On April 23, 2026, the U.S. Department of Justice (“DOJ”) reached a historic milestone in federal cannabis policy when Acting Attorney General Todd Blanche signed a final order transferring Food & Drug Administration (“FDA”)-approved marijuana products and all cannabis subject to a state medical marijuana license from Schedule I to Schedule III of the Controlled Substances Act (“CSA”).
For patients, providers, operators, lenders, investors, and virtually everyone involved in this industry, this marks one of the most significant federal cannabis developments in decades. The order takes effect immediately and creates a new pathway for state-regulated medical marijuana businesses to operate in compliance with both state law and federal controlled substances law for the first time in history.
Although the order does not currently address recreational cannabis, its impact on the industry is significant. Blank Rome is committed to guiding clients through these policy changes and helping them leverage emerging opportunities in the sector, which we believe will further benefit the industry as a whole. Here are the significant highlights and impacts of the policy change.
The Separate Formal Rescheduling Rulemaking Continues: Alignment is Necessary
It is important to note that the final order excludes recreational marijuana and does not end the ongoing formal rulemaking process regarding marijuana rescheduling, which was initiated under the previous administration.
The Drug Enforcement Administration (“DEA”) has cancelled the long-delayed Administrative Law Judge hearing associated with that proceeding and announced a new hearing that will begin on June 29, 2026, and conclude no later than July 15, 2026. Interested parties have 30 days from publication of that order to request participation.
Because the new final order moves all marijuana subject to a state medical marijuana license to Schedule III, the remaining formal rulemaking will focus on marijuana that remains in Schedule I—namely, marijuana not subject to a state medical marijuana license. The cannabis industry needs to be prepared and aligned to advocate with one voice that adult use should be included in Schedule III. There are factions in and outside of the government that will try to prevent full rescheduling and industry members must truly unite and jointly support the cause to defeat opposition.
Blank Rome is fortunate to truly have the leading regulatory attorneys who understand the intricacies of the federal and state laws pertaining to the cannabis industry and the firm is committed to advising and supporting our clients and the industry in winning this effort. Blank Rome prides itself on forging relationships among our clients and contacts in the cannabis industry and we will continue to do our part to foster such alignment.
Immediate Tax Relief Under Section 280E
One of the most immediate consequences of the final order is relief from Internal Revenue Code Section 280E for businesses handling marijuana subject to a state medical marijuana license who have obtained a DEA registration.
Because Section 280E applies only to Schedule I and II substances, marijuana that is subject to a state medical marijuana license no longer falls within its ambit. This development will materially improve cash flow, profitability, and enterprise value across the state-licensed medical cannabis sector.
While the order provides that such tax relief is effective as of January 1, 2026, the order also encourages the U.S. Department of the Treasury to make that relief retrospective, and Treasury has announced that it will issue additional guidance on implementation. This could result in direct tax relief or, if not granted, various legal arguments to justify such tax relief.
Expedited DEA Registration for State-Licensed Medical Marijuana Businesses
The final order also creates an expedited pathway for state-licensed medical marijuana companies to obtain registration with the DEA.
Registered entities may manufacture, distribute, dispense, import, and export marijuana under federal law. This creates the possibility—previously unavailable—for businesses operating under state medical marijuana programs to conduct those operations under DEA registration and thus in full compliance with the CSA.
This enhanced federal legitimacy could have substantial downstream effects, particularly with respect to interstate and international commercial opportunities.
Blank Rome is uniquely positioned to guide its clients through this DEA process being one of a handful of law firms who regularly assist clients with cannabis matters involving the DEA and FDA. In addition, our understanding of this process enables us to best advise clients on the implications and potential opportunities regarding interstate commerce and international import/export possibilities.
60-Day Application Window and Six-Month Review Requirement
The final order permits state-licensed medical marijuana companies that apply for DEA registration within 60 days of publication of the order to continue operating under their state licenses while DEA reviews their applications.
DEA must also process these early applications within six months.
Operators considering registration must submit applications within this 60-day window to secure expedited processing. Blank Rome’s attorneys stand ready to assist clients in this process.
Research Access Expanded
The final order also significantly expands research opportunities.
Researchers may now obtain marijuana and marijuana-derived products directly from state licensees for scientific research, provided both the researcher and the supplier are DEA registered.
This is a major development because it facilitates research using the actual products patients are using in state-regulated medical marijuana programs, rather than limiting studies to federally supplied research material that often differs significantly from commercial products.
Key Open Questions
Although the final order provides significant clarity, important questions remain, which Blank Rome will be addressing for its clients, including:
1) Import and Export: The order contemplates DEA registration for import and export activity involving state-licensed Schedule III medical marijuana. However, DEA has historically exercised strict control over marijuana exports—even where it had legal authority to permit them.
Whether federal policy will materially shift in this area remains uncertain.
