DOJ and DEA Order Immediately Reschedules FDA-Approved and State-Licensed Medical Cannabis to Schedule III: What Operators Need to Know

On April 23, 2026, the United States Department of Justice and the Drug Enforcement Administration announced an order that marks the most consequential shift in federal cannabis policy in more than five decades. Acting Attorney General Todd Blanche signed an order that immediately places both FDA-approved cannabis products and state-regulated medical cannabis products into Schedule III of the Controlled Substances Act, while simultaneously setting in motion an expedited administrative process to consider broader rescheduling of cannabis for non-medical use.

This action follows President Trump’s December 18, 2025, Executive Order on Increasing Medical Marijuana and Cannabidiol Research, which directed the Attorney General to complete the rescheduling process as expeditiously as permitted by law. While the order delivers meaningful and long-awaited relief to medical cannabis operators, it notably does not extend that relief to the adult-use market.

What the Order Does

The order announced today takes the following key actions:

• Immediate Schedule III placement. FDA-approved cannabis products and cannabis products regulated under a qualifying state-issued medical license are immediately moved from Schedule I to Schedule III of the Controlled Substances Act.
• Section 280E relief for medical operators. Because Internal Revenue Code Section 280E applies only to trafficking in Schedule I and Schedule II substances, today’s order renders Section 280E inapplicable to state-licensed medical cannabis operators and FDA-approved cannabis products. This removes a longstanding federal tax prohibition that has prevented these operators from deducting ordinary and necessary business expenses.
• Expedited DEA registration pathway. The order establishes a fast-track process for state-licensed medical cannabis entities to register with the DEA and integrate into the federal regulatory framework that governs Schedule III substances, including rules for recordkeeping, security, disposal, and labeling.
• New administrative hearing on broader rescheduling. DEA will commence a new and expedited administrative hearing on June 29, 2026, to consider whether cannabis more broadly should be moved from Schedule I to Schedule III. A new notice of hearing will be published in the Federal Register. DEA is simultaneously withdrawing the prior notice of hearing and terminating the proceedings initiated following the May 2024 Notice of Proposed Rulemaking.
• No relief for adult-use operators. Cannabis outside of the FDA-approved or state-licensed medical systems, including recreational cannabis in adult-use states, remains in Schedule I pending the outcome of the June 29 hearing process.

Background: How We Got Here

Today’s action is the culmination of a multi-year federal review process that began in earnest in October 2022, when President Biden directed agencies to reassess cannabis’s Schedule I status.

• In August 2023, the Department of Health and Human Services, informed by the FDA and the National Institute on Drug Abuse, completed the required scientific and medical review and formally recommended that cannabis be placed in Schedule III. Under the Controlled Substances Act, HHS findings are binding on DEA as to scientific and medical matters, though DEA retains ultimate scheduling authority.
• On May 21, 2024, the DOJ and DEA published a Notice of Proposed Rulemaking proposing to reschedule cannabis from Schedule I to Schedule III, followed by a notice of hearing on August 29, 2024. The agencies received tens of thousands of public comments in response.
• A DEA administrative hearing was granted and was originally scheduled to begin in January 2025, but was indefinitely delayed by procedural disputes, leaving the administrative record unfinished.
• On December 18, 2025, President Trump signed an Executive Order directing the Attorney General to complete the rescheduling process as expeditiously as the law allows.

In a prior post to my professional network, I discussed the two realistic paths forward for the administration: either completing the stalled DEA administrative process and issuing a reasoned Final Rule, or attempting to act without finishing the hearing. Today’s order effectively charts a hybrid course. The administration has taken immediate action on a narrower category of cannabis (FDA-approved and state-licensed medical products) while restarting and expediting a new administrative hearing process for the broader rescheduling question beginning June 29.

