What California operators must do after rescheduling: DEA registration, license restructuring, and 280E

On April 23, 2026, the DOJ and DEA issued a final order rescheduling certain marijuana products from Schedule I to Schedule III of the Controlled Substances Act. The order is subject to litigation, but it remains in effect for now.

The shift applies primarily to FDA-approved cannabis-derived drug products and state-licensed medical cannabis programs that meet federal criteria, not adult-use cannabis. For California operators, it opens a path out of 280E for qualifying medical activity, but it also introduces new federal expectations and deadlines.

In this post, we focus on three questions California cannabis businesses should be asking themselves:

1. Are we going to hop into the Schedule III framework?
2. How do we handle DEA registration and license restructuring?
3. What does 280E look like after rescheduling, especially if we missed the early DEA window?

Decide whether you want to be in the Schedule III world

Rescheduling is not automatic relief for every operator. It’s primarily relevant if you have either (1) a state-licensed medical cannabis license whose activity fits the federal definition of “marijuana for medical purposes, or (2) a dual-license (Adult-Use/Medical) operation that conducts meaningful medical activity.

The core strategic decision is whether you want to become a federally recognized Schedule III medical provider or remain purely state-legal adult-use.

In making that decision there are some factors to weigh, including: (1) current and projected mix of medical vs adult-use revenue; (2) appetite for federal oversight, inspections, and diversion‑control obligations under DEA rules; and (3) banking, insurance, and investor expectations in a post-rescheduling environment.

If your business is effectively all adult-use with little medical activity, chasing DEA registration may not be worth the added complexity. If you have a serious medical footprint, the tax benefits and legitimacy may be compelling.

DEA registration: the deadline, what it got you, and what if you missed it?

DEA opened its Medicinal Marijuana Dispensary Registration Portal at the end of April, and federal rules created a special 60‑day window. Under 21 CFR 1301.13(k):

• Applications filed within 60 days of the rule’s publication (through June 26, 2026) qualified for expedited processing and could operate during the pendency of the application so long as they comply with state medical licensing.
• DEA has confirmed it will continue accepting applications beyond the 60 days, but applications submitted after June 26, 2026, are no longer covered by the expedition provision.

To put that into plain terms, if you applied by June 26, you can operate under state medical licenses while DEA processes your registration, and DEA is supposed to process your application within six months.

If you missed that window, you can still apply, but you lose the special fast‑track and automatic “operate while pending” protection. You’ll need to work closely with counsel and your state regulators to ensure your operations remain compliant while DEA considers your application.

For California operators who haven’t yet applied DEA registration is still available. The door is not closed, but the early mover advantages have passed. However, further delay increases risk that future federal guidance or enforcement priorities will be less forgiving to late entrants. If DEA registration is part of your long‑term strategy (especially for medical‑heavy operations), the prudent move is to begin preparing your application so that you can file as soon as possible after you have made the decision that registering is best for your business.

License restructuring under California’s new DCC rules

California’s Department of Cannabis Control responded quickly to federal rescheduling. In emergency regulations finalized in spring 2026, the DCC allowed licensees to change designation between adult‑use (A) and medicinal (M) at any time, not just at renewal, and created a clearer pathway for splitting combined A/M retail licenses into separate A and M licenses on the same premises.

In practical terms, this means that if you intend to pursue DEA registration and maximize medical activity, you may want to convert or split licenses to ensure medical activity is clearly segregated and documented. License conversion and modification requests should be made through DCC’s forms and processes with the assistance of counsel.

One huge consideration to make before deciding to register with the DEA is that the DEA will require all registrants to only work with other DEA registered entities. As such, you will need to ensure that businesses upstream and downstream of your supply chain are also planning on registering with the DEA, and, if not, decide if you will be able to fill those losses.

280E after rescheduling: what changes, what doesn’t

IRC Section 280E disallows ordinary business deductions for businesses trafficking in Schedule I or II substances. Once medical cannabis moved into Schedule III, federal tax authorities acknowledged that 280E no longer applies to qualifying medical activity.

