The Justice Department Told Marijuana Testers They Lack Standing

Justice Department lawyers told the D.C. Circuit in July that drug testers lack standing to stop marijuana rescheduling. They said an FDA-pathway cannabinoid firm is not a market competitor either, because it still has no approved product.

On September 9, 2026, the U.S. Court of Appeals for the District of Columbia Circuit refused to freeze Acting Attorney General Todd Blanche’s April order while the case proceeds. The order stays in force. The merits fight is not over.

Justice Lawyers Told the Court Testers Are the Wrong Plaintiffs

The filing that set off the fight is the government’s July 2, 2026 opposition to a stay, signed by Assistant Attorney General Brett A. Shumate and appellate lawyers Daniel Aguilar and McKaye L. Neumeister. The petitioners asking the freeze were the National Drug and Alcohol Screening Association (NDASA), the trade group for workplace screening, and MMJ International Holdings, Inc., with its BioPharma Cultivation and BioPharma Labs units.

NDASA, the brief said, never named a specific member with a concrete injury. Its declaration talked about what a hypothetical employer “may decide” after the order, and about industry-wide cost guesses. That, the government wrote, is not associational standing. Lost medical-review-officer revenue was, in the same telling, either speculation about third-party clients or a “self-inflicted” billing choice.

MMJ’s claim fared no better under competitor standing. The company has two Investigational New Drug applications at the Food and Drug Administration and has not finished clinical trials. A hopeful entrant, the brief said, is not a “direct and current competitor” whose bottom line the order is already hitting. Investor-confidence and first-mover arguments were the same kind of future harm the D.C. Circuit has rejected before.

Then came the line that turned a standing brief into a policy fight. Even if the injuries were real, the lawyers wrote, they sit outside the Controlled Substances Act’s zone of interests. Congress wrote the statute to regulate substances for research and medical use. It did not write it, they said, as a permanent source of income for testing marijuana, or to protect “market opportunities” for cannabinoid drugs.

Petitioners thus invoke pocketbook interests served by keeping all marijuana in schedule I.

McKaye L. Neumeister, attorney, Justice Department opposition to stay, D.C. Circuit, July 2, 2026

Patrick F. Philbin, counsel for NDASA, and Burke Law Group lawyers for MMJ had called the April order “brazen agency overreach.” They said Blanche used a treaty shortcut the D.C. Circuit cabined nearly 50 years ago in NORML v. DEA. The government’s answer was that these challengers are not the people the scheduling statute was built to hear.

Eight Years of FDA Work Became the Standing Problem

Duane Boise, chief executive of MMJ International Holdings, answered the next day. The company has spent eight years and $10 million trying to make cannabinoid medicines the way federal agencies told it to: FDA investigational drugs, a DEA Schedule I lab registration, and an Orphan Drug designation for Huntington’s disease, plus a second program aimed at multiple sclerosis.

For eight years, we have done exactly what the government demanded. We followed the FDA pathway, complied with the DEA, and invested over millions in drug development for clinical research. Now, the DOJ tells the Court our injuries don’t matter because we haven’t completed the very process they forced us to navigate.

Duane Boise, CEO, MMJ International Holdings, July 3, 2026

Boise’s other line was the one the company put on the case. The government, he said, was telling the court that protecting patients through FDA review and protecting the public through workplace testing “are not interests the Controlled Substances Act was designed to protect.” He disagreed. Congress, he said, wrote the CSA for public health, scientific integrity, and public safety, not to reward firms that skipped the federal system and punish the ones that used it.

WHAT THE STAY PAPERS PUT IN DOLLARS

• NDASA roll: The association told the court it has more than 3,500 members, including 700 employer members that test workers.
• Policy rewrite bill: Revising those employer testing policies, the motion said, will likely cost more than $700,000 in total.
• MRO hit: Marijuana-positive results are the largest source of medical-review-officer revenue, and the motion projected at least a 35% decline over the next 6 to 12 months if employers drop the panel.
• MMJ outlay: The companies put $10 million and eight years into Schedule I cannabinoid drugs that still have no FDA-approved product to sell.

That is the trap the brief exploits. MMJ cannot show competitor standing until it has a product. It cannot finish a product until DEA and FDA let the trials and the plant supply move. The same agencies now say the injury is too early to count. State-licensed medical operators, who never ran that gauntlet, already have a Schedule III box and a faster federal registration path.

Why Federal Marijuana Testing Stops at Schedule III

NDASA’s public-safety case is older than this lawsuit. In June 2024 comments on the original rescheduling proposal, the group warned that a full move of marijuana to Schedule III would end DOT testing for marijuana use among safety-sensitive transportation workers. The mechanism is a stack of older rules, not a new DOT memo.

