The Anti-Rescheduling Lawsuit: Bill Barr and SAM's Legal War on Schedule III Cannabis

On May 6, 2026, after weeks of public warnings, the anti-legalization group Smart Approaches to Marijuana formally filed its legal challenge against the Department of Justice's cannabis rescheduling order. The lawsuit seeks to undo the most significant federal cannabis policy shift in half a century—and the legal firepower behind it makes dismissing the effort a mistake.

SAM retained the services of a law firm where former Trump administration Attorney General William Barr is a partner. The irony is thick enough to cut: the challenge targets a rescheduling move that Trump himself directed via executive order, using the legal expertise of Trump's own former AG to fight it.

Welcome to cannabis politics in 2026, where nobody's interests align the way you'd expect.

What Was Rescheduled (and What Wasn't)

Before dissecting the lawsuit, the underlying action deserves precise framing, because the public discourse has been muddier than it needs to be.

On April 23, 2026, Acting Attorney General Todd Blanche issued an order immediately placing two categories of cannabis products into Schedule III: FDA-approved drug products containing marijuana (primarily Epidiolex and its generics), and marijuana products regulated under a qualifying state medical marijuana license.

This is not full federal legalization. It's not even full rescheduling. Recreational marijuana remains firmly in Schedule I, as does any cannabis not covered by an FDA approval or a state medical license.

What the order does accomplish is significant: it removes the Section 280E tax burden from qualifying medical cannabis businesses, allowing them to deduct ordinary business expenses for the first time. For operators who've been paying effective tax rates of 70 percent or more due to 280E, this is financially transformative—retroactively so, as the order directs the IRS to consider providing relief for prior tax years.

The order also initiated an expedited administrative hearing process for broader rescheduling, with proceedings set to begin June 29, 2026.

SAM's Legal Arguments

The petition for review attacks the rescheduling order on three fronts, each with different legal weight and likelihood of success.

Administrative Procedures Act violations: SAM argues that the rescheduling order bypassed the notice-and-comment rulemaking process required by the APA. This is potentially the strongest argument in the filing. Federal agencies generally must publish proposed rules, accept public comment, and respond to substantive concerns before finalizing regulatory changes. The expedited nature of the April 23 order—issued without a traditional comment period—gives this argument footing.

Exceeds the Attorney General's authority under the Controlled Substances Act: This argument positions the rescheduling as an overreach of executive power, claiming that the AG lacks authority to partially reschedule a substance based on state licensing frameworks. The CSA establishes a federal scheduling structure, and SAM contends that tying federal scheduling to state-level regulatory compliance creates an unprecedented and legally unsupported framework.

Arbitrary and capricious action: The catch-all administrative law challenge. SAM claims the rescheduling decision isn't supported by adequate scientific evidence and represents a politically motivated departure from the DEA's prior position.

The Politics Behind the Lawsuit

SAM's official mission is to prevent marijuana legalization and commercialization, and the organization has been consistent—if increasingly lonely—in that position for over a decade. Founded by former Obama administration official Kevin Sabet, SAM has watched its influence wane as public support for legalization surged past 70 percent in national polling.

Hiring Bill Barr's firm adds credibility and courtroom capability, but it also adds political complexity. Barr served as Attorney General under Trump from 2019 to 2020, and his firm's involvement in challenging a Trump-directed policy creates a fascinating split within conservative cannabis politics.

The coalition backing the lawsuit—SAM and the National Drug and Alcohol Screening Association—represents two groups with material interests in maintaining Schedule I status. Drug testing companies face potential revenue loss if cannabis is rescheduled, as employers may reduce testing programs for a Schedule III substance. SAM's organizational survival depends on maintaining the policy fight that justifies its existence.

This doesn't invalidate their legal arguments, but it contextualizes the motivation. The lawsuit isn't principally about scientific classification—it's about preserving a regulatory framework that serves specific institutional interests.

Can It Actually Win?

Legal experts are divided, but the consensus leans toward skepticism about the lawsuit's ultimate success—with important caveats.

The APA argument has genuine teeth. Courts have repeatedly struck down agency actions that bypassed required procedures, and if a judge determines that the expedited rescheduling skipped mandatory steps, the order could be vacated on procedural grounds alone—without the court ever reaching the merits of rescheduling itself.

However, the DOJ structured the April 23 order carefully. By limiting immediate rescheduling to FDA-approved products and state-licensed medical operations (rather than all cannabis), the department arguably stayed within existing statutory authority. The expedited hearing process for broader rescheduling, beginning June 29, provides the procedural framework that a traditional notice-and-comment period would have offered.

The arbitrary and capricious challenge faces the steepest climb. Courts defer heavily to agency scientific determinations under the Chevron doctrine (or what remains of it after recent Supreme Court decisions), and the Department of Health and Human Services already conducted a scientific review supporting rescheduling before the DOJ acted.

A temporary injunction—blocking the rescheduling while litigation proceeds—is the most realistic near-term risk. If a court grants injunctive relief, it could freeze the 280E tax benefits and delay the June 29 hearing, creating months or years of continued uncertainty.

What the Industry Should Be Watching

For cannabis operators, the lawsuit creates three categories of risk that deserve attention.

Tax planning uncertainty: Companies that have already restructured their accounting to claim 280E deductions need contingency plans. If the rescheduling is temporarily enjoined, those deductions could be challenged retroactively. Conservative operators are maintaining dual accounting frameworks until the litigation resolves.

Capital market effects: Cannabis stocks and investment activity are sensitive to federal policy signals. A successful injunction could trigger a sell-off in publicly traded MSOs that priced in 280E relief. Conversely, a quick dismissal of the lawsuit would remove an overhang that's currently suppressing valuations.

June 29 hearing implications: If the lawsuit delays or alters the broader rescheduling hearing, the timeline for full Schedule III status extends indefinitely. Everything from banking access to research funding depends on how this process unfolds.

The Bigger Picture

SAM's lawsuit is unlikely to permanently block cannabis rescheduling. The political momentum, scientific evidence, and economic incentives all point in one direction, and the legal arguments—while not frivolous—face an uphill battle against deference to executive authority and agency expertise.

But "unlikely to win" and "inconsequential" are different things. Even a temporary injunction could cost the industry hundreds of millions in delayed tax relief. Prolonged litigation uncertainty affects investment decisions, hiring plans, and expansion strategies across the sector.

The cannabis industry has been here before—watching progress get tangled in legal challenges while the market keeps growing underneath. The lesson from every previous delay is that the trajectory doesn't change, but the timeline does.

SAM and Bill Barr are making their stand. The cannabis industry needs to plan for the possibility that the stand takes longer to resolve than anyone would prefer, even if it ultimately ends the same way everything else in cannabis reform has ended: with the market winning and the holdouts running out of arguments.

The June 29 hearing remains the more consequential date on the calendar. But this lawsuit just made the road there a little more complicated.