Holon Law’s Statement on Rescheduling Marijuana to Schedule III of the CSA
Marking a significant moment in the path to end federal cannabis prohibition, the U.S. Department of Justice (“DOJ”) and the Drug Enforcement Administration (“DEA”) issued an April 23, 2026 Final Order (the “Order”) proposing to immediately reclassify qualified medical marijuana products under Schedule III of the Controlled Substances Act (“CSA”). While the Order recognizes the long ignored medical value of cannabis and indicates a significant shift in policy, there are significant concerns about the limited scope and potential legal and procedural hurdles the Order is likely to encounter. For state cannabis businesses eagerly awaiting relief from punitive tax policies under Section 280(e) of the Internal Revenue Code (“IRC”), the tenuous nature of the Order leaves it unclear whether they will soon get much needed reprieve.
If upheld, the Order would move FDA-approved drug products containing marijuana and marijuana and products containing marijuana produced and sold by a federally registered state medical marijuana licensee to Schedule III of the CSA. Adult-use or recreational marijuana and marijuana not covered under a state medical license will remain Schedule I.
The Order would leave unlicensed bulk marijuana, marijuana extracts, and delta-9 tetrahydrocannabinol (“THC”) used to make FDA approved drug products. and containing synthetically produced tetrahydrocannabinol (“THC”) that may otherwise meet the definition of medical marijuana on the CSA’s most restrictive schedule. The Order would require state licensed cannabis operators seeking to operate under the federal framework to register with DEA by June 22, 2026 and DEA will “attempt” to review and approve this registration by December 22, 2026. In effort to satisfy U.S. treaty obligations, the Order would also require state medical cannabis businesses to sell cultivated bulk marijuana to DEA at a “nominal” price, then buy it back at the price, plus an “administrative fee.”
The Order continues the process that started with President Biden’s 2022 executive order directing his administration to “…initiate the administrative process to review expeditiously how marijuana is scheduled under federal law.” In August 2023, the U.S. Department of Health and Human Services (“HHS”) issued its recommendation to reclassify marijuana as a Schedule III substance. The rulemaking process was put on hold when President Trump took office in 2025, then restarted again in December 2025 when President Trump issued Executive Order 14370 directing his DOJ to proceed with marijuana rescheduling. The rulemaking process for marijuana not covered by the order is slated to continue with a public hearing on June 29, 2026.
Holon Law Partners continues to monitor and engage federal policy makers on this issue to help clients navigate the evolving federal landscape.
