Company: IXHL
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001213900-25-092837
Chunk: 86

Company: Incannex Healthcare Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1
Chunk 86
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 States, the DEA establishes annually
an aggregate quota for the amount of substances within Schedules I and II that may be manufactured or produced in the United States based
on the DEA’s estimate of the quantity needed to meet legitimate medical, scientific, research and industrial needs. This limited
aggregate amount of cannabis or psilocybin that the DEA allows to be produced in the United States each year is allocated among individual
companies, which, in turn, must annually apply to the DEA for individual manufacturing and procurement quotas. The quotas apply equally
to the manufacturing of the API and the production of dosage forms. The DEA may adjust aggregate production quotas and individual manufacturing
or procurement quotas from time to time during the year, although the DEA has substantial discretion in whether or not to make such adjustments
for individual companies.

State governments also maintain separate controlled
substance laws and regulations, including licensing, recordkeeping, security, distribution, and dispensing requirements. State authorities,
including boards of pharmacy, regulate use of controlled substances within the state. Failure to maintain compliance with applicable requirements,
particularly as manifested in the loss or diversion of controlled substances, can result in enforcement action that could have a material
adverse effect on our business, operations and financial condition. The DEA may seek civil penalties, refuse to renew necessary registrations,
or initiate proceedings to revoke those registrations. In certain circumstances, violations could lead to criminal prosecution.

Following receipt of a scientific and medical evaluation
of marijuana from HHS recommending that the substance be moved from Schedule I to Schedule III, the DEA issued a notice of proposed rulemaking
in May 2024 to effectuate such rescheduling. The DEA scheduled a public hearing on the proposal for January 2025, but the hearing was
postponed indefinitely by the presiding administrative law judge. As of September 2025, the rulemaking appears stalled and marijuana remains
a Schedule I substance. However, President Trump has expressed interest in rescheduling marijuana and his administration is continuing
to evaluate the Schedule III proposal.

In May 2024, the DEA published a notice of proposed
rulemaking to reschedule marijuana (the cannabis plant and the various compounds, manufactures, salts, derivatives, mixtures, or preparations
from it) from Schedule I to Schedule III. Additionally, in August 2025, the DEA forwarded to HHS a citizen petition proposing that the
agencies reschedule psilocybin from Schedule I to Schedule II. After receiving the petition, HHS will conduct a scientific and medical
review of