A Drug-Testing Trade Group Tried to Undo Schedule III. On September 9, Three Judges Said No.

Gabe Perlow had already sold his way out of Pennsylvania cannabis once. In September 2020 he and his investor group handed PurePenn, the McKeesport grower-processor they had built after the state's first permit round, to Trulieve for $46 million up front. Then he went to work for other people's licenses in Missouri, Ohio and Illinois through a services firm he co-founded in 2022, and watched a grow building on Pittsburgh's North Side sit dark. "So, it's just sitting here empty," he recalled thinking. "I'm in Pittsburgh. I know this building is empty."

He filled it. Tri-Mountain Pure, the company he backs and operates, won a Pennsylvania grower-processor permit in June 2025 and a dispensary permit in January 2026. The first harvest came in February. In May the company opened a medical dispensary called Dark Matter at 2400 Penn Avenue in the Strip District, built around the idea that customers would rather park where nobody sees them. "It took me a round trip to get back to PA," Perlow said. "It's good to be back here."

On June 29, 2026, the day the Drug Enforcement Administration opened its rescheduling hearing in a courtroom in Arlington, Virginia, a lawyer named Shane Pennington of Blank Rome filed a motion on Tri-Mountain Pure's behalf in a case 240 miles away that Perlow had not started and could not control. His company, along with MedPharm Iowa LLC, the Des Moines medical producer that does business as Bud & Mary's, asked the U.S. Court of Appeals for the District of Columbia Circuit for permission to intervene and help the federal government defend the order that had just taken cannabis out of Schedule I for companies like his. The motion listed what the two operators stood to lose: relief from Internal Revenue Code Section 280E, business planning already built on the order, pending DEA registration applications, research opportunities, commercial relationships and workforce recruiting.

On September 9 the court answered. No.

The two state-licensed companies, the panel wrote, "fail to demonstrate that their interests in this litigation are not adequately" represented by the Justice Department already in the case. They may file amicus briefs. They do not get a seat at the table.

That was the smaller half of the order. In the same ruling, judges Robert Wilkins, Justin Walker and Bradley Garcia refused to freeze the rescheduling itself, rejecting an emergency request from a drug-testing trade association and a pharmaceutical developer who want the whole thing undone. "Petitioners have not satisfied the stringent requirements for a stay pending court review," the panel wrote. Medical cannabis stays in Schedule III while the D.C. Circuit decides whether it belongs there, and the tax relief that has reshaped multistate operators' balance sheets since spring stays with it.

The order under attack was signed on April 22, 2026, by Acting Attorney General Todd Blanche and published in the Federal Register six days later. It moved two categories of marijuana from Schedule I to Schedule III, effective immediately: FDA-approved drug products containing marijuana, and marijuana sold under a qualifying state medical license. It did not legalize anything, and it did not touch adult-use cannabis. What it did was switch off Section 280E for the operators it covers, the tax provision that had barred them from deducting ordinary business expenses, and it did so on the authority of an executive order President Trump signed on December 18, 2025, directing the government to expand medical marijuana and cannabidiol research.

The challenge that reached the D.C. Circuit this month did not come from the usual prohibitionist quarter alone. It came from two parties with very different grievances who happen to want the same outcome.

The first is the National Drug and Alcohol Screening Association, which filed a petition for review on May 4 alongside Smart Approaches to Marijuana. NDASA's executive director, Mary Jo McGuire, has testified that the 1986 executive order authorizing mandatory federal drug testing reaches only Schedule I and Schedule II substances, and that moving marijuana to Schedule III therefore strips the legal footing out from under testing for safety-sensitive federal roles covering roughly 10 million workers and more than seven million tests a year. The association has also been blunt about the money: marijuana positives are the largest single source of medical review officer revenue, and it projects at least a 35 percent decline over the following six to twelve months.

