Tuesday, August 4, 2026

DCC License Conversions After Rescheduling: How and When to Split A/M Licenses in California

DCC license conversions after rescheduling: how and when to split A/M licenses in California

When obtaining a California cannabis licenses, operators had to decide whether to operate under an adult-use license, a medicinal license, or a combined A/M structure. However, what once looked like a routine licensing question with a simple answer now affects tax planning, federal compliance, and supply-chain viability. For some businesses, converting or splitting licenses may help align their operations with Schedule III medical activity and better 280E positioning. For others, rushing into a conversion could create new compliance problems.

Why license structure matters now

The federal government’s April 2026 rescheduling action created a path for qualifying medical cannabis activity to move outside the full reach of Internal Revenue Code Section 280E. Adult-use activity, however, remains subject to the same punitive tax treatment. That makes the distinction between medical cannabis and adult-use cannabis more important than before.

Many businesses have treated A, M, and combined A/M designations as mostly administrative. After rescheduling, those choices may affect whether a company can credibly position part of its business as medical, whether it can support a future DEA registration, and whether its books and records can sustain a defensible allocation between medical and adult-use activity.

What changed under the DCC rules

As mentioned in our prior post, the DCC’s 2026 emergency regulations allow operators to revisit license designations outside the annual renewal cycle and restructure existing operations more easily. For businesses holding combined A/M licenses, that creates an opportunity to separate adult-use and medicinal activity more clearly and efficiently.

In the right case, a cleaner split can support better accounting, stronger compliance controls, and a more coherent medical-only posture.

Why some operators should consider conversion or splitting

The strongest reason is tax planning. If a meaningful part of the business may qualify as medical under the new federal framework, a clearer medicinal structure may help support that position. That does not guarantee 280E relief, but it puts the operator in a better position than a business trying to claim medical treatment while maintaining a blurred structure.

Operators considering DEA registration should be asking whether their business actually looks like a medical operation. A separate medicinal license, distinct inventory controls, and medical-specific procedures can bolster your position.

A distinct medicinal structure may also help with patient branding, financings, or sale transactions where buyers want cleaner separation between medical and adult-use operations.

The supply-chain issue operators cannot ignore

If a retailer wants to truly create a split between its medical and adult-use operation, the same logic should apply upstream: cultivators, manufacturers, and distributors should also have an isolated medical license or a medical operation clearly separate from adult-use activity. A strategy for a medicinal retailer is harder to defend if the product moves through businesses that blur medical and adult-use operations at every step along the supply chain.

This creates a chain-wide segregation issue. A retailer may split its licenses, but if cultivators, distributors, or manufacturers do not separate medical product, maintain distinct records, and structure their licenses accordingly, the medical model may exist only at the point of sale. That weakens both the compliance and the tax posture as a medical-only operation.

For California businesses, conversion analysis should include a full supply-chain audit. Before restructuring around a medical-only strategy, operators should identify which partners down the supply chain can support a separate medical channel and which cannot. If the answer is very few, a premature conversion may create complexity without much benefit.

Common pitfalls

The first mistake is treating conversion as purely a tax move. Yes, 280E matters, but weak operations can turn a good theory into audit risk. The second mistake is assuming a medicinal license alone solves the DEA issue. It does not; federal alignment depends on how the business actually operates and how product moves through the supply chain.

Another common problem is failing to align local permits, leases, and vendor contracts with the new structure.

Who should move now, and who should wait

Operators with real medical patient volume, serious interest in DEA registration, and a supply chain that can align with the medical only framework are the strongest candidates for immediate action. The same is true for businesses preparing for financing, sale, or restructuring.

By contrast, purely adult-use retailers with little medical demand may be better off waiting. So may businesses whose suppliers lack medical operations, and businesses that lack the internal systems needed to support clean separation of medical and adult-use activity.

Practical next steps

Before pursuing a conversion or split, licenses California cannabis businesses should ask:

  • Does the business have enough genuine, medical cannabis activity to justify a medicinal strategy?
  • Can accounting, inventory, and SOPs support a defensible separation between medical and adult-use activity?
  • Is the supply chain capable of moving toward medical cannabis only?
  • Do local permits, leases, and contracts support the proposed change?

