Author RN Collins

The 6th in a series of 10 articles for cannabis law report

Contact RN Collins: https://www.linkedin.com/in/rn-collins/

Federal Schedule III and State Cannabis Systems

Legislative Brief Series

I. Introduction

For more than fifty years, marijuana has occupied Schedule I of the federal Controlled Substances Act (CSA)—the most restrictive classification, reserved for substances deemed to have no accepted medical use and a high potential for abuse.¹ That classification has coexisted in deepening tension with a patchwork of state systems that now encompass, as of early 2026, twenty-four states and the District of Columbia permitting adult-use cannabis, and forty states plus the District authorizing medical use in some form.² The collision between federal prohibition and state licensure has generated persistent legal dysfunction across tax, banking, research, and enforcement domains.

The prospect of reclassification to Schedule III—advanced by a 2023 HHS recommendation, a 2024 DEA proposed rule, and a December 2025 presidential executive order—has remained procedurally stalled into 2026. This brief surveys the current legal framework, the full procedural history of the rescheduling effort through February 2026, the critical November 2025 federal hemp definition amendment that reshaped the broader cannabis-and-cannabinoids regulatory landscape, the practical consequences of a Schedule III transfer, and the principal areas of continued federal-state conflict that legislatures and regulators must address.

II. The Current Federal-State Legal Framework

A. Schedule I Status and Its Consequences

Congress placed marijuana in Schedule I in 1970 when it enacted the CSA.³ Schedule I substances are defined as those with a high potential for abuse, no currently accepted medical use in treatment in the United States, and a lack of accepted safety for use under medical supervision.⁴ The practical consequences of that classification for the modern cannabis industry have been severe and multidimensional.

The most financially punishing consequence has been the operation of Internal Revenue Code Section 280E.⁵ Enacted in 1982 in response to a Tax Court decision allowing a convicted cocaine trafficker to deduct ordinary business expenses, Section 280E prohibits any trade or business that consists of trafficking in Schedule I or II controlled substances from deducting ordinary and necessary business expenses from gross income.⁶ Because state-licensed cannabis businesses trade in a Schedule I substance, they are denied deductions for payroll, rent, utilities, insurance, marketing, and virtually all operating costs other than cost of goods sold—a regime that routinely produces effective federal tax rates of seventy percent or more.⁷ The result is that state-legal cannabis operators are taxed on gross income rather than net income, placing them at a structural financial disadvantage relative to every other lawfully operating industry.

Banking access presents a parallel problem. Federal anti-money laundering laws prohibit depository institutions from knowingly receiving proceeds of criminal activity.⁸ Because cannabis remains a Schedule I controlled substance, proceeds from cannabis sales technically constitute proceeds of a federal crime. This has caused the majority of large financial institutions to decline cannabis banking relationships, forcing many state-licensed operators into cash-only business models that generate public safety risks and undermine tax compliance.⁹ As of July 2025, a majority of state attorneys general—representing a bipartisan coalition—had written to Congressional leaders urging passage of the SAFER Banking Act, noting that regulated cannabis businesses then employed approximately 425,000 Americans nationwide and projected combined annual U.S. sales approaching $34 billion.¹⁰

Research barriers constitute a third domain of Schedule I harm. Schedule I substances are subject to the most restrictive DEA registration requirements, the most limited sourcing options, and the most burdensome protocol approval processes—barriers that have materially slowed clinical investigation of cannabis-derived therapeutics and deterred participation by academic medical centers and federally funded research institutions.¹¹

B. State Systems and the Federal-State Gap

Against the background of federal prohibition, states have constructed comprehensive licensing and regulatory systems that the federal government has, in practice, declined to dismantle. California was the first state to authorize medical use in 1996.¹² Since then, forty states and the District of Columbia have enacted medical programs of varying comprehensiveness, while twenty-four states and the District have legalized adult-use cannabis.¹³

The principal mechanism through which the federal government has accommodated state medical programs is the Rohrabacher-Blumenauer appropriations rider, first enacted in 2014, which prohibits the Department of Justice from using appropriated funds to prevent states from implementing their own medical marijuana laws.¹⁴ The rider does not apply to adult-use programs, and it requires annual Congressional reauthorization. As a rider to an appropriations measure rather than permanent statutory law, it provides no durable or judicially enforceable protection.

