Schedule III for Medical Marijuana! Here’s the Big Shift, Broken Down

Here is our quick breakdown of rescheduling news: what the final order does, how DOJ says it can do it, a high-level overview of changes, and what comes next.

What the Order Does

Today, April 23, 2026, the United States Acting Attorney General, Todd Blanche, (the “AG”) and the U.S. Department of Justice (“DOJ”) announced the issuance of a final order that “immediately places” some cannabis into Schedule III of the Federal Controlled Substances Act (the “Order”):

• FDA-approved drug products that contain delta-9 THC derived from the cannabis plant (and fall within the CSA definition of “marijuana”), and importantly
• Marijuana handled under a state medical marijuana license.

One of the stated goals is to expand medical benefits for Americans while minimizing disruption to existing state systems. Note that “synthetically derived” THC is not covered because the Order says it remains Schedule I. Additionally, hemp is expressly outside the scope of the Order, which focuses on delta-9 THC derived from the marijuana plant, and not “hemp” as defined under federal law.

AG’s Legal Authority

Legal authority for the action is stated to come from U.S. obligations under the Single Convention, allowing the AG to issue an order under 21 U.S.C. § 811(d)(1) and place the substance in the schedule deemed most appropriate without the usual scheduling findings and without standard notice-and-comment rulemaking. The Order cites Office of Legal Counsel (including a 1972 opinion and an April 2024 memo) to support that broader reading.

Expedited DEA Registration for State-Licensed Medical Operators

Yes, you read that right: DEA registration will be required for state-licensed medical operators.

That said, the Order instructs the DEA to create a streamlined path for state-licensed medical marijuana entities to seek DEA registration as manufacturers, distributors, and/or dispensers using state credentials as conclusive proof of state-law authorization.

• Default rule: DEA must grant registration unless it conflicts with the public-interest factors in 21 U.S.C. § 823 or treaty requirements.
• State license is critical: federal registration would automatically suspend if the underlying state license is suspended, revoked, or expires.
• Timing matters: applications submitted within 60 days of publication of the application process are directed to be processed within six months, and “early” applicants may be able to operate under state authority while review is pending. In other words, we expect a scramble.
• Lower burden (in theory): the Order says reporting/recordkeeping and order forms will be limited to what treaty/statute require, and state records will be accepted where possible. It also contemplates relying on state packaging/security rules, with a required federal warning label.

The 280E Tax ISSUE

The Order flags a major downstream effect, namely that IRC § 280E disallows certain deductions for businesses “trafficking” in Schedule I or II substances. If activity shifts into Schedule III under this framework, the Order suggests state licensees would no longer be subject to 280E’s deduction disallowance. That being said, the Order also stresses that it is not making a determination of anyone’s tax liability. Notably, the Order even encourages Treasury to consider retrospective relief for prior years tied to state medical licenses.

Treaty Wholesale Requirements

To stay aligned with treaty obligations (notably Single Convention Articles 23 and 28), the Order describes a structure where DEA plays a central role in wholesale controls, including purchasing and reselling crops from registered manufacturers and setting prices, along with administrative fees and storage/access requirements. The purpose for this structure was outlined in a 2018 OLC Memo. Here are some key points:

• Key carve-outs: the Order emphasizes that the wholesale “monopoly” concept does not extend to “medicinal cannabis,” defined in DEA regs as cannabis-based drug products that can be legally marketed under the FD&C Act (i.e., FDA-approved drug products). The Order also says it exempts marijuana subject to state medical marijuana licenses from the requirement that the government monopolize wholesale trade.
• Rule language may look different: The exemptions become a little less clear when you read language from the Order about the DEA establishing a “nominal price purchase and resale mechanism” during which registered manufacturers must store crops in a facility to which the DEA has access until that transaction is complete. We expect more to come on this for sure.

Import/Export: Still Controlled, but Clearly Permissible

The order amends DEA regulations to add these FDA-approved marijuana-containing products and state-licensed medical marijuana to the list of controlled substances that require import and export permits (under 21 CFR 1312.30).

Research: A Cautious Green Light (with Conditions)

On research, the Order says that researchers registered to conduct marijuana research can obtain marijuana or marijuana-derived products from a state licensee without civil/criminal liability solely for that sourcing choice, as long as the state licensee held a valid federal registration at the time of transfer, and DEA won’t treat use of state-licensed products in registered research as grounds for adverse action.

Next Steps: Hearing Starting June 29, 2026

While the Order appears to be immediately effective upon publication in the Federal Register, proposed rulemaking to implement potentially broader reform will also go through appropriate administrative processes, outlined in the AG’s Notice of Hearing:

• Formal Hearing: scheduled to begin on June 29, 2026 and set to conclude no later than July 15, 2026.
• Holiday Break: to allow all parties “to celebration 250 years of American Independence,” the hearing will recess on July 3 and reconvene on July 6
• Potential Postponement: as we saw under the Biden Administration, the hearing may be moved or even postponed. Anti-cannabis groups already have their lawyers working on various legal challenges, assuredly. Hold on to your hats.

Bottom line

Today’s executive order should not be confused as marijuana “legalization.” Rather it is a targeted attempt to thread a needle between federal drug scheduling, treaty obligations, and the reality of state medical programs.

The hearing and future DEA administrative processes will be telling, but questions still remain, such as what protection (if any) medical marijuana patients will receive (protection from job loss, etc.), whether interstate commerce between state medical marijuana programs will be permissible, whether strictly medical marijuana operators that register with DEA can uplist to a US exchange, and what (if any) impacts this will have on criminal justice reform. And these are just a few of the numerous issues we anticipate that will need to be addressed. And of course, the Order itself doesn’t cover adult use or recreational marijuana. Broader reform through rulemaking will be required there. In other words, our work is far from over.

That said, be sure to watch three pressure points in the near future: (1) how fast DEA processes the new registration pipeline, (2) how the wholesale purchase/resale mechanics work in practice, and (3) what the 280E shift means once tax advisors and the IRS weigh in.

Stay tuned.

April 23, 2026

This article was written by Kight Law attorney Amber Lengacher. Kight Law represents hemp businesses in the US and throughout the world.