$MSOS $TLRY $CGC $ACB Cannabis Rescheduling Hearing Week 2 Wrap: Finn, the TBI and the Final Stretch Into the July 15 Schedule III Deadline

How We Got Here: The April Order and the Expedited Hearing

The rescheduling effort began with a Notice of Proposed Rulemaking published in the Federal Register on May 21, 2024, proposing to move marijuana from Schedule I to Schedule III. The process stalled and restarted. On December 18, 2025, President Trump issued an executive order instructing the Attorney General to complete the rescheduling rulemaking “in the most expeditious manner” allowed by law.

The decisive step came on April 23, 2026, when Acting Attorney General Todd Blanche issued an order that did two things at once. First, it immediately placed FDA-approved marijuana products and state-licensed medical marijuana products into Schedule III. Second, it launched an expedited administrative hearing to consider whether the broader definition of marijuana should follow. The formal notice ran in the Federal Register on April 28, 2026.

That split is why the current hearing feels narrow and technical. The medical piece is, functionally, already done. The hearing is about the rest – and because the Controlled Substances Act requires an eight-factor scientific and public-health analysis, the room has been dominated by arguments over abuse potential, dependence, medical utility, product standardization and public safety, not by market forecasts.

The “Upside-Down” Hearing: Who Is in the Room – and Who Is Not

The single most-discussed feature of this proceeding is its lineup. Every one of the seven designated participants selected by the DEA opposes rescheduling, and only those parties are permitted to present witnesses, introduce evidence and cross-examine the government’s experts. The DEA – as the proponent of its own proposed rule – carries the burden of proof, which produces the odd spectacle of the government arguing in favor of cannabis while the invited participants argue against it. Legal observers have called it the hearing where “the government is now making the case for cannabis.”

A long list of reform and industry groups asked to participate and were denied, including the Drug Policy Alliance, NORML, the Marijuana Policy Project, the Cannabis Regulators of Color Coalition, the Latino Cannabis Alliance, the Law Enforcement Action Partnership, Doctors for Drug Policy Reform, the Parabola Center for Law & Policy, Supernova Women and Students for Sensible Drug Policy. Their absence is why advocates have described the record as being shaped by “a narrow set of voices.”

The optics extended to access. The hearing opened June 29 in a courtroom with roughly 25 public seats and no cameras; the DEA denied requests from a news outlet, a member of Congress and others to livestream the proceedings. Supporters of reform have argued that a matter of this public importance should be open; the DEA kept it closed. None of this changes the legal test, but it explains the tone of the coverage.

Week One Recap: The Government Puts On Its Case

The hearing began June 29 with the DEA’s opening statement, delivered by agency attorney James J. Schwartz, and coverage described the government as coming “out swinging” in defense of the proposed rule. The DEA’s first witness was Dr. Dominic Chiapperino, director of the controlled substance staff in the FDA’s Center for Drug Evaluation and Research – the scientific backbone of the government’s eight-factor case that marijuana has a currently accepted medical use and a lower abuse potential than Schedule I implies.

After the government rested, the opposition began. The first designated party to open its case was a drug-and-alcohol screening association, setting the template for the rest of the hearing: witnesses focused on abuse potential, dependence, impaired driving, product inconsistency and public-safety enforcement. The hearing then recessed around the July 4 holiday, going into recess on July 3 and reconvening July 6.

Week Two, Day Seven: Dr. Kenneth Finn Calls Medical Marijuana a “Ruse”

The most quotable testimony of the second week came from Dr. Kenneth Finn, a board-certified physician in physical medicine and rehabilitation and pain management and a former president of the American Board of Pain Medicine. Finn testified that state “medical” marijuana programs do not operate under the standards required of modern medicine, and a wire report summarized his view bluntly: he called the state medical system a “ruse.”

His most memorable line drew a direct parallel to the opioid crisis. Finn testified that cannabis recommending patterns are “somewhat reminiscent of the pill mills of yesteryear,” and said he stopped writing marijuana recommendations himself after his own patients returned with adverse events. He also argued that recommendations are written by a concentrated group of clinicians – testifying that in Colorado, where he practiced for three decades, fewer than 2 percent of licensed physicians are certified to recommend marijuana.

