannabis Hearing Begins: Why Schedule III Still Matters for $TLRY, $CGC and $MSOS

The market did not get a final ruling today. What it got is the start of a federal process that could decide whether the cannabis trade remains a narrow medical-only tax story or becomes a broader sector repricing catalyst.

Published: June 29, 2026  |  Focus tickers: $TLRY, $CGC, $MSOS, $CRON, $ACB, $GTBIF, $CURLF, $TCNNF, $CRLBF, $VRNOF

The Hearing Started — But The Decision Did Not Arrive

Formal DEA hearing proceedings began on Monday, June 29, 2026, at 9:00 a.m. Eastern Time at DEA headquarters in Arlington, Virginia. The hearing is scheduled to run from June 29 through July 15, 2026, from 9:00 a.m. to 5:00 p.m., according to the DEA’s public notice.

That matters because the market often treats cannabis policy headlines as binary events. The reality is different. This is not a final ruling day. It is the opening of an administrative record. The DEA will receive factual evidence and expert opinion, the proceeding will continue through the scheduled window, and a finalized corrected transcript is expected after the conclusion of the hearing.

For traders, that creates a complicated setup. Instead of one clean headline, the sector may now move through a series of partial signals: testimony summaries, legal interpretations, industry reactions, procedural filings, agency comments, tax guidance and political pressure.

In other words, the cannabis catalyst has moved from rumor mode to process mode. That is progress, but it is not certainty.

Why Schedule III Is The Real Prize

Under the current federal framework, marijuana has historically been treated as a Schedule I controlled substance, a category associated with strict federal restrictions and no accepted medical use under the Controlled Substances Act framework. Schedule III would still be controlled and regulated, but it would represent a very different federal status.

For cannabis companies, the biggest practical issue is Section 280E of the Internal Revenue Code. Section 280E generally prevents businesses that traffic in Schedule I or Schedule II controlled substances from deducting ordinary business expenses. For cannabis operators, that has created years of unusually high effective tax burdens and distorted financial statements.

This is the core of the trade. Schedule III does not make cannabis legal like alcohol. It does not automatically solve banking. It does not instantly move U.S. multistate operators onto Nasdaq or the NYSE. But it can change the tax math, and the tax math is one of the biggest structural problems in the cannabis business model.

The April Order Created A Two-Track Cannabis Market

The reason this hearing matters is that the April 2026 federal action did not settle the entire cannabis question. The Department of Justice moved FDA-approved marijuana products and marijuana products subject to qualifying state-issued medical licenses into Schedule III, while maintaining strict federal controls. That was a major shift, but it was not broad federal legalization.

That created a two-track cannabis market. Medical cannabis received a clearer federal path. Broader adult-use cannabis remained exposed to uncertainty. The June 29 hearing is designed to evaluate broader changes to marijuana’s status under federal law.

This is why cannabis stocks can rally on the headline and then fade on the details. The first reaction is often “rescheduling is happening.” The second reaction is “how broad is it?” That second question is what the market is now trying to price.

The Hearing Is Already Politically Sensitive

The proceeding is also controversial. DEA has said the hearing is open to the public and credentialed media in limited capacity, but video and audio recordings are not permitted in the courtroom. Cell phone use is also prohibited during the hearing. A finalized and corrected transcript is expected after the proceedings conclude.

That means investors may not get full real-time visibility into the hearing. Instead, they may have to rely on agency updates, media summaries, legal notes and later transcripts.

Industry-focused media also reported criticism from cannabis reform advocates, who argued that supporters of broader reform were not invited to participate and that the lack of livestreaming limits transparency. Whether one agrees with that criticism or not, the political optics matter. Cannabis equities do not trade only on legal text; they also trade on perceived momentum, fairness of process and confidence that reform is moving forward.

Why $MSOS Is The Cleaner Policy Trade Than $TLRY Or $CGC

The cleanest policy exposure remains the U.S. cannabis complex. That is why $MSOS, the AdvisorShares Pure US Cannabis ETF, deserves special attention. The ETF is designed around U.S. cannabis exposure, where the 280E tax issue, banking restrictions, state/federal conflict and exchange-listing limitations are most relevant.

Canadian names such as $TLRY, $CGC, $CRON and $ACB can still move sharply on U.S. federal cannabis headlines. They are liquid, familiar to retail traders and often act as sentiment vehicles during cannabis reform cycles. But they are not identical to U.S. plant-touching operators.

This distinction matters. If the market wants a fast momentum trade, the liquid Canadian tickers can move quickly. If the market starts pricing actual U.S. tax relief and operating leverage, the MSO group becomes more strategically relevant.

