💸 The Tape

While everyone fixates on the administrative process, a quieter but more powerful path is opening through the judiciary. Lower courts are already chipping away at the foundations of Schedule I classification and its evil tax twin, Section 280E. A well-timed Supreme Court ruling could achieve what decades of lobbying and one slow-moving rulemaking never quite managed: de facto descheduling and a constitutional gut punch to the punitive tax regime that has starved legal operators of basic deductions.

The momentum is undeniable. Consider the growing pile of judicial breadcrumbs. Just last month, the justices heard arguments in U.S. v. Hemani, a Second Amendment challenge to the federal ban on gun ownership for cannabis users. Several justices — including Trump appointees Barrett and Gorsuch — openly questioned whether the mere fact that a substance sits on Schedule I automatically makes its users “dangerous” in a way that justifies stripping constitutional rights. Gorsuch pointedly noted the absurdity of litigating the case while the government itself contemplates moving cannabis to Schedule III. When even conservative justices start wondering aloud why a plant the president wants to treat like ketamine still gets equated with heroin, the writing is on the wall.

This isn’t an isolated blip. Across the country, federal appeals courts have started demanding individualized assessments rather than blanket prohibitions. The Tenth Circuit tossed an indictment against a man whose only “crime” was possessing both cannabis and a firearm. The Eleventh Circuit sided with medical cannabis patients seeking to exercise Second Amendment rights. The Eighth Circuit vacated a conviction and suggested a jury might need to decide whether cannabis actually made the defendant dangerous. The Third Circuit now requires “individualized judgments.” These decisions chip away at the categorical logic that underpins Schedule I itself.

Meanwhile, the tax code’s cruel joke — Section 280E — is facing its own constitutional reckoning. Enacted in 1982 to punish drug traffickers, 280E bars businesses selling Schedule I or II substances from deducting ordinary business expenses. Legal cannabis companies pay effective tax rates north of 70% while alcohol and tobacco giants write off everything from advertising to office coffee. It’s not just unfair; it’s increasingly viewed as unconstitutional.

Multiple challenges argue 280E violates the Fifth and Fourteenth Amendments’ equal protection guarantees. Why should a substance legalized by 24 states, decriminalized in most others, and under active consideration for Schedule III by the executive branch still trigger the same punitive tax treatment as fentanyl? Lower courts have already begun questioning the statute’s continued application as cannabis policy evolves. A Supreme Court victory here wouldn’t just move cannabis to Schedule III — it could render 280E a dead letter for any substance no longer deemed to have “no currently accepted medical use.”

The constitutional arguments are straightforward and powerful. The Supreme Court’s recent Second Amendment cases (Bruen and its progeny) demand that gun regulations map onto historical traditions. Cannabis prohibition lacks any such deep-rooted analogue; the plant was widely used medicinally at the founding. Equal protection doctrine similarly frowns on arbitrary classifications that treat similarly situated industries differently. Alcohol and tobacco — both federally legal and far more harmful by many metrics — enjoy full tax deductions. Cannabis, now backed by thousands of peer-reviewed studies and state-level legalization data, gets punished as if it were still 1970.

Recent scientific validation only strengthens the case. A landmark Oxford Population Health study released earlier this year found zero evidence that cannabis use accelerates cognitive decline or increases dementia risk in older adults — directly undermining the “no accepted medical use” pillar of Schedule I. Hebrew University researchers demonstrated that CBD and CBG can reduce liver fat and improve metabolic health in models of the world’s most common liver disease. These aren’t fringe findings. They’re published in top journals and add to a mountain of evidence showing cannabis belongs nowhere near heroin on the scheduling scale.

The industry’s own resilience provides further proof. Despite 280E’s crushing weight, multi-state operators like Curaleaf, Green Thumb, and Trulieve continue generating hundreds of millions in revenue while delivering record cash flows and brand leadership. State-legal markets have created tens of thousands of jobs, billions in tax revenue, and safer products than the illicit market ever offered. The notion that cannabis has “no currently accepted medical use” looks increasingly absurd when veterans’ groups, cancer patients, and epilepsy advocates line up to testify otherwise.

