The Rescheduling Backlash: Inside SAM's Lawsuit to Reverse Cannabis Schedule III

The champagne had barely gone flat. On April 23, 2026, the Department of Justice issued its final rescheduling order, officially reclassifying state-legal medical cannabis and FDA-approved cannabis products from Schedule I to Schedule III of the Controlled Substances Act. For an industry that had been fighting for this moment for decades, it felt like the beginning of a new chapter — federal recognition that cannabis has accepted medical use and a lower potential for abuse than heroin, LSD, and ecstasy, the company it had kept on Schedule I since 1970.

Then came the lawsuit.

Smart Approaches to Marijuana (SAM), alongside the National Drug and Alcohol Screening Association (NDASA), filed a legal challenge in the U.S. Court of Appeals for the DC Circuit, seeking to reverse the rescheduling entirely. The case is being handled by a law firm where former Attorney General William Barr is a partner — a detail that tells you quite a bit about the political weight and ideological commitment behind this challenge.

This is not a nuisance filing. It is a serious legal effort to undo the most significant shift in federal cannabis policy in over fifty years, and the arguments it raises deserve careful examination regardless of where you stand on legalization.

Who Is SAM and What Do They Want?

Smart Approaches to Marijuana is the most prominent anti-legalization advocacy organization in the United States. Founded in 2013 by former Obama administration drug policy advisor Kevin Sabet, SAM positions itself as a third-way alternative to both full legalization and mass incarceration. The organization's stated mission is to promote health-first approaches to cannabis policy, which in practice means opposing commercial legalization, recreational use, and — now — the rescheduling of cannabis to a less restrictive classification.

SAM has been fighting rescheduling at every stage of the process, submitting public comments, lobbying members of Congress, and arguing that moving cannabis to Schedule III would open the door to what they call the "Big Marijuana" commercialization of a drug they believe causes significant public health harm.

The National Drug and Alcohol Screening Association, the co-plaintiff, represents companies and professionals in the workplace drug testing industry. Their interest in the case is partly philosophical and partly economic — rescheduling to Schedule III could complicate the legal basis for cannabis-related workplace testing and potentially reduce demand for their services.

The Legal Arguments

SAM's lawsuit makes three principal arguments, each targeting a different aspect of the rescheduling process.

First, they argue that the rescheduling violates the Administrative Procedure Act's rulemaking requirements. The APA governs how federal agencies create and modify regulations, and it requires agencies to follow specific procedural steps including adequate public notice, a meaningful comment period, and a reasoned explanation for the final decision. SAM contends that the DOJ's rulemaking process was inadequate — that the agency did not sufficiently address opposing comments, that the scientific basis for the decision was incomplete, and that the process was tainted by political pressure.

Second, they argue that the rescheduling exceeds the Attorney General's authority under the Controlled Substances Act. This is a more aggressive claim, essentially asserting that the CSA does not give the AG the power to reschedule cannabis in the manner the DOJ chose — specifically, the approach of rescheduling state-legal medical cannabis and FDA-approved products rather than cannabis broadly. SAM contends this creates a legally novel framework that the CSA was never designed to accommodate.

Third, and perhaps most broadly, they argue that the rescheduling decision is "arbitrary and capricious" — a legal standard that requires courts to determine whether an agency action was reasonable and based on a rational consideration of the relevant factors. SAM will likely argue that the evidence does not support the conclusion that cannabis meets the criteria for Schedule III, which requires that a drug have a moderate to low potential for physical dependence and an accepted medical use.

The William Barr Factor

The involvement of former Attorney General William Barr's law firm adds a layer of political significance to the case that extends beyond the legal arguments. Barr served as AG under President Trump and was known for his hard-line positions on drug enforcement. His firm's willingness to represent SAM in this challenge signals that the anti-rescheduling effort has heavyweight institutional backing and is not a fringe action by a small advocacy group throwing legal filings at the wall.

It also means that the legal team working the case has experience at the highest levels of federal law enforcement and understands the internal mechanics of DOJ decision-making — knowledge that could prove valuable in constructing arguments about procedural deficiencies in the rescheduling process.

What Schedule III Actually Changed

To understand what is at stake in this lawsuit, you need to understand what the move from Schedule I to Schedule III actually did — and what it did not do.

Schedule III classification means the federal government now recognizes that cannabis has an accepted medical use in treatment in the United States — a statement that Schedule I explicitly denied. It also means that cannabis is now classified alongside drugs like ketamine, anabolic steroids, and certain formulations of codeine, rather than alongside heroin and psilocybin.