As such, for operators whose activity now falls under Schedule III, Treasury and IRS have indicated that rescheduling generally removes 280E as a bar to claiming deductions and credits for those specific operations. Adult‑use sales, however, remain outside the scope of the rescheduling order and stay subject to 280E. Mixed operators offer more complexity because they will need to apportion expenses between Schedule III medical activity and Schedule I recreational activity. Forthcoming IRS guidance is expected to address cost allocation.

If you missed the DEA early application window, you do not automatically lose future 280E relief. Eligibility turns on whether your operations fit the Schedule III medical framework and ultimately obtain DEA registration, not strictly on filing in the first 60 days. However, until your operations clearly fall within Schedule III and you have a defensible position (including registration or a strong pending‑application posture), you should assume 280E continues to apply to your activity and plan conservatively with your CPA.

What to do now, if you missed the early DEA registration window

Missing the June 26, 2026, window simply means you lost the expedited processing and automatic permission to operate while pending, not that DEA registration is off the table. If you still plan to pursue Schedule III medical positioning, there are steps you can still take.

1. Start documenting medical activity now. Patient records, physician recommendation processes, and compliance logs will all matter to DEA and IRS.
2. File a DEA application as soon as practical, understanding that processing may be slower and your ability to rely on “operate while pending” language will be less straightforward.
3. Coordinate closely with California regulators. Make sure any license conversions or splits align with the federal medical framework.
4. Work proactively with tax advisors. Assume 280E still applies for 2026 unless and until IRS guidance and your specific facts support full‑year relief; watch IRS bulletins and Treasury releases closely.

The longer operators wait to align their licensing, registration, and accounting with the new framework, the harder it will be to claim the benefits of rescheduling without inviting scrutiny.

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For more on marijuana rescheduling and the DEA rulemaking process, please check out these recent posts:

• The Quietest Fight of DEA’s Life: Reflections on the Marijuana Rescheduling Hearing
• Law and Politics: Why Marijuana Rescheduling’s One-Sided Hearing Matters
• Would Cannabis Rescheduling Help Businesses in Unified Markets? Washington Weighs In
• The Motion to Stay DEA’s Schedule III Rule: Strong Enough to Stick?
• Standing Is Everything: Three States Join the Medical Marijuana Rescheduling Fight
• Medical Marijuana Rescheduling Q&A: Cutting Through the Noise
• A Calculated Bet: DEA Registration is Open, and the Clock is Ticking
• Marijuana Rescheduling and Income Tax
• The U.S. Opens Its Medical Marijuana Market to Global Trade (For Now); Broader Marijuana Rescheduling on Deck

The post What California Operators Must Do After Rescheduling: DEA Registration, License Restructuring, and 280E appeared first on Harris Sliwoski LLP.

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Medical Marijuana Schedule III Litigation: The D.C. Circuit’s First Major Test

While most attention has focused on the recently concluded marijuana rescheduling hearing, an equally significant legal battle has unfolded in the D.C. Circuit over the final rescheduling order (“Final Order”).  Petitioners, the Department of Justice, newly intervening parties, and amici participants have exchanged a series of briefs over the past month. Those filings may ultimately determine whether the rescheduling effort survives judicial review.

At this stage, however, the court is not deciding whether moving marijuana to Schedule III was lawful. Instead, the parties are litigating several threshold issues. The court must resolve those questions before it can reach the merits. Most importantly, it must decide whether any petitioner has standing to challenge the Final Order, whether implementation of that order should be stayed while the litigation proceeds, and whether additional parties may intervene in support of rescheduling.

How the court answers these procedural questions may prove just as important as the merits of the Final Order.

(All briefs discussed can be found on PACER, D.C. Circuit Court of Appeals Docket #: 26-1136)

Standing comes first

As I have discussed previously, the fate of the Final Order may turn less on marijuana policy than on a fundamental question of administrative law: standing. Before the D.C. Circuit can consider whether the Department of Justice lawfully moved marijuana to Schedule III, it must determine whether any petitioner has suffered the type of concrete injury required to challenge the Final Order.

The Department of Justice argues that neither petitioner has standing. DOJ contends that the National Drug and Alcohol Screening Association (NDASA) relies on speculative predictions about employer behavior rather than concrete injury. It also argues that another petitioner, MMJ BioPharma, has failed to establish competitor standing or a cognizable injury. Finally, DOJ maintains that neither petitioner has shown an injury within the Controlled Substances Act’s “zone of interests.”