If the answers are favorable, a conversion may be worth pursuing now. If not, prepare first and file later. Businesses most likely to benefit from rescheduling will treat licensing, tax, and supply-chain analysis as one strategy.

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

The post DCC License Conversions After Rescheduling: How and When to Split A/M Licenses in California appeared first on Harris Sliwoski LLP.



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Monday, August 3, 2026

The Contradictions of Cannabis Law: From the United States to International Treaties

Cannabis law has never been more contradictory. In the U.S., federal and state governments often regulate identical products under completely different legal frameworks. Hemp and marijuana can produce the same intoxicating effects, yet lawmakers treat them as fundamentally different. Medical marijuana now occupies a unique place under federal law while adult use marijuana remains prohibited. Internationally, countries continue to expand legalization, despite treaty obligations that appear to prohibit it.

Viewed individually, each of these developments seems difficult enough to understand. Viewed together, they reveal a much larger problem. Cannabis law no longer operates as a coherent legal system. Instead, it has become a patchwork of statutes, regulations, court decisions, and international obligations that often conflict with and contradict one another.

That complexity makes it easy to focus on the latest headline and lose sight of the broader legal landscape. This article steps back and examines where cannabis stands today. It looks at the current state of marijuana and hemp regulation in the U.S., and the international legal framework that continues to influence cannabis policy around the world.

Nomenclature: cannabis, marijuana and hemp

Before discussing the law, I want to explain how I use the terms cannabis, marijuana, and hemp. I choose each word deliberately because each carries a different legal meaning.

I use cannabis when referring to the plant as a whole, including both hemp and marijuana. I also use the term when discussing international law because the international treaties regulate cannabis rather than hemp and marijuana as separate legal categories.

I use marijuana when referring to cannabis or cannabis products that exceed 0.3 percent THC under current U.S. federal law, or 0.4 milligrams THC under the forthcoming federal definition.

I use hemp when referring to cannabis or cannabis products that fall below those statutory thresholds. With the exception of cannabis, which only some states define by statute, these definitions come directly from federal law.

Many people use the terms cannabis and hemp as though they describe different plants. They do not. Hemp is cannabis. Marijuana is cannabis. Saying marijuana and cannabis, or hemp and cannabis doesn’t make sense. Especially when talking about laws and regulations.

I also recognize the ongoing debate surrounding the word marijuana. Some argue that the term has racist origins and should disappear from modern legal and public policy discussions. The historical record, however, is more nuanced than that argument suggests.

Historian Isaac Campos, Professor of Latin American History at the University of Cincinnati and author of Home Grown: Marijuana and the Origins of Mexico’s War on Drugs, compares the word marijuana to the word salsa. Just as salsa refers to a particular type of sauce rather than sauce generally, marijuana developed as a specific term for a particular cannabis product. Whether one agrees with its use or not, replacing every instance of marijuana with cannabis creates practical problems because modern statutes regulate hemp and marijuana differently.

For that reason, I use these terms according to their legal definitions rather than their political appeal.

I also understand why many advocates prefer the word cannabis. It often sounds more scientific, less controversial, and more acceptable to audiences that still associate marijuana with criminality. That may be an effective communications strategy. It is not always the most accurate legal terminology.

Until lawmakers replace today’s arbitrary THC thresholds with a more rational system, legal precision matters. Whether the future framework distinguishes between intoxicating and non-intoxicating cannabis, or adopts another approach altogether, I will continue to use the terminology that best reflects the law as it exists.

The mess with U.S. cannabis regulation

Hemp

No area of cannabis law better illustrates the inconsistencies in the American legal system than hemp. Today, federal and state law regulate intoxicating THC products based on where the THC came from instead of what the product actually does. If a manufacturer derives THC from hemp, one set of rules applies, or sometimes no rules apply. If the same manufacturer derives an identical cannabinoid from marijuana, an entirely different–and far more restrictive–regulatory framework controls.

