By Cecilia Oyediran, Esq.
Last Updated: May 2026
This information is educational only and subject to change. It is not legal advice.
On April 28, 2026, the U.S. Department of Justice (DOJ) officially moved certain state-licensed medical cannabis from Schedule I to Schedule III under the federal Controlled Substances Act (CSA).
This has created many questions for cannabis businesses, workers, patients, and consumers. Below is a high-level overview of what we know right now.
What changed under federal law?
The federal government partially changed how cannabis is classified under the Controlled Substances Act.
State-licensed medical cannabis and FDA-approved cannabis products are now classified as Schedule III substances under federal law.
However, adult-use (recreational) cannabis was not included in this change and remains Schedule I under federal law.
What does Schedule III mean?
Schedule III substances are recognized by the federal government as having:
- Accepted medical use
- A lower potential for abuse or dependence compared to Schedule I or II substances
This is the first time the federal government has formally recognized accepted medical use for state-licensed medical cannabis under the Controlled Substances Act.
Did cannabis become federally legal?
No. Rescheduling is not the same as federal legalization. Cannabis remains a controlled substance under federal law, and unauthorized possession, distribution, or production of cannabis can still result in federal penalties.
What are some of the biggest potential impacts for medical cannabis businesses?
One of the most significant potential impacts involves federal taxes.
Businesses operating in compliance with state medical cannabis laws may no longer be subject to Internal Revenue Code Section 280E, which previously prevented many cannabis businesses from taking ordinary business tax deductions.
The U.S. Department of the Treasury and the Internal Revenue Service (IRS) are expected to issue additional guidance, including transition rules and possible 280E relief.
Can medical cannabis businesses now apply for DEA registration?
Yes. As of April 28, 2026, eligible state medical marijuana licensees may apply for DEA registration to:
- Manufacture medical marijuana (including cultivation and certain processing activities)
- Distribute medical marijuana
- Dispense medical marijuana
The DEA registration portal is currently open, and the agency announced a 60-day expedited application period ending on June 26, 2026.
Businesses considering DEA registration should consult legal counsel.
Does this change New York cannabis law?
No. New York’s cannabis laws and regulations, including the Marijuana Regulation and Taxation Act (MRTA), remain fully in effect. Cannabis businesses and workers must still comply with all applicable New York State regulations.
Does this change interstate commerce rules?
No. Interstate cannabis commerce remains prohibited under federal law. Cannabis operators must continue operating within the limits of their state licenses and cannot transport cannabis across state lines unless federal law changes in the future.
Do state medical cannabis businesses still need to follow state regulations?
Yes. State medical cannabis operators must still comply with all applicable state requirements related to:
- Packaging
- Labeling
- Security
- Disposal
- Inventory tracking
- Testing and compliance
Federal rules may also require an additional warning label stating that transferring the drug to anyone other than the patient is a crime.
What has not changed?
Several important things remain the same:
- Adult-use (recreational) cannabis remains Schedule I under federal law
- Broader federal rescheduling of all cannabis has not happened yet
- Interstate cannabis commerce is still prohibited
- Many federal criminal penalties for unauthorized cannabis activity still exist
- DOT drug testing requirements remain in effect
- Employer drug testing requirements in regulated industries may still apply
- Rescheduling does not automatically expunge prior federal cannabis convictions
Does this mean workplace cannabis policies will change?
Not automatically. Many workplace drug testing and safety requirements remain in place, especially in federally regulated industries and positions subject to Department of Transportation (DOT) rules.
Employers should continue following applicable federal, state, and local employment laws when developing workplace policies.
Will there be more changes in the future?
Possibly. The DEA was directed to restart formal rulemaking proceedings to consider moving all cannabis to Schedule III. Additional hearings, public comment periods, and federal guidance are expected.
Federal agencies may also issue future guidance related to:
- Banking
- Insurance
- Taxation
- Employment
- Public housing
- Healthcare and patient access
Where can I get legal advice about how this impacts me or my business?
The Cannabis Workforce Initiative (CWI) provides educational information only and does not provide legal advice. If you have questions about how federal rescheduling may affect you, your license, or your business operations, consult a qualified attorney.