2) Dual-License Operators: Many businesses operate under both medical and adult-use licenses.
It remains unclear whether, and to what extent, DEA will require such businesses to restructure operations to obtain or maintain registration. Historically, DEA has viewed ongoing handling of Schedule I substances in violation of federal law as grounds to deny or revoke registration.
Whether DOJ will take a more flexible approach under this new framework remains to be seen.
Litigation Expected
The final order will face immediate legal challenge in federal court, and challengers are likely to seek a stay.
The CSA permits parties aggrieved by the order to petition directly for judicial review in federal appellate court. While the outcome of that litigation is difficult to predict, the final order includes a severability provision intended to preserve the remainder of the framework if one or more portions is invalidated.
As a result, even successful challenges may not undo the entire regulatory structure.
Blank Rome’s administrative law professionals are among the leading attorneys who have been and will continue to be in the rescheduling trenches and on the front line in court on behalf of its clients.
New Opportunities
The increased federal legitimacy of the cannabis industry stands to create significant downstream impacts, opening the door to new business opportunities. Navigating the evolving landscape demands not only deep understanding of regulatory frameworks but also forward-thinking industry insight. As the leading full-service business and regulatory law firm to the cannabis industry, Blank Rome provides its clients with the resources, skills, and deep industry knowledge needed to stay ahead of competitors and seize emerging opportunities. As legal environments shift, it is essential for companies to stay informed and strategically positioned to anticipate and respond to emerging trends, challenges, and avenues for growth, including:
- Banking/Lending: Blank Rome has been a pioneer in both cannabis and non-cannabis lending transactions, representing and structuring such transactions on behalf of borrowers and lenders. We expect rescheduling to attract new capital and increase interest from current lenders, though it may introduce new complexities. Blank Rome is prepared to advise clients on these developments.
- Exchange Uplisting: While the major U.S. stock indices have yet to comment on rescheduling, it is believed that cannabis companies may eventually have an opportunity to list or uplist on major U.S. stock markets. Blank Rome’s Securities practice group will be advising clients through this process. In Bankruptcy Protections / Receiverships (Federal and State), Blank Rome’s Cannabis practice has consistently led the way in advising on and structuring workouts, as well as managing the most significant receiverships within the cannabis industry on behalf of borrowers, lenders, and receivers. We anticipate that, under certain circumstances, bankruptcy judges may be more amenable to allowing bankruptcy filings, especially for medical operators. With a nationally recognized bankruptcy group—featuring a dedicated Delaware office—and in collaboration with our Cannabis industry team, Blank Rome is uniquely positioned to guide all parties through the bankruptcy situations likely to arise.
- Interstate and International Commercial Opportunities: As previously discussed the current rescheduling order could lead to the ability to import and export cannabis over state lines and U.S. borders. There are numerous issues and questions to be addressed particularly with interstate commerce involving states versus federal rights such as the applicability of the dormant commerce clause, which raises constitutional arguments regarding interstate commerce. Blank Rome’s regulatory attorneys are ready to assist as these opportunities develop.
- Intellectual Property (“IP”) Rights: Another area we anticipate expansion of protective rights in favor of the cannabis industry is IP protection. Our Intellectual Property group is assisting Blank Rome clients in protecting their cannabis IP rights.
Looking Ahead
This final order represents a fundamental shift in federal marijuana policy and provides state-licensed medical marijuana businesses with opportunities that did not previously exist under federal law. However, adult use cannabis cannot be dropped by the wayside, and the industry must be aligned to prevent that from happening.
The legal and regulatory landscape remains dynamic. DEA and FDA implementation, Treasury guidance, the ongoing formal rescheduling proceeding, and inevitable federal litigation will all shape what comes next.
Businesses operating in the cannabis industry—particularly those in state medical marijuana programs—must immediately begin evaluating how DEA registration, tax treatment, compliance obligations, and strategic planning may impact their business and prepare to take advantage of such opportunities.
The practical consequences of this order will depend not only on what DOJ has written, but on how federal agencies and the courts respond in the months ahead.
Blank Rome’s Cannabis practice stands ready to assist its clients in successfully navigating these steps, including:
- preparing and submitting applications for DEA registration, a step that must be completed by June 23, 2026, to benefit from mandated expedited processing;
- preparing and submitting requests to participate in the upcoming hearing relevant to the ongoing formal rulemaking process to consider broader rescheduling;
- providing strategic counsel and business advice regarding the implications of the final order for corporate issues, potential reorganization of corporate structure, mergers and acquisitions, banking, securities and public markets, tax considerations, restructurings / creditors rights and more;
- representation in litigation related to these decisions;
- beginning the process of obtaining federal IP protection for medical cannabis, related trademarks and patents; and
- providing regular in real time updates and insights regarding the status and implications of the process as it continues to unfold.