That distinction doesn’t make any sense. Consumers experience the same intoxicating effects regardless of the source of the cannabinoid. The law, however, treats those products as though they are fundamentally different. The consequences extend well beyond intoxicating hemp products.

Industrial hemp has become collateral damage in the fight over intoxicating cannabinoids. Laws and regulations frequently target all hemp products when they attempting to just regulate intoxicating THC. Although some laws distinguish between industrial hemp and intoxicating products, those efforts rarely go far enough. Industrial hemp continues to carry the stigma created by products that have little in common with fiber, grain, or other traditional hemp uses. That confusion has slowed investment, discouraged innovation, and prevented industrial hemp from reaching its economic potential.

Congress is now preparing to make the legal landscape even more complicated, but somewhat more sensible. On November 12, 2026, the federal definition of hemp will change. Biomass will remain subject to the familiar 0.3 percent THC threshold. Finished products, however, will shift to a new 0.4 milligram THC standard. If that change takes effect as written, it will eliminate 95% of hemp products (both intoxicating and non-intoxicating) currently on the market. While the 0.4mg threshold is arbitrary and not really based on anything, the new law at least puts intoxicating hemp back into the definition of marijuana. This is where it should be. Again, the distinction should be intoxicants versus non intoxicants.

The legislation, however, creates another contradiction. Marijuana seeds, which currently qualify as hemp because they contain only trace amounts of THC, will become marijuana under the new definition. Marijuana tissue cultures and clones, however, will remain hemp. The result is difficult to explain. A marijuana clone (testing no greater than 0.3% THC) taken from a schedule I marijuana seed, is non-scheduled hemp. Then, at some point during its growth cycle, that same clone becomes marijuana again. I struggle to identify the legal or scientific principle that justifies the result.

Not surprisingly, the hemp industry has mounted an aggressive lobbying campaign. Industry groups want Congress to delay implementation or replace the ban with a comprehensive regulatory framework for consumable hemp products. The White House has publicly supported repealing the ban. Recently, I have heard from numerous sources that White House Chief of Staff Susie Wiles is pushing hard for a three-week extension while lawmakers negotiate a longer-term solution through the continuing resolution expected during the December lame duck session. Senate Majority Leader John Thune reportedly supports that effort, improving the industry’s chances. I have heard this optimism many times before though, so who knows what’s true.

The marijuana industry has little reason to celebrate those developments. Multi-state operators have spent years competing against hemp businesses selling products that often produce the same effects as marijuana while operating under a far less restrictive regulatory system. From their perspective, Congress should not preserve an unintended loophole.

Both industries make legitimate arguments, though the hemp industry has a much shorter leg to stand on. Neither, however, address the underlying problem. The law regulates the source of the cannabinoid instead of the finished product. That approach has produced two competing markets for finished products that are often chemically indistinguishable.

This may be an unpopular position, but I believe the hemp ban must take effect if we want genuine cannabis reform. The current divide between hemp and marijuana has fractured the industry, created competing political interests, and allowed harmful unregulated hemp products to become the face of the cannabis movement. As long as one side benefits from a separate regulatory framework, there is little incentive to pursue comprehensive reform. Only when both industries operate under the same legal burdens can they unite behind a common sense framework for all cannabis. Until then, the industry will remain divided, making meaningful reform far more difficult to achieve.

Ultimately, lawmakers should stop asking whether a product comes from hemp or marijuana. They should ask whether the product is intoxicating or not. That distinction reflects science, consumer experience, and sound public policy. The current framework reflects none of those things.

The argument over what constitutes a low dose

The cannabis industry cannot build consumer trust if it refuses to acknowledge what intoxication looks like. One of the industry’s biggest mistakes has been its effort to redefine the term “low dose.” Some hemp advocates argue that up to ten milligrams of THC qualifies as low dose.

