💸 The Tape

The opponents of cannabis rescheduling got the soundbite they wanted on Day Two of the DEA hearing. Whether it actually means what they think it means is a different question entirely.

FDA official Dominic Chiapperino — director of the controlled substance staff at FDA's Center for Drug Evaluation and Research and one of the government's two designated witnesses — acknowledged under cross-examination that marijuana would not have passed the prior five-part test the agency had used for decades to determine whether a drug has a "currently accepted medical use" (CAMU). SAM CEO Kevin Sabet called the admission "truly extraordinary" and posted a video claiming it proves the government changed the rules to get the outcome it wanted.

It's an effective talking point. It's also misleading — because the five-part test that marijuana failed wasn't abandoned arbitrarily. It was replaced because the Department of Justice's own Office of Legal Counsel determined it was legally wrong.

What Actually Happened With the CAMU Test

For years, the DEA used a five-part analysis to evaluate whether a substance had accepted medical use. The test required proof that the drug's chemistry was known and reproducible, that adequate safety studies existed, that controlled research demonstrated efficacy, that qualified experts accepted it, and that widely available scientific evidence supported it. Under this framework, marijuana was denied rescheduling repeatedly — in 1992, 2001, 2011, and 2016 — primarily because it had never been through FDA clinical trials and therefore couldn't demonstrate "efficacy" under the test's narrow pharmaceutical definition.

The problem, as the DOJ's Office of Legal Counsel (OLC) concluded in a 2024 opinion, was that the five-part test was "impermissibly narrow" — essentially requiring FDA approval as a prerequisite for finding accepted medical use, even though the Controlled Substances Act itself contains no such requirement. The OLC determined that a two-part analysis was legally sufficient: first, whether there is "widespread, current experience with medical use" by licensed healthcare providers operating under state law; and second, whether there is "some credible scientific support" for at least one of the conditions it's being used to treat.

This wasn't a backdoor policy change. It was a formal legal correction by the Department of Justice's highest authority on statutory interpretation — the same office that advises the Attorney General and the President on what the law actually says. The OLC opinion explicitly stated that the prior test had been applying a standard Congress never enacted.

Does Cannabis Meet the New Standard?

The answer is unambiguously yes — and the data supporting it is overwhelming.

On the first prong — widespread medical use by licensed providers — over 40 states have legalized medical cannabis programs. More than 6 million patients are actively registered across these programs. Over 500,000 physicians and practitioners have authorized cannabis for medical use. The industry generated approximately $7.6 billion in medical sales in 2025. State programs collectively operate thousands of licensed dispensaries, cultivators, and manufacturers under regulatory frameworks that include physician certification, patient registries, product testing, and ongoing oversight.

No reasonable interpretation of "widespread, current experience with medical use" can exclude a substance being used by millions of patients under the supervision of hundreds of thousands of healthcare providers across 40 state-regulated programs. The breadth of adoption is simply beyond dispute.

On the second prong — credible scientific support — the evidence base is substantial and growing. The National Academies of Sciences, Engineering, and Medicine published a comprehensive review in 2017 identifying conclusive or substantial evidence that cannabis is effective for chronic pain, chemotherapy-induced nausea and vomiting, and spasticity associated with multiple sclerosis. Hundreds of peer-reviewed studies have documented therapeutic benefits across pain management, epilepsy, PTSD, appetite stimulation, and inflammatory conditions. The FDA itself has approved Epidiolex (CBD) for seizure disorders and Marinol/Syndros (synthetic THC) for nausea and appetite — acknowledging that cannabinoids have medical utility even under the most restrictive pharmaceutical standard.

The opponents' argument that marijuana "failed" the old test therefore proves it shouldn't be rescheduled ignores the central finding: the old test was wrong. A substance used medically by millions of patients under physician supervision in 40 states, supported by hundreds of studies and multiple FDA-approved cannabinoid products, has accepted medical use. The prior test's inability to recognize that reality was the test's failure, not marijuana's.

The Diversion Argument

Opponents also pressed on diversion from state medical programs — the claim that marijuana authorized for medical use inevitably ends up in the hands of recreational users and minors. It's a concern worth taking seriously, but the data doesn't support the catastrophic framing the opponents presented.

State medical cannabis programs operate under seed-to-sale tracking systems, patient registries, purchase limits, and regulatory oversight that collectively create one of the most heavily monitored distribution chains in American consumer markets. Are there instances of diversion? Undoubtedly. But the same is true of every Schedule III substance currently on the market — hydrocodone-combination products were Schedule III until 2014 precisely because of widespread diversion, and substances like ketamine and testosterone remain in Schedule III despite well-documented diversion pathways.

The relevant question isn't whether any diversion occurs — it's whether the level of diversion disqualifies the substance from Schedule III classification. Given that multiple Schedule III drugs with higher abuse potential and more dangerous diversion consequences operate within the current framework, the argument that cannabis uniquely fails this standard is difficult to sustain.

The Government's Second Witness

While the CAMU cross-examination dominated Day Two coverage, the government's second witness — Dr. Corey Burchman, a New Hampshire physician — provided testimony that may ultimately carry more weight with the ALJ.

Burchman testified about his clinical experience using medical cannabis as an alternative to opioids for chronic pain patients, stating that once medical cannabis became available, he and his colleagues would "avidly use that ability to limit opioids" and that some patients were able to fully transition off prescription painkillers. He described the experience as "positive" and said it "benefitted patients."

