Judge Rejects Bid to Reopen the Rescheduling Hearing
In today’s Trade To Black podcast presented by Flowhub, Shadd Dales welcomes Dentons cannabis attorney Eric Berlin to break down a major ruling in the DEA’s marijuana rescheduling hearing. FundCanna CEO Adam Stettner follows with his weekly take on the news and what it means for the industry. On Thursday, Chief Administrative Law Judge Derek Julius rejected opponents’ request to reopen the hearing for more testimony and document discovery.
Judge Julius noted that the record already holds more than 2,500 pages of testimony and thousands of pages of exhibits. He admitted the Government Accountability Office report, which found gaps in written scheduling policies at the DEA and FDA, but limited the follow-up to short written briefs. Optional supplemental briefs of up to 10 pages are due October 29, replies are due November 5, and the stay ends when briefing closes. Parties can’t reply to each other’s briefs, and further requests are disfavored.
Berlin walks through how the judge handled each of the opponents’ five discovery topics. Two were ruled immaterial, two could have been raised during cross-examination of the FDA’s controlled substances staff director, and the fifth would only confuse the matter. The judge also noted that the government bears the burden of proof. If opponents believe the record is bare, that argument goes to whether the burden was met, not to reopening the hearing. Berlin calls the order a strong result for time efficiency and expects that opponents will struggle to tie record-keeping gaps to this rescheduling proposal.
Berlin notes the timeline rules out a recommendation before the November 3 election, but he doesn’t think that matters. The judge hasn’t set a date, and his recommendation isn’t the final decision, which rests with the DEA Administrator. Berlin believes a careful record now reduces the risk of a successful appeal later.
Stettner calls the delay frustrating but good news given its substance. He argues rescheduling is a starting line, not a finish line. Major banks and investment banks are now asking to meet with him about M&A, profitable operators and expansion opportunities, conversations he says weren’t happening a year ago.
Heading into earnings season, Stettner will be watching gross margins, EBITDA, units sold relative to revenue, debt and liquidity. He also wants to see how much of any margin improvement comes from 280E relief rather than operations.
On hemp, Stettner says it should be legal but fully regulated, with testing, age-gating and proper packaging. He sees mainstream coverage from outlets like Bloomberg as another sign the industry is approaching the starting line.
Tune in for the full breakdown.