So how might the Supreme Court actually force the issue? Several vehicles are already in motion or easily imaginable:

First, a direct constitutional challenge to Schedule I placement itself could reach the high court. Plaintiffs could argue that maintaining cannabis in Schedule I violates due process and equal protection given the overwhelming modern evidence of medical utility and relative safety. The Court could strike the classification or remand with instructions that force the DEA and DOJ to reconsider under a rational basis that actually reflects reality.

Second, and perhaps more likely, the Court could rule on 280E’s constitutionality in a tax case. A cannabis business denied ordinary deductions could argue the statute creates an irrational classification now that the executive branch itself concedes medical use. A narrow ruling invalidating 280E for substances under active rescheduling consideration would effectively achieve Schedule III treatment for tax purposes without waiting for DOJ paperwork.

Third, the gun cases provide a sneaky but potent backdoor. If the Court rules that mere cannabis use cannot justify Second Amendment disqualification — especially when the government is actively moving the drug to Schedule III — it sends a powerful signal that the underlying Schedule I premise is constitutionally shaky. Lower courts would then apply that logic across the board.

The beauty of the judicial route is its independence. While DOJ rulemaking can be delayed by politics, endless comment periods, or inter-agency turf wars, the Supreme Court answers to the Constitution. And this Court has shown little hesitation in reining in administrative overreach when fundamental rights are at stake.

None of this is guaranteed, of course. The justices could issue narrow rulings that leave the status quo intact. But the trajectory is unmistakable. Every new scientific study, every state legalization milestone, every lower-court victory, and every public opinion poll (only 1 in 10 Americans still support full prohibition) piles more weight on the scales. The Schedule I label, born of 1970s Reefer Madness politics and Nixon-era cynicism, is creaking under modern scrutiny.

For the cannabis industry, this creates a fascinating strategic moment. While lobbyists continue pressing DOJ for the administrative win, smart operators and trade groups should simultaneously support constitutional challenges that could deliver even broader relief. A Supreme Court decision invalidating 280E or reclassifying cannabis on constitutional grounds would be more durable than any executive action that future administrations could undo with a pen stroke.

The irony would be delicious: after years of begging regulators for relief, the industry might ultimately be saved by nine justices in robes who simply read the Constitution, the science, and the obvious mismatch between law and reality.

The Supreme Court has surprised us before. In an era when federal cannabis policy feels stuck in neutral, don’t be shocked if the justices decide it’s time to shift into drive. The evidence is there. The cases are ripening. And the American public has already voted with its wallets and ballots.

Whether through deliberate rescheduling or judicial necessity, the end of Schedule I is coming. The only real question left is which branch of government will finally pull the plug — and how much unnecessary pain the industry will endure in the meantime.

The Supreme Court may just decide it’s waited long enough.

📈 Dog Walkers

CALIFORNIA: Vapes Category Up

For generations, cannabis flower reigned supreme — the original, the classic, the undisputed champion of every legal dispensary shelf. But in California, the crown has officially slipped. According to state sales data, cannabis vapes officially surpassed flower in June 2025 and have held the top spot ever since.

Last month alone, California consumers spent more than 10% more on vapes than on flower — and a staggering 170% more on vapes than edibles. The shift isn’t subtle. It’s generational.

Headset data shared with SFGATE reveals that Gen Z (ages 14–29) is the driving force. Over the past 12 months nationally, this cohort allocated 38% of its cannabis dollars to vapor pens, edging out flower at 32.5%. Millennials, by contrast, still favor flower (40.1%) over vapes (25.7%). For the first time, a generation entering the legal market is choosing discreet, handheld pens as their default format.

Mitchell Laferla, senior data analyst at Headset, sees the trend accelerating: “Gen Z is becoming a larger part of the market by the day so eventually their love for this category is going to affect the category assortment of the overall market.” His own February numbers still show flower slightly ahead (31.2% vs. 29.3%), but he predicts vapes will overtake even there within months.

The preference extends beyond legal buyers. A recent Wall Street Journal report highlighted Bay Area high schools where teens overwhelmingly choose vapes — easy to buy via Snapchat, prompting schools to install bathroom sensors. While overall teen cannabis use has declined, the method of consumption has shifted dramatically toward pens.