What This Means for Medical Cannabis Operators

For state-licensed medical cannabis operators, the most immediate and tangible impact is tax relief. The removal of Section 280E as applied to these operators eliminates the prohibition on deducting ordinary and necessary business expenses, a change that has been among the most significant financial pressures on the licensed medical cannabis industry since its inception. Operators should work with their tax advisors promptly to evaluate the effect of this change on current-year tax positions, planned transactions, and financial reporting.

Medical operators should also begin preparing for the federal regulatory obligations that accompany Schedule III status, including DEA registration under the expedited pathway established by the order, and compliance with Schedule III rules governing recordkeeping, security, disposal, and labeling. Although the order integrates state licensing systems into the federal framework rather than displacing them, state-licensed operators must now plan for overlapping federal and state regulatory compliance.

What This Means for Adult-Use Operators

Adult-use operators receive no direct relief from today’s order. Cannabis outside of the FDA-approved and state-licensed medical systems remains a Schedule I controlled substance, and Section 280E continues to apply to adult-use operators. The broader rescheduling question will now be addressed through the new DEA administrative hearing beginning June 29, 2026.

Adult-use operators should closely monitor the June 29 proceeding, evaluate whether to participate in the hearing, and continue planning for the possibility of broader rescheduling later in 2026 or beyond, subject to the outcome of that proceeding and any resulting legal challenges.

Anticipated Legal Challenges

Today’s order is likely to face prompt legal challenges. Acting Attorney General Blanche invoked his authority to reschedule substances to carry out United States obligations under the Single Convention on Narcotic Drugs as the basis for immediate rescheduling of the narrower medical category, rather than completing the traditional notice-and-comment rulemaking process already underway. Opponents of rescheduling are expected to argue that the action is inconsistent with the Administrative Procedure Act and the Controlled Substances Act, particularly in light of the pending hearing that the DEA has now terminated.

Courts may be asked to review the scope of the Attorney General’s authority to act in this manner, and preliminary injunctive relief or stays are possible. Operators should closely monitor these challenges, as litigation outcomes could affect both the timing and the durability of the relief provided by today’s order.

Important Limitations

Even as to the categories of cannabis covered by today’s order, it is important to recognize what Schedule III placement does not do. Rescheduling to Schedule III, whether through today’s order or through the broader process that begins on June 29, will not:

• Legalize adult-use cannabis federally;
• Authorize interstate cannabis sales or commerce; or
• Eliminate state cannabis licensing regimes, which will continue to govern cultivation, manufacturing, distribution, and retail activity within each state.

Cannabis will remain a federally controlled substance, and criminal penalties and regulatory controls will continue to apply to activity outside of lawful channels.

Key Takeaways and Next Steps

This is a watershed moment for the medical cannabis industry and a meaningful step in the broader federal cannabis policy conversation, but it also introduces new compliance obligations and legal uncertainty. Operators, investors, and other industry participants should consider the following next steps:

• Consult with tax advisors on the immediate Section 280E implications for medical operators, including amended returns, current-year planning, and financial reporting treatment.
• Begin preparation for DEA registration and Schedule III compliance obligations under the expedited pathway established by the order.
• Review state law interactions with the new federal framework, particularly in states with robust medical cannabis programs.
• Evaluate participation in the DEA administrative hearing beginning June 29, 2026, which will determine whether cannabis more broadly moves to Schedule III.
• Monitor legal challenges that may affect the scope, timing, or durability of today’s order.

How We Can Help

Scarinci Hollenbeck’s Cannabis & Hemp Law practice group advises cannabis and hemp operators, investors, and ancillary businesses on federal and state regulatory compliance, licensing, tax structuring, corporate transactions, and litigation. We are actively advising clients on the implications of today’s order and on how to position their businesses for both the immediate changes and the broader rescheduling process scheduled to begin on June 29.

If you have questions about how today’s DOJ and DEA order affects your business, please contact Daniel T. McKillop, Partner and Chair of the Cannabis Law practice group at Scarinci Hollenbeck, or the Scarinci Hollenbeck attorney with whom you regularly work.