On April 23, 2026, the U.S. Department of Justice issued a final order rescheduling certain cannabis products from Schedule I to Schedule III under the Controlled Substances Act. The action applies primarily to FDA-approved cannabis-derived drug products and qualifying state-licensed medical cannabis programs, and represents a major change in federal cannabis policy.
Notwithstanding its significance, this change is limited in scope and does not legalize adult-use cannabis at the federal level. However, it materially affects federal tax treatment, regulatory oversight, and federal engagement with the medical cannabis industry.
The full order is available here.
A central feature of the rescheduling framework is the establishment of a new federal DEA registration pathway for qualifying medical cannabis operators. Registration is required for entities engaging in covered activities, including manufacturing, distributing, dispensing/selling, importing, exporting, and conducting research.
DEA began accepting applications from state-licensed medical cannabis businesses on April 29, 2026. Operators seeking to participate in or benefit from the Schedule III framework must obtain DEA registration.
Applicants must provide:
The annual non-refundable application fee is $794.
Additional information regarding registration and compliance requirements is available on the DEA Diversion Control website linked here.
At the state level, the California Department of Cannabis Control (DCC) has updated its licensing procedures to allow operators to change their license designation between adult-use and medicinal at any time, rather than only at renewal. This may be implemented by submitting Form 27 (Notification and Request to Modify a License) to licensechange@cannabis.ca.gov.
DCC is also in the process of consolidating its cultivation licensing system with other license types; once complete, cultivation licenses will be eligible to carry both adult-use (A) and medicinal (M) designations.
Importantly, while the federal rescheduling represents a meaningful shift for medical cannabis and FDA-approved cannabis-derived products, it does not legalize adult-use cannabis federally and does not alter California’s existing regulatory framework. Adult-use cannabis remains governed exclusively by state law.
The U.S. Department of the Treasury and the Internal Revenue Service have confirmed they are preparing formal guidance on the tax implications of rescheduling, with initial commentary indicating potentially significant relief from the limitations imposed by Section 280E for qualifying medical cannabis operators.
Importantly, additional IRS guidance is needed to clarify how medical versus adult-use sales will be distinguished for operators holding both A and M license designations, including whether, and to what extent, specific allocation methodologies or separate accounting will be required.
The full press release is available here.
If you have questions regarding the DOJ order, DEA registration requirements, or how these developments may impact your business, please contact our team.
By: Yelena Katchko, April 30, 2026.
© 2026 Katchko, Vitiello & Karikomi, PC all rights reserved.