On April 22, 2026, the U.S. Department of Justice (DOJ), acting through the Drug Enforcement Administration (DEA), issued a Final Order rescheduling certain marijuana products from Schedule I to Schedule III under the Controlled Substances Act (CSA). The order applies only to (i) FDA approved marijuana products and (ii) marijuana held pursuant to a qualifying state medical marijuana license, while expressly leaving all other marijuana, including adult use cannabis, in Schedule I.
Although this development has generated significant attention, market optimism, and speculation regarding tax and commercial implications, the order raises substantial legal and procedural questions and is already the subject of anticipated immediate litigation. Clients should proceed cautiously.
Below is a summary of what the order does, what it does not do, and why near term judicial intervention is a real possibility.
What the DOJ Order Does
- Places FDA approved marijuana products and state licensed medical marijuana into Schedule III.
- Leaves all other marijuana, including state legal adult use cannabis, in Schedule I.
- Claims authority under a treaty compliance provision of the CSA (21 U.S.C. § 811(d)(1)) to proceed by order, rather than by completing the long pending administrative rescheduling hearing.
- States that, as a result, Section 280E should no longer apply to qualifying state medical licensees, while cautioning that the order itself does not constitute a tax determination.
Why the Order Is Legally Unsettled
1. Bypassing the Ongoing Rescheduling Hearing
The DEA had already scheduled a formal administrative hearing to address marijuana rescheduling; a hearing that remains stayed due to a pending interlocutory appeal.
Rather than completing that process, DOJ relied on its treaty compliance authority to bypass the hearing entirely. Whether the CSA permits this maneuver, particularly where the treaty does not require immediate action, is a central issue that courts are likely to scrutinize closely.
2. Reliance on Treaty Authority Is Conditional, Not Absolute
DOJ relies heavily on a 2024 Office of Legal Counsel (OLC) opinion stating marijuana could be placed in Schedule III while remaining compliant with the United States’ obligations under the Single Convention on Narcotic Drugs.
However, a close reading of that OLC opinion reveals that:
- The treaty question is described as a “close one.”
- Schedule III compliance is premised on the implementation of additional regulatory controls to close any remaining gaps between Schedule III restrictions and treaty requirements.
- The opinion contemplates regulatory supplementation, not a self executing scheduling change.
The Final Order largely assumes, rather than implements, those additional controls; a sequencing issue that weakens DOJ’s legal footing.
3. Novel “Medical Only” Bifurcation Has No Clear CSA Mechanism
The CSA historically regulates substances by substance, not by channel of use. The order’s decision to treat marijuana as Schedule III only when held under a medical license, while remaining Schedule I in all other contexts, is novel and lacks an obvious statutory mechanism. This structural novelty is likely to be a focal point of litigation.
Immediate Litigation and TRO Risk
Well funded opponents have already indicated they will pursue immediate legal challenges, which will likely include temporary restraining order (TRO) and preliminary injunction relief.
A TRO would preserve the long standing status quo, under which marijuana (outside narrow FDA products) has remained Schedule I for over 50 years, while courts evaluate:
- whether DOJ exceeded its statutory authority,
- whether treaty compliance actually required this action, and
- whether bypassing the hearing process was lawful.
Interstate Commerce and State Law Disruption Risk
Most state cannabis laws, medical and adult use alike, are explicitly structured around federal illegality, and include prohibitions on interstate commerce for that reason.
By declaring state licensed medical marijuana federally lawful, the order opens the door to Dormant Commerce Clause challenges to those state restrictions. If such challenges succeed, and the order is later enjoined or vacated, states, businesses and courts could be left with irreversible legal dislocation.
Practical Guidance for Clients
Until litigation unfolds, consider the following:
- Do not assume the order is final or durable for planning purposes.
- Avoid irreversible reliance decisions (interstate structuring, major capex, tax position shifts) predicated on Schedule III status.
- Paper regulatory risk explicitly in transactions (conditions precedent, Material Adverse Change clauses, escrows, indemnities).
- Distinguish medical and adult use revenue streams carefully in modeling and disclosure.
- Be especially cautious with tax positions that assume the elimination of Section 280E without judicial confirmation.
As in tax practice, advising reliance based solely on perceived enforcement tolerance or political momentum, rather than legal authority, carries significant downstream risk.
Bottom Line
The DOJ’s medical only Schedule III order is meaningful, but it is also legally vulnerable, procedurally unconventional and already headed for court. Clients should treat this as a development subject to near term judicial testing, not a settled change in federal cannabis law.
We will continue to monitor any litigation closely and provide updates as events unfold.
Our Cannabis Industry Team represents many of the leading cannabis, hemp and CBD companies, including large multi-state operators, start-ups, growers, registered medical marijuana organizations and non-plant-touching businesses. If your cannabis-related company needs assistance, please reach out to attorney Jason W. Klimek at (585) 419-8646 and jklimek@harrisbeachmurtha.com; attorney attorney James B. Mann at (917) 733-4043 and jmann@harrisbeachmurtha.com; or the Harris Beach attorney with whom you most frequently work.
This alert is not a substitute for advice of counsel on specific legal issues.
Harris Beach Murtha’s lawyers and consultants practice from offices throughout Connecticut in Bantam, Hartford, New Haven and Stamford; New York State in Albany, Binghamton, Buffalo, Ithaca, New York City, Niagara Falls, Rochester, Saratoga Springs, Syracuse, Long Island and White Plains; as well as in Boston, Massachusetts, and Newark, New Jersey.