Written by: Marcus Wolter, Bianca Lindau, and Crystel Saraie
When we published our last update in December, the operative question was whether the administration would follow through on its rescheduling directive, and on what timeline. On April 22, 2026, Acting Attorney General Todd Blanche signed an order with immediate effect, moving state-licensed medical marijuana and FDA-approved cannabis products from Schedule I to Schedule III under the Controlled Substances Act.[1] Rather than completing the traditional notice-and-comment rulemaking process, which had already extended across two administrations, the Department of Justice invoked treaty compliance authority under 21 U.S.C. § 811(d)(1), the same mechanism the DEA used in 2018 to schedule certain FDA-approved CBD products, allowing the order to take effect immediately. The legal and commercial implications are substantial. So are the limitations.[2]
Scope: More Limited Than Reported
The order does not effect a broad rescheduling of cannabis. Any form of marijuana that is neither contained in an FDA-approved drug product nor subject to a qualifying state-issued medical marijuana license remains a Schedule I controlled substance. Recreational cannabis, which continues to represent the majority of revenue for most multi-state operators, falls outside the order’s scope entirely. Concurrently, the Department terminated the prior Biden-era rescheduling proceedings and established a new expedited DEA administrative hearing commencing June 29, 2026, to evaluate whether adult-use cannabis should follow medical cannabis into Schedule III.[3] That proceeding now represents the most significant near-term regulatory development for the industry as a whole.
Section 280E: Relief Confirmed, But Partial and Structurally Complex
In December, we characterized 280E relief as widely anticipated but not yet operative. It is now likely effective for qualifying medical operators, and the applicable date carries material consequences. Entities with fiscal years that straddle April 23 may be required to bifurcate their accounting. In the absence of further IRS guidance, the most defensible current position is that pre-April 23 expenses remain subject to prior law, while post-April 23 expenses attributable to qualifying medical operations should be analyzed under the Schedule III framework.[4]
For operators conducting medical and adult-use operations within a single legal entity, the relief is immediate in principle but operationally complex in practice. Such operators will be required to allocate expenses between medical operations now falling outside Section 280E and adult-use operations that remain subject to it. The IRS has not yet issued guidance governing that allocation methodology.[5]
On the question of retroactive relief, the order raises the possibility without establishing an entitlement. The Acting Attorney General encouraged the Secretary of the Treasury to consider providing retrospective relief from Section 280E liability for taxable years in which a state licensee operated under a state medical marijuana license, while expressly noting that nothing in the order constitutes a determination of federal tax liability.[6] Amended prior-year returns should not be filed without qualified tax counsel, though operators are well advised to document their positions carefully in advance of formal IRS guidance.
A Registration Deadline Warranting Immediate Attention
Separate from the tax analysis, the order establishes a registration pathway that carries its own near-term deadline. State-licensed medical marijuana businesses have a 60-day window to file for federal DEA registration, closing June 22, 2026, to receive prioritized processing of their obligations, with a target processing timeframe of six months. Operators filing within that window may continue operating under their existing state licenses during the pendency of DEA review. Those that do not file within the window appear to forfeit that protected continuity guarantee. This deadline has received considerably less attention than the 280E developments and warrants priority treatment by any operator holding a state medical license.
Unresolved Matters
Three issues identified in December remain materially open. With respect to banking, cannabis remains federally illegal outside FDA-approved uses and the state-licensed medical category, and financial institutions may continue to decline service absent congressional action or revised regulatory guidance. The SAFER Banking Act has not advanced. With respect to interstate commerce, Schedule III status confers no authority to transport or sell cannabis across state lines.[7] With respect to legal durability, the treaty-authority mechanism employed to bypass standard notice-and-comment rulemaking is legally novel in this context and is expected to be subject to judicial challenge, with potential consequences for implementation timing.[8]
Revised Guidance
The practical framework set out in December remains applicable, though priorities have been reordered by the April order. Medical operators should treat the June 22 DEA registration deadline as the immediate priority, engage tax counsel on current-year 280E treatment and expense allocation, and begin preparing for Schedule III federal compliance obligations governing recordkeeping, security, and labeling. Operators with combined medical and adult-use operations should establish accounting systems capable of segregating expenses by business line in advance of IRS guidance. Adult-use operators should model the financial consequences of broader rescheduling, evaluate participation in the June 29 hearing, and avoid assuming that the April order’s benefits extend automatically to recreational operations. Investors and acquirers should focus diligence on the medical and adult-use revenue split, DEA registration readiness, and each operator’s compliance infrastructure, the valuation premium previously anticipated for medical-focused operators has now begun to materialize, and deal pricing should reflect the distinction between those operators and their recreational-only counterparts.
The December order expressed a policy direction. The April order gives that direction binding legal effect, within a defined and limited scope. For the balance of the industry, the June 29 hearing will be determinative.
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Sources
[1] Schedules of Controlled Substances: Rescheduling of Food and Drug Administration Approved Products Containing Marijuana From Schedule I to Schedule III; Corresponding Change to Permit Requirements, AG Order No. 6754-2026 (proposed Apr. 23, 2026) (to be codified at 21 C.F.R. pts. 1300, 1301, 1308, 1312), https://www.justice.gov/opa/media/1437751/dl.
[2] HealthDataConsortium.org Editorial Team, Marijuana Rescheduling 2026: Order, Deadlines, What Changed, Health Data Consortium (Apr. 27, 2026), https://healthdataconsortium.org/marijuana-schedule-iii-2026-doj-order/.
[3] Press Release, Office of Public Affairs (Department of Justice), Justice Department Places FDA-Approved Marijuana Products and Products Containing Marijuana Subject to a Qualifying State-issued License in Schedule III, Strengthening Medical Research While Maintaining Strict Federal Controls (Apr. 23, 2026), https://www.justice.gov/opa/pr/justice-department-places-fda-approved-marijuana-products-and-products-containing-marijuana.
[4] Friedlich, Mark, AT Think Cannabis tax relief is here, for some, accountingTODAY (last updated Apr. 24, 2026, 2:53 p.m. EDT), https://www.accountingtoday.com/opinion/cannabis-tax-relief-is-here-for-some.
[5] Id.
[6] AG Order No. 6754-2026, supra note 1, at page 23.
[7] 21 C.F.R. § 1312.11.
[8] Friedlich, supra note 4.g.