The Cole Memorandum, issued by Deputy Attorney General James M. Cole in August 2013, had established a policy of federal enforcement deprioritization for state-compliant cannabis activity, but it was rescinded by Attorney General Sessions in January 2018, demonstrating the fragility of executive policy as a substitute for legislative resolution of federal-state conflict.¹⁵

III. Procedural History of Rescheduling

A. The Biden-Era Administrative Process

In October 2022, President Biden directed the Secretary of HHS and the Attorney General to review marijuana’s scheduling status under the CSA.¹⁶ On August 29, 2023, the HHS Office of the Assistant Secretary for Health transmitted a formal recommendation to DEA recommending that marijuana be transferred from Schedule I to Schedule III.¹⁷ The recommendation was based on an eight-factor analysis conducted by the FDA, which determined that marijuana had a currently accepted medical use in treatment in the United States—a reversal of FDA’s 2016 finding—and a lower abuse potential relative to other Schedule I and II substances.¹⁸ The National Institute on Drug Abuse concurred with FDA’s recommendation.¹⁹

In April 2024, the DOJ Office of Legal Counsel issued an opinion concluding that neither international drug control treaties nor the CSA’s statutory text required marijuana to remain in Schedule I, and that HHS’s scientific and medical findings were entitled to significant deference by DEA in the rulemaking process.²⁰ On May 21, 2024, the Attorney General published a Notice of Proposed Rulemaking (NPRM) in the Federal Register proposing to transfer marijuana from Schedule I to Schedule III.²¹ The NPRM received approximately 43,000 public comments.²²

In August 2024, DEA announced it would hold an administrative law hearing on the proposed rule, scheduled to commence January 21, 2025.²³ The hearing process became ensnared in procedural disputes involving allegations of DEA bias and improper ex parte communications with anti-rescheduling designated participants. DEA Chief Administrative Law Judge John J. Mulrooney II granted an interlocutory appeal on January 13, 2025—eight days before the scheduled hearing start—canceling the proceedings and staying all proceedings pending resolution of the appeal, which was directed to the DEA Administrator.²⁴ Mulrooney ordered the parties to provide joint status reports every 90 days while the appeal remained pending.²⁵

B. 2025 Developments: New Administrator, Stalled Process, Executive Order

The Trump administration’s inauguration in January 2025 placed rescheduling on hold pending policy review. President Trump nominated Terrance Cole—a 22-year DEA veteran and former Virginia Secretary of Public Safety and Homeland Security—as the new DEA Administrator. During his April 2025 confirmation hearing, Cole told the Senate Judiciary Committee that reviewing the stalled rescheduling process would be “one of my first priorities” if confirmed.²⁶ He declined, however, to commit to the Schedule III outcome, stating he needed to “understand more where the agencies are, and look at the science behind it.”²⁷ The U.S. Senate confirmed Cole on July 22, 2025, by a 50-47 vote.²⁸ Notably, after confirmation, Cole omitted cannabis rescheduling from his publicly stated priority list, emphasizing instead his agency’s focus on dismantling drug cartels and addressing the fentanyl crisis.²⁹

Compounding the process delay, Chief ALJ Mulrooney retired effective August 1, 2025, leaving the DEA without an administrative law judge to preside over pending enforcement matters, including the stalled rescheduling proceedings.³⁰ Under the interlocutory appeal structure, it is now Administrator Cole—rather than any ALJ—who has sole discretion to resolve the pending appeal by setting a briefing schedule, entertaining oral arguments if he chooses, and issuing a binding written decision.³¹

On December 18, 2025, President Trump signed Executive Order 14370, entitled “Increasing Medical Marijuana and Cannabidiol Research.”³² The Order directed the Attorney General to “take all necessary steps to complete the rulemaking process related to rescheduling marijuana to Schedule III of the CSA in the most expeditious manner in accordance with Federal law, including 21 U.S.C. § 811.”³³ The Order does not itself reschedule marijuana—that authority rests with the DEA through formal rulemaking—but it signals the Trump Administration’s intent to accelerate the stalled administrative process.³⁴

The Order recited the factual predicate for rescheduling: more than 30,000 licensed healthcare practitioners across 43 jurisdictions are authorized to recommend medical use of marijuana for more than six million registered patients to treat at least fifteen medical conditions; FDA has found credible scientific support for marijuana in treating pain, anorexia related to certain medical conditions, and chemotherapy-induced nausea and vomiting; and NIDA has concurred with the FDA recommendation.³⁵ The Order separately directed the White House Deputy Chief of Staff to work with Congress to revise the statutory definition of hemp-derived cannabinoid products to allow access to appropriate full-spectrum CBD products, and directed HHS, FDA, CMS, and NIH to develop research methods utilizing real-world evidence to improve access to hemp-derived cannabinoid products.³⁶

