DOJ Says ‘Pocketbook Interests’ Drive Cannabis Rescheduling Foes

The Justice Department is asking a federal appeals court to let its medical marijuana rescheduling take hold, telling the judges that the drug-testing group and pharmaceutical company trying to freeze the reform are guarding their own revenue, not the public interest.

In a brief filed July 2, 2026 with the U.S. Court of Appeals for the D.C. Circuit, the government urged the court to reject a request to pause the reclassification of state-licensed medical cannabis while a broader legal challenge plays out. The two groups behind that request, it argued, “come nowhere near satisfying the demanding standard for that extraordinary relief.”

Why the government says the challengers can’t sue

The pause request came from the National Drug and Alcohol Screening Association, a trade group for drug-testing companies, and MMJ International Holdings, a firm developing cannabis-based medicines. The Justice Department’s central argument is that neither has the legal standing to be in court at all — that neither can point to a concrete injury the reform actually causes.

The drug-testing association had warned that rescheduling would shrink its members’ revenue as employers drop marijuana from workplace testing panels, and drive up costs for those that keep testing but must sort out whether a positive result reflects legal medical use. The department called that generalized speculation about the industry rather than specific harm to identifiable members, and said any lost business would trace back to employers’ own choices to stop testing or to screeners’ own billing decisions — not to the order itself.

The drugmaker fared no better in the government’s telling. MMJ is not a current competitor in the market, the department said, because it has two experimental-drug applications pending with the Food and Drug Administration but no approved product for sale — so it cannot claim rescheduling will cost it business to rivals. Congress wrote the federal drug law to serve the public and the researchers and physicians who need access to controlled substances, the brief argued, not to hand drug screeners a permanent source of testing income or to protect a would-be competitor’s future sales. Taken together, it said, the challengers were pursuing “pocketbook interests served by keeping all marijuana in schedule I.”

A crowded fight over the April order

The pause request is one thread in a larger battle. The D.C. Circuit is weighing three consolidated challenges to the April 2026 order that moved state-licensed medical marijuana and FDA-approved cannabis products out of Schedule I — the drug law’s most restrictive tier — and into Schedule III. One suit was brought by the drug-testing association and the anti-legalization group Smart Approaches to Marijuana; another by the attorneys general of Nebraska and Indiana, after Louisiana dropped out; and a third by a coalition of addiction-treatment figures, doctors and MMJ.

At the core of those suits is a claim that the acting attorney general overstepped. The challengers say he could not use his narrow power to bring U.S. drug law in line with international treaties as a shortcut to reschedule marijuana, pointing to a D.C. Circuit ruling from nearly 50 years ago that they read as barring exactly that move. The government counters that the challengers have not shown they are likely to win that argument — the threshold a court weighs before hitting pause on a federal policy.

The drug-testing association and MMJ filed the separate motion to freeze the order, calling marijuana a dangerous drug and warning of the harm that would follow from wider access while the case is pending. The government pushed back on that too, noting that 40 states have already legalized medical marijuana, so a narrow federal reclassification is unlikely to add much to those harms during the appeal.

Behind the order is Acting Attorney General Todd Blanche, who issued it on April 23, 2026. It marked the first time the federal government formally recognized marijuana’s medical value by moving part of the market out of Schedule I; recreational cannabis was left untouched, still classed alongside heroin.

What operators should watch next

The stay fight is unfolding alongside a separate administrative process. On June 29, 2026, the DEA opened a hearing on whether to extend Schedule III status to all marijuana, including adult-use products, with proceedings scheduled to run no later than July 15, 2026. Congress has weighed in as well: a House committee voted to bar federal officials from carrying out rescheduling, though lawmakers from both parties have said they doubt that effort will succeed.

Even if rescheduling survives the courts, it would not make state-licensed cannabis fully legal under federal law. As the Congressional Research Service has explained, moving marijuana to Schedule III leaves it a federally controlled substance; a long-standing congressional budget provision — not the schedule change — is what shields state-legal medical operators from prosecution, and it does nothing for recreational businesses.

For now, the appeals court has to decide whether to freeze the reform while it works through the lawsuits. Its ruling on the pause request will be the first real measure of how much traction the opponents’ arguments have, and whether the administration’s signature cannabis reform keeps advancing in the meantime.