NDASA responds that its members would face immediate compliance costs upon rescheduling. They supplemented the record with additional declarations describing concrete injuries. MMJ likewise refined its competitor standing theory. It argues that the Final Order benefits state-regulated operators while diminishing the value of the traditional FDA and DEA pharmaceutical pathway. It argues that state-legal products from Trulieve Cannabis Corp., Cresco Labs Inc., Verano Holdings Corp., Green Thumb Industries Inc., and TerrAscend Corp. directly compete with MMJ’s pharmaceutical product.

I continue to believe NDASA is likely to establish standing. DOJ presented a very strong opening brief (surprisingly so), but NDASA substantially strengthened its position in reply. I remain less convinced that MMJ can establish standing on its own, although it also improved its argument in the reply. If NDASA establishes standing, however, MMJ’s standing becomes largely irrelevant because the court can proceed to the merits.

Whether Petitioners should receive a stay

If the petitioners establish standing, the court must next decide whether to stay the Final Order pending review. A stay is extraordinary relief, as it would freeze the Final Order (at least temporarily). It requires a likelihood of success on the merits, irreparable injury, minimal harm to others, and consistency with the public interest.

DOJ argues that the Acting Attorney General acted within the authority granted by 21 U.S.C. § 811(d)(1). It also argues that the petitioners’ alleged injuries remain speculative. NDASA and MMJ respond that they face present, unrecoverable economic harms. They also argue that the Final Order immediately changes both compliance obligations and the competitive landscape.

The parties also disagree about the public interest. DOJ argues that the Final Order should remain in effect while the litigation proceeds. The petitioners argue there is no public interest in allowing an allegedly unlawful agency action to take effect.

In my view, the petitioners’ strongest argument is not a legal one but a practical one. Marijuana has remained prohibited for more than 50 years. Preserving the status quo for a few additional months while the court reviews the Final Order’s legality is hardly an extraordinary burden.

What does § 811(d)(1) actually authorize?

Assuming the petitioners establish standing, the central statutory question is whether DOJ exceeded its authority under § 811(d)(1).

DOJ argues that the statute authorized the Attorney General to issue the Final Order without following the traditional scheduling procedures. It relies on NORML v. DEA and a 2024 Office of Legal Counsel opinion (cited to in the Attorney General’s “Questions Related to the Potential Rescheduling of Marijuana”) supporting rescheduling.

The petitioners disagree. They argue that § 811(d)(1) authorizes only an expedited scheduling determination, not an expedited process for adopting an entirely new regulatory framework.

That disagreement naturally leads to the Administrative Procedure Act (“APA”).

The APA question may be even more important

The petitioners argue that DOJ did far more than simply reschedule marijuana. According to their briefing, the Final Order also adopts substantive regulations needed to satisfy treaty obligations. They argue those regulations required notice-and-comment rulemaking under the APA and the CSA.

DOJ responds that treaty-based scheduling occurs by “order,” not by “rule.” It also argues that any problematic regulatory provisions are severable from the scheduling determination.

The petitioners reject that position. Using DOJ’s own words, they argue the regulations are indispensable to treaty compliance and therefore cannot be severed while leaving the scheduling decision intact.

Treaty obligations remain at the center of the case

Nearly every issue in the case traces back to a U.N. treaty known as the Single Convention on Narcotic Drugs. DOJ argues that § 811(d)(1) permits the Attorney General to place marijuana in Schedule III while imposing whatever restrictions are necessary to maintain treaty compliance.

The petitioners respond that DOJ has effectively conceded their point by acknowledging that rescheduling alone would not satisfy treaty obligations. If additional regulations are essential, they argue, those regulations require ordinary rulemaking procedures.

In my view, the more significant question is not whether state-legal medical marijuana may be placed in Schedule III. The better question is whether Congress intended § 811(d)(1) to authorize an entirely new regulatory framework for dozens of state medical marijuana programs and thousands of marijuana products.

