Client Alert: US Reschedules Medical Cannabis, Plans Hearing for Adult Use
The Department of Justice today announced a final order immediately placing FDA-approved drug products containing cannabis and state-legal medicinal cannabis products into Schedule III. Issued by Acting Attorney General Todd Blanche, the action follows President Trump’s December 2025 Executive Order to expedite this process and shifts these products into a category alongside substances like ketamine and anabolic steroids. The order creates a formal federal framework under the Controlled Substances Act designed to strengthen medical research while maintaining strict federal controls against illicit trafficking. In practical terms, the order recognizes qualifying state medical cannabis programs at the federal level for a specific class of products; however, it does not legalize adult-use cannabis, deschedule the substance entirely, or create an unrestricted federal market. It will, however, expand opportunities for research into the medical benefits of cannabis. In addition, for medical cannabis companies, the change provides long-awaited relief from the burdensome tax code Section 280E, which prohibited most tax deductions for these companies.
A central feature of the order is a new expedited DEA registration process for entities that already hold a qualifying state medical cannabis license. Under this framework, applicants may seek DEA registration as manufacturers, distributors, or dispensers by submitting required materials alongside proof of their state license, which the DEA is directed to grant unless it conflicts with the public interest or U.S. treaty obligations. Notably, the DOJ provides a 60-day window from publication during which applicants may continue state-conformant operations while their DEA applications are processed. The order also preserves rigorous federal standards for recordkeeping and security, while explicitly contemplating separate permit requirements for any potential import or export activity relating to medical cannabis products.
For cannabis operators, the implications are significant but legally bounded. For qualifying medical cannabis businesses, the order establishes a first of its kind federal path to affirmatively lawful operations under the CSA, moving beyond a historical reliance on mere enforcement discretion or annual appropriations riders. In addition, the DOJ has announced a new administrative hearing on June 29, 2026 to evaluate the broader reclassification of cannabis, meaning this current order is an immediate step toward a potentially larger rescheduling. It is important not to interpret this as full legalization, since the change is limited to defined medical products, remains strictly registration-based, and does not automatically authorize non-medical operations or unrestricted interstate commerce. Businesses should immediately prioritize registration strategy, license hygiene, and potential corporate restructuring, particularly as the DEA withdraws prior notices to accelerate this new, streamlined path toward federal oversight.
What is unclear is whether the path to federally legal medical cannabis products with a DEA registration will lead to long-awaited reversal of restrictions on the medical side of the industry. For example, because of federal illegality, plant-touching cannabis companies cannot generally obtain trademarks for their products, list their stock on national exchanges, obtain institutional funding, ship products either interstate or globally or allow their customers to use credit cards. Time will tell whether these regulatory advances will yield progress on these issues.
Please contact our team with any questions or inquiries regarding how these regulatory changes may impact your specific operations.
This summary was written by David Feldman and Magnolia Mullen. This is intended for informational purposes only and is not to be relied upon as legal advice.