This messaging is dangerous and irresponsible. Ten milligrams is high-dose, period. Five milligrams will be intoxicating for many consumers. Calling those amounts “low dose” does not change the experience of the person consuming it. That position also hurts the broader legalization movement. Every new cannabis consumer arrives with different expectations and a different tolerance. Many have never consumed THC before. Others remain skeptical about cannabis altogether.

Their first experience matters. If that first experience leaves someone feeling anxious, overwhelmed, or far more intoxicated than expected, they are less likely to become repeat consumers. They are also more likely to tell friends and family that cannabis is not for them, or worse yet, harmful.

The industry should not be careless about how much THC it should sell. It should instead focus on how many consumers have a safe and positive first experience. For that reason, I believe a true low dose should not exceed 2.5 milligrams of THC.

Even at that level, some consumers will experience intoxication while many others will not. More importantly, 2.5 milligrams provides a far more appropriate starting point for people who are unfamiliar with cannabis. It also establishes a practical benchmark for responsible consumption.

One of the industry’s greatest challenges is that consumers have no reliable way to measure THC intoxication. Unlike alcohol, there is no cannabis equivalent of a breathalyzer. Nor is there a widely accepted rule of thumb that helps people understand when they may be impaired. Consumers must instead rely on their own judgment, which can be especially difficult for those with little or no experience using THC.

The industry should work toward changing this paradigm, especially when claiming a product is low dose. Consumers need a simple, conservative standard that encourages responsible use and sets realistic expectations. Most alcohol consumers understand that one standard drink consumed slowly over the course of a meal presents a different risk than consuming several drinks in quick succession. Cannabis should strive for a similar framework. A single 2.5 milligram beverage consumed gradually over dinner is generally less likely to produce an unexpectedly intense experience than multiple, higher dose products consumed over the same period.

A dosing standard would give consumers a practical point of reference as they learn how THC affects them. It also promises flexibility. Someone who wants five or ten milligrams when only low-dose options are available can simply consume two or four 2.5 milligram beverages. The opposite is much harder. A consumer who wants only 2.5 milligrams but can only purchase a 5 or 10 milligram beverage must estimate a partial serving, with no reliable way to know how much THC they actually consumed. Standardizing 2.5 milligram servings (as low dose) would give consumers greater control over their dose rather than forcing them to guess.

Now, I know many people will say, well these low-dose proposals allow up-to 5 or 10 milligrams, so there is a place for 2.5 milligrams. The problem there is that the industry focuses more and more on high-THC products, pushing out low-dose options.

If the cannabis industry truly wants normalization, it must stop defining success by potency and start defining success by predictability and new customer engagements. Consumers should know what to expect before they consume a product. A widely accepted low dose standard (that is actually low dose), would improve consumer confidence, encourage responsible use, and make cannabis more approachable for the millions of people who have yet to try it.

Lower doses may also reduce some of the unpleasant experiences associated with combining THC and alcohol. More research is needed before drawing firm conclusions, but common sense suggests that lower doses present fewer risks than higher ones.

The cannabis industry often talks about normalization. Normalization starts with responsible products and realistic expectations. Consumers deserve honest labeling. They should know when a product is likely to intoxicate them. Calling an intoxicating dose “low dose” does the opposite.

Demand for high potency products will always exist. I have no objection. Consumers, though, should have the freedom to choose the products that best fit their preferences and tolerance. The problem arises when the industry markets those products as appropriate entry points for new consumers. That approach serves neither the consumer nor the long-term interests of the cannabis industry.

Marijuana

The same contradictions that plague hemp regulation also define modern marijuana law. Today, I can walk into a dispensary in Colorado and purchase a medical marijuana product that qualifies as federally lawful under Schedule III (assuming compliance with state law). I can also walk in as an adult-use customer and purchase the exact same product that remains a Schedule I controlled substance. The products are identical; they are just sold separately.

That is a remarkable place for federal law to be. Adult use marijuana is now legal in 24 states and the District of Columbia. Forty-one states and the District of Columbia authorize medical marijuana. Another eight states operate more limited medical cannabis programs. Idaho remains the only state that prohibits cannabis in every form, except truly industrial hemp.

