Federal appeals court leaves medical cannabis in Schedule III while the challenge proceeds

As of September 10, 2026. The US Court of Appeals for the District of Columbia Circuit declined on September 9 to freeze the federal order that moved state-licensed medical marijuana into Schedule III. The order stays in effect while the court reviews whether the Justice Department had the authority to issue it.

The court’s stated reason was one sentence: “Petitioners have not satisfied the stringent requirements for a stay pending court review.”

That is a ruling about the standard for emergency relief, not about whether the rescheduling order is lawful. The D.C. Circuit has not reached that question.

Who asked, and what they asked for

The petitioners are the National Drug and Alcohol Screening Association, a group that represents drug-testing employers and medical review officers, and MMJ International Holdings along with its subsidiaries. They moved on June 9 to stay the order pending judicial review, arguing that marijuana abuse “has dangerous, lifelong consequences” and that the policy would “stimulate the industry and increase marijuana abuse,” per Marijuana Moment’s account of the briefs.

The Justice Department opposed the motion and questioned whether the challengers belong in court at all, describing their stake as “pocketbook interests” tied to keeping marijuana in Schedule I. The September 9 order does not resolve that standing dispute.

Two medical marijuana companies, MedPharma Iowa and Tri-Mountain Pure, asked to intervene on the government’s side. The court denied intervention, finding their interests adequately represented by the existing parties, and allowed them to file friend-of-the-court briefs instead.

The Marijuana Herald reports the panel as Judges Robert Wilkins, Justin Walker, and Bradley Garcia.

What the order under review actually covers

Acting Attorney General Todd Blanche signed the Final Order on April 22, 2026, and it was published in the Federal Register on April 28. It moved two categories from Schedule I to Schedule III: marijuana in FDA-approved drug products, and marijuana subject to a qualifying state medical marijuana license. Adult-use marijuana was left in Schedule I.

The rule’s own definition of a qualifying license includes one issued by “a federal territorial entity,” so the territory is inside its reach on paper. The open question is narrower. The Virgin Islands issues no medical-only license, and its dispensary license covers medical, sacramental, and adult-use sales at one counter. Whether that counts as a license to dispense “for medical purposes” under the rule has not been answered. The Virgin Islands is not a party to the D.C. Circuit case, and no petitioner or intervenor has raised the territorial question. Vibe High’s April report on the order covers what Schedule III would change for a licensee.

Where the territory’s stake actually sits

Medical is the smaller side of the local program. The Virgin Islands Cannabis Use Act legalized adult use as well, and adult use is what the ten conditional dispensaries on St. Thomas, St. John, and St. Croix are preparing to sell to any adult 21 and over, without a card. That side of the program remains a Schedule I transaction under federal law, and the September 9 order does not touch it.

The medical side is where the April order could carry weight. If a Virgin Islands license qualifies, licensees could seek DEA registration, and federal tax relief under Section 280E and easier banking could follow for the medical side of the business. The Office of Cannabis Regulation has not published guidance on how it reads the order, and it has issued no statement on it since April.

Set against the registry, the scale is modest. OCR reported 42 active medical patients at the Cannabis Advisory Board’s August 20 meeting, down from 45 in May.

The other federal track

This case is one of two federal proceedings running at once, and they do different things.

• The D.C. Circuit case reviews the April order that already took effect. It decides whether that order survives.
• The DEA administrative proceeding before Chief Administrative Law Judge Derek Julius considers moving marijuana to Schedule III more broadly, which would reach adult use. Its hearing record closed on August 17. The judge’s recommended decision has no due date.

The September 9 ruling does not authorize, accelerate, or decide anything in the administrative proceeding.

The local calendar is unmoved

Nothing in this ruling changes the territory’s own sequence. Cultivation is gated on facility sign-off. First sales are gated on the St. Croix testing laboratory, which stakeholders have told OCR could be ready by October. Neither depends on a federal schedule.

What to watch

• September 15. The second-round license application window closes.
• Around October 9. Parties in the D.C. Circuit case must submit proposed briefing formats within 30 days of the September 9 order. That filing sets the schedule on which the merits get decided.
• September 24. The Cannabis Advisory Board’s next meeting is proposed for 2 p.m., per the St. Thomas Source report of the August 20 session.
• Any OCR statement on whether Virgin Islands licenses fit the April order’s definition of a medical license.