Motions to intervene reflect the broader stakes

Two medical marijuana operators have moved to intervene in support of DOJ. They argue that the litigation directly affects their businesses and that DOJ is not equipped to adequately represent their commercial interests. The petitioners respond that DOJ is fully capable of defending its own Final Order. Although procedurally distinct, these motions underscore the litigation’s broader economic significance.

Looking ahead

This litigation is ultimately about administrative law as much as marijuana policy. Before the court reaches the merits, it must resolve standing, the stay request, and the motions to intervene. Because the petitioners argue that a stay is necessary to prevent ongoing harm while the case proceeds, the court is likely to address those threshold issues rather quickly. I expect a decision within the next week or two. The coming rulings will not decide whether DOJ ultimately acted lawfully. They will, however, provide the first meaningful indication of how the court views each side’s case. If the court grants both standing and a stay, I believe that will signal the end of state-legal medical marijuana in Schedule III.

For more on marijuana rescheduling and the DEA rulemaking process, please check out these recent posts:

• The Quietest Fight of DEA’s Life: Reflections on the Marijuana Rescheduling Hearing
• Law and Politics: Why Marijuana Rescheduling’s One-Sided Hearing Matters
• Would Cannabis Rescheduling Help Businesses in Unified Markets? Washington Weighs In
• The Motion to Stay DEA’s Schedule III Rule: Strong Enough to Stick?
• Standing Is Everything: Three States Join the Medical Marijuana Rescheduling Fight
• Medical Marijuana Rescheduling Q&A: Cutting Through the Noise
• A Calculated Bet: DEA Registration is Open, and the Clock is Ticking
• Marijuana Rescheduling and Income Tax
• The U.S. Opens Its Medical Marijuana Market to Global Trade (For Now); Broader Marijuana Rescheduling on Deck

The post Medical Marijuana Schedule III Litigation: The D.C. Circuit’s First Major Test appeared first on Harris Sliwoski LLP.

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Celebrating Martin Jelsma’s Retirement and Extraordinary Legacy

When I first met Martin Jelsma (retiring as Programme Director Drugs & Democracy at the Transnational Institute) in 2019, I was a law clerk who, from day one, began following developments in international cannabis policy. At the time, I was trying to understand the intricate architecture of the international drug control treaties—how they functioned, how they constrained reform, and how countries like the United States fit within that framework.

That search for understanding led me to biweekly conversations with Martin and John Walsh (Director of Drug Policy and the Andes with the Washington Office on Latin America). Those discussions quickly became the highlight of my work. Looking back, I realize how fortunate I was to have two of the world’s leading experts willing to invest their time in someone just beginning to navigate this field. Martin never simply answered questions. He challenged my assumptions, exposed gaps in my reasoning, and patiently guided me toward a deeper understanding of the treaties and the legal and political forces that shape global drug policy. It was an education of the highest order, and one that has influenced every step of my career since.

The intellectual foundation Martin helped build made so much of what followed possible. It laid the foundation for what I do now: advising on international treaty issues, speaking at conferences around the world, and teaching law school and undergraduate courses on International Cannabis Policy. So much of what we know—and what I teach—about international drug policy has been shaped by Martin and John’s decades of careful research, thoughtful analysis, and unwavering commitment to reform.

Martin is, quite simply, one of the titans of the modern drug policy movement. Few people have had a comparable impact on how governments, advocates, academics, and practitioners understand the international drug control system. His scholarship has fundamentally reshaped conversations around cannabis and coca reform, and his influence extends far beyond the pages of his publications. It lives on in the policies that have changed, the people he has mentored, and the countless advocates and scholars whose work has been informed by his own.

While Martin’s official retirement is at the end of this month, I suspect everyone who knows him understands that it is unlikely to be the final chapter of his contributions. Whether through writing, public engagement, advocacy, or simply continuing to mentor the next generation, I have little doubt that Martin will remain one of the most influential voices in drug policy. His lifelong commitment has never been about an institution or a title—it has been about building drug policies that promote health and human welfare, respect local cultures and traditions, and are grounded in evidence rather than ideology. That mission does not end with retirement.