As we have discussed in many blogs over the past few months (see links at the end of this post), state legal medical marijuana currently sits in Schedule III of the Controlled Substances Act. Although the D.C. Circuit could ultimately vacate the Attorney General’s final order, the current framework has already produced consequences that few people predicted.

State licensed medical marijuana operators that submitted DEA registration applications during the expedited registration period now occupy a fundamentally different position under federal law, assuming they continue complying with applicable state requirements. A simple filing with the DEA made state legal medical marijuana operators legal, while the agency reviews their applications.

Only a few years ago, that statement would have sounded impossible. The changes extend beyond paperwork. DEA agents now visit state licensed marijuana facilities to conduct inspections rather than raids. That shift says more about the evolution of federal cannabis policy than almost any statute or court decision. Significant questions remain unanswered, however.

One conclusion, however, is difficult to dispute. Federal marijuana policy has entered a period of rapid change. The legal framework remains unsettled, but the direction is clear. Cannabis law continues to move away from prohibition and toward regulation, even if that progress occurs one inconsistent step at a time.

Medical marijuana versus marijuana

Perhaps the most confusing aspect of marijuana policy today is the relationship between the medical marijuana final order and the separate DEA rescheduling for marijuana.

Many people assume the hearing concerns only adult-use marijuana because state legal medical marijuana has already been moved to Schedule III. That interpretation is understandable, but it is not what the hearing is about. The hearing addresses whether marijuana, as a Schedule I controlled substance, should be rescheduled under the Controlled Substances Act. In other words, the Administrative Law Judge (“ALJ”) is considering whether all marijuana that remains in Schedule I should move to Schedule III. If the D.C. Circuit ultimately vacates the medical marijuana final order, the outcome of the rescheduling hearing could still result in all marijuana–including medical marijuana–being placed in Schedule III if DEA adopts that recommendation.

That is where things become confusing. DEA has already concluded, through the medical marijuana final order, that state legal medical marijuana has accepted medical use and therefore belongs in Schedule III. Yet it has also asked an ALJ to determine whether marijuana has accepted medical use, even though the very category of marijuana that DEA already found to have accepted medical use is no longer part of the proceeding.

That procedural posture creates a difficult question. Under the CSA, a substance cannot be removed from Schedule I unless it has a currently accepted medical use. By excluding state legal medical marijuana from the rescheduling hearing, the ALJ must evaluate the medical efficacy of the remaining category of marijuana without considering the very evidence that supported DEA’s earlier determination. Depending on how the ALJ approaches that question, the recommendation could be to leave marijuana in Schedule I, move it to Schedule II, or move it to Schedule III.

Regardless of the ultimate recommendation, the existence of these parallel proceedings highlights just how untenable the current regulatory landscape has become. DEA has already recognized accepted medical use for one category of marijuana while simultaneously asking whether marijuana has accepted medical use, at all.

Cannabis regulation internationally

The inconsistencies in cannabis law do not stop at the U.S. They extend throughout the international legal system. The U.S. was the architect of international cannabis policy under the Single Convention on Narcotic Drugs, which has shaped U.S. cannabis policy for decades. The Attorney General relied heavily on international drug treaties when issuing the final order governing state legal medical marijuana. Despite the current degradation of international law by the U.S. , those treaties continue to influence how governments around the world, including the U.S., approach cannabis reform.

Cannabis appears in Schedule I of the Single Convention. THC and other cannabinoids appear separately in Schedule II of the 1971 Convention on Psychotropic Substances. Together with the 1988 Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, these agreements make up the international drug control treaties. For purposes of this discussion, however, the Single Convention and the 1971 Convention are our focus. Those treaties limit cannabis to exclusively medical, scientific, and industrial purposes. The Official Commentary to the Single Convention also makes clear this exclusive limitation.

