Key Points

• Medical Marijuana Moves to Schedule III Immediately. The Acting Attorney General's Medical Rescheduling Final Order reclassifies FDA-approved marijuana products and state-licensed medical marijuana from Schedule I to Schedule III.
• Broader Rescheduling Hearing Set for Summer 2026. A formal DEA hearing on the proposal to reschedule marijuana will start June 29, 2026. Interested parties must file new notices of intention to participate.
• State Licensees Should Act Now. State-licensed medical marijuana businesses should promptly apply for DEA registration, and consult tax counsel on Section 280E relief and potential retrospective relief.

Acting Attorney General Todd Blanche issued two landmark actions on April 22, 2026, relating to the rescheduling of marijuana under the Controlled Substances Act (CSA).

The Medical Rescheduling Final Order moves FDA-approved marijuana products and state-licensed medical marijuana into Schedule III, effective immediately. The Notice of Hearing on Proposed Rescheduling announces a formal hearing on the broader proposal to reschedule marijuana generally from Schedule I to Schedule III.

Together, these actions mark the most consequential shift in federal marijuana policy in decades.

Medical Rescheduling Final Order

Effective April 22, 2026, the Medical Rescheduling Final Order moves two categories of marijuana into Schedule III:

• FDA-approved drug products containing marijuana
• Marijuana covered by a qualifying state medical marijuana license.

Acting Attorney General Blanche issued this order under 21 U.S.C. § 811(d)(1), which authorizes expedited scheduling to fulfill U.S. treaty obligations. The order bypasses the standard notice-and-comment rulemaking process.

Marijuana not covered by an FDA-approved product or state medical license remains Schedule I, subject to all existing criminal and regulatory controls. Synthetically derived THC also remains Schedule I and is excluded from this order.

Expedited DEA Registration for State Licensees

The order creates an expedited DEA registration pathway for state medical marijuana licensees. Applicants may submit existing state credentials as conclusive proof of state-law authorization. The DEA must grant registration unless it would conflict with the public interest or Single Convention requirements. State licensees who apply within 60 days of publication may continue operating under their state licenses while DEA review is pending.

The order significantly reduces regulatory burdens. Reporting, recordkeeping and order-form requirements are limited to what is strictly necessary under federal law and treaty obligations. State-required records will be accepted to the maximum extent permissible. Registrants may also rely on state labeling, packaging, disposal and security requirements in lieu of federal requirements, provided labels include the statutory warning under 21 U.S.C. § 825(c).

Tax Implications

The Medical Rescheduling Final Order provides immediate federal tax relief for entities holding state medical marijuana licenses. Specifically, these state licensees are no longer subject to Section 280E of the Internal Revenue Code, which disallows ordinary business deductions for entities trafficking in Schedule I or II controlled substances. This relief applies prospectively to all state-licensed medical marijuana manufacturers, distributors and dispensers as of April 22, 2026.

Other points of interest:

• State-Authorized Certifications. A state-licensed entity dispensing medical marijuana through a state-authorized certification (rather than a prescription) should still benefit from the rescheduling to Schedule III for purposes of Section 280E, but affected licensees should consult tax counsel for advice specific to their circumstances.
• Retrospective Relief. Acting Attorney General Blanche encouraged the Secretary of the Treasury to consider providing retrospective relief from Section 280E liability for prior taxable years. If granted, such relief could apply to tax years during which a licensee operated under a valid state medical marijuana license. However, retrospective relief is not automatic and requires separate Treasury Department action. State licensees with open tax years or pending IRS disputes should preserve their records and monitor Treasury guidance closely.
• State Tax Considerations. The Medical Rescheduling Final Order addresses federal scheduling only and does not affect state tax treatment. Many states have adopted their own versions of Section 280E or imposed separate limitations on deductions for marijuana businesses. State licensees should consult with state tax counsel to determine whether their state conforms to federal tax treatment or maintains independent restrictions on business deductions.
• Recommended Actions. State licensees should: (1) consult with tax counsel regarding amended returns for prior tax years if Treasury issues retrospective relief guidance; (2) review state tax obligations separately from federal relief; and (3) update accounting practices to reflect the availability of ordinary business deductions for federal tax purposes beginning April 22, 2026.

Import and Export Requirements

To maintain compliance with the Single Convention, the Medical Rescheduling Final Order amends DEA regulations at 21 CFR 1312.30 to require import and export permits for FDA-approved drug products containing marijuana and state-licensed medical marijuana that has been rescheduled to Schedule III.

Notice of Hearing on Proposed Rescheduling

Acting Attorney General Blanche also issued the Notice of Hearing on Proposed Rescheduling, announcing a formal DEA hearing on the broader proposal to transfer marijuana from Schedule I to Schedule III. This hearing relates to the May 21, 2024, Notice of Proposed Rulemaking, which found that marijuana has currently accepted medical use, lower abuse potential than Schedule I or II substances, and may lead to moderate physical or high psychological dependence.

A prior hearing scheduled for December 2, 2024, was cancelled. The new hearing is issued pursuant to Executive Order 14370 (December 18, 2025), which directs the Attorney General to expeditiously complete rescheduling rulemaking.

The hearing runs June 29 through July 15, 2026, at the DEA Hearing Facility, 700 Army Navy Drive, Arlington, Virginia 22202, with a recess July 3–6 for Independence Day. Previously submitted participation requests do not carry over — interested parties must file new notices by May 20, 2026 (paper) or May 24, 2026 (electronic).

Action Items for Interested Parties

State-Licensed Medical Marijuana Entities

State-licensed medical marijuana businesses should promptly apply for DEA registration by submitting proof of their state license along with applicable DEA forms. Applicants who submit within 60 days of publication may continue operating while their applications are pending. Licensees should also consult tax counsel regarding Section 280E relief and potential retrospective relief.

Interested Persons Seeking to Participate in the Hearing

Any interested person must file a new written notice of intention to participate, regardless of prior submissions. Each notice must: (1) state with particularity the person’s interest in the proceeding; (2) identify the specific objections or issues to be addressed; and (3) briefly state the person’s position. Submit electronic notices as a PDF to nprm@dea.gov (referencing "Docket No. DEA-1362”) by 11:59 p.m. ET on May 24, 2026. Mail paper submissions to Drug Enforcement Administration, Attn: Administrator, 8701 Morrissette Drive, Springfield, Virginia 22152, postmarked by May 20, 2026.

Handlers of FDA-Approved Marijuana Products

Entities handling FDA-approved marijuana products must comply with Schedule III requirements, including DEA registration, prescription requirements, recordkeeping, security measures, labeling standards and biennial inventory requirements.

For more information, please contact Nikolas S. Komyati at nkomyati@foxrothschild.com, William Bogot at wbogot@foxrothschild.com or another member of the firm’s Cannabis Law Practice Group.

This information is intended to inform firm clients and friends about legal developments, including the decisions of courts and administrative bodies. Nothing in this alert should be construed as legal advice or a legal opinion. Readers should not act upon the information contained in this alert without seeking the advice of legal counsel. Views expressed are those of the author(s) and not necessarily this law firm or its clients. Prior results do not guarantee a similar outcome.