I know firsthand that my own work advancing thoughtful, evidence-based cannabis policy would not exist in its current form without Martin’s generosity, guidance, and intellectual leadership. I count myself extraordinarily fortunate to know him, let along to have learned from him or so many years. I hope that over the course of my career I can have even a small fraction of the impact he has had on this field.

Thank you, Martin, for your remarkable contributions to global drug policy, for your generosity as a teacher and mentor, and for believing that investing your time in a young law clerk was worthwhile. Your legacy is already secure, but I am confident your influence is far from over. Congratulations on a well-earned retirement, and best wishes for whatever comes next. I, for one, look forward to seeing where your next chapter leads.

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Meet the daddy of Granddaddy Purple

Granddaddy Purple is a living legend. Personally, it was the strain that defined my transition into adulthood, from going non-verbal before first-period calculus to unwinding after long workdays. More than two decades after its release, GDP maintains its aspirational role, celebrated for its striking violet hues, candy-grape aroma, and deeply relaxing effects. I sat down […]

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Join Jason Adelstone Tomorrow for The Cannabis Brief LIVE: Cannabis Rescheduling After the Hearing

Tomorrow morning at 10:00 a.m. PT, Harris Sliwoski attorney Jason Adelstone will join fellow cannabis industry professionals for a live webinar, The Cannabis Brief LIVE: Cannabis Rescheduling After the Hearing.

The discussion will examine where federal cannabis rescheduling stands following the DEA administrative hearing process, what recent developments mean for the industry, and what cannabis businesses should be watching in the months ahead. Panelists will also discuss the practical implications for operators as the regulatory landscape continues to evolve.

Jason regularly advises cannabis businesses on licensing, regulatory compliance, commercial transactions, and day-to-day operational issues. As a member of Harris Sliwoski’s nationally recognized cannabis practice, he helps clients navigate complex legal and regulatory challenges with practical, business-focused guidance.

Whether you’re a cannabis operator, investor, entrepreneur, or industry professional, this webinar is an excellent opportunity to hear from experienced practitioners on one of the most closely watched issues facing the industry today.

The webinar begins tomorrow at 10:00 a.m. PT. Registration is free, and you can reserve your spot here.

We hope you’ll join Jason and the rest of the panel for what promises to be a timely discussion of the latest developments surrounding cannabis rescheduling and their potential impact on the industry.

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Five photoperiod Fast Buds strains built for resin, terpenes, and yield

Fast Buds built its photoperiod collection around the traits modern growers value most: resin production, terpene expression, consistency, and yield. While photoperiod cannabis seeds offer growers complete control over cultivation, the genetics behind them ultimately determine the quality of the final harvest. Built for resin production Exceptional resin production is one of the defining characteristics […]

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Harris Sliwoski Welcomes Jared Schwass

Harris Sliwoski is pleased to announce that Jared Schwass has joined the firm as an attorney in our California office.

Jared advises entrepreneurs, investors, startups, and established companies operating in highly regulated industries, with a particular focus on the cannabis sector. His practice includes corporate transactions, mergers and acquisitions, regulatory compliance, licensing, land use, and outside general counsel services.

Before joining Harris Sliwoski, Jared served as lead California regulatory counsel at a top Am Law 100 firm, where he advised some of the nation’s largest cannabis companies on licensing, compliance, land use, enforcement matters, and regulatory due diligence for mergers and acquisitions. Throughout his career, he has worked on transactions representing billions of dollars in aggregate cannabis industry deal value.

Jared also brings valuable government experience to the firm. As Deputy County Counsel for Mendocino County, he advised on the development, interpretation, and implementation of local cannabis regulations, providing firsthand insight into how regulatory agencies approach licensing, compliance, and policy development.

Most recently, Jared founded and led his own practice, serving as outside general counsel to regulated businesses throughout California. He advised clients on corporate governance, commercial agreements, regulatory strategy, and business expansion, helping companies navigate every stage of growth—from local permitting to multi-state operations.

Jared’s addition further strengthens Harris Sliwoski’s nationally recognized cannabis and corporate practices, expanding our ability to help clients navigate complex regulatory frameworks, sophisticated transactions, and strategic business growth in California and across the United States.

Welcome, Jared!

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