The real world, however, tells a different story. Countries have found multiple ways to liberalize cannabis laws without abandoning the treaty system. Canada and Uruguay adopted comprehensive adult use legalization. The Netherlands and Switzerland created scientific pilot programs to study regulated adult use markets and supply chains. Germany, Malta, Czechia, and Luxembourg authorized more limited reforms that emphasize home cultivation, personal possession, and cannabis social clubs. The Netherlands, Italy, and Spain, rely on nonenforcement policies rather than formal legalization, although several have recently begun tightening those approaches.

Thailand chose another path altogether. It removed the cannabis plant from scheduling entirely. Problematically, this was done before creating a comprehensive regulatory framework, which has caused a backlash to descheduling. That experience illustrates the risks of legalizing first and regulating later.

The U.S. presents its own contradiction. Almost half of the states have legalized adult use marijuana while the federal government remains a party to treaties that generally prohibit those programs. For years, however, the United States has maintained that state legalization does not violate its treaty obligations. Officials in the Obama, Trump, and Biden administrations have consistently argued that the drug treaties regulate the conduct of nations rather than the internal allocation of authority within a federal system. Pat Prugh was the first to vocalize this position publicly. Ms. Prugh, who served multiple times as the State Department’s representative to the Commission on Narcotic Drugs, explained this position during the Biden Administration, noting that the treaties are outward looking and govern relations between states rather than domestic constitutional structures (the video has since been removed).

Although that explanation has not persuaded many countries or drug policy reform advocates, the treaties themselves recognize that constitutional limitations may affect a nation’s ability to fully implement their provisions. In the U.S., principles of federalism prevent the federal government from requiring states to criminalize marijuana. That position, however, becomes much more difficult to maintain now that the federal government has affirmatively moved forward with state legal medical marijuana. The federal government has chosen to recognize and regulate medical marijuana itself, making treaty compliance a far more complicated question for medical use.

That raises an obvious question. If the treaties prohibit adult use legalization, why have so many countries moved forward? The answer is practical rather than theoretical. Amending the drug treaties to allow for adult-use or to remove cannabis all together would require unanimous international consensus. That outcome remains highly unlikely and probably impossible. Instead of waiting for formal treaty reform, countries have developed legal theories that permit greater flexibility while preserving the overall treaty system.

Canada and Uruguay provide the best examples. Both countries grounded legalization in the drug treaties’ overarching objective (and the objective of all international law) of protecting the health and welfare of society. Although each government used different reasoning, both concluded that regulated legalization better serves public health than prohibition. Neither country has faced meaningful international consequences.

Switzerland, Malta, Luxembourg, Czechia, and the Netherlands have reached similar conclusions through different mechanisms. They rely on scientific pilot programs, decriminalization, social clubs, and home cultivation rather than full commercial legalization. Those programs have also proceeded without significant international opposition. Germany has taken another approach. It implemented a robust medical framework that resembles the early days of California’s medical marijuana program.

All of these examples show countries finding room for reform within the treaty structure. Governments considering legalization should study these models carefully. They demonstrate that reform does not require abandoning international law. It requires identifying legally defensible pathways within it.

Inter se modification

One option receives far less attention than it deserves. International law allows treaty parties to enter into separate agreements among themselves through a mechanism known as inter se treaty modification. Although inter se modification has been used (limitedly) in other treaty contexts, no nation has tested it under the international drug treaties.

The concept is relatively straightforward. A group of likeminded countries could agree to legalize and regulate the production, trade, and domestic sale of adult use marijuana among themselves while continuing to comply with their remaining treaty obligations toward countries that choose not to participate.

That approach fits comfortably within the broader objectives of the drug treaties. The treaties seek to ensure access to controlled substances for medical and scientific purposes while preventing diversion into unlawful markets. An inter se agreement would not authorize illicit trafficking. Rather, it would establish a lawful regulatory framework among participating countries. As long as those countries continued to satisfy their reporting obligations, ensured access for medical and scientific purposes, and prevented diversion into nonparticipating countries, a credible argument exists that such an agreement complies with international law.

