$MSOS $TLRY $CGC $ACB: Inside the 274 Pages That Closed the Cannabis Rescheduling Record

What happened on August 17

The evidentiary hearing itself had already concluded on July 15. What August 17 closed was the post-hearing briefing phase of the federal marijuana rescheduling proceeding. Chief Administrative Law Judge Derek C. Julius had set that date for optional transcript corrections and post-hearing submissions, subject to a fifty-page limit for the briefs. Every side used the opportunity.

The hearing had opened on June 29 and concluded on July 15 after 11 hearing days. The seventeen-day span on the calendar included weekends, the Independence Day recess and non-hearing days; it should not be confused with seventeen days of testimony.

The assembled August 17 document set contains six filings totaling 274 PDF pages. One filing — the Government’s — argues for transfer to Schedule III. Five filings, representing all seven outside designated parties, oppose that result.

The file has two tracks, and they are constantly confused

Much of the confusion around federal cannabis policy in 2026 comes from combining two legally distinct actions that happened on the same date.

Track one: a final rule that is already in force

On April 28, 2026, a final federal rule became effective when it was published in the Federal Register. It moved to Schedule III two defined categories: FDA-approved drug products containing marijuana and marijuana covered by a qualifying state-issued medical marijuana licence.

It did not move every form of marijuana to Schedule III. Unlicensed marijuana crops, bulk marijuana and other marijuana outside the categories covered by the final order remain in Schedule I.

That April action is already being challenged in the U.S. Court of Appeals for the D.C. Circuit. The litigation concerns, among other things, the legal authority used to create this partial rescheduling framework. It is separate from the administrative hearing on marijuana as a broader class.

Track two: the broader rulemaking is still open

The broader proceeding addresses the remaining marijuana covered by the May 2024 proposed rule. The evidentiary hearing began June 29 before Chief ALJ Derek C. Julius, concluded July 15 after eleven hearing days, and entered its post-hearing phase. The August 17 briefs are part of that still-open administrative proceeding.

No final decision has been issued in that broader case.

Inside the briefs: one statutory test, competing methodologies and a fight over authority

Under the Controlled Substances Act, Schedule I treatment rests on statutory criteria that include high abuse potential, no currently accepted medical use in treatment in the United States, and a lack of accepted safety for use under medical supervision. In the current proceeding, the sharpest dispute is over how the Government should determine whether marijuana has a currently accepted medical use.

The Government’s case

The Government’s August 17 filing asks the tribunal to recommend Schedule III. Its legal framework relies heavily on the Office of Legal Counsel analysis that governs the Executive Branch’s interpretation of the scheduling criteria and on the Department of Health and Human Services’ medical and scientific evaluation.

The Government argues that the traditional five-part test used in earlier marijuana scheduling proceedings cannot by itself answer the current medical-use question because it does not adequately account for widespread therapeutic use inside state-regulated medical programmes.

The HHS approach instead examines a two-part framework for accepted medical use. The Government points to the scale of state medical practice — including tens of thousands of practitioners and millions of registered or participating patients across dozens of U.S. jurisdictions — as evidence that medical use cannot simply be treated as nonexistent.

On abuse potential, the Government’s argument is comparative rather than absolute: marijuana can have abuse potential and still satisfy the statutory criteria for Schedule III if its relative profile fits that schedule better than Schedule I or II.

The case against

The joint filing from Smart Approaches to Marijuana and the opposed states is the largest of the six submissions. Its core position is that the established five-part test remains the proper method for determining accepted medical use and that a different standard should not be introduced simply to reach a different result in this proceeding.

The Tennessee Bureau of Investigation focuses heavily on burden of proof and argues that the proponent of rescheduling must establish that the statutory criteria are satisfied. Other opposition filings develop arguments concerning impaired driving, workplace testing, youth exposure, product potency, psychiatric and dependency risks and the variability of commercial cannabis products.

A second layer of the opposition case is jurisdictional. Some parties argue that the Attorney General lacked authority to initiate or structure parts of the rescheduling process in the manner used here. That argument matters because it is not merely a disagreement over cannabis science: it is an argument capable of being carried into judicial review.

What happens next — the actual procedure

The next phase is governed by DEA’s administrative-hearing rules in 21 C.F.R. Part 1316. Those rules are more precise than the social-media timeline usually attached to the case, but they still do not produce a fixed date for the next substantive decision.

