💸 The Tape

Chief Administrative Law Judge Derek Julius ended the GAO detour on Wednesday with an order that gave rescheduling opponents the one thing they said they wanted and denied them everything they actually wanted. The GAO report is admitted into the record. The hearing will not reopen. There will be no new witnesses, no discovery into GAO’s working files, no second cross-examination of FDA’s Dominic Chiapperino, and no inquiry into who designed HHS’s two-part test for currently accepted medical use. Parties get ten double-spaced pages by October 29 to argue how much weight the report deserves, ten more pages by November 5 for replies, and then the stay expires on its own.

Julius’s reasoning was short and pointed. The record already holds more than 2,500 pages of testimony and thousands of pages of exhibits. The questions opponents raised either fell outside the hearing’s scope or could have been answered with evidence they already had. The GAO report “speaks for itself,” and further testimony about how it was prepared would only complicate the proceeding. On the two-part test, he cut to the real issue: what matters is how much deference the test deserves, not its origin story, and the parties had every chance to brief deference during the hearing. Requests for anything beyond the two filing dates, he added, are “disfavored.”

That’s the procedural story. The more important question is what the calendar looks like once November 5 passes.

Step one: the recommended decision

With the record closed and the stay expired, Julius writes. His recommended decision is the document this entire two-year process was built to produce. It will contain findings of fact on the eight statutory factors, conclusions of law on whether marijuana meets the Schedule I criteria, and a recommendation to the Administrator on the proposed rule. The order sets no deadline for it, which is normal for ALJ proceedings and frustrating for everyone waiting on it.

The realistic window is weeks to a few months. Julius closed the original record in late August and was presumably well into drafting before the September stay. The GAO briefing adds a section, not a rewrite. The DEA’s own filings have signaled the agency wants this done, and the ALJ has no institutional reason to sit on a decision in a proceeding where the government’s final brief already concedes marijuana “no longer fits the statutory requirements for Schedule I.”

Step two: the Administrator’s final order

The recommended decision goes to DEA Administrator Terrance Cole, who makes the actual decision. He can adopt the recommendation, modify it, or reject it. The APA requires him to engage with the ALJ’s findings, and the Attorney General’s April order placing state-licensed medical cannabis in Schedule III has already established the Department’s position. The path of least resistance is a final rule that extends Schedule III to all marijuana, which is what HHS recommended in 2023 and what DEA’s own litigators argued at the hearing.

Cole’s decision becomes a final rule published in the Federal Register. Final rules of this kind typically carry a 30-day effective date, though the agency can set a longer implementation period to address registration, security and recordkeeping transitions for a controlled substance moving from Schedule I to III. For operators, the effective date is the date that matters: it is when Section 280E stops applying to adult-use cannabis businesses, and when the tax treatment that medical operators have enjoyed since April extends to the rest of the industry.

Step three: judicial review

Any aggrieved party can petition for review in a federal court of appeals within 30 days of the final rule. Smart Approaches to Marijuana and its allies have already shown they will litigate. The challenges to the April medical-only order are consolidated in the D.C. Circuit, which declined to block that order, and a challenge to the full rule would almost certainly land in the same court. Petitioners can ask for a stay pending review, but the standard requires a likelihood of success on the merits, and the D.C. Circuit’s earlier refusal to halt the medical move tells you how that motion is likely to fare. Absent a stay, the rule takes effect on schedule while the appeal proceeds.

That is the sequence: recommendation, final order, Federal Register, effective date, appeal. Four discrete steps, each with its own clock, and the first one starts the moment the November 5 replies are filed.

What the opponents have left

Not much, and the order makes that clear. Their supplemental brief can argue that the GAO’s finding of missing written procedures undermines the weight HHS’s analysis deserves. The DEA will reply that GAO reviewed documentation, not science, and that a recommendation to write down existing practice does not alter a ten-month evaluation by four working groups. Julius has already signaled where he leans by framing the question as whether the gaps are “substantial enough to affect this proceeding.” He did not find that they are, and he structured the briefing to let the opponents try one last time to show it.

Their remaining play is the courtroom, and the GAO report will be their lead argument there too. The problem is that an appellate court reviews the agency’s final rule for arbitrary-and-capricious reasoning, and a record of 2,500 pages of testimony, a two-year HHS evaluation and a fully briefed ALJ decision is the opposite of a thin record. The GAO’s recommendations give DEA and FDA homework. They do not give the D.C. Circuit a reason to vacate.

What it means for the sector

The binary that has split the industry since April, medical operators in Schedule III and adult-use operators still in Schedule I, now has a visible endpoint. Every multi-state operator with mixed-use assets has been modeling 280E relief on a “someday” basis. After November 5, the modeling shifts to “which quarter.” The recommended decision is the next catalyst, the final rule is the one that moves earnings, and the effective date is the one that moves cash.

Julius gave the opponents their report and took away their delay. Twenty pages and two weeks from now, the only thing left between adult-use cannabis and Schedule III is a judge who has already read everything.

📈 Dog Walkers

$DB.TSXV ( ▼ 3.24% ) Knows Its Self Worth

Decibel Cannabis found itself on the receiving end of an unsolicited partial tender offer this week, and the company’s response was a polite shrug with a clear subtext.

Ewing Morris Avenue LP, a Toronto-based investment manager, is offering C$1.91 per share in cash for up to 2,617,801 common shares, roughly 6.8% of the 38.5 million shares outstanding, for total consideration of about C$5.0 million. The price represents a 16.4% premium to the 20-day VWAP and a 19.4% premium to the October 16 close of C$1.60. The offer requires a minimum of 1,745,200 shares to be deposited, will be prorated if oversubscribed, and expires November 6 unless extended.

The structural detail that matters: Ewing Morris has stated the offer is not a take-over bid under Canadian securities law, which means Decibel won’t file a directors’ circular and shareholders don’t get the full protections that come with a formal bid. Decibel is not a party to the transaction, issues no shares and receives no proceeds.

The board took no position on whether holders should tender. Management and every director did. All of them have said they will not tender, including shares underlying options and RSUs, and describe themselves as long-term holders. Executive Chair Shawn Dym framed the premium as evidence of “the quality of the business we are building” while acknowledging that the offer gives sellers an exit the thin TSXV trading book hasn’t easily provided.

Read between the lines. An investment manager is willing to pay up for a meaningful stake in a company whose insiders won’t sell at that price. Decibel has spent the year consolidating shares 15-for-1, launching brands in the UK through Hilltop Leaf and leaning into EU-GMP exports from Chatham. Someone has done the math on the medical export story and likes the entry point. Management’s refusal to tender suggests they think C$1.91 is still cheap.

📺 Trade To Black

Is Trump Really Losing Support From Cannabis Consumers? | TDR Cannabis in 5

• Trump’s approval among cannabis consumers has cratered to 29%, down from 48% last quarter and 73% before that, per a new NuggMD/Marijuana Moment poll of 654 consumers in legal states. But only 20% disapprove, 51% are neutral, and 47% say broader legalization would win them back.

• Shadd Dales argues the survey doesn’t explain why support fell, and the timing is suspect: the president’s overall approval is sliding with midterms two weeks out, so the cannabis number may be tracking the general mood more than cannabis policy.

• The frustration over rescheduling delays is real, especially for operators still waiting on Section 280E clarity while broader rescheduling sits in a DEA hearing and court challenges.

• The record still stands: a December 2025 executive order directing rescheduling and an April 2026 order moving medical cannabis to Schedule III. Shadd’s take is that this administration has advanced federal reform further than any in 50 years, Biden deserves credit for starting the review, and both things can be true at once.