On April 22, 2026, the Department of Justice (DOJ) issued a final order that places only limited categories of marijuana-related products into Schedule III under the Controlled Substances Act: (1) Food and Drug Administration (FDA)-approved drug products containing marijuana and (2) marijuana (and certain related materials) that are subject to a qualifying state-issued medical marijuana license.

This is a meaningful compliance and business shift for state medical marijuana programs and FDA‑approved products.

It is not full legalization; marijuana outside those categories (including adult‑use or recreational) remains Schedule I under federal law.

This update applies to businesses operating under a state medical marijuana licensing framework and to entities handling FDA‑approved marijuana drug products.

Employers outside the cannabis industry should note that most marijuana activity remains illegal under federal law, including for workplace and safety‑sensitive positions. The final order is effective April 22, 2026.

What Employers Need to Do

1) Determine Whether the Organization is in Scope of the Final Order: Confirm whether any activity involves FDA-approved marijuana drug products or is conducted under a qualifying state medical marijuana license, because only those channels are covered by the Schedule III change.

2) Prepare for Tax Guidance and Update the Tax Workplan: Engage tax counsel to assess how Treasury/IRS’s forthcoming guidance may affect deductions/credits, including how IRC § 280E applies to multi-activity operations and any required allocation methods.

3) Monitor the Broader Rescheduling Hearing and Participation Requirements: Track the June 29, 2026, hearing and related participation deadlines if the business plans to participate; follow the hearing notice instructions and reference Docket No. DEA-1362 in submissions.

4) Review Workplace Policies for Medical-use Disclosures and Safety-sensitive Roles: Evaluate whether HR and safety procedures appropriately address employee disclosures and job-related safety assessments, given that federal scheduling has shifted for certain medical channels while adult-use remains Schedule I.

5) For Department of Transportation (DOT) Regulated Positions: Maintain Part 40 compliance and monitor the Office of Drug and Alcohol Policy and Compliance (ODAPC): Continue operating the DOT drug and alcohol testing program under 49 CFR Part 40 and monitor ODAPC for any updated direction related to rescheduling.

Overview

1) What Changed (Scope is Narrow): The final order moves limited categories of marijuana into Schedule III under federal law, but only within tightly controlled medical channels:

• FDA-approved marijuana drug products; and
• Marijuana regulated under a qualifying state medical marijuana license, including certain extracts and naturally derived delta-9 THC, only to the extent tied to those two channels.

2) How DOJ/DEA Moved Quickly (Treaty-based Authority): The Department of Justice (DOJ), acting through the Drug Enforcement Administration (DEA), proceeded under 21 U.S.C. § 811(d)(1), which allows expedited scheduling actions when necessary to meet U.S. obligations under international treaties, including the 1961 U.N. Single Convention on Narcotic Drugs.

3) What Did not Change

• Adult-use/recreational marijuana is not covered and remains Schedule I, as do other non-covered forms outside FDA approval and a qualifying state medical license.
• Analyses of the order also note synthetically derived THC is excluded from the change and remains Schedule I.

4) What’s Next Procedurally (Broader Rescheduling Remains Pending)

• DOJ/DEA announced a new administrative hearing beginning June 29, 2026, to consider broader rescheduling of marijuana from Schedule I to Schedule III.
• The hearing notice states the proceeding will begin June 29, 2026, and is scheduled to conclude no later than July 15, 2026, with participation instructions tied to Docket No. DEA-1362.

5) Federal tax follow-on (Treasury/IRS guidance forthcoming)

• Treasury and the IRS announced they plan to issue guidance addressing federal tax consequences and emphasized that IRC § 280E generally applies to Schedule I or II trafficking, so rescheduling can remove 280E as a bar for activities that no longer involve Schedule I or II substances under the final order.

• Treasury also signaled expected guidance on multi-activity businesses (e.g., apportioning expenses where some activities remain Schedule I/II) and a transition approach tied to the taxable year that includes the effective date of the final order.

Why This Matters

• For qualifying state medical and FDA-approved channels, Schedule III status can shift how stakeholders approach federal compliance, research access, and operational planning—while leaving a large portion of the broader cannabis market unchanged at Schedule I.

• Treasury/IRS has indicated the change is expected to produce significant tax consequences because 280E is tied to Schedule I/II trafficking, and guidance is forthcoming on how it applies (including for mixed operations).

Key Risks for Employers

• Scope Risk: Many marijuana-related activities remain Schedule I, including adult-use, and are not affected by the final order, so federal risk exposure may remain unchanged for non-covered operations.

• Tax Compliance Uncertainty (Near Term): Treasury/IRS guidance is still pending; businesses with multiple lines of activity may need careful segmentation and expense apportionment consistent with forthcoming guidance.

• Safety-sensitive Workforce Risk (DOT-regulated Roles): DOT’s drug and alcohol testing program is governed by 49 CFR Part 40; employers must continue complying with the current DOT framework and monitor ODAPC for post-rescheduling updates.

• Regulatory Uncertainty: Broader rescheduling is still pending through a separate administrative hearing process, and the outcome could further change compliance expectations.
  

Source Reference

• DOJ – Final Order – Rescheduling of Food and Drug Administration Approved Products Containing Marijuana and Products Containing Marijuana Subject to a Qualifying State-issued License From Schedule I to Schedule III; Corresponding Change to Permit Requirements
• Federal Register – Schedules of Controlled Substances: Rescheduling of Marijuana (Docket No. DEA-1362)

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