D.C. Circuit Weighs Whether DEA Rescheduling Violated Separation of Powers

Constitutional Challenge Reaches Appellate Court

Petitioners argued today that the DEA's rescheduling decision—announced May 16, 2024, and finalized under 21 U.S.C. § 811—violated the non-delegation doctrine by allowing the executive to make policy choices Congress never authorized. The three-judge panel heard arguments from a coalition of hemp operators, CBD manufacturers, and state-licensed dispensaries who claim the rescheduling harmed their businesses. It created regulatory uncertainty. It triggered new federal tax obligations under 26 U.S.C. § 280E.

Lead counsel cited a 2015 Yale Law Journal note that warned the CSA's "good cause" standard for scheduling had collapsed into executive discretion untethered from statutory limits. That note, authored by then-student researcher Amir Ghafourifar, predicted courts would eventually face the question now before the D.C. Circuit: whether the separation of powers permits an agency to redefine criminal liability for millions of Americans without clear congressional guidance.

The 2015 Yale Warning and Today's Case

Ghafourifar's 2015 analysis argued that the CSA's five-factor test for scheduling—abuse potential, scientific evidence, public health risk, history of abuse, and international treaty obligations—had become so malleable that successive administrations used it to justify opposite conclusions. The DEA cited the same statute to keep cannabis in Schedule I for 50 years, then invoked it again in 2024 to move cannabis to Schedule III based on an HHS recommendation that acknowledged no change in the drug's chemistry or pharmacology.

Petitioners today pointed to that whipsaw as proof the statute provides no "intelligible principle" to guide agency action, the standard set by the Supreme Court in *J.W. Hampton, Jr. & Co. v. United States* (1928). The government countered that the CSA's five-factor framework is sufficiently determinate and that courts have repeatedly upheld it, most recently in *Americans for Safe Access v. DEA* (D.C. Cir. 2013).

Timing and Procedural Posture

The consolidated petition was filed June 3, 2024, eighteen days after the DEA published its final rule in the Federal Register. The D.C. Circuit granted an expedited briefing schedule in October 2024 after petitioners argued the rescheduling's economic impact—estimated at $1.8 billion in new federal tax liability for state-licensed operators—constituted irreparable harm. Oral arguments were originally scheduled for March 2026. Panel recusals delayed them twice.

The current panel consists of Judges Patricia Millett, Neomi Rao, and Justin Walker. Millett authored the 2013 *Americans for Safe Access* opinion upholding the DEA's Schedule I classification; Rao and Walker are both Trump appointees with records skeptical of broad agency deference post-*Loper Bright Enterprises v. Raimondo* (2024).

The Government's Defense

DOJ attorneys argued the CSA's structure—requiring HHS scientific review before DEA action—satisfies separation-of-powers concerns by cabining executive discretion within expert judgment. They emphasized that the DEA can't reschedule without an HHS recommendation and that HHS conducted a two-year review involving the FDA, NIDA, and external researchers before recommending Schedule III placement in August 2023.

The government's position is that the statutory framework operates as Congress intended: scientific agencies assess medical evidence, the DEA applies that evidence to the five-factor test, and judicial review ensures the agency stayed within statutory bounds.

Petitioners countered that this process still permits the executive to criminalize or decriminalize conduct affecting millions of people based on policy preferences dressed up as science. They noted the HHS recommendation itself acknowledged that cannabis's abuse potential and lack of accepted medical use—the statutory criteria for Schedule I—hadn't changed since 1970, yet HHS recommended rescheduling anyway based on a new interpretation of "accepted medical use."

Implications for Federal Cannabis Policy

If the D.C. Circuit rules for petitioners, the DEA's rescheduling could be vacated, returning cannabis to Schedule I and nullifying state-legal operators' newfound ability to deduct business expenses under 280E. A ruling for the government would cement the rescheduling but leave unresolved broader questions about executive authority over controlled substances.

Beyond cannabis, the case carries significant weight. Petitioners argued that if the CSA's delegation survives scrutiny, no statute is too vague to pass muster under the non-delegation doctrine—a doctrine the Supreme Court hasn't used to strike down a law since 1935 but which conservative justices have signaled interest in reviving.

What Happens Next

The panel will issue a written opinion within 90 to 180 days. Either side can petition for rehearing en banc. The losing party is likely to seek Supreme Court review. Given the circuit split on agency deference post-*Loper Bright* and the constitutional stakes, the case has a plausible path to the high court's docket in the 2027 term.

For full background on the DEA's rescheduling process and the litigation it triggered, see the CannIntel topic hub on the DEA rescheduling legal challenge.

The next signal: whether the panel requests supplemental briefing on the *Loper Bright* implications, a move that'd suggest the court is considering a broad ruling on agency authority rather than a narrow procedural dismissal.