Under 21 C.F.R. § 1316.65, after the period for proposed findings and conclusions has expired, the presiding officer prepares a report containing findings, conclusions and a recommended decision. The regulation says this is to happen “as soon as practicable”; it does not assign a specific calendar deadline.

Once the report is served, parties have 20 days to file exceptions under § 1316.66. The presiding officer cannot certify the administrative record to the Administrator until at least 25 days after service of the report.

After certification, § 1316.67 directs the DEA Administrator to publish the final order in the Federal Register as soon as practicable. If a final rule changes the schedule, its effective date ordinarily cannot be less than 30 days after publication unless the Administrator makes the required public-interest finding for an earlier date.

Three quieter channels can move cash while the hearing is silent

The DEA hearing produces the biggest headlines, but several parallel policy channels can affect cannabis economics before the broader rescheduling case reaches a final order.

1. Tax: the channel that reaches the bank account

Treasury and the IRS said in April that they plan to issue guidance on the federal tax consequences of the medical-marijuana rescheduling order. The most important issue for operators with multiple business activities is how Section 280E applies when part of the business involves marijuana that is no longer Schedule I or II while another part still does.

Treasury specifically identified expense apportionment as an issue for the forthcoming guidance and also said it expects a transition rule addressing the taxable year containing the effective date.

For affected medical-marijuana operators, this is a direct cash-flow issue. The April final rule itself notes that Section 280E applies to businesses trafficking in Schedule I or II substances and that qualifying state medical licensees can therefore have materially different tax treatment after the rule. Individual tax liability, however, remains fact-specific.

2. The D.C. Circuit: litigation against the rule already in force

The April medical-marijuana rule is being challenged separately from the ALJ proceeding. The petitions target the legal basis and structure of the partial rescheduling action rather than asking the court to conduct its own medical review of cannabis.

That distinction matters. A judicial decision affecting the April rule could alter assumptions the market has already begun to treat as settled, while the broader Schedule III proceeding could continue on its own administrative track.

3. Federal health and transportation policy

CMS has created a model-specific Substance Access Beneficiary Engagement Incentive under which participating organisations in certain Innovation Center models can furnish eligible hemp-derived products to qualifying beneficiaries subject to programme limits, including an annual value cap of up to $500. This is not a blanket Medicare coverage change and should not be described as Medicare broadly reimbursing cannabis products.

Separately, the FAA is supporting expert work through the National Academies on cannabis use and operational fitness in safety-sensitive aviation roles, including pilots and air traffic controllers. That work may inform future policy, but the existence of a study should not be confused with a change to current FAA or DOT drug-testing rules.

The hemp deadline: current law versus the Senate proposal

Current federal law changes the statutory definition of hemp on November 12, 2026. Among other effects, the revised framework uses a total-THC approach and imposes a per-container threshold for certain final hemp-derived cannabinoid products.

The important August development is that the Senate has moved to postpone part of that transition — but the postponement is not yet enacted law.

On August 8, the Senate passed a revised continuing-resolution package funding the government through December 11. The Senate language would postpone most of the November 12 hemp-definition change until December 11, 2026, while restrictions involving cannabinoids that cannot naturally be produced by the cannabis plant would remain on the earlier timetable.

The House must still agree to the Senate legislation, and the measure must be signed before that delay changes current law. Until then, November 12 remains the operative statutory date.

What the companies reported while the lawyers were writing

The policy case is difficult to price because it has no fixed calendar. Company filings are easier: they give investors dated revenue, adjusted EBITDA, cash and cash-flow numbers that can be compared without predicting what the DEA will do next.

Adjusted EBITDA is improving faster than cash conversion

The quarter-by-quarter picture is more nuanced than a single profitability metric. Aurora, Canopy and Organigram all reported free-cash-flow outflows in the periods above even while operating measures improved. Canopy is the clearest warning: its adjusted EBITDA loss narrowed substantially year over year, yet quarterly free cash outflow widened to C$25.7 million.

That does not make adjusted EBITDA useless. It means it should not be read as cash flow.

International exposure is becoming increasingly important

Aurora’s total revenue fell 9%, but its international medical cannabis revenue rose 17% to C$43.3 million while Canadian medical cannabis revenue fell 25%. Organigram’s acquisition of Sanity Group contributed approximately C$40 million of net revenue in the quarter and materially increased its international exposure. Tilray reported 34% growth in international medical cannabis revenue for fiscal 2026.