President Reagan’s Executive Order 12564, issued September 15, 1986, defines “illegal drugs” for the federal workplace program as substances in Schedule I or II. HHS mandatory guidelines follow that line: an employee may be tested for drugs listed in those two schedules. The Omnibus Transportation Employees Testing Act of 1991 then ties the Department of Transportation to HHS science and to HHS-certified labs. If marijuana leaves Schedules I and II, those labs lose the legal basis to run the federal marijuana panel. A positive result from an uncertified lab would not hold up.

NDASA Chairman Mark Magsam has said that without a safety carve-out, transportation employees “may very well find a loophole where they would be free from marijuana testing.” Board member Emilee Avery, a fitness-for-duty manager, has said a Schedule III move would take down safeguards built after the 1980s accidents that first put marijuana on the transportation panel. The group’s 2024 comments pointed to the 1987 Conrail-Amtrak crash, Federal Railroad Administration testing that followed, and DOT-wide testing from 1989. In more than 35 years of that system, NDASA wrote, the National Transportation Safety Board has not found a commercial transportation accident caused by marijuana.

The association also argued there is still no reliable on-the-job impairment test for THC the way there is for alcohol. THC is fat-soluble and lingers. Products in the market, it said, run from about 5% THC to 90%, and smoked, vaped, and edible doses hit at different speeds. Presence testing is what the federal panel still uses.

NDASA’S 2024 ASK, BEFORE THE LAWSUIT

• Leave it in Schedule I: Withdraw the proposal and let Congress decide scheduling.
• Or move it only to Schedule II: That would keep marijuana inside HHS testing authority under the 1986 order.
• Or write a new executive order first: Let HHS certify labs for drugs beyond Schedules I and II before any Schedule III final rule.

None of those three landed. Blanche’s April order used a different statute and a narrower product list. The testers sued anyway, because a limited Schedule III blessing for state medical marijuana still forces medical review officers to sort lawful medical use from prohibited use, and because a separate DEA hearing is still aimed at the rest of the plant.

Two Marijuana Tracks Now Sit in Federal Law

Blanche signed Attorney General Order No. 6754-2026 on April 22, 2026. It published on April 28 at 91 Fed. Reg. 22714 and took effect that day. The final rule FDA-approved marijuana products in Schedule III, and it put marijuana held under a state medical marijuana license in Schedule III as well. It also built an expedited DEA registration path for those state license holders and tightened import and export permit rules for the newly listed drugs.

The legal hook was 21 U.S.C. § 811(d)(1). If a treaty already requires control, the Attorney General may issue an order controlling a treaty-covered drug under the schedule he deems most appropriate, without the usual eight-factor findings and without the on-the-record hearing in § 811(a) and (b). The United States is a party to the 1961 Single Convention on Narcotic Drugs. The Office of Legal Counsel had already said Schedule III can satisfy that treaty. HHS had recommended Schedule III on August 29, 2023. The government says those two documents were enough.

Petitioners say NORML v. DEA, decided in 1977, blocked exactly this move. When two schedules both meet the treaty, they argue, the Attorney General cannot pick between them by fiat. He has to run the hearing Congress wrote. Blanche also cancelled a pending formal hearing and opened a new one the same week, a split the challengers call a rewrite of the registration and import rules without notice and comment.

WHAT THE APRIL ORDER CHANGED, AND WHAT IT DID NOT

Employer-guidance shops that parsed the April order told clients the same split: federal testing programs did not flip overnight, DOT rules did not vanish, and a medical marijuana card still does not excuse a positive federal test. The testers’ lawsuit is about the next step, and about the cost of living in this in-between state.

State Operators Get the Registration Shortcut MMJ Never Got

The order’s other half is the piece MMJ cannot swallow. State medical license holders get an expedited federal registration to manufacture, distribute, or dispense marijuana for medical purposes, designed to match Single Convention licensing rules. MMJ’s pitch is that it already did the harder version of that work, including a Schedule I analytical lab that DEA inspected, and is still waiting on a bulk-manufacturer registration that would let it make its own drug substance.

Boise has asked why companies that operated outside the CSA should get the fast lane while federally compliant developers keep waiting. The Justice Department’s answer is procedural, not sentimental. Until MMJ has an authorized product, it is not in the market the order rearranges. Harm to “goodwill” and fundraising does not substitute for a product on a shelf.

State operators, for their part, have treated Schedule III as a tax event. Qualifying medical activity that leaves Schedule I also leaves the reach of Internal Revenue Code Section 280E, the rule that blocks ordinary business deductions for trafficking in Schedule I or II substances. MMJ has said operators moved quickly to rebuild around that saving. The D.C. Circuit has not blessed that foundation. It has only refused to tear it up before briefing the merits.

Two state-licensed firms, MedPharm Iowa, LLC, doing business as Bud & Mary’s, and Tri-Mountain Pure, LLC, sought to intervene on the government’s side. A group of cannabis-industry lawyers filed as amici. The people making money from the new Schedule III box are in the case to keep it. The people who built businesses on Schedule I testing, and the company that built a pipeline on Schedule I research rules, are in the case to unwind it.