Public health experts are watching closely. Ziva Cooper, professor at UCLA’s David Geffen School of Medicine and a leading cannabis researcher, notes that concentrated cannabis oil carries unique risks compared to flower: potential heavy-metal or pesticide contamination, different pulmonary concerns, and possibly higher dependence potential. “We don’t have clear answers yet,” she cautions, “but the rapid growth across all age groups should be a cause for concern.”

Still, the market has spoken. Vapes offer convenience, precise dosing, discretion, and faster onset — exactly what a smartphone-native generation values. Flower, for all its tradition, suddenly feels a bit… analog.

California’s $5+ billion legal cannabis market is undergoing its most significant format shift since recreational legalization. What began as a Gen Z preference is now reshaping retail shelves, product development pipelines, and public health conversations. The age of the joint may not be over, but the era of the pen has clearly arrived — and it’s moving faster than anyone expected.

STUDY: Cannabis is Liver Medicine

In a twist that might make even the staunchest prohibitionist pause, researchers at the Hebrew University of Jerusalem have uncovered evidence that two non-intoxicating cannabis compounds could offer a fresh path forward for treating metabolic dysfunction-associated steatotic liver disease (MASLD) — the most prevalent chronic liver disorder on the planet.

Published in the British Journal of Pharmacology, the study found that cannabidiol (CBD) and cannabigerol (CBG) significantly reduced liver fat accumulation and improved overall metabolic health in experimental models of the condition, which currently affects roughly one-third of adults worldwide and is tightly linked to obesity and insulin resistance.

Unlike THC, neither CBD nor CBG produces a psychoactive “high,” making them attractive candidates for long-term therapeutic use. Lead researcher Joseph Tam, director of the Multidisciplinary Center for Cannabinoid Research, explained the mechanism: “Our findings identify a new mechanism by which CBD and CBG enhance hepatic energy and lysosomal function.” The compounds triggered “metabolic remodeling,” essentially creating a cellular “backup battery” by boosting phosphocreatine levels while restoring the activity of cathepsins — the liver’s internal “cleaning crews” that break down harmful fats and waste.

CBG, a precursor molecule from which CBD is derived, delivered particularly strong results, outperforming CBD in reducing total body fat mass, lowering LDL cholesterol, and enhancing insulin sensitivity.

The implications are significant. MASLD has few approved pharmaceutical treatments, leaving patients largely reliant on lifestyle changes that prove difficult to sustain. These findings suggest plant-derived compounds could one day provide a targeted, tolerable alternative.

That said, the research remains preclinical. The authors stress that controlled experimental models do not yet translate directly to human patients, and further clinical trials are essential. Broader context adds caution: a major 2025 JAMA analysis of over 2,500 papers found very few medical conditions where cannabinoids have clear, high-quality evidence of benefit.

Still, the Hebrew University results open an intriguing new chapter. As MASLD rates climb alongside global waistlines, the idea that cannabis-derived molecules might help the very organ responsible for metabolizing them feels poetically fitting. While more work lies ahead, this study provides a promising roadmap — and another reminder that the cannabis plant continues to surprise science in unexpected ways.

🗞️ The News

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Is Cannabis Rescheduling About To Happen This Week? | TTB Powered by Flowhub

What we will cover:

✅ Cannabis rescheduling is once again the dominant conversation across the industry. On this episode of Trade To Black powered by Flowhub, macro investor Doug Kass said Friday that a federal cannabis rescheduling announcement could be imminent, raising the question many investors are asking: could a decision finally arrive this week?

Hosts Shadd Dales and Anthony Varrell break down the latest developments surrounding federal rescheduling and discuss what a potential announcement could mean for cannabis equities, investor sentiment, and the broader industry outlook.

The show also features Anthony Coniglio, CEO of NewLake Capital Partners (OTCQX: NLCP), who joins the podcast to discuss the company’s latest earnings results. NewLake reported $12.3 million in quarterly revenue, beating expectations while continuing to generate stable cash flow in a challenging capital markets environment. Coniglio provides insight into tenant performance, capital allocation, and the outlook for cannabis real estate financing.