On January 6, 2026, DEA publicly confirmed in a joint status report that the interlocutory appeal “remains pending with the Administrator” and that “[n]o briefing schedule has been set.”³⁷ This was the fourth joint status report filed by the parties with largely identical language—demonstrating that the executive order had not materially advanced the administrative process.³⁸ Legal analysts have identified three possible procedural pathways for completing rescheduling: (a) Administrator Cole resolves the interlocutory appeal and restarts the administrative hearing track; (b) DOJ invokes the “treaty exception” under 21 U.S.C. § 811(d)(1), permitting the Attorney General to bypass standard rulemaking procedures on the ground that schedule III placement is required to comply with international treaty obligations, offering a faster but more APA-vulnerable path; or (c) DOJ bypasses the hearing track entirely, finalizes the rule based on the existing comment record, and defends the procedural choice in APA litigation.³⁹

Litigation challenges under the APA are expected from organizations such as Smart Approaches to Marijuana, which has retained former Attorney General Bill Barr to pursue such challenges if a final rule is issued.⁴⁰

IV. The November 2025 Hemp Definition Amendment: A Major Collateral Development

An analytically significant development affecting the broader federal cannabis regulatory landscape that is not directly part of the marijuana rescheduling process is the November 2025 amendment to the federal definition of hemp. On November 12, 2025, Congress enacted and President Trump signed the Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026 (P.L. 119-37), which contained in Section 781 the most consequential federal hemp policy change since the 2018 Farm Bill.⁴¹

Under the 2018 Farm Bill, “hemp” was defined as the Cannabis sativa L. plant and any part of the plant with a delta-9 THC concentration of not more than 0.3 percent on a dry weight basis—a definition that excluded hemp and its derivatives from the CSA’s definition of marijuana, and was widely understood to create a “loophole” permitting products high in non-delta-9 cannabinoids such as delta-8 THC, THCA, delta-10 THC, and other isomers to be sold as legal hemp so long as delta-9 THC content remained below 0.3 percent.⁴² Section 781 of P.L. 119-37 amends the statutory definition to require that hemp contain a total THC concentration—encompassing THCA and all cannabinoids with similar effects to THC, as determined by HHS—of not more than 0.3 percent on a dry weight basis, and imposes a strict container-level cap for finished products: any final hemp-derived cannabinoid product with greater than 0.4 milligrams combined total THC per container will be excluded from the definition of hemp and therefore treated as marijuana under the CSA.⁴³ The amendment also excludes from the definition of hemp all cannabinoids that are not capable of being naturally produced by the cannabis plant, or that are synthesized or manufactured outside the plant.⁴⁴

The new definition takes effect November 12, 2026, providing a one-year runway for industry adjustment.⁴⁵ Within 90 days of enactment, FDA is required to publish lists of all cannabinoids naturally produced by Cannabis sativa L., all THC-class cannabinoids, and all other known cannabinoids with similar effects to THC—lists that will be determinative of which compounds count toward the new total THC cap.⁴⁶ FDA missed the 90-day publication deadline (which fell in February 2026), introducing additional regulatory uncertainty.⁴⁷

The practical consequence of P.L. 119-37 is potentially to recriminalize as Schedule I marijuana a substantial portion of the estimated $28 billion intoxicating hemp market—including most ingestible products (beverages, edibles, tinctures), many full-spectrum CBD products, and all delta-8 THC, delta-10 THC, and THCA products currently on the market.⁴⁸ Because the CSA excludes hemp by cross-reference to the agricultural marketing statute’s definition, narrowing that definition pushes the excluded products back into Schedule I status when the effective date arrives.⁴⁹ Multiple CRS analyses have noted that this outcome creates significant overlap with the marijuana rescheduling process: to the extent hemp-derived cannabinoid products are reclassified as marijuana, any rescheduling of marijuana to Schedule III would also affect those products.⁵⁰ Congressional sponsors have already signaled plans to pursue legislative fixes to protect the CBD and wellness markets during the 2026 window.⁵¹

The December 2025 executive order expressly acknowledged this tension, noting that “some full-spectrum CBD products will once again be controlled as marijuana under the CSA when [the hemp definition amendment] goes into effect” and directing executive branch officials to work with Congress to update the statutory definition to protect appropriate full-spectrum CBD product access.⁵²