The improvement across Canadian-listed cannabis companies is therefore not simply a story about Canadian adult-use demand. International medical markets, distribution and acquired businesses are increasingly important parts of the mix.

Organigram’s C$105.5 million net income needs context

Organigram reported C$105.5 million of net income on C$105.8 million of quarterly net revenue. Read in isolation, those numbers look as though nearly every dollar of revenue became profit. That is not what happened.

The company explicitly attributes much of the increase in net income to non-cash fair-value gains on preferred shares. Its adjusted EBITDA reconciliation removes C$104.3 million of “other income” and related items before arriving at adjusted EBITDA of C$13.4 million.

That is why the bottom line should not be treated as equivalent to operating cash generation. Organigram used C$4.3 million of cash in operations after working capital and reported a C$3.9 million free-cash-flow outflow in the quarter.

And one corporate situation changed after the original draft

Curaleaf’s approach to Aurora is no longer merely an announced intention. On August 18, Curaleaf formally commenced its unsolicited take-over bid and filed the formal offer and circular.

Under the offer, Aurora shareholders would receive 0.3463 of a Curaleaf subordinate voting share plus US$0.75 in cash for each Aurora common share. Based on Curaleaf’s August 10 reference price, the bidder describes the package as approximately US$4.00 per Aurora share, subject to a maximum value of US$5.00 per share under the offer’s cap mechanism.

The offer is scheduled to remain open until 5:00 p.m. Mountain Time on December 1, 2026, unless extended, varied or withdrawn in accordance with its terms.

Aurora had already formed an independent special committee after Curaleaf’s August 11 announcement. The important distinction is now straightforward: this is a live unsolicited tender offer, not merely a public expression of intent, but it is also not a completed transaction.

$MSOS: the policy ticker is much more concentrated than the name suggests

When investors want listed exposure to U.S. federal cannabis policy, the AdvisorShares Pure US Cannabis ETF often becomes the trade because many U.S. multi-state operators historically have not had ordinary primary listings on the major U.S. exchanges.

That makes understanding the fund’s actual exposures more important than reading the word “ETF” as a synonym for broad diversification.

As of August 18, 2026, AdvisorShares reported approximately US$914.1 million in net assets, a US$4.55 NAV and 200.88 million shares outstanding.

Together those three exposures represented 75.01% of the portfolio reported for that date. Glass House Brands represented 7.55%, while Verano represented 6.05%.

Some large exposures are implemented through total-return swaps rather than ordinary directly held equity. That synthetic positioning also helps explain why the holdings file can display a large negative cash position alongside the swap assets: looking only at the cash line without the derivative exposure would give a misleading picture of the portfolio.

The fund is also actively managed, not a passive index product. Its published fee table shows a gross expense ratio of 0.81% and a net expense ratio of 0.78%, with a stated expense-limitation arrangement at 0.74%; fund-level accounting items can prevent those figures from matching one-for-one.

$CGC: a shareholder vote, a quorum threshold and a new auditor

Canopy Growth filed its definitive proxy on August 7 and subsequently mailed its 2026 meeting materials. The annual general and special meeting is scheduled for Friday, September 25 at 1:00 p.m. Eastern, virtually, with a July 31 record date.

The deadline specified for depositing proxies is September 23 at 1:00 p.m. Eastern.

The meeting’s quorum threshold is one-third of the outstanding voting shares. For a company with a widely dispersed shareholder register, participation is therefore not a trivial procedural detail.

What is on the ballot

The agenda includes the election of five directors, appointment of MNP LLP as auditor, a proposed share consolidation, an advance-notice by-law proposal, renewal of the omnibus incentive plan, an advisory say-on-pay vote and a vote on the frequency of future say-on-pay votes.

The consolidation proposal gives the board discretion to select a ratio between one-for-five and one-for-fifteen and to implement it within the authorised period if the board considers doing so appropriate.

The proposal is best read as an authorization rather than an announcement that a reverse split will definitely occur. Shareholders approved a substantially similar authorization in 2025 and the board ultimately did not implement it.

The auditor change deserves separate attention

On August 7, PKF O’Connor Davies resigned as Canopy’s auditor with immediate effect. According to Canopy’s Form 8-K, the resignation followed a strategic decision by the audit firm concerning its work in the cannabis sector rather than a reported disagreement with Canopy over accounting principles or disclosure.

