Cannabis Musings - April 23, 2026

The US (partially) reschedules cannabis.

Friends – it finally happened, and in the funniest way possible. In case you missed it, the federal government is rescheduling some cannabis and ostensibly working to reschedule the rest. But, it’s not that simple, because logic and reason never apply when it comes to cannabis policy.

The actual order signed by Acting Attorney General Todd Blanche is a doozy of a read, because it helps clarify the challenge of how to get this done. I give a lot of credit to the federal government for threading the needle, but the outcome ends up being a structural cacophony that will surely benefit lawyers and accountants. The problem that the DOJ and the DEA had to solve for is dealing with the Single Convention on Narcotic Drugs, 1961. We talked about this back in 2023, and On Drugs has a thorough explainer, but the upshot is that parties to the Single Convention (which includes the US) are very limited in their ability to legalize cannabis and other drugs. Now, of course, Canada legalized cannabis for adult use back in 2018, and the world didn’t end for the Great White North, but this DOJ order puts the Single Convention front and center, taking great pains to reschedule within the framework of the treaty.

The very short takeaway is that, despite the earlier rumors, and some incorrect headlines, the DOJ has moved marijuana (i.e., non-hemp cannabis) that’s either FDA approved (i.e., a pharmaceutical product that’s gone through the FDA new drug approval process, which is currently a very short list) or “subject to a state medical marijuana license.” It’s the latter where all of the action and confusion is, developing a process that only lawyers and accountants could love. It doesn’t apply to non-medical cannabis, it doesn’t apply to synthetically-derived cannabis, and it doesn’t apply to hemp (because hemp isn’t “marijuana” under federal law).

What’ll happen is that state-licensed medical plant touchers will have the pleasure of registering with the DEA (to the DOJ’s credit, it looks like they’re trying to make that process moderately painless by fitting it into existing DEA practitioner licensing and relying upon existing state medical licenses). Then, and I’m not making this up, the DEA will buy and sell cannabis:

To address Single Convention compliance under Article 23, the rule establishes a nominal-price purchase-and-resale mechanism through which the Administration acquires and resells registered manufacturers’ marijuana crops, thereby satisfying the Convention’s requirement that a government agency serve as the exclusive purchaser of cannabis production. Registered manufacturers must store crops in a facility to which DEA maintains access until that transaction is complete, and each manufacturer registration must specify the areas in which cultivation is permitted. … All manufacturers registered under this subsection shall establish a nominal price for the purchase of their marijuana crops. The Administration shall then purchase the entity’s crops at that price and sell the crops back to the entity, or a related or subsidiary entity, at the same price with the addition of the administrative fee as calculated under Part 1318.06(a).

In other words, the DEA is going to become a drug dealer. Tsedrait. (“Nutty.”) How could you not love this stuff?

This raises many practical questions about how this will all work. For example, the DEA will still have some discretion with registrations, so how generous will it be with that? How quickly will the resale transaction (which presumably is just all on paper) take place? How will cultivators feel about granting the DEA “access” to their facilities? Will the DEA have (and exercise) the right to inspect those facilities? What if the DEA isn’t as cooperative with the implicit mandate from President Trump and the DOJ in all of this? The lawyers and accountants are basically being granted a federally-sponsored pension plan by all of this.

The second big takeaway from the order is how all of this interplays with 280E:

“…as a consequence of this rule, holders of state medical marijuana licenses will no longer be subject to the deduction disallowance imposed by Section 280E of the Internal Revenue Code, which applies only to businesses engaged in “trafficking in controlled substances ... in a schedule I or II,” 26 U.S.C. § 280E. The Administrator encourages the Secretary of the Treasury to consider providing retrospective relief from Section 280E liability for taxable years in which a state licensee operated under a state medical marijuana license.”