V. Consequences of Schedule III Transfer for State Systems

A. Tax Relief Under Section 280E

Reclassification to Schedule III would remove cannabis businesses from the scope of Section 280E.⁵³ Section 280E expressly applies only to businesses trafficking in Schedule I and II controlled substances; a Schedule III classification would render the provision inapplicable going forward.⁵⁴ The NPRM’s Regulatory Flexibility Act analysis explicitly acknowledged this consequence.⁵⁵ For state-licensed operators, restoration of ordinary deductions for payroll, rent, and other business expenses would produce a material reduction in effective federal tax rates, improved cash flow, and enhanced enterprise valuation.⁵⁶

Tax consequences are prospective only. Section 280E will cease to apply upon the effective date of a final rescheduling rule; past tax years during which marijuana was a Schedule I substance remain subject to the restriction.⁵⁷ Operators with open IRS audits or contested tax positions should anticipate that rescheduling will shift the legal landscape for settlement but will not automatically resolve prior disputes.⁵⁸

B. Banking and Financial Services

Rescheduling to Schedule III would not, by itself, legalize cannabis banking or eliminate the need for financial institutions to maintain anti-money laundering compliance procedures.⁵⁹ Even as a Schedule III substance, cannabis would remain federally controlled and subject to CSA distribution requirements. FinCEN’s cannabis banking guidance, now more than a decade old, has not been updated to reflect the current landscape, and FinCEN has signaled reluctance to revise it absent broader Congressional or interagency direction.⁶⁰ Many banks are therefore expected to maintain enhanced due diligence protocols and Suspicious Activity Report filings for cannabis-related businesses even after rescheduling.⁶¹

The SAFE/SAFER Banking Act, which would provide statutory safe harbor protections for financial institutions serving state-compliant cannabis businesses, has passed the House of Representatives in various forms seven times but has never received a Senate floor vote.⁶² As of early 2026, the SAFER Banking Act remains pending in the Senate with no floor vote scheduled, despite the bipartisan July 2025 letter from state attorneys general.⁶³ Senate Banking Committee Chairman Thom Tillis (R-NC), while expressing general support for addressing cannabis banking, noted in December 2025 that he is “not quite there” on the SAFER Banking Act because he views it as a “forcing mechanism for a more comprehensive framework.”⁶⁴ Senator Jacky Rosen (D-NV), ranking member, indicated she hopes Congress will hold discussions in 2026 on addressing cannabis banking.⁶⁵

The November 2025 hemp definition amendment adds a new dimension to the banking problem: financial institutions that previously treated hemp-derived products as lower-risk than marijuana-related businesses must now assess whether their hemp business clients’ product portfolios will fall within the new Schedule I-controlled category when the November 2026 effective date arrives.⁶⁶

C. Research Barriers

Transfer to Schedule III would ease but not eliminate federal research barriers. Schedule I imposes the most stringent DEA registration requirements, the most restricted sourcing options, and the most extensive protocol approval requirements.⁶⁷ A Schedule III classification would align cannabis with substances like ketamine and buprenorphine, under a framework that permits clinical research without the extraordinary procedural burdens applicable to Schedule I substances.⁶⁸ However, FDA would retain authority to regulate clinical research involving cannabis as a new drug requiring approval, DEA registration requirements would continue to apply under substance-specific registration frameworks, and the Federal Food, Drug, and Cosmetic Act’s safety and efficacy requirements would remain unaffected by the scheduling change.⁶⁹

The 2022 Marijuana and Cannabidiol Research Expansion Act had already created specialized DEA approval procedures for marijuana research and manufacture of marijuana for research purposes; those procedures would continue to operate, but researchers would gain additional flexibility under the less restrictive Schedule III framework.⁷⁰

D. Continued Federal-State Legal Conflicts

Schedule III reclassification would not bring state-legal medical or recreational cannabis markets into compliance with the CSA.⁷¹ Schedule III substances may be lawfully dispensed only pursuant to a valid prescription for an FDA-approved drug product. Marijuana itself is not an FDA-approved drug, and adult-use cannabis markets involve commercial distribution well outside any prescription framework. Accordingly, state-licensed adult-use retailers, dispensaries, cultivators, and processors would remain federal criminal actors under the CSA after rescheduling, absent additional Congressional action.⁷² The Rohrabacher-Blumenauer appropriations rider would continue as the primary federal accommodation for medical programs, subject to annual reauthorization.⁷³

