The United States Department of Justice and the Drug Enforcement Administration announced on April 24, 2026, the immediate placement of both FDA-approved products containing cannabis and cannabis products regulated under a qualifying state medical cannabis license into Schedule III of the Controlled Substances Act. The action follows President Trump's December 18, 2025, Executive Order on Increasing Medical Marijuana and Cannabidiol Research and was taken by Acting Attorney General Todd Blanche under his authority to reschedule substances in accordance with US obligations under the Single Convention on Narcotic Drugs.
Separately, the DOJ withdrew the prior notice of hearing published under the previous administration in August 2024 and announced a new expedited administrative hearing process beginning June 29, 2026, to consider the broader rescheduling of marijuana from Schedule I to Schedule III. The previous proceedings have been terminated in order to move more efficiently toward complete redesignation, with firm deadlines to be established under the new framework.
"The Department of Justice is delivering on President Trump's promise to expand Americans' access to medical treatment options," Blanche said. "This rescheduling action allows for research on the safety and efficacy of this substance, ultimately providing patients with better care and doctors with more reliable information."
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The order's most immediate commercial significance lies in Section 280E of the Internal Revenue Code, which applies only to Schedule I and II substances. For qualifying state-licensed medical operators, the move effectively removes the disallowance of standard business deductions that has historically driven effective federal tax rates as high as 70% or more. The order does not extend to adult-use cannabis, does not legalize marijuana federally, and does not alter existing Bank Secrecy Act obligations for financial institutions.
Terry Mendez, CEO of Safe Harbor Financial, offered the most precise breakdown of the order's scope and limits. "This order places two specific categories into Schedule III: FDA-approved drug products containing marijuana and marijuana produced under a qualifying state medical marijuana license," Mendez said. "It is not a broad federal rescheduling. It is a targeted action limited to medical cannabis and FDA-approved products. Financial institutions must continue to adhere to FinCEN guidance, including SAR and CTR reporting and enhanced due diligence requirements. The order also does not provide retroactive 280E relief, though it encourages Treasury to consider that step."
For operators in state-licensed medical markets, the reaction was direct. Thomas Sheridan, CEO of MWG Holdings Group and parent company of Perfect Union, explained what it means on the ground in California. "For years, dispensaries in this state have been taxed in an unsustainable way under 280E, unable to deduct basic business expenses like rent, payroll, and marketing that every other retailer in America takes for granted," Sheridan said. "Moving state-licensed medical cannabis to Schedule III finally breaks that penalty. The tax relief this unlocks is real, it is immediate, and it could be the difference between survival and closure for small and mid-sized California operators who have been fighting just to keep their doors open."
Charlie Bachtell, CEO of Cresco Labs, called it a long-overdue step that for the first time classifies cannabis as medicine at the federal level. Kim Rivers, CEO of Trulieve, described it as the first ever meaningful policy shift related to cannabis in American history. The same sentiment runs across much of the cannabis value chain, with David Sandelman of Cannatrol, Jon Marshall of Deep Roots Harvest and The Source, Jasmine Johnson of GUD Essence, Omar Delgado of Ivy Hall, and Paula Savchenko of Cannacore Group all welcoming the 280E relief while noting that banking, interstate commerce, and adult-use regulation remain unresolved.
Anthony Coniglio, CEO of NewLake Capital Partners, described the action as material for investors and real estate partners evaluating the cannabis sector, while stressing that the broader rescheduling proceeding remains critically important and should move forward on an expedited basis.
Cameron Clarke of Sunderstorm called the 280E elimination consequentially vital for retailers competing against the illicit market, adding that when retailers are profitable the entire supply chain strengthens. Brett Harris, Founder and CEO of LuvBuds, said the operators who start preparing now by tightening execution and building retail discipline will be the ones who win when the financial landscape fully opens up. Socrates Rosenfeld, CEO of Jane Technologies, called the acknowledgment that cannabis has accepted medical use overdue, and described Schedule III as a step rather than a finish line. George Archos of Verano, Jim Cacioppo of Jushi, Irwin Simon of Tilray Brands, and Michael DeGiglio of Village Farms all welcomed the action and expressed readiness to build on the moment as the regulatory process continues.
The most substantive note of caution came from Betty Aldworth, Co-Executive Director of MAPS and Chair of the Marijuana Policy Project. "Rescheduling is a step in the right direction, not a solution," Aldworth said. "It does not resolve the fundamental contradictions between federal and state law. It does not address the ongoing reality of cash-only operations that put workers and communities at risk. It does not protect people from the legal consequences of cannabis use embedded in housing, immigration, employment, or family law. What we are seeing now is a familiar pattern: momentum framed as reform, without the structural change required to make that reform meaningful in people's lives."
Michael Johnson, CEO of Metrc, and Mike Butler and Dr. Annabelle Manalo-Morgan of the ACCM both pointed to traceability and expanded research access as the next priorities as the industry absorbs the implications of the order.
The June 29 hearing will determine whether the broader rescheduling of marijuana from Schedule I to Schedule III moves forward under the new administrative framework. No timeline for a final rule has been announced.
Source: DOJ