His comparison of withdrawal syndromes was characteristically blunt: "Withdrawal from opioids is like a dumpster fire. Withdrawal from marijuana is more like a dying glowing ember of a campfire."

That testimony directly addresses the practical medical reality that the scheduling debate is ultimately about. Physicians are using cannabis to reduce opioid dependence. Patients are benefiting. The clinical evidence supports it. And the withdrawal profile — which even HHS characterized as "relatively mild compared to alcohol" — is categorically less dangerous than the substances cannabis is being used to replace.

The Bottom Line

The opponents got Chiapperino to admit marijuana would have failed the old test. What they can't get anyone to admit is that the old test was legally sound — because the DOJ's own legal authority already determined it wasn't. The OLC opinion stands. The two-part test has been adopted by the DEA for evaluating other substances as well, not just cannabis. And the evidentiary record showing that marijuana meets the new standard is supported by 40 state programs, millions of patients, hundreds of studies, and FDA-approved cannabinoid products.

Sabet called the admission "extraordinary." The more extraordinary fact is that the federal government spent decades using a test its own lawyers eventually concluded was too narrow to capture the reality of medical practice — and that cannabis patients in 40 states were denied federal recognition as a result.

The test changed because it was wrong. The question now is whether the ALJ's recommendation will reflect what the evidence actually shows — or what a discredited framework once concluded.

📈 Dog Walkers

$TSNDF ( ▲ 5.36% ) Expands In Jersey

TerrAscend is adding another New Jersey dispensary — and the math on this one is hard to argue with.

The company signed an option agreement to acquire Aunt Mary's Dispensary, located in a high-traffic retail corridor in Flemington, Hunterdon County, for a total purchase price of $9 million. The deal structure includes a $3 million convertible promissory note (five-year term, 6% interest) for a 35% option stake, with the remaining $6 million in cash payable upon exercise.

The numbers make the case. Aunt Mary's generates over $10 million in annualized revenue from 5,200 square feet of retail space with limited nearby competition. At a 0.9x revenue multiple, the acquisition is immediately accretive on both EBITDA and free cash flow — before TerrAscend even introduces its premium brand portfolio including Kind Tree, Legend, Valhalla, and Cookies.

Executive Chairman Jason Wild called it exactly what it is: "disciplined, accretive" dealmaking. For a company that just closed a $21.7 million convertible financing with proceeds earmarked specifically for acquisitions, Aunt Mary's is the first deployment of that capital — and it validates Wild's stated intent to grow the retail footprint in high-growth markets where TerrAscend already has operational scale.

New Jersey will be TerrAscend's fifth dispensary in the state. The playbook is working.

$TLRY ( ▼ 2.6% ) Goes Deeper On Canadian Medical

Tilray just bought its way into the one piece of the Canadian medical cannabis value chain it was missing: the patient.

The company announced the acquisition of HelloMD Corporation, a digital healthcare and patient engagement platform that has supported hundreds of thousands of patients through telehealth consultations, educational resources, and personalized medical cannabis guidance. Tilray was the successful bidder in HelloMD's formal sale process, with court approval expected June 29. Financial terms were not disclosed.

The strategic logic is straightforward. Tilray already owns EU-GMP certified cultivation and manufacturing, pharmaceutical distribution through CC Pharma, medical cannabis clinics, digital pharmacy capabilities, and patient access platforms across North America, Europe, Australia, and international markets. What it lacked was a direct-to-patient digital front door — a platform that captures patients at the education and consultation stage and connects them through the entire care journey to product access and fulfillment.

HelloMD fills that gap. President Blair MacNeil said the acquisition creates "a fully vertically integrated medical cannabis framework for Tilray in Canada" — connecting cultivation, clinical expertise, practitioner support, product access, and fulfillment into a single integrated model.

Beyond the immediate Canadian application, Tilray sees HelloMD as a platform to expand into adjacent wellness categories including sleep support and pain management — over-the-counter markets worth billions where the company has minimal presence today. Subject to regulations, Tilray plans to use HelloMD's digital engagement capabilities to build awareness of regulated cannabis alternatives among consumers already seeking natural health solutions.

For a company positioning itself as the world's leading medical cannabis platform — with operations spanning 20+ international markets and the largest European pharmaceutical distribution network in cannabis — owning the patient relationship from first consultation through ongoing care is the piece that makes the rest of the infrastructure commercially complete.

🗞️ The News

📺 Trade To Black

ALJ Hearing Day 2: What We Learned & What's Next | TTB Presented by Flowhub

• Inside the Hearing Room: Cannabis attorney Eric Berlin of Dentons provides a firsthand account of how arguments are being presented, what the ALJ appears focused on, and how early testimony fits within the CSA scheduling framework.

• Opponent Arguments Emerging: Key themes from rescheduling opponents include concerns about the FDA relying on older data sets, questions around diversion from state programs, variability in cannabis products, and the absence of pregnancy-specific analysis in the government's scientific review.

• Day One Revelations: Michael Bronstein breaks down the most significant moments from the government's presentation, including the lead witness's admissions about data gaps and how opponents attempted to exploit those gaps to undermine the rescheduling justification.

• Process Check: Two days in, the hearing is producing a clear evidentiary record — with the government defending its case while designated opponents probe for weaknesses that could inform the ALJ's recommendation and potentially fuel the parallel D.C. Circuit litigation challenging the existing medical rescheduling order.