The U.S. Department of Justice (DOJ) and U.S. Drug Enforcement Administration (DEA) have issued a final order for the partial medical cannabis rescheduling, moving specific categories of cannabis from Schedule I to Schedule III of the Controlled Substances Act (CSA). This decision, announced on April 23, 2026, and effective upon publication in the Federal Register on April 28, 2026, represents a significant shift in federal cannabis policy, as reported by Reuters Legal News.
The order specifically targets two categories: cannabis products approved by the U.S. Food and Drug Administration (FDA) and cannabis regulated under state medical cannabis licenses. Concurrently, a Notice of Proposed Rulemaking (NPRM) has initiated an expedited administrative hearing process to consider the broader rescheduling of all cannabis, including recreational use, from Schedule I to Schedule III.
The DOJ’s approach involves two distinct tracks. Track one is the immediate rescheduling via the final order, signed by Acting Attorney General Todd Blanche. This order moves to Schedule III:
The DOJ invoked its authority under Section 811(d)(1) of the CSA, which allows the Attorney General to reschedule substances to fulfill U.S. treaty obligations under the 1961 Single Convention on Narcotic Drugs. This treaty-based pathway enabled the DOJ to bypass the traditional notice-and-comment rulemaking process, leading to immediate implementation. The DOJ’s final order became effective on April 28, 2026.
Track two involves a Notice of Proposed Rulemaking and hearing, scheduled to commence on June 29, 2026, and conclude by July 15, 2026. This process will gather evidence on whether all cannabis, including adult-use products, should be transferred to Schedule III. This new proceeding follows the withdrawal of a prior proposed rule from May 2024, which had stalled amid procedural disputes.
For state-licensed medical cannabis operators, the practical consequences are immediate. Section 280E of the Internal Revenue Code, which previously barred businesses dealing in Schedule I or II controlled substances from deducting ordinary business expenses, no longer applies to these entities starting in tax year 2026. This change is anticipated to provide financial relief. The Treasury and the IRS have announced plans to issue guidance regarding these tax consequences, including potential retrospective relief for prior tax years. However, this relief does not extend to recreational cannabis operators, who remain subject to Section 280E.
The order also implicitly ratifies state medical cannabis licensing regimes by defining one of the qualifying categories for rescheduling by reference to these state licenses. This provides a degree of federal recognition for an industry that has long operated in a legal grey area. However, Schedule III status for state-legal medical operators is not automatic; they must affirmatively register with the DEA. This registration requires an annual US$794 fee and a comprehensive application covering business details, state license information, criminal history, and detailed compliance procedures. The DEA opened its Medical Marijuana Dispensary Registration Portal on April 29, with a deadline of June 27 for applications to ensure continued operation while pending.
It is important to note what this order does not accomplish. It does not federally legalize cannabis, nor does it decriminalize possession or expunge prior cannabis convictions. Furthermore, it does not open the doors of federally insured banks to cannabis businesses, which must still adhere to the Bank Secrecy Act’s anti-money-laundering framework. The SAFE Banking Act, aimed at addressing these banking issues, remains unpassed.
While the order reduces one layer of federal legal risk for medical operators, it has no effect on the status of state-legal recreational cannabis, which remains a Schedule I controlled substance under federal law.
Legal challenges to the DOJ’s order are widely anticipated. Opponents are expected to argue that the Attorney General’s use of the CSA’s treaty-power provision to bypass notice-and-comment rulemaking violates both the Administrative Procedure Act and the CSA’s procedural requirements. Smart Approaches to Marijuana (SAM), an anti-legalization group, has announced intentions to sue, retaining former Attorney General Bill Barr for the effort.
The broader rulemaking process, concerning the rescheduling of all cannabis, is set to proceed on a tight timeline. Notices of intention to participate in the hearing are due by May 24, with participant selection by June 22. The hearing itself is scheduled from June 29 to July 15, 2026. While a final rule could potentially emerge by late 2026, litigation is likely to introduce delays. The outcome of this process could either bring all cannabis into Schedule III or formalize a lasting federal distinction between medical and recreational cannabis.
Disclaimer: This article is for informational purposes only and does not constitute medical advice. Hemp Gazette does not provide medical recommendations, diagnoses, or treatment plans. Always consult a qualified healthcare practitioner before making any decisions regarding your health or any medical condition. Statements concerning the therapeutic uses of hemp, cannabis, or cannabinoid-derived products have not been evaluated by Australia’s Therapeutic Goods Administration (TGA). Medicinal cannabis products in Australia are accessed via prescription pathways under TGA regulation.
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