On efficacy, Finn attacked the evidence for cannabis in chronic pain, the most commonly cited medical use. He testified that of 27 randomized controlled trials he reviewed, 18 showed no benefit and one showed worsening – roughly two-thirds showing no benefit. His case-in-chief, cross-examination and redirect all concluded on July 8, ahead of schedule, and the judge placed the hearing in recess for July 9 rather than start the next party a day early.

Week Two: The Tennessee Bureau of Investigation Takes the Enforcement Angle

The hearing resumed July 10 with the Tennessee Bureau of Investigation presenting its case-in-chief. Its witness was Erica Stephens, an assistant special agent in charge of the Tennessee Dangerous Drugs Task Force. Stephens testified that deregulation of marijuana – including the legalization of hemp – makes enforcement harder, encourages the involvement of criminal organizations in production and distribution, and negatively affects the health and safety of Tennesseans.

Her legal argument was that the government’s rescheduling proposal is “deficient” and “overlooks or ignores substantial evidence” relevant to the required eight-factor analysis, which she said weighs against moving marijuana to Schedule III. Representing the TBI was Tennessee assistant attorney general Reed Smith, whose questioning ranged across diversion, violent crime, delta-8 THC, and the argument that cannabis lacks a reproducible profile in plant form.

Smith also leaned on the regulatory history: a 2015 Health and Human Services recommendation that cannabis remain in Schedule I, and the way the 2018 Farm Bill’s definition of hemp bears on the 2023 HHS recommendation for Schedule III. That thread – hemp, delta-8 and the boundary between legal and illegal cannabinoids – has been a recurring theme in the opposition’s strategy.

The Final Stretch: July 13-15 and Why There Are No Closing Arguments

The remaining schedule is tight. On July 13, pharmacist Phillip A. Drum, PharmD, is set to testify. On July 14, four state governments – Nebraska, Idaho, Indiana and Louisiana – are scheduled to present their cases. The hearing must then conclude no later than July 15, the hard limit set in the April order.

There will be no oral closing arguments. Instead, under 21 C.F.R. section 1316.64, each party will file post-hearing briefs, with the judge providing instructions at the close of testimony. That is a routine but important detail for anyone modeling timing: the loudest part of the process ends July 15, but the written record and briefing continue afterward.

What Happens After July 15: A Recommendation, Not a Verdict

This is the part the headlines tend to blur. When the hearing ends, the parties file post-hearing briefs, and Chief Administrative Law Judge Derek Julius reviews the full evidentiary record and issues a recommended decision to the DEA Administrator. The Administrator then publishes a Final Rule in the Federal Register that sets the actual scheduling determination.

Two features make the timeline genuinely uncertain. First, Julius’ recommendation is non-binding – the DEA and the Justice Department are free to adopt it or reject it. Second, no statute requires the judge to issue his recommendation by any particular date. So while July 15 is a firm end to testimony, it is not a firm date for a decision, and anyone trading the event should treat “deadline” as “end of hearing,” not “end of story.”

Why It Matters for Cannabis Stocks

The market has already been trading the setup. The AdvisorShares Pure US Cannabis ETF ($MSOS) climbed to its highest level of 2026 into the July 15 deadline, with a one-year NAV return near 104% to May 31 versus roughly 30% for the S&P 500. That move reflects both the April medical down-scheduling – which removed Section 280E for FDA-approved and state-licensed medical products – and hope that a broader Schedule III outcome extends that tax relief across the industry.

The single-name reactions have been structural, not just sentimental. Trulieve ($TCNNF) moved its listing to the NYSE as TRLV, Curaleaf ($CURLF) completed a 1-for-3 reverse split, and Canopy Growth ($CGC) shares rose on its fiscal 2026 results. Names most often cited as leverage to a broad rescheduling include the U.S. multi-state operators Curaleaf, Green Thumb ($GTBIF) and Trulieve, alongside the Canadian-listed and diversified players Tilray ($TLRY), Canopy ($CGC), Cronos ($CRON), Aurora ($ACB) and SNDL ($SNDL).