The 280E Question Is The Heart Of The Trade

For cannabis operators, the market does not only care about symbolism. It cares about taxes. If a cannabis business is no longer treated as trafficking in a Schedule I or II controlled substance, the 280E deduction disallowance may no longer apply in the same way to qualifying activities.

That is why Treasury and IRS guidance matters almost as much as the DEA proceeding. Investors need to understand not only whether marijuana moves to Schedule III, but how federal tax authorities will handle business deductions, mixed medical/adult-use operations, transition periods and compliance documentation.

This is especially important for operators with both medical and adult-use exposure. If only medical activity receives Schedule III treatment while adult-use remains Schedule I, companies may need clearer separation between business lines. That could create winners and losers inside the same sector.

The strongest operators may be those with better compliance infrastructure, cleaner documentation, stronger medical exposure and enough financial flexibility to survive the transition period.

SAFE Banking Is Back In The Conversation

The hearing is not happening in isolation. Cannabis banking legislation has also returned to the political conversation. That matters because rescheduling alone does not automatically fix banking.

Even under Schedule III, cannabis would remain federally controlled. Banks would still face compliance, anti-money-laundering and reputational-risk questions. Many financial institutions may wait for explicit congressional or regulatory protection before fully serving the industry.

That is why the cannabis trade has several layers:

Schedule III could help taxes, research and federal legitimacy.

Banking reform could improve access to financial services.

Exchange listing reform could eventually improve institutional liquidity.

Descheduling/legalization remains a separate and much bigger political fight.

Why The Market May Stay Volatile Into July 15

Because the hearing is scheduled to continue through mid-July, cannabis stocks may not trade like a simple one-day catalyst. The sector may instead move through a rolling policy window.

Short-term traders will watch for media summaries, leaks, commentary and sudden interpretation shifts. Long-term investors will watch the legal structure of the proceeding. Policy-focused funds will watch whether the government’s position looks strong enough to survive litigation. Cannabis operators will watch whether the process points toward broad Schedule III treatment or keeps the medical/adult-use split alive.

This is exactly the kind of setup that can produce sharp intraday moves and equally sharp reversals. Cannabis equities have a long history of rallying on policy optimism and fading when the details become complicated. That pattern remains very much alive.

What Bulls Need To See

For the bullish cannabis thesis to strengthen, the market needs signs that the proceeding is moving toward broad Schedule III treatment rather than merely reinforcing the medical-only framework already established in April.

• Clear administrative support for transferring marijuana more broadly from Schedule I to Schedule III.
• Evidence that the government believes the final rule can survive procedural and legal challenges.
• Follow-up Treasury/IRS guidance that gives operators usable tax clarity.
• Additional political momentum around banking protections.
• Evidence that institutional investors are preparing for a more investable cannabis capital-markets structure.

What Bears Will Focus On

The bearish case is not that nothing has happened. Something has happened. The medical cannabis rescheduling action is real, and the broader hearing is real. The bearish case is that the market may be overpricing speed, scope and certainty.

• The hearing could preserve a narrow medical/adult-use divide.
• Opponents may challenge the process in court.
• The official transcript may not be available until after the hearing ends.
• Banking access may remain limited even after Schedule III.
• U.S. exchanges may still hesitate to list plant-touching operators.
• Canadian cannabis names may rally on U.S. headlines without receiving the full economic benefit.

Timeline To Watch

Bottom Line

The June 29 DEA cannabis hearing is not a final ruling, but it is not meaningless. It is the formal start of the next phase in the U.S. cannabis rescheduling battle. The April action gave the sector a medical Schedule III framework. This hearing will test whether that framework can become broader.

For traders, the danger is chasing the first headline. For investors, the opportunity is understanding the difference between symbolic reform and economic reform.

Schedule III matters because it can change the math. But until the broader process is complete, cannabis remains a policy trade wrapped inside a tax story, a legal story, a banking story and a liquidity story.

That is why $TLRY, $CGC and $MSOS should stay on the radar through mid-July — not because today delivered the final answer, but because today officially opened the next federal phase of the cannabis reform process.

Sources Reviewed

• DEA — Hearing on Proposed Marijuana Rescheduling Begins June 29
• DEA — Marijuana Rescheduling Regulatory Actions
• Federal Register — Schedules of Controlled Substances: Rescheduling of Marijuana
• U.S. Department of Justice — Schedule III Medical Marijuana Order
• U.S. Treasury / IRS — Tax Guidance Process Following DOJ Final Order
• Reuters — Cannabis Rescheduling Arrives, With Limits
• Reuters — How U.S. Marijuana Reclassification Could Help Cannabis Companies
• Marijuana Moment — Activists Criticize DEA Hearing Access And Participant Selection
• Cannabis Business Times — SAFE Banking Act Reintroduced