And that is all you need – a credible argument. Inter se modification would not eliminate every legal question. In fact, many commentators argue that it cannot apply to the drug treaties. Others, like myself, disagree. The important point is that international law does not clearly foreclose the argument. That distinction matters. Most major cannabis reforms adopted over the past several decades has rested on a legal theory that the International Narcotics Control Board (“INCB”) believes exceeds the limits of the treaties. No country implementing such reforms has faced any repercussions. Medical marijuana, adult use legalization, scientific pilot programs, cannabis social clubs, and home cultivation all began as legal arguments with enough justification to support the domestic law change. Inter se modification is no different.

Unlike many existing approaches, inter se modification would not ask countries to ignore the treaties or reinterpret them beyond recognition. It would rely on an established mechanism within international law itself. Rather than undermining the treaty system, it would acknowledge that the treaties remain binding, while using one of international law’s recognized procedures to accommodate changing public policy. If the goal is to create a lawful framework for international adult use cannabis commerce without repealing or amending decades old treaties, inter se modification deserves serious consideration.

The public health arguments proposed by Canada and Uruguay continue to be sported by evidence. Canada, Switzerland, and U.S. state programs continue to report encouraging outcomes, including steady or reduced youth access, declining alcohol and tobacco consumption, and shrinking illicit markets. Those developments strengthen both the legal and policy arguments for alternate approached to cannabis legalization.

How would the U.S. comply with drug treaties under the new medical marijuana framework?

If DEA begins issuing registrations, the U.S. will have to comply with several obligations imposed by the international drug treaties. Those obligations extend far beyond simply authorizing cultivation and sales. The Attorney General already outlined some of the obligations in its final order. But they also include various reporting requirements on cultivation, production, and diversion, establishing annual estimates and quarterly updates, issuing import and export permits, and complying with oversight requirements. All of these obligations are overseen by the INCB.

Rather than make this post even longer than it already is (thank your for even getting this far), I want to focus on just one of those requirements, quotas, because they will likely have the greatest practical impact on registered operators.

Quotas

The drug treaties require countries to submit annual estimates to the INCB covering expected cultivation, production, imports, exports, and other controlled activities. Although governments, including the U.S., commonly refer to these estimates as “quotas,” the treaties themselves use the term “estimates.”

That distinction matters. Many people assume quotas function as hard production caps. They do not. Countries may revise their estimates whenever circumstances change by submitting supplemental estimates to the INCB. The system was designed to accommodate changing demand rather than freeze production at a fixed number.

The domestic reality presents a much more difficult question. Before a registrant can cultivate, process, or distribute medical marijuana, DEA will need to assign that registrant a production quota. This is currently done on a per order basis for Schedule I marijuana bulk manufacturers. Obviously, under the new medical marijuana regime, that would be impractical. An annual quota per business or state makes the most sense. The obvious question is how DEA will determine those quotas during the program’s first year.

Historical sales data provides little guidance. In states with both medical and adult use markets, most regulated sales occur through adult use businesses. California provides a good example. If DEA relies solely on historical medical sales, many registrants will receive quotas that bear little resemblance to future demand under the new federal framework.

The problem becomes even more significant if medical marijuana begins replacing portions of today’s adult use market. I believe that shift will likely be substantial–not because consumer demand will suddenly change, but because businesses and legislatures will have strong incentives to prioritize federally recognized medical programs over state only adult use systems. For that reason, I believe DEA should resist the temptation to overengineer the first year’s quotas.

The U.S. must submit estimates to the INCB, but estimates should reflect actual market conditions whenever possible. At the outset, no one knows what the new medical marijuana market will look like. Any estimate submitted today will rely entirely on assumptions rather than evidence. A better approach would be for the United States to adopt what Martin Jelsma and John Walsh have described as “respectful non-compliance”. Under that approach, the U.S. would comply with its treaty obligations, except the initial estimate requirement (and of course the state legal adult-use markets, which this does not apply to). After one year of actual program operation, the government would start submitting estimates based on real production and demand rather than speculation. That approach would produce more accurate estimates while demonstrating good faith compliance with the broader treaty framework.