The caution is that the tax and demand benefit of full rescheduling is real but not automatic, and it is being priced into a group that has already run hard. Schedule III does not federally legalize adult-use sales, does not by itself fix banking access, and does not remove state-by-state complexity. It principally changes tax treatment (280E) and research access. A one-sided hearing record, a non-binding recommendation and an open-ended timeline all argue for treating this as a multi-step process rather than a single dated catalyst.

Scenarios Into and After July 15

Key Risks

• Non-binding recommendation: the ALJ ruling does not bind the DEA or DOJ; the Administrator can adopt, narrow or reject it.
• Open-ended timeline: no deadline forces the judge or the Administrator to act by a set date; “July 15” ends testimony, not the rulemaking.
• One-sided record: a hearing dominated by opposition witnesses builds an evidentiary base that litigants can use to challenge either outcome.
• Schedule III is not legalization: it changes tax (280E) and research access, not federal adult-use legality, interstate commerce or banking by itself.
• Crowded positioning: $MSOS and the majors have already rallied hard; a “sell-the-news” or delay reaction is possible.
• Litigation and hemp/delta-8 overhang: the boundary between hemp-derived cannabinoids and marijuana remains a contested, unresolved theme.

Merlintrader Bottom Line

How the First Hearing Collapsed – and Why This One Restarted

This is the second time the government has tried to run a rescheduling hearing, and the story of the first attempt explains why the current one feels so tightly controlled. The original hearing was set to begin January 21, 2025 before DEA Chief Administrative Law Judge John J. Mulrooney II. It never happened.

Pro-rescheduling participants – among them the cannabis producer Village Farms International and the veterans-focused group Hemp for Victory – accused the DEA of improper ex parte communications with anti-rescheduling parties, including Smart Approaches to Marijuana, and of failing to disclose a conflict of interest. In their telling, the agency responsible for defending the Schedule III proposal was quietly coordinating with the people trying to kill it, in a way designed to “subvert the process and thwart” the Justice Department’s own rule.

Mulrooney denied their request for reconsideration but granted leave to file an interlocutory appeal, canceled the January 21 hearing and suspended the proceedings pending that appeal. Then the process simply lost its judge: Mulrooney retired in August 2025, leaving the DEA with no administrative law judge available to hear the matter at all. Joint status reports into early 2026 confirmed that nothing was moving.

The Trump administration broke the logjam with a different lever. Rather than wait for the stalled adjudication, the April 23, 2026 order used a treaty-compliance pathway to place medical marijuana into Schedule III immediately, and then launched a fresh hearing – now before Chief Administrative Law Judge Derek Julius – on a new procedural foundation. That history is why the current record is so carefully bounded, and why every side is watching the process, not just the science.

The Seven: A Field Guide to Who Is Arguing Against Rescheduling

On June 18, 2026 the DEA named seven “interested persons” as designated participants – every one of them a party that considers itself adversely affected by a move to Schedule III. Knowing who they are makes the testimony easier to read, because each brings a distinct angle of attack.

The pattern is deliberate. There is no cannabis company, no medical-cannabis patient group and no reform organization on the list – the parties that participated in the first, collapsed hearing, such as Village Farms and Hemp for Victory, are absent this time. That is exactly why coverage has framed the proceeding as one where the government argues for its own rule while a wall of opponents argues against it.

Plain English: The Eight-Factor Test and Why 280E Is the Real Prize

Two pieces of jargon run through every day of testimony. The first is the eight-factor analysis: the Controlled Substances Act requires the government to weigh eight statutory factors – including a drug’s actual and relative abuse potential, its scientific evidence and pharmacology, its state of scientific knowledge, its history and current pattern of abuse, the scope and significance of that abuse, any risk to public health, its psychic or physiological dependence liability, and whether it is a precursor to an already-controlled substance. Nearly every opposition witness has argued that the government’s analysis is “deficient” on one or more of these factors.

The second is Section 280E of the tax code, and for investors it is the heart of the trade. Because marijuana is a Schedule I substance, 280E has long barred cannabis businesses from deducting ordinary operating expenses, pushing effective tax rates far above normal corporate levels. Moving a product to Schedule III removes that penalty. That is why the April medical down-scheduling already mattered to margins, and why a broader Schedule III outcome – extending 280E relief across the adult-use industry – is what the equity market is really pricing.