Last week marked a significant development for the cannabis industry. On April 23, the U.S. Department of Justice (DOJ) announced that state-licensed medical cannabis has been rescheduled to Schedule III under federal law (effective April 28), while also initiating additional Drug Enforcement Administration (DEA) hearings in June 2026 that could lead to broader rescheduling decisions, including potential implications for adult-use cannabis.
While the regulatory landscape will continue to evolve, medical cannabis operators should focus on some immediate considerations:
- Evaluating DEA registration is now critical for medical license holders: With medical cannabis moving to Schedule III, DEA registration has become an important consideration for qualifying medical operators. Registering helps align operations with the updated federal framework; however, it comes with both known and currently unknown restrictions and regulations. The DEA has established a 60-day window during which companies that register will benefit from an expedited review process, so time is of the essence for companies considering whether to register.
- Treasury and IRS guidance on Section 280E: State-licensed medical cannabis operators will no longer be subject to Section 280E. Section 280E relief is expected to be effective for the full 2026 taxable year, and the Treasury has been directed to consider retroactive relief for prior tax years.
- Planning for continued and federal policy changes: This announcement is not the final step in the rescheduling process. Upcoming DEA hearings will hopefully result in broader changes that will positively impact adult use operators as well. As a result, all cannabis companies regardless of their license status should be evaluating their current tax positions, entity structuring, and long-term business strategies.
We encourage cannabis license holders to begin proactive discussions now around how these changes may affect current operations and how to prepare for additional federal developments ahead. If you are subject to DEA registration and have questions, we can assist with introductions to attorneys who have experience in the DEA registration process.
For questions about DEA registration, tax implications, or how rescheduling could impact your business, please reach out to our team below:
Scott Hammon, CPA
Industry Group Leader, Cannabis
SHammon@mgocpa.com
Curtis Winar, CPA/CFF, CVA
Tax Partner
CWinar@mgocpa.com
Sarah McGuire, CPA
Consulting Partner
SMcGuire@mgocpa.com
