Acting AG Reschedules Medical Marijuana to Schedule III Under CSA
Summary
Acting Attorney General Todd Blanche issued the Medical Rescheduling Final Order on April 22, 2026, reclassifying FDA-approved marijuana products and state-licensed medical marijuana from Schedule I to Schedule III under the Controlled Substances Act, effective immediately. The order establishes an expedited DEA registration pathway allowing state medical marijuana licensees to apply using existing state credentials, with a 60-day window during which applicants may continue operating while review is pending. State-licensed entities gain immediate relief from Section 280E of the Internal Revenue Code, which previously disallowed ordinary business deductions for Schedule I and II controlled substance trafficking; retrospective relief for prior tax years remains subject to separate Treasury Department action.
State-licensed medical marijuana businesses have a 60-day window from April 22, 2026 to file expedited DEA registration applications and continue operating under their state licenses during review. Businesses with open tax years or pending IRS disputes should preserve all records and monitor Treasury guidance on retrospective Section 280E relief — this relief is not automatic and requires separate Treasury action.
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What changed
The Medical Rescheduling Final Order moves FDA-approved marijuana products and state-licensed medical marijuana from Schedule I to Schedule III under the Controlled Substances Act. Prior to this order, marijuana was classified as a Schedule I controlled substance with no accepted medical use and high abuse potential, restricting state-licensed medical marijuana businesses from accessing ordinary federal business deductions under Section 280E of the Internal Revenue Code. The order enables state-licensed manufacturers, distributors, and dispensaries to claim ordinary business deductions for federal tax purposes prospectively from April 22, 2026, and opens a pathway for retrospective relief from prior years subject to Treasury Department action.
Affected state-licensed medical marijuana businesses should take immediate action to apply for DEA registration within the 60-day expedited review window and update accounting practices to reflect newly available deductions. Entities with open tax years or pending IRS disputes should preserve records and monitor Treasury guidance on retrospective Section 280E relief. The order also modifies Single Convention import and export requirements, requiring DEA permits for rescheduled marijuana products. Participation requests for the June 29, 2026 DEA hearing must be filed by May 20, 2026 (paper) or May 24, 2026 (electronic).
What to do next
- State-licensed medical marijuana businesses should promptly apply for DEA registration by submitting proof of their state license along with applicable DEA forms
- Licensees should consult tax counsel regarding Section 280E relief and potential retrospective relief
Hearing
- Date
- 2026-06-29
- Location
- 700 Army Navy Drive, Arlington, Virginia 22202
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