💸 The Tape

For six weeks the only thing left in the DEA's marijuana rescheduling hearing was the recommendation itself. Testimony wrapped in July, final briefs landed in August, and every trader in the sector has been refreshing the docket waiting for Chief Administrative Law Judge Derek Julius to send his findings to Administrator Terry Cole. On Tuesday he sent something else: a stay.

The trigger was a motion from the National Drug and Alcohol Screening Association, DUID Victim Voices and Dr. Kenneth Finn — three of the hearing's designated opponents — asking to reopen the record to include a Government Accountability Office report published September 23. Julius wrote that he "finds merit in this argument that, if the record were to be extended to also include the GAO Report, a stay would be warranted to await briefing on it," and paused the proceeding while he decides whether to let it in. DEA has until October 13 to file a response of up to 20 pages on whether the record should be reopened. Other parties may respond on the same terms but aren't required to.

What the GAO is

The Government Accountability Office is Congress's auditor. Founded in 1921 as the General Accounting Office and renamed in 2004, it's an independent, nonpartisan agency in the legislative branch, run by a Comptroller General who serves a single 15-year term specifically so no president can lean on him. Its roughly 3,000 staff investigate how federal agencies spend money and follow their own rules, and they do it on request from members of Congress. GAO findings carry weight because they're methodical and rarely wrong on facts, but its recommendations are advisory. Agencies "concur" or "non-concur," and GAO tracks whether they follow through — sometimes for years.

GAO has been circling cannabis policy all year. Its August banking report, requested by Senators Warren, Warnock, Smith and Fetterman, found that about 1,000 banks and credit unions serve cannabis businesses under a 2014 FinCEN guidance built on a Justice Department memo that was rescinded in 2018, and that no institution has ever been penalized solely for serving a state-licensed operator. It's the same posture GAO takes in every drug-policy review: document the gap between what agencies do and what they've written down, then tell them to write it down.

What the scheduling report says

The September report — GAO-26-108623 — is 31 pages on how DEA and FDA make scheduling decisions. Its headline finding is that DEA has followed HHS on every single substance where a recommendation was required: 95 of 95 from 2020 through 2025, with 84 finalized in alignment and the remaining 11 later placed in Schedule I, also as HHS recommended. Disagreements between the agencies "are rare," officials told GAO, and get resolved privately before public comment.

The "gaps" are procedural. DEA "does not have any policies or procedures regarding how its staff are to conduct evaluations or schedule substances" — no written playbook for collecting data, running eight-factor analyses or weighing HHS input. FDA lacks written criteria for assessing a drug's "potential for abuse" relative to other substances. The FDA-NIDA coordination MOU is more than 40 years old. GAO made three recommendations, all of which the agencies accepted. It did not review the marijuana rulemaking and reached no conclusion about whether it was handled properly.

Why opponents want it in the record

NDASA and its co-movants are making a straightforward play: if the agency that's about to reschedule marijuana has no written procedure for doing so, the outcome is arbitrary and the ALJ should say so. It's the same argument SAM is running in the D.C. Circuit against the April medical-only rule, and the GAO report gives it a citation.

The problem is that the report cuts the other way at least as hard. The eight-factor analysis for marijuana was done by HHS, whose 2023 recommendation ran to hundreds of pages and was reviewed by the Office of Legal Counsel, which concluded it was legally sufficient and that DEA must give it significant deference. A GAO finding that DEA has followed HHS 95 times out of 95 is not evidence that DEA should break the streak on the 96th. If anything, it tells the ALJ that departing from HHS now would be the anomaly requiring explanation. DEA's own final brief already leaned on this: the agency said it must give "significant deference" to HHS's "extensive ten-month study" and asked Julius to "expeditiously recommend" Schedule III.

Is this Julius being careful, or Julius being slow?

Careful. An administrative law judge's job is to build a record that survives review, and the fastest way to lose one on appeal is to ignore a motion to admit relevant new evidence from a party with standing. Julius hasn't reopened the record. He's paused, asked DEA whether it objects, and given the other participants a chance to weigh in. That's the minimum process due on a motion like this, and it inoculates his eventual recommendation against the argument that he refused to consider a federal watchdog's findings. The judge who ran the Biden-era hearing into the ground did so partly by getting procedure wrong; Julius appears determined not to repeat it.

It also gives DEA an opening. The agency's 20-page response is a chance to argue that the GAO report is irrelevant to the merits — it reviewed procedures, not this rulemaking — or, more cleverly, that it confirms the agency's consistent deference to HHS. Either way DEA gets to frame the report before the opponents do.

What it does to the timeline

Two paths. If Julius denies the motion after October 13, the record stays closed and his recommendation could still land in late October. If he grants it, expect a supplemental briefing schedule of a few weeks, which pushes the recommendation into November or December — after the midterms, and squarely into the same window as the hemp deadline. Markets that had priced a recommendation "any day now" are going to have to re-price patience.

The substance hasn't changed. HHS recommended Schedule III, OLC said defer, DEA's own lawyers argued for it in the hearing, and the GAO just documented that DEA has never once done otherwise. The stay is a procedural pause, not a signal. The opponents got two extra weeks and a footnote. What they didn't get is a new argument.

📈 Dog Walkers

$CGC ( ▼ 0.03% ) Bolsters German Office

Canopy Growth (TSX: WEED) (Nasdaq: CGC) named Sebastian Blöte Country Manager for Germany, effective October 1, handing him responsibility for sales, partner relationships and commercial execution in the largest medical cannabis market outside North America.

Blöte's résumé is what the job requires. He spent more than a decade in European cannabis, most recently as European Sales Director and then Digital Sales Director at a Germany-based medical cannabis company, where he led its Swiss market entry and an Austrian product launch. Before that he co-founded and ran a German medical cannabis import and distribution business. That's a career built inside the pharmacy-and-prescriber channel Canopy needs to win.

The hire caps a year of quiet repositioning. CEO Luc Mongeau notes the international medical business has posted double-digit sequential growth for three straight quarters, and the last two months have brought EU GMP recertification at Kincardine, a UK supply deal with GROW Group, and an expanded Australian portfolio. The supply side is fixed; the missing piece was someone in Germany who knows which clinics to call.

The competitive backdrop matters. Aurora is defending its German franchise while fending off Curaleaf; Organigram just installed a Berlin-based executive to run its rest-of-world business; High Tide's Remexian doubled its German share in six months. Canopy has been the recognizable brand without a dedicated field leader. Blöte's own framing — Canopy has "the portfolio, supply capabilities and infrastructure in place; the opportunity now is to build on that foundation and increase the pace" — is the right diagnosis.

Canopy still can't get a third of its shareholders to vote at an AGM, but on the operating side, this is the kind of hire a serious European medical business makes.

📺 Trade To Black

Tolerance, Polls, and Rescheduling Fallout

• Tolerance is climbing: This week's NuggMD Check-In Poll finds half of consumers say their tolerance has increased over time versus just 10.5% who say it's dropped — a live question for potency caps and consumer education.

• Massachusetts isn't going backward: A new CommonWealth Beacon/MassINC poll shows 61% of likely voters oppose the ballot measure to roll back legalization, with only 27% in favor.

• Teen use at an all-time low: Federal data released last week shows adolescent marijuana use falling as adult-use expands, gutting one of prohibition's oldest arguments.

• What banks are actually saying: Safe Harbor CEO Terry Mendez on DEA registration math that may not pencil, ancillary providers getting pulled into cannabis banking, uneven DEA site visits, and why lenders still won't go beyond real estate.