The Justice Department's answer was to put that arithmetic on the record and call it disqualifying. NDASA's claimed injuries, the government wrote in July, amount to "generalized speculation about how the rescheduling order might affect the drug-testing industry rather than particularized allegations," and any lost revenue traces to customers' own choices rather than the order. Then came the line that will follow the case: "Petitioners thus invoke pocketbook interests served by keeping all marijuana in schedule I." The Controlled Substances Act, the department argued, was not written for their benefit.

The second challenger has the opposite complaint. MMJ International Holdings and its subsidiaries, MMJ BioPharma Cultivation and MMJ BioPharma Labs, have spent more than eight years and millions of dollars pursuing cannabinoid therapeutics through the FDA, with active investigational new drug applications and an orphan drug designation for a Huntington's disease program, and they still do not hold the federal registrations required to manufacture the controlled substance they want to study. The April order handed state-licensed operators an expedited federal registration pathway and a tax cut. It handed MMJ nothing.

Duane Boise, president and chief executive of MMJ International Holdings, has argued through the spring and summer that the government reversed the order of operations, giving state operators a federal blessing that federally compliant drug developers still cannot obtain. When Perlow's and Bud & Mary's lawyers filed to intervene, Boise treated the filing itself as evidence.

“The companies seeking to intervene openly acknowledge the substantial financial and regulatory benefits they expect to receive if DOJ's Final Order remains in place.”

— Duane Boise, President and CEO, MMJ International Holdings

He is not wrong about the acknowledgment. The intervention motion said as much in plain language, which is part of why the government's standing argument cuts in an awkward direction: the Justice Department spent July telling the court that financial stakes are not a legal interest, and the two companies that wanted to help it spent June listing theirs.

That dependency is the uncomfortable part. The administration that wrote the order is the only party defending it, and the same administration is simultaneously running the broader proceeding that could extend Schedule III to all marijuana, or decline to. The DEA's expedited hearing on that question opened June 29 and closed July 15. An administrative law judge will recommend; the DEA administrator decides. No recommendation has issued.

Pennington, who has litigated scheduling questions against the DEA for years, now represents clients reduced to friends of the court. Amicus status lets Tri-Mountain Pure and Bud & Mary's file briefs on a schedule the court sets. It does not let them take a position the government has not taken, appeal a ruling they dislike, or object if the Justice Department decides mid-case that some part of the April order is indefensible.

McGuire's side reads the same order differently. NDASA has never argued the science; it has argued the plumbing, that a schedule change made without the notice-and-comment process and without a fresh scientific review from the Department of Health and Human Services is unlawful however sensible the result. Boise makes a version of the same procedural argument from the other direction, that state-licensed products were promoted out of Schedule I without meeting any of the federal pharmaceutical standards his company has spent eight years trying to meet. The stay denial resolves none of that. It says only that the challengers did not clear the bar for emergency relief, which is a high one.

What the court did decide, quietly, is who the fight belongs to. Three consolidated petitions, one government defendant, and a set of briefing proposals due within 30 days, with the panel warning the parties against "repetitious submissions." The operators whose tax bills turn on the outcome will watch from the gallery.

1. Early October 2026, proposed briefing formats due in the consolidated D.C. Circuit cases; the court has asked for a joint proposal.
2. Pending, the administrative law judge's recommendation from the DEA hearing that ran June 29 to July 15 on moving all marijuana to Schedule III.
3. After that, the DEA administrator's decision, the step that determines whether adult-use operators ever see the relief medical operators got in April.
4. Open, whether Tri-Mountain Pure and Bud & Mary's file amicus briefs, and whether the court's schedule gives them room to say anything the Justice Department has not.

In Pittsburgh, none of this reaches the sales floor. Dark Matter has been open since May. The North Side grow that sat empty for years is running. Perlow got his round trip and his second Pennsylvania company, and for the first time since the state issued its first permits in 2017, the federal tax code is no longer confiscating the difference between revenue and profit.

He also has no standing to protect that. A company he built is a named party in nothing, its interests represented by a Justice Department that could change leadership, change position, or lose. The court's word for what it wants from him is amicus, friend. On September 9 the friends were told to wait outside.

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