Three GOP Attorneys General Sue DOJ Over Cannabis Rescheduling

Attorneys general from three Republican-led states filed suit last week seeking to block the Justice Department's directive to reschedule cannabis from Schedule I to Schedule III, marking the first major legal challenge to the federal reclassification effort.

Nebraska AG Mike Hilgers, Louisiana AG Liz Murrill, and Indiana AG Todd Rokita argue the rescheduling order exceeds the DOJ's authority and conflicts with their states' prohibition policies. The lawsuit, filed in federal court, comes as the Drug Enforcement Administration prepares to finalize the historic regulatory change recommended by the Department of Health and Human Services in 2023.

The challenge sets up a potential legal battle that could delay implementation of the rescheduling process, which has been in motion since President Biden's initial directive in October 2022. Cannabis remains fully prohibited in all three plaintiff states, with no medical or adult-use programs.

The Legal Arguments

The Republican attorneys general contend that rescheduling marijuana would undermine their enforcement of state drug laws and create conflicts between federal and state regulations. Their lawsuit raises questions about the administrative process used to advance the rescheduling recommendation through federal agencies.

Under the Controlled Substances Act, the Attorney General holds authority to reschedule drugs based on scientific and medical evaluations from HHS. The current rescheduling effort followed a comprehensive FDA review that concluded cannabis has accepted medical use and lower abuse potential than Schedule I or II substances.

But the three states argue this determination was flawed. They point to ongoing prohibition in their jurisdictions as evidence that medical cannabis lacks the "currently accepted medical use" required for Schedule III classification.

Industry Impact

Rescheduling to Schedule III would allow cannabis businesses to claim standard federal tax deductions under Section 280E of the tax code, potentially saving the industry billions annually. Currently, marijuana companies cannot deduct ordinary business expenses like payroll, rent, or marketing costs.

The change would also ease certain research restrictions and potentially influence banking access, though it would not federally legalize cannabis. State-licensed operators would still face limitations under federal law, including interstate commerce restrictions.

Cannabis policy experts note the lawsuit faces significant hurdles. "The states will need to demonstrate standing and prove the rescheduling violates administrative procedures," said one attorney who specializes in cannabis regulation. "That's a high bar given the extensive review process HHS conducted."

What's Next

The DEA has not yet published its final rule on rescheduling, following a public comment period that drew more than 43,000 submissions last year. The agency must respond to substantive comments before issuing final regulations.

Legal challenges to the rescheduling process were widely anticipated by industry observers. Similar lawsuits could emerge from other prohibition states or anti-legalization advocacy groups seeking to preserve Schedule I status.

The case will likely take months to resolve through federal courts. Meanwhile, the rescheduling process continues through administrative channels, with the DEA expected to issue final guidance in 2025.

Nebraska, Indiana, and Louisiana maintain some of the strictest cannabis laws in the nation. Nebraska voters rejected a medical marijuana ballot initiative in 2024 after courts removed it from the ballot, while Indiana and Louisiana have limited CBD-only programs for specific medical conditions.

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This article is based on original reporting by ganjapreneur.com.