What Schedule III Means for State-Licensed Medical Cannabis Companies

Article by: Ivy Perez-Bader, Raza Lawrence, and Tom Zuber

On April 23, 2026, the Department of Justice (DOJ) and the Drug Enforcement Administration (DEA) took a historic step the cannabis industry has awaited for years: Acting Attorney General Todd Blanche signed a final rule immediately placing both FDA-approved marijuana products and marijuana regulated under a qualifying state medical marijuana license into Schedule III of the Controlled Substances Act. This action, taken pursuant to the Attorney General’s authority to satisfy the United States’ obligations under the Single Convention on Narcotic Drugs, represents one of the most consequential federal marijuana policy shifts in decades. At the same time, the DEA initiated an expedited administrative hearing process, beginning June 29, 2026, to consider whether all marijuana should be rescheduled from Schedule I to Schedule III.

 

For years, Zuber Lawler has counseled clients through a federal regulatory environment that classified marijuana alongside heroin and LSD under Schedule I. That era is now beginning to change—at least for FDA-approved marijuana products and state-licensed medical marijuana operators. The reclassification to Schedule III—placing qualifying medical marijuana products in the same federal schedule as substances such as ketamine, anabolic steroids, and testosterone—carries major implications for taxation, DEA registration, compliance obligations, and the federal treatment of state medical marijuana programs. It does not, however, federally legalize adult-use marijuana or remove marijuana entirely from the Controlled Substances Act. Below, we outline the key legal and operational implications of the rule, along with the immediate action items state-licensed medical cannabis operators should address now.

 

Key Takeaways from the DEA’s Final Rule and Hearing Notices

• Immediate Rescheduling of Qualifying Marijuana Products. The final rule places into Schedule III all marijuana (as defined in 21 U.S.C. § 802(16)) that is either contained in an FDA-approved drug product or subject to a state medical marijuana license. This includes marijuana extracts and naturally derived delta-9-tetrahydrocannabinol (Δ9-THC) derived from the cannabis plant, which falls outside the definition of hemp, provided they fall within those categories.
• Unlicensed Marijuana Remains Schedule I. Any form of marijuana that is not contained in an FDA-approved drug product or covered by a state medical marijuana license remains a Schedule I controlled substance, subject to all existing regulatory controls and criminal, civil, and administrative sanctions.
• Synthetic THC Is Not Affected. The final rule does not apply to tetrahydrocannabinols that can be obtained only through artificial synthesis. Synthetic THC remains separately regulated and generally remains in Schedule I absent another applicable exception.
• Section 280 E Tax Relief.  For many operators, this is likely the most immediate and financially significant change. Because Section 280E of the Internal Revenue Code applies only to businesses trafficking in Schedule I or II controlled substances, businesses trafficking solely in marijuana that is placed into Schedule III under the final rule should generally no longer be subject to Section 280E going forward. Operators with mixed medical and adult-use operations, historical Section 280E liabilities, or complex entity structures should consult tax counsel regarding how the rule applies to their specific circumstances. The Administrator has encouraged the Secretary of the Treasury to consider providing retrospective relief for taxable years in which a state licensee operated under a state medical marijuana license.
• Expedited DEA Registration Pathway for State Licensees. The rule establishes an expedited registration process for entities holding state medical marijuana licenses, enabling them to register with the DEA as manufacturers, distributors, and/or dispensers. A qualifying state medical marijuana license serves as sufficient proof of state-law authorization for purposes of DEA registration.
• Registration Types for State Licensees. Under the new framework, a registered marijuana manufacturer may cultivate, produce, process, package, label, and transfer marijuana to registered distributors or other registered manufacturers. A registered distributor may receive and transfer marijuana between registered entities. A registered dispenser may dispense marijuana to individuals authorized by state law for medical purposes. A single entity may hold multiple types of registrations. Registrations under this framework do not authorize the manufacture, distribution, dispensing, or use of marijuana for non-medical (i.e., adult-use or recreational) purposes.
• State Law Compliance Serves as Federal Compliance in Key Areas. Registrants may rely on state-law labeling, packaging, disposal, and physical-security requirements in lieu of certain federal requirements, provided the label includes the statutory warning required by 21 U.S.C. § 825(c). State-required reports, records, and forms will be accepted to the maximum extent permissible, reducing the burden of duplicative compliance obligations.
• State Medical Marijuana Certifications Sufficient for Dispensing. A certification or other document that state law deems sufficient for a patient to obtain marijuana for medical purposes is sufficient under the new federal framework, so long as it is dated and signed on the day of issuance, it bears the user’s full name and address, and identifies the issuing practitioner.
• DEA Hearing on Broader Rescheduling. Separately from the final rule, the DEA will hold a formal administrative hearing beginning June 29, 2026, at the DEA Hearing Facility at 700 Army Navy Drive, Arlington, Virginia, regarding the proposed rescheduling of all marijuana from Schedule I to Schedule III. The hearing will conclude no later than July 15, 2026. Interested persons who wish to participate must file a written notice of intention to participate electronically by 11:59 p.m. ET on May 24, 2026, or by mail postmarked no later than May 20, 2026.
• No Immediate Full Legalization. Businesses should understand that rescheduling does not immediately legalize marijuana. The rule does not itself provide retroactive criminal relief, expungement, or sentence reductions for prior marijuana convictions. Cannabis companies will still face business banking restrictions, in part due to continuing risks under anti-money laundering laws.
• Interstate Commerce Compliance Uncertainty. While rescheduling marijuana to Schedule III for state-licensed medical programs provides major tax relief, it does not itself create affirmative federal authorization for interstate transfers of marijuana, leaving significant unresolved questions regarding the extent to which interstate medical cannabis commerce may occur consistent with both federal and state law. The final rule adds marijuana in FDA-approved products and state-licensed marijuana to the list of Schedule III substances requiring an import and export permit under 21 CFR § 1312.30, which governs international importation and exportation rather than domestic interstate transport. The DEA’s final rule does make clear that the new registration framework for state licensees is expressly limited by the scope of each entity’s state medical marijuana license. A registered manufacturer may transfer marijuana only to “registered distributors or other registered manufacturers, subject to the limitations of its state license,” and a registered distributor may transfer only to “registered dispensers or other registered distributors, subject to the limitations of its state license.” Because state medical marijuana licenses are inherently state-specific, the rule’s repeated qualification effectively tethers each registrant’s authorized activities to its home state’s licensing framework,  significantly limiting interstate medical cannabis commerce absent additional federal or state.