Big, if true! It’d be great if the IRS were to allow this all to be retroactive, but we’ll believe it when we see it. In the meantime, what’s not yet clear is what happens to operators who hold both medical and adult use licenses, because 280E applies to the taxpayer, not the product. If an operator is selling both adult use and medical, it’s still “trafficking” in a Schedule I controlled substance, suggesting that 280E would still apply to that taxpayer, regardless of whether they’re selling some non-Schedule I/II products. Adult use operators generally aren’t effectively able to split out the sales of, say, paraphernalia and swag, from the effects of 280E, so why would this be any different? Now, the IRS might take a different position and just allow those dual license holders to split the operations (further extending the pension plan for lawyers and accountants), or it won’t – the IRS is totally separate from the DOJ and the White House, and 280E is a statute that may only be changed by Congress. 280E relief will have an immediate impact to the bottom line for many operators, so the outcome on this is critical to the industry.

If the IRS doesn’t make life easy and insists that operators that only hold state medical licenses are outside of the 280E penumbra, that would create an even weirder scenario. Would that encourage adult use operators to convert their operations to medical? Would dual license holders spin out their adult use operations? Would states move to make all of their licenses medical and then make the prescription process perfunctory? Me ken nit tantsen oif tsvai chassenes oi fain mol. (“You can’t dance at two weddings at the same time!”) Again, we need to see how this all plays out, and make sure we’re all an active part of that process.

One other interesting thing is how this might affect interstate commerce pacts among states, which we haven’t talked about for a while. These are the agreements among states that would allow for crossing state lines with product (which is currently not allowed by the states) into other states that agree to the pact. States like California have laws that would allow for this, so long as it wouldn’t put the state at risk with the federal government. If state-licensed medical cannabis is now a Schedule III controlled substance, would final rulemaking provide states enough comfort (protection) to start implementing interstate commerce for medical cannabis?

Don’t get me wrong – for all of the questions, this is pretty darn great for an industry that could really use it. It’s not as great as it could be, but it’s still great, for a change. We have the Trump Administration to thank, and we also have the Biden Administration to thank. The order is very much reliant upon the process and August 2023 conclusions of the Department of Health and Human Services recommending rescheduling, which were kicked off by President Biden’s 2022 order. It’s also very much reliant upon the personal influence of President Trump over the DOJ and DEA, departments that were previously recalcitrant towards rescheduling.

Now, we should expect paskudnik groups like the ironically-named Smart Approaches to Marijuana to vigorously challenge in court every step of this process, including both this final order and the forthcoming “expedited” process in front of a DEA administrative law judge to consider the rescheduling of adult-use (non-medical) cannabis. Indeed, the DOJ is withdrawing the current proceedings (the one that the DEA was gaming and got stalled when President Trump took office), and starting up a new one. The final order takes great pains to forestall many of the anticipated arguments against rescheduling.

In the meantime, ignore all of the breathless takes in the media and on social media, and wait for the cannabis professionals to provide sober, thoughtful guidance. Policy is incremental and this is a marathon. As much as the industry can be a daily grind, progress is being made, thanks to the hard work of so many. Things just got interesting again.

Oh, and if you’re a lawyer and need continuing legal education credits, or just want to know more about cannabis law, all of this will be very much part of the discussion at the PLI Cannabis: Legal and Business Fundamentals 2026 program this coming Tuesday, April 28^th, online, in person, and recorded. I’ll be speaking about M&A, but the entire day is filled with a veritable Murderers’ Row of cannabis attorneys, and we’re all going to be talking about the impact of the DOJ’s order.

Be seeing you.

© 2026 Marc Hauser. None of the foregoing is legal, investment, or any other sort of advice, and it may not be relied upon in any manner, shape, or form. The foregoing represents my own views and not those of Jardín, B&Y Ventures, or anyone else who employs/hires me.

Watch me schmooze almost every Friday at Noon ET on This Week in Cannabis LIVE with Jeremy Berke and Jay Rosenthal of Cultivated Media and AnnaRae Grabstein and Ben Larson of the High Spirits Podcast. Access the livestream and recordings here.