MMJ International Holdings Joins Legal Challenge to Trump's Cannabis Rescheduling Order

WASHINGTON, June 2, 2026 (Newswire.com) - A federally compliant pharmaceutical cannabinoid developer has joined a coalition challenging the Trump administration's landmark cannabis rescheduling order, arguing the new regulatory framework creates a competitive disadvantage for companies that spent years and millions of dollars pursuing the traditional FDA approval pathway.

MMJ International Holdings, (MMJ), a private pharmaceutical cannabinoid development company and parent of MMJ BioPharma Cultivation and MMJ BioPharma Labs, is one of five petitioners who filed a petition for review on May 28 in the U.S. Court of Appeals for the District of Columbia Circuit - the final day of the 30-day window following the order's publication in the Federal Register. MMJ has spent years and millions of dollars building a federally compliant pharmaceutical operation, including DEA-registered laboratory infrastructure, FDA Investigational New Drug applications, and Orphan Drug Designation for Huntington's disease.

The Order at Issue

Acting Attorney General Todd Blanche signed the final order on April 22, reclassifying two categories of cannabis products from Schedule I to Schedule III under the Controlled Substances Act: FDA-approved drug products containing marijuana, and products operated under qualifying state-issued medical marijuana licenses.

The order, which took effect immediately upon publication on April 28, also eliminates the Section 280E tax deduction disallowance for state-licensed cannabis businesses - a provision that has long burdened the industry by preventing operators from deducting ordinary business expenses.

The administration grounded the rescheduling in the treaty-implementation provision of the CSA, Section 811(d)(1), which allows the Attorney General to issue scheduling orders necessary to fulfill U.S. obligations under the Single Convention on Narcotic Drugs without the standard notice-and-comment rulemaking process.

MMJ's Competitive Injury Claim

MMJ's challenge centers on what the company describes as a "regulatory double standard." While state-market cannabis operators - many of whom have operated in a federal legal gray zone for years - now receive an expedited DEA registration pathway under the new order, MMJ argues it spent years competing at a structural disadvantage by choosing the costlier, more rigorous federal pharmaceutical route. MMJ BioPharma Labs holds an active DEA Schedule I analytical laboratory registration, and the company developed pharmaceutical soft-gel cannabinoid formulations under full FDA manufacturing controls.

The petition argues that the order's expedited registration pathway for state licensees "effectively bypasses the rigorous public-interest standards, criminal-history requirements, and diversion-prevention controls that DEA imposed on pharmaceutical applicants like MMJ, constituting a competitive injury cognizable under Article III."

In plain terms: companies that built their businesses outside the federal framework now receive an on-ramp to federal legitimacy, while companies like MMJ that invested in regulatory compliance face a newly leveled - and arguably tilted - playing field.

A Constitutional Wrinkle

MMJ brings an additional and unusual legal argument to the challenge. MMJBC had previously sued over the constitutionality of the DEA's administrative law judge structure in MMJ BioPharma Cultivation Inc. v. Bondi (D.R.I.), and the Department of Justice formally conceded in that case that the "multiple layers of removal restrictions for administrative law judges in 5 U.S.C. § 7521 do not comport with the separation of powers and Article II."

The petitioners argue the rescheduling order compounds this injury by restructuring the scheduling framework while that constitutional defect remains unresolved - particularly given that an expedited rescheduling hearing is currently scheduled to commence June 29, 2026, before the same administrative structure DOJ has already conceded is unconstitutional.

Broader Coalition

MMJ is joined in the petition by four other parties: New Directions Addiction Recovery Services, an Illinois substance abuse recovery clinic; Dr. Kenneth Finn, a pain medicine specialist who had standing in the now-terminated DEA administrative hearing; Dr. Elizabeth "Libby" Stuyt, a Colorado addiction psychiatrist; and Cannabis Industry Victims Educating Litigators (CIVEL), an advocacy group for those harmed by the cannabis industry.

The petition outlines 13 legal issues the coalition intends to develop in full briefing, including challenges under the major questions doctrine, the Administrative Procedure Act, the Fifth Amendment's equal protection clause, and the Supreme Court's Loper Bright decision limiting agency deference.

The D.C. Circuit has consolidated this petition with two earlier ones - filed May 4 by Smart Approaches to Marijuana and the National Drug and Alcohol Screening Association, and May 22 by the attorneys general of Nebraska and Indiana (Louisiana subsequently withdrew from the latter).

What Investors Should Watch

The legal challenge introduces meaningful uncertainty for cannabis businesses and investors counting on the rescheduling order's downstream effects - most notably the 280E tax relief and the new DEA registration pathway for state operators.

A court stay of the order pending review would freeze those benefits and leave the industry in its prior federal posture. Vacatur of the order entirely would return cannabis to Schedule I, unwinding the tax and regulatory gains.

The petitioners have formally requested the D.C. Circuit stay the order, declare it unlawful, and vacate it in its entirety.

For pharmaceutical-track companies like MMJ, a successful challenge could rebalance the regulatory landscape in their favor - though the litigation timeline and outcome remain highly uncertain. Oral argument scheduling, potential expedited consideration given the June 29 hearing date, and possible emergency stay motions are the near-term procedural milestones to monitor.

This article is based on court filings in Case No. 26-1136, U.S. Court of Appeals for the D.C. Circuit, and the final rule published at 91 Fed. Reg. 22,714 (Apr. 28, 2026).

CONTACT:
Madison Hisey
[email protected]
203-231-8583

SOURCE: MMJ International Holdings

Source: MMJ International Holdings