DEA will also need to decide how it administers quotas after the program begins. Will quotas function as flexible estimates that operators can modify as market conditions change, or will DEA treat them as fixed production limits? Hopefully they choose the former.

Some observers worry that DEA will use quotas to artificially restrict production. I am less concerned about that possibility, but it could happen. If DEA sets quotas too low, many operators will simply conclude that federal registration is not economically viable and surrender their registrations. A quota system that prevents businesses from operating profitably ultimately undermines the federal medical marijuana program itself.

DEA still has numerous questions to answer before the program becomes operational. Quotas represent only one example. Import permits, export permits, cultivation and production reporting, inventory controls, labeling, destruction of product, and treaty reporting obligations all remain unresolved.

One thing, however, is already clear. DEA understands that treaty compliance is no longer an academic exercise. The final order and the agency’s ongoing implementation efforts demonstrate that these questions have moved from the classroom to the real world. The challenge now is developing a framework that satisfies international obligations without undermining the very program the agency has created.

Conclusion

Cannabis law has reached an inflection point. For decades, policymakers have layered new laws, regulations, and interpretations onto a prohibition framework that ignores reality. The result is a legal system filled with contradictions. Identical products receive different treatment based solely on their statutory classification. Federal and state governments increasingly pursue different policy objectives. Countries around the world continue expanding cannabis reform, yet remain parties to treaties drafted more than 60 years ago.

The contradictions are becoming harder to ignore. The U.S. now faces challenges that extend far beyond the traditional legalization debate. DEA must determine how to implement a federally recognized medical marijuana program while complying with international treaty obligations. Regulators must establish production estimates, administer quotas, oversee imports and exports, and answer questions that no previous administration has confronted. At the same time, Congress continues searching for a workable solution to the divide between hemp and marijuana, a distinction that often bears little relationship to science or consumer experience.

The international community faces a similar challenge. Countries increasingly recognize that prohibition has failed to achieve many of its stated objectives, yet meaningful amendment of the drug treaties remains politically impossible. As a result, governments have begun developing legal frameworks that preserve respect for international law while allowing domestic cannabis reform to continue. Whether through public health justifications, scientific pilot programs, constitutional federalism, or as I hope to see one day soon, inter se modification, the trend is unmistakable. Many countries are no longer asking whether reform is possible. They are asking how to accomplish it within the existing legal framework.

That, in my view, is the conversation that matters. The future of cannabis policy should not turn on arbitrary THC thresholds, outdated terminology, or whether a cannabinoid originated from hemp or marijuana. It should focus on creating coherent legal frameworks that protect public health, provide regulatory certainty, satisfy international obligations, and reflect the realities of modern cannabis markets.

The legal landscape will continue to evolve. Courts will issue new decisions. Congress will amend existing statutes. DEA will refine its regulatory framework, or a future administration might eliminate it all together. All the while, countries will continue testing the limits of the international drug treaties.

The question is no longer whether cannabis law will change. It will. The real question is whether lawmakers and regulators will finally replace today’s “reefer madness” informed patchwork of inconsistent rules with a legal framework that is logical, predictable, and capable of supporting the regulated cannabis industry that already exists.

The post The Contradictions of Cannabis Law: From the United States to International Treaties appeared first on Harris Sliwoski LLP.



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Friday, July 31, 2026

Star signs and cannabis strains: August 2026 horoscopes

It’s eclipse season, Stargazers! Your August 2026 horoscope tells you which direction the sun and moon should guide you.

The post Star signs and cannabis strains: August 2026 horoscopes appeared first on Leafly.



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Tuesday, July 28, 2026

What California Operators Must Do After Rescheduling: DEA Registration, License Restructuring, and 280E

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



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Friday, July 24, 2026

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



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Thursday, July 23, 2026

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.

The post Celebrating Martin Jelsma’s Retirement and Extraordinary Legacy appeared first on Harris Sliwoski LLP.



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Tuesday, July 21, 2026

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 […]

The post Meet the daddy of Granddaddy Purple appeared first on Leafly.



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