On April 23, 2026, the US Department of Justice ordered the rescheduling of FDA-approved products containing marijuana and medical marijuana that is subject to a state-issued medical marijuana license to Schedule III of Controlled Substances Act. The long-awaited rescheduling was undertaken pursuant to the DEA Administrator’s authority under United Nations Single Convention on Narcotic Drugs. Thus, the order bypassed the notice-and-comment rulemaking process that is typically performed by the DEA when rescheduling controlled substances.
What the Order Does – Effective Immediately
The Order establishes a bifurcated framework. Effective immediately, the following are rescheduled to Schedule III:
- FDA-approved drug products containing marijuana
- Marijuana subject to a qualifying state-issued medical marijuana license
All other marijuana, including adult-use (recreational) marijuana and unlicensed marijuana products, remains in Schedule I.
Section 280E: What Changes and What Doesn’t
The order declared that “state licensees will no longer be subject to the deduction disallowance imposed by Section 280E of the Internal Revenue Code.” This is a welcome position change for licensed medical marijuana users who should consult with their tax advisors regarding the deduction of ordinary and necessary business expenses on federal tax returns. This position change could dramatically reduce effective tax rates for compliant medical marijuana licensees.
The DOJ’s Order also explicitly encourages the Secretary of the Treasury to consider providing retrospective 280E relief for prior taxable years in which a state licensee operated under a state medical marijuana license. That relief is not guaranteed, but the mere suggestion of it is striking.
Of course, Section 280E continues to apply in full to adult-use cannabis programs, which remain on Schedule I.
Expedited DEA Registration for Medical Operators
The Final Order creates a new expedited federal registration process for state-licensed medical marijuana manufacturers (including cultivators and processors), distributors, and dispensers. The registration process will generally follow the existing protocols for DEA registration that is applicable to entities and persons handling controlled substances. Further, in the spirit of “cooperative federalism,” the DEA will defer to state licensing regimes in connection with certain requirements like reporting, recordkeeping, packaging, labeling, and security.
- State credentials accepted: Existing state medical marijuana licenses serve as conclusive evidence of state-law authorization.
- Registration must be granted unless inconsistent with the public interest or U.S. treaty obligations.
- Tied to state standing: The federal registration will correspond to the state licenses as far as expiration dates and whether a license is suspending, expired or revoked.
- 60-day application window: Operators who apply within the first 60 days following publication of the order may continue operating under their state licenses while DEA review is pending. The DEA must process those applications within six months.
- Registration Fees. The current DEA registration fees are:
- Manufacturers: $3,699.00 annual fee
- Distributors: $1,850.00 annual fee
- Dispensers: $888.00 three-year fee
- DEA Nominal Purchase Requirements. To maintain compliance with the international treaties, the DEA is required to purchase medical marijuana from registered manufacturers at a nominal price, and then sell the same medical marijuana back to the registered entity. For each transaction, the registered entity will be required to pay an administrative fee.
Colorado’s MED licensing requirements are unchanged. State compliance obligations remain fully in effect. If your business hold a state-issued medical marijuana business license, you can reach out to our office to discuss next steps for applying for your DEA registration within 60 days of the order.
New Administrative Hearing — June 29, 2026
Contemporaneously with the DOJ order, the DEA announced it will hold a new administrative hearing to consider the broader rescheduling of all marijuana. This is the proceeding that could extend Schedule III status and 280E relief to adult-use programs.
- Deadline to participate: Interested parties must file a written notice of intention to participate by 11:59 PM ET on May 24, 2026.
- If a final rule results: Schedule III status and 280E relief would extend beyond medical licensees to the broader cannabis industry.
BHGR’s Cannabis Group is actively monitoring the implications of the order and all developments related to the June 29 hearing and expected DEA and IRS guidance. It is still possible that opponents of the rescheduling will challenge the order so it is important to stay informed. We will continue to issue updates as this process unfolds. If you have questions about how this action affects your business, contact us today.