Practically, the most immediate impact was on the cannabis industry's tax burden. Under Section 280E of the Internal Revenue Code, businesses trafficking in Schedule I or II substances cannot deduct ordinary business expenses from their federal taxes. Moving cannabis to Schedule III eliminates that provision, potentially saving the legal cannabis industry billions of dollars annually and making the difference between profitability and insolvency for many operators.

Rescheduling also opens the door to expanded research. Schedule I drugs face the most restrictive research requirements, and the difficulty of obtaining Schedule I research licenses has been a major obstacle to clinical cannabis studies for decades. Schedule III classification significantly reduces those barriers.

What rescheduling did not do is legalize recreational cannabis at the federal level. Adult-use cannabis remains illegal under federal law, and Schedule III still carries criminal penalties for unauthorized manufacture, distribution, and possession. The DOJ's order specifically targeted state-legal medical cannabis and FDA-approved cannabis products — a nuanced approach that acknowledged the medical reality without addressing the broader legalization question.

Why This Lawsuit Matters Beyond the Courtroom

Even if SAM's lawsuit ultimately fails — and many legal experts believe the challenge faces steep odds in court — the case matters because of the uncertainty it injects into an industry that desperately needs stability.

Cannabis companies have been making business decisions based on the assumption that rescheduling is settled law. Tax planning, hiring, expansion plans, research partnerships, and investment pitches have all been built around the new Schedule III reality. A successful legal challenge would not just reverse a regulatory decision — it would upend the financial assumptions underlying the entire legal cannabis industry.

The banking sector, which has been slowly warming to cannabis clients in the wake of rescheduling, could pull back if there is a credible risk that the reclassification could be reversed. Investors who entered or expanded their cannabis positions based on Schedule III could face losses. Research institutions that began cannabis programs under the new regulatory framework would face renewed restrictions.

Even if the lawsuit takes years to resolve, the mere existence of the challenge creates a cloud of uncertainty that affects decision-making across the industry today.

The Counterarguments

Defenders of rescheduling — and there are many, spanning the industry, the medical community, and a significant portion of the general public — argue that SAM's case has fundamental weaknesses.

On the APA procedural claims, the DOJ conducted a lengthy rulemaking process that included an extensive public comment period and a detailed justification in the final rule. Courts generally give agencies significant deference on procedural matters, and overcoming that deference requires showing clear violations rather than disagreements about how thoroughly the agency responded to opposing views.

On the authority question, the Controlled Substances Act gives the Attorney General broad power to reschedule drugs based on scientific and medical evaluation, and the DOJ relied on a recommendation from the Department of Health and Human Services — exactly the process the CSA envisions. Arguing that the AG exceeded authority in following the statutory procedure is a tough sell.

On the "arbitrary and capricious" standard, SAM would need to show that no reasonable person could have reached the conclusion the DOJ reached — a very high bar. With the HHS recommendation, decades of state-level medical cannabis programs, and multiple FDA-approved cannabis-derived medications on the market, there is a substantial evidentiary foundation supporting the Schedule III determination.

What Happens Next

The case is now before the U.S. Court of Appeals for the DC Circuit, which handles a significant portion of challenges to federal agency actions. The court will first decide whether SAM and NDASA have standing to bring the case — whether they can demonstrate a concrete injury caused by the rescheduling, rather than a generalized policy disagreement.

If the court finds standing, it will proceed to the merits, evaluating the procedural, authority, and arbitrary-and-capricious claims against the administrative record. This process could take a year or more, during which the rescheduling order would likely remain in effect unless the court issues an injunction — which would require SAM to demonstrate a likelihood of success on the merits and irreparable harm.

The Bottom Line

SAM's lawsuit against cannabis rescheduling is the most significant legal challenge to federal cannabis reform in decades. Whether it succeeds or fails, it represents the organized resistance of a well-funded, politically connected movement that has opposed every step toward normalization and is not going away.

For the cannabis industry, the lawsuit is a reminder that progress is never as permanent as it feels on announcement day. The rescheduling order was historic, but it was also the beginning of a fight, not the end of one. The legal, political, and cultural battles over cannabis policy in the United States are going to continue for years, and the outcome of this case will help determine whether the momentum toward normalization is irreversible or whether the opponents of reform still have enough leverage to pull the country backward.

The smartest thing the industry can do right now is pay attention, plan for contingencies, and not mistake a single regulatory victory — however significant — for the end of the war.