Bill Barr to Sue Trump: SAM Hires Former AG to Block Schedule III Order

Less than 48 hours after acting Attorney General Todd Blanche signed the Department of Justice order moving state-licensed medical marijuana from Schedule I to Schedule III, the country's most prominent anti-legalization group has lined up its counterattack — and they've hired a familiar Washington name to lead it. Smart Approaches to Marijuana (SAM) confirmed this week that it has retained former U.S. Attorney General William P. "Bill" Barr to file a federal lawsuit aimed at blocking, or at minimum delaying, the rescheduling.

The hire represents a serious legal escalation for what had appeared to be a fait accompli. Cannabis operators have already begun rewriting tax positions to take advantage of the end of Section 280E. Stock analysts spent Friday running rosier 2027 EBITDA models. But if SAM and Barr can secure even a temporary restraining order, the immediate tax windfall — and the broader regulatory thaw set to peak with June's DEA rescheduling hearings — could land in legal limbo for months.

How SAM Plans to Fight the Schedule III Order

Filed by Acting AG Blanche on April 23, 2026, the DOJ order does something unusual: it splits the cannabis schedule rather than moving the plant wholesale. State-licensed medical marijuana products and FDA-approved cannabis pharmaceuticals jump to Schedule III; everything else — adult-use product, hemp-derived intoxicants outside an FDA pathway, illicit market cannabis — stays on Schedule I.

That bifurcation is precisely where SAM's lawsuit is expected to hit hardest. According to reporting from Marijuana Moment and the Cannabis Business Times, Barr is preparing to argue three core points: that the Justice Department lacked statutory authority to carve out a sub-class of cannabis without going through the full Administrative Procedure Act rulemaking; that the order violates U.S. obligations under international drug treaties, specifically the Single Convention on Narcotic Drugs; and that there is no scientifically valid basis for moving marijuana out of Schedule I under the Controlled Substances Act criteria.

SAM president Kevin Sabet framed the argument bluntly in a statement issued Thursday night. "Today's marijuana is more dangerous than previously thought, not less dangerous," Sabet said. "And until data shows otherwise, it meets current criteria for Schedule I." He called the DOJ action a "backdoor legalization" attempt and said the lawsuit would seek both injunctive relief and a declaratory judgment voiding the order.

Why Bill Barr Matters Here

Hiring Barr — who served as attorney general under both George H.W. Bush and Donald Trump — is calculated, not symbolic. Barr is the only person in modern American history to have run the Justice Department twice. He knows the internal mechanics of CSA scheduling decisions intimately, and during his second term in 2019–2020 he was personally involved in DOJ deliberations over a previous attempt to expand cannabis research. His name on the briefs gives SAM credibility with a federal bench that has, in recent rescheduling-adjacent cases, leaned skeptical of executive branch shortcuts.

It also creates an unusual political tableau: a former Trump AG suing a sitting Trump administration over a Trump-directed policy. SAM has been candid that the lawsuit is not about politics — Sabet has been an equal-opportunity critic of cannabis policy under Biden, Harris, and Trump — but the optics will not be lost on the conservative legal commentariat.

The earlier SAM-related litigation does not suggest an easy path. In a separate matter earlier this spring, a federal judge denied SAM's request for a temporary restraining order against a CBD pilot program, finding that the group had not demonstrated irreparable harm. Cannabis attorneys watching the new filing expect SAM will need to clear that same evidentiary bar, and the harm — to whom, in what amount, and how immediately — is harder to articulate when the underlying drug remains illegal at the state level absent a license.

What's Actually At Stake for the Industry

The legal threat lands at a moment when the cannabis industry has already priced in a Schedule III win. Multi-state operators saw share prices jump dramatically on Wednesday and Thursday — Canopy Growth (CGC) up 19%, Curaleaf (CURLF) up 26%, the AdvisorShares Pure US Cannabis ETF (MSOS) up roughly 19% on the week — anchored to the assumption that Section 280E of the tax code, which has cost state-licensed operators an estimated $2 billion annually in non-deductible expenses, will end immediately.

If a federal court grants a TRO or preliminary injunction, three things change overnight. First, operators that had begun reclassifying their April expense ledgers under standard IRS treatment may need to reverse course and continue accruing 280E exposure. Second, the DEA's broader rescheduling hearings, currently slated to begin in late June, become legally complicated — a court could decide they cannot proceed while the Schedule III order itself is under challenge. Third, capital that had been waiting on federal clarity to deploy into cannabis might pause again, putting downward pressure on the same stocks that just rallied.

Foley Hoag, in an alert to cannabis-industry clients, called the litigation risk "the most significant near-term variable in the post-Schedule III landscape." The firm noted that injunctive relief is rare in CSA scheduling cases, but added that the unusual structure of the DOJ's split-schedule approach gives plaintiffs more legal handholds than a clean cross-the-board reschedule would have.

The 280E Tax Stakes

Section 280E of the Internal Revenue Code is the financial fulcrum of every conversation in cannabis right now. The provision, originally written in 1982 in response to a drug trafficker's tax case, prohibits any business "trafficking" in Schedule I or Schedule II controlled substances from deducting ordinary business expenses on federal returns. Cannabis companies could not deduct rent, payroll, marketing, insurance, or interest — effectively pushing federal effective tax rates north of 70% for many operators.

Schedule III flips that. Once cannabis is no longer a Schedule I or Schedule II substance, 280E does not apply. Industry tax counsel at Dentons estimates the immediate tax-rate normalization could free up between $1.8 billion and $2.4 billion in annual cash flow across the U.S. cannabis industry — money that has been quietly suffocating operator balance sheets for a decade.

A successful SAM injunction would not retroactively reinstate 280E for the days the order was effective. But it could pause the relief going forward, and more dangerously, it could throw the legal status of any in-flight tax filings into uncertainty just as the calendar approaches the September 15 corporate filing deadline.

What Happens Next

The lawsuit is expected to be filed in the U.S. District Court for the District of Columbia within the next 10 to 14 days. SAM will likely seek expedited consideration of a preliminary injunction. The DOJ will respond with a motion to dismiss, arguing that SAM lacks standing — a doctrinal hurdle that has tripped up advocacy-group challenges to executive branch drug-scheduling decisions in the past.

The June DEA rescheduling hearings remain on the calendar for now. Several state attorneys general — including counterparts in Nebraska, South Dakota, and Idaho — have indicated they may file amicus briefs supporting SAM's position. On the other side, the Cannabis Trade Federation, the National Cannabis Industry Association, and Curaleaf have begun building a defensive coalition prepared to intervene in support of the rescheduling.

For patients, dispensary owners, and investors, the practical advice from legal counsel is the same it has been for the last week: do not change federal compliance posture overnight. The Schedule III order is in effect, but the ground may shift again before summer.

Key Takeaways

• Smart Approaches to Marijuana has retained former U.S. Attorney General Bill Barr to file a federal lawsuit challenging the April 23, 2026 DOJ order rescheduling state-licensed medical marijuana to Schedule III.
• SAM's legal arguments are expected to focus on Administrative Procedure Act compliance, international treaty obligations, and the underlying CSA criteria for Schedule I status.
• A successful preliminary injunction could pause 280E tax relief, complicate the DEA's June rescheduling hearings, and reverse some of the cannabis stock gains posted last week.
• A previous SAM TRO request in a separate CBD pilot case was denied, suggesting the standing-and-harm bar remains high.
• Industry estimates put annual 280E tax savings under Schedule III at $1.8–$2.4 billion; that figure is now contingent on how the courts respond to SAM's filing.

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