The filing nevertheless sits against an already disclosed accounting-control background. Canopy had an adverse opinion on internal control over financial reporting at March 31, 2026 and previously disclosed restatements and non-reliance relating to fiscal 2024 and fiscal 2025 reporting, including the accounting classification of equity-linked instruments.

The audit committee appointed MNP LLP as the new independent registered public accounting firm for the fiscal year ending March 31, 2027, subject to the shareholder vote included in the September meeting.

What broader Schedule III would actually change — and what it would not

It would materially change the Section 280E equation

Section 280E denies ordinary deductions and credits to a business trafficking in controlled substances listed in Schedule I or II under the conditions described by the tax code. Moving an activity from Schedule I to Schedule III therefore can remove that statutory disallowance for the affected activity.

That is already relevant to the medical-marijuana categories covered by the April final rule, and Treasury is preparing guidance for businesses whose operations cross the line between rescheduled and still-Schedule-I activities.

If the remaining marijuana were ultimately moved to Schedule III, the potential 280E effect for U.S. operators would be one of the largest direct cash-flow changes associated with the reform.

It could reduce some federal barriers to research

Schedule I research carries controlled-substance registration, handling, security and protocol burdens specific to the most restricted federal category. Schedule III would reduce some of those scheduling-related barriers.

It would not make cannabis research unregulated. DEA registration requirements, FDA rules, human-subject protections and ordinary clinical-research standards would still apply where relevant.

It would not create nationwide interstate recreational commerce

A scheduling change is not the same thing as federal legalization of state adult-use markets. It does not automatically turn fifty separate licensing systems into one national market, nor does it by itself authorize state-licensed recreational products to move freely across state lines.

Investors modelling an immediate national supply chain from Schedule III alone would therefore be modelling a broader reform than the one actually under consideration.

It would not automatically solve banking or exchange listing

Rescheduling can materially change legal and risk analysis for financial institutions, but banking also involves anti-money-laundering obligations, federal enforcement risk, internal compliance standards and institutional risk appetite.

Likewise, moving marijuana to Schedule III does not itself guarantee that every cannabis issuer becomes eligible for Nasdaq or NYSE listing. Exchange eligibility depends on the issuer’s activities, the applicable rules and how the exchanges interpret the resulting federal framework.

Why the hearing record is one-sided — and why that cuts both ways

The unusual structural fact in this proceeding is straightforward: the federal Government is the proponent of broader rescheduling while all seven outside designated hearing participants oppose it.

That means the adversarial evidentiary record was built overwhelmingly by parties challenging the Government’s position. Industry companies and the principal pro-rescheduling trade organisations were not among the outside designated parties presenting a case in the hearing.

In the short term, that gives the opposition a large evidentiary footprint for the ALJ to address. The August 17 documents reinforce the point: 222 of the 274 assembled pages come from filings opposing a broader move out of Schedule I.

But the same record also preserves objections for later judicial review. Challenges to methodology, burden of proof, statutory authority and jurisdiction are now embedded in the administrative record. That does not prove the opponents expect to lose before the agency; it does mean the proceeding is building the material a court could eventually be asked to review.

How to read the next cannabis headline without getting caught

The file has entered the phase in which anticipation can travel faster than documents. Four filters are useful.

1. Ask which legal track the headline belongs to

If the story concerns FDA-approved products or state-licensed medical marijuana, it may concern the April final rule that is already effective.

If it concerns moving the remaining marijuana as a broader class, it belongs to the ALJ proceeding that still has no recommended decision and no fixed decision date.

2. Ask whether the document actually exists

An ALJ report will be a dated document. Exceptions will be filed documents. A DEA final order will be published through a formal regulatory process. Until one of those documents exists, a headline assigning a specific decision or date is reporting an expectation, leak, forecast or interpretation — not the formal regulatory event itself.

3. Ask who has the economic exposure

A U.S. operator carrying a large 280E burden has different exposure from a Canadian producer whose growth comes from Europe, medical cannabis or non-cannabis businesses.

Likewise, $MSOS is overwhelmingly exposed to a small number of U.S. operators, whereas $TLRY, $ACB, $CGC, $CRON and $OGI each have different geographic, balance-sheet and product exposures.

4. Ask what the balance sheet allows

The precise date of the next federal decision is unknown. Cash therefore matters because it determines how much strategic time a company has without relying on a specific regulatory catalyst.

A policy thesis can be right and still arrive too late for a weak balance sheet. That is why liquidity, free cash flow and dilution capacity belong beside every Schedule III thesis.

Dates that are real