The 60-Day DEA Registration Window: A Critical Immediate Deadline

 

Qualifying state medical marijuana licensees should treat the 60-day DEA registration window as an immediate priority. The DEA Administrator is directed to make every effort to process all applications submitted within 60 days of the publication of this rule in the Federal Register within six months. Any applicant who submits an application within 60 days of publication may engage in the manufacture, distribution, and/or dispensing of marijuana for medical purposes in conformity with a state-issued license during the pendency of the application.

This creates a meaningful safe harbor: applicants who file within the initial 60-day window may continue operating under their state licenses while the DEA processes their federal registration applications. If a state medical marijuana license is suspended, revoked, or expires, the DEA registration is automatically suspended as well.

 

Registration fees under the current schedule are as follows: manufacturers pay $3,699 annually; distributors pay $1,850 annually; and standard dispensers, including pharmacies, pay $888 for a three-year cycle. The DEA, however, has established a specific annual fee of $794 for entities registering through the new Medical Marijuana Dispensary Registration Portal. At present, the DEA accepts payment for these dispensary registration applications only through PayPal. The final rule does not create a standalone “cultivator” registration category. Instead, cultivation is encompassed within the manufacturer registration type under § 1301.13(k)(1)(A). Notably, the DEA has already launched its dedicated Medical Marijuana Dispensary Registration Portal, which opened to registrants on Wednesday, April 29, 2026. As of the publication of this article, DEA has not designated a separate registration portal for manufacturers, distributors, or other medical marijuana registrants outside the dispensary category.

The 60-day registration window is one of the most significant immediate deadlines created by the final rule. This expedited registration pathway applies only to qualifying state medical marijuana licensees and does not apply to adult-use-only operators. If your cannabis company holds a state medical marijuana license, you should strongly consider beginning preparation of your DEA registration application now. Filing within the 60-day window following the rule’s publication, the date of publication in the Federal Register is vital to maintaining uninterrupted operations under the express protection of the new rule while your DEA application is pending. Companies should also immediately inventory their existing compliance infrastructure—including recordkeeping, security, labeling, and packaging—to ensure alignment with the new federal requirements, keeping in mind that state-law compliance will satisfy many of these obligations.

 

If you wish to participate in the broader rescheduling hearing commencing June 29, 2026, file your notice of intention to participate no later than May 24, 2026 (electronically) or ensure it is postmarked by May 20, 2026 (by mail).

Zuber Lawler advises clients on DEA registration strategy, Section 280E implications, compliance planning, and participation in the broader rescheduling proceedings, and is actively assisting operators in navigating the immediate legal and operational challenges created by this rule.

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Tom Zuber, recognized nationwide by Chambers USA for his expertise in cannabis law, is the Managing Partner of Zuber Lawler. Mr. Zuber and his colleagues manage legal matters around the world, including as to deals, intellectual property, employment, and litigation. He personally manages relationships with a number of the firm’s Fortune 500 clients, as well as funds and government entities. He is a leading voice in relation to a variety of emerging industries and technologies, including legalized cannabis, legalized psychedelics, and longevity. He was named one of High Times “100 Most Influential People in the Cannabis Industry,” and was named one of “23 Visionaries Who Shaped the Cannabis Landscape In 2023” by Benzinga. He holds a J.D. from Columbia Law School, where he was named a Harlan Fiske Stone Scholar; an M.P.P. from Harvard University; and a B.S. in biomedical engineering from Rutgers University, where he graduated with highest honors.

Raza Lawrence is widely recognized as a leading voice in plant medicine law. He has many years of experience advising cannabis and psychedelics medicine businesses on navigating local, state, and federal laws and regulations, mergers and acquisitions, licensing deals, employment matters, internal and governmental investigations, and litigation. He holds a J.D. from Harvard Law School, where he graduated cum laude, and a B.A. from Washington University in St. Louis, where he graduated summa cum laude.

Ivy Bader, a non-attorney regulatory compliance coordinator, has over a decade of experience in the highly regulated cannabis domestic and international markets. Ms. Bader has experienced advising some of the biggest names in worldwide cannabis as to operations compliance and expansion in California, Maryland, Massachusetts, New Jersey, New York, Ohio, and The Netherlands. Prior to joining Zuber-Lawler, she worked as a regulatory compliance consultant advising cannabis companies on application reviews, inspections, and financial audits.