The Appeals Court Left the Order in Force

NDASA petitioned on May 4, 2026, with Smart Approaches to Marijuana. Nebraska and Indiana filed a second petition (Louisiana signed on, then withdrew). MMJ joined a third petition in May with New Directions Addiction Recovery Services, two physicians, and a victims’ group. The D.C. Circuit consolidated the matters as SAM, Inc. v. Department of Justice, Nos. 26-1106, 26-1130, and 26-1136.

THE ROAD TO THE DENIED STAY

1. December 18, 2025: President Donald Trump signs Executive Order 14370, directing the Attorney General to finish marijuana-to-Schedule-III rulemaking as fast as federal law allows, framed as increasing medical marijuana and cannabidiol research.
2. April 22, 2026: Blanche signs Order 6754-2026, moving FDA-approved marijuana products and state-licensed medical marijuana to Schedule III.
3. April 28, 2026: The order publishes and takes effect. DEA also notices a hearing on broader rescheduling, to begin June 29, 2026.
4. May 4, 2026: NDASA and SAM petition the D.C. Circuit. MMJ’s petition follows in May. States file a parallel case.
5. June 9, 2026: NDASA and MMJ jointly move to stay the order pending review.
6. June 29, 2026: The DEA administrative hearing on the rest of the plant begins.
7. July 2, 2026: The Justice Department files the standing and zone-of-interests opposition.
8. July 3, 2026: Boise issues MMJ’s rebuke of that brief.
9. September 9, 2026: The D.C. Circuit denies the stay. The order remains in effect. The court does not decide the merits.

Boise’s September 9 statement treated the denial as a timing ruling, not a win on authority. The court, he said, decided whether an interim freeze was warranted before full briefing. It did not decide whether the Attorney General could build this Schedule III system without the procedures Congress wrote.

That is accurate as far as it goes. A stay is an extraordinary pause. Denying one does not mean Blanche had the power he claimed under § 811(d). It means the challengers did not meet the freeze test, including likelihood of success and irreparable harm, while the government is the party on the other side.

A Separate Hearing Still Has to Decide the Rest of the Plant

The April order is not full rescheduling. Recreational marijuana stays in Schedule I. The plant that is not in an FDA drug or under a state medical license is still the subject of the DEA hearing that opened June 29, 2026, on the May 21, 2024 proposal. Corrected public transcripts of that hearing were posted in late August. A recommended decision from the administrative law judge had not been issued by mid-September.

NDASA is a designated opponent in that hearing too. So are SAM, several states, and physicians who argue botanical marijuana lacks the chemistry and dosing of the synthetic cannabinoids already in Schedule III. The government is the proponent. Its case rests on HHS’s 2023 finding of currently accepted medical use and on a lower abuse-and-dependence profile than Schedules I and II comparators. That record will go to DEA Administrator Terrance Cole. It is a different case from the D.C. Circuit docket, even though the same fight over testers, treaties, and FDA-pathway firms runs through both.

The White House presented the December order as a research and patient move, not as a rewrite of who may sue over scheduling.

President Donald J. Trump signs an Executive Order rescheduling marijuana from Schedule I to Schedule III — recognizing legitimate medical uses and expanding medical marijuana and cannabidiol research to better support patients and doctors. pic.twitter.com/7NpPaLbNTl

— The White House (@WhiteHouse) December 18, 2025

The July brief is the colder document. It tells medical-review officers their revenue is not a CSA interest. It tells a Huntington’s and MS drug developer that eight years of INDs are not standing. Cannabis-reform groups have said for years that screening companies profit from marijuana remaining easy to treat as banned. The Justice Department put a cleaner version of that charge in a table of authorities and called it zone of interests.

The testers can still lose on standing and be right about the tripwire. If the rest of the plant goes to Schedule III without a new testing order, HHS and DOT lose the Schedule I/II hook that has carried the marijuana panel since the late 1980s. Pilots, truckers, school-bus drivers, and rail operators are the workforce on that wire. MMJ can still lose on competitor standing and be right that the federal path it followed is now slower than a state medical license. Those are merits and policy problems. The September 9 order did not reach them. It left Blanche’s Schedule III box in place and sent the parties back to briefing whether anyone in the tester-and-IND coalition is a proper plaintiff at all.

Disclaimer: This article is news reporting and analysis of court filings, a Federal Register order, and public comments. It is informational only and is not legal, medical, employment, or investment advice. It does not tell employers how to write a drug-testing policy, patients how to use cannabinoid products, or companies how to treat Schedule III status for taxes or DEA registration. Readers who need to act on scheduling, workplace testing, or investigational drugs should consult a qualified attorney, a certified medical review officer, or a licensed clinician who handles controlled-substance rules. Figures, docket numbers, and case status reflect the cited filings and notices as of the dates on those documents and can change with the next court order or DEA decision.