A newly released transcript from an 11-day federal hearing has the government’s own attorneys arguing that marijuana no longer meets two of the three legal tests required to keep a drug in Schedule I. A recent video from The Dales Report (TDR) walked through the headline finding, so we pulled the underlying statute and outside reporting to check it and fill in what the video leaves out. Accurate as of September 2, 2026. This process is moving fast enough that parts of this could be outdated within days.
Not legal or tax advice. We sell nutrients. This article reports what’s in the public record about a federal hearing. It is not legal counsel, tax guidance, or advice about your license, your business, or your compliance obligations. If federal rescheduling affects your operation, talk to a licensed attorney or accountant about your specific situation.
The Three-Part Test a Drug Has to Fail to Stay in Schedule I
Federal law does not leave Schedule I placement to opinion. Under 21 U.S.C. § 812(b)(1), a substance can only sit in Schedule I if the government finds all three of these true: it has a high potential for abuse, it has no currently accepted medical use in the United States, and there is a lack of accepted safety for its use under medical supervision. We checked that text directly against the U.S. Code. TDR’s video correctly cites 21 U.S.C. 812B but only names two of the three requirements. The government isn’t arguing marijuana fails all three tests. It’s arguing marijuana fails the second and third: accepted medical use, and accepted safety.
What the Government Told the Tribunal
According to the released transcripts and the DEA’s own post-hearing brief, filed August 17, 2026, the government’s case breaks into two parts.
On medical use, the tribunal only needs to find a currently accepted medical use for one condition to disqualify marijuana from Schedule I. The Department of Health and Human Services’ review, reported to have taken roughly ten months, found accepted medical use for three conditions: anorexia tied to a medical condition, nausea and vomiting including chemotherapy-induced cases, and pain. The video mentions “three therapeutic conditions” but never names them. We’re naming them here because outside reporting on the same hearing already has, not because the video’s transcript excerpt does.
On safety, the government argued marijuana can’t be called unsafe under medical supervision when close to 40 states run regulated medical cannabis programs involving more than 30,000 doctors and over 6 million patients. We looked for a primary source on those exact figures and couldn’t independently confirm them. Treat them as TDR’s characterization of the government’s argument, not a number Cronk is vouching for.
The video also states that no opposing testimony contradicted these findings. That much checks out in every account we found, though it describes what happened inside this specific hearing record, not a claim that no one opposes rescheduling generally. Seven parties, Smart Approaches to Marijuana, the National Drug and Alcohol Screening Association, the Tennessee Bureau of Investigation, and the states of Idaho, Indiana, Louisiana, and Nebraska, filed opposing post-hearing briefs the same week the DEA filed its own.
Abuse Potential Is a Separate Argument, Not a Third Failed Test
This is the one place the video’s framing gets genuinely confusing. The government does talk about marijuana’s abuse potential, but not as a claim that marijuana fails the “high potential for abuse” test. That argument shows up later, when the government makes the case for where marijuana should land instead: Schedule III. There, the government says marijuana’s abuse potential and dependence profile sit closer to existing Schedule III substances than to Schedule I or II, with withdrawal described as far milder than opioids. Those are two different legal questions: whether marijuana still belongs in Schedule I, and if not, where it belongs instead. The video runs them together in a way that’s easy to misread as “marijuana fails all three Schedule I tests.” It doesn’t argue that. It argues marijuana fails two of the three, and separately, that Schedule III fits better than where it sits now.
What Rescheduling to Schedule III Would Actually Change, In One Concrete Way
We’re not weighing in on whether marijuana should move to Schedule III. But one consequence of the schedule number itself is verifiable and doesn’t depend on anyone’s opinion. Federal tax code section 26 U.S.C. § 280E denies ordinary business tax deductions, the normal write-offs for rent, payroll, and other operating costs, to any trade or business trafficking in a Schedule I or Schedule II controlled substance. We checked the statute text directly. It names Schedule I and Schedule II specifically. It does not name Schedule III. If marijuana moves to Schedule III and nothing else in the tax code changes, 280E would stop applying to state-legal cannabis businesses, the same way it already doesn’t apply to any other Schedule III substance today. That’s a mechanical result of the schedule number, separate from the banking access, research rules, and other changes people debate when they talk about rescheduling. We’re not estimating a dollar figure for what that’s worth to any business. We don’t have one to verify, so we’re not naming one.
What the Video Leaves Out
A few things stood out once we checked outside coverage of the same hearing.
First, the transcript itself was corrected after the fact. Chief Administrative Law Judge Derek Julius ordered 294 corrections to the hearing transcript on August 20, 2026, with a corrected version due by August 26. Reporting on the correction order describes most of it as clerical, spelling and speaker names, but says a handful of corrections changed meaning, and in some cases reversed it. The TDR video, published August 28, treats the transcript as a finished document and never mentions that a correction round happened days earlier. If you’re reading other coverage of this hearing, it’s worth knowing the record itself was still being fixed less than two weeks before most of it ran. Separately, the video states the transcript runs 2,470 pages. Cannabis Business Times, Marijuana Moment, and The Marijuana Herald all put the full 11-day transcript at 2,533 pages, commonly rounded to roughly 2,500.
Second, Judge Julius’s recommendation is not a two-way choice. He can recommend Schedule I, Schedule II, or Schedule III. The video’s framing treats the government having asked for Schedule III as though that settles it. That’s what the government requested. It’s not what Julius is required to recommend, and nothing in the record we reviewed says otherwise.
A smaller gap worth naming: the hearing concluded in Arlington, Virginia, and both sides filed their post-hearing briefs on August 17, a detail the video only describes as “last week.”
What Happens Next
Judge Julius now drafts a recommended decision, and there’s no public timeline for when it lands. Once it does, an exceptions period opens where any party can respond or object. After that closes, the DEA enters a fixed 30-day final order window that cannot be shortened. At the end of it, DEA Administrator Terry Cole issues the final ruling. As of this writing, September 2, 2026, Julius has not issued a recommendation and nothing in the public record has changed since the transcripts were released. We checked before publishing this. If that changes, we’ll update this article rather than write a new one.
The Bottom Line
We sell nutrients, not legal advice, so take this for what it is: a report on what’s actually in the public record, not an opinion on what should happen to marijuana’s federal status. What’s confirmed is that the government’s own attorneys told a federal tribunal that marijuana no longer meets two of the three statutory tests for Schedule I, and formally asked that it be moved to Schedule III instead. What’s not confirmed, or not yet decided, is everything downstream of that: the judge’s actual recommendation, whether the DEA administrator accepts it, and what any of it would change for growers day to day. We’ll cover that once there’s something real to report.
Watch the source video: TDR Cannabis in 5, “Government Says Marijuana Fails Schedule I Test”