Interstate commerce in cannabis would remain a federal crime regardless of scheduling, as would any cannabis-related activities not covered by the medical appropriations rider.⁷⁴ NYSE and Nasdaq have indicated that a Schedule III reclassification alone would not be sufficient to permit the listing of plant-touching cannabis companies on major U.S. exchanges.⁷⁵ Significant questions concerning the applicability of federal bankruptcy protections, intellectual property registration, and stock exchange listing standards would require further regulatory or legislative resolution.⁷⁶

VI. Legislative Considerations for Congress and State Legislatures

Congress faces a range of options beyond the pending administrative rescheduling. At the most expansive end, legislation to deschedule cannabis entirely from the CSA—as proposed by the Cannabis Administration and Opportunity Act introduced in earlier Congresses—would resolve the federal-state conflict comprehensively but faces substantial political obstacles in the current Congress.⁷⁷ More targeted legislative interventions include: statutory enactment of banking safe harbor protections through the SAFER Banking Act; amendment of Section 280E to exclude state-compliant cannabis businesses regardless of scheduling status; a statutory carve-out preserving DOT drug testing authority for safety-sensitive positions in the event of rescheduling; and amendment of the CSA to create an express federal accommodation for state adult-use programs analogous to the medical appropriations rider.⁷⁸

The November 2025 hemp definition amendment adds a fifth legislative priority that Congress must address before November 2026: establishing a workable federal regulatory framework for hemp-derived cannabinoid products, including full-spectrum CBD, that resolves the conflict between the existing 0.4 mg per-container cap and the consumer wellness market that has developed under the 2018 Farm Bill framework. The executive order’s directive to work with Congress on this question, combined with bipartisan concern about the economic impact on hemp producers and small businesses, suggests this will be an active legislative front in 2026—though the outcome remains uncertain given Congressional capacity constraints.⁷⁹

State legislatures operating within existing regulatory frameworks should anticipate that Schedule III rescheduling—if and when finalized—will alter the competitive and financial position of licensed operators within their markets by reducing effective tax burdens, may attract new entrants and institutional capital into previously unserved segments of the market, and may prompt additional states that have cited federal prohibition as a reason for caution to revisit medical or adult-use legislation.⁸⁰ State legislatures with hemp regulatory programs that diverge from the new federal total-THC standard should also assess whether their state frameworks will require amendment to avoid direct conflict with the November 2026 federal definition change.

VII. Conclusion

The proposed transfer of marijuana from Schedule I to Schedule III represents the most significant potential shift in federal cannabis policy in more than fifty years. The Trump Administration’s December 2025 executive order reinvigorated a rulemaking process that had stalled through 2025, but the administrative and litigation obstacles to finalization remain substantial. As of early February 2026, DEA Administrator Terrance Cole—confirmed in July 2025—holds sole discretion to resolve the pending interlocutory appeal that has frozen the administrative hearing process, but has taken no public action on the rescheduling docket and has omitted cannabis from his stated enforcement priorities. The retired Chief ALJ has left no successor in place, further complicating the hearing-track pathway.

Simultaneously, the November 2025 federal hemp definition amendment is moving toward a November 2026 effective date that will recriminalize the majority of the intoxicating hemp market absent further Congressional or FDA action—adding pressure on both Congress and the executive branch to produce coordinated federal cannabis and hemp policy before year’s end. Even a completed rescheduling would leave the fundamental legal contradiction between federal prohibition and state licensing systems intact, requiring further Congressional action to achieve durable resolution. State cannabis regulators and their legislative principals should monitor the DEA rulemaking process closely, engage actively in any resumed notice-and-comment or hearing process, prepare for both the financial consequences of Section 280E relief and the continued compliance burdens of federal Schedule III status, and track the hemp definition amendment’s implementation timeline for state-level conflicts.

Endnotes

¹ Controlled Substances Act, 21 U.S.C. § 812(c) Schedule I(c) (2018); Congressional Research Service, Legal Consequences of Rescheduling Marijuana, LSB11105, at 1 (2025), https://www.congress.gov/crs-product/LSB11105.

² Ctrs. for Disease Control & Prevention, State Medical Cannabis Laws (updated Feb. 2024), https://www.cdc.gov/cannabis/about/state-medical-cannabis-laws.html; MJBizDaily, Where Marijuana Is Legal in the United States (updated June 20, 2025), https://mjbizdaily.com/map-of-us-marijuana-legalization-by-state/ (24 states and D.C. permitting adult use; 40 states and D.C. permitting medical use, per CRS 2025 confirmed figure).

³ Jackson Lewis P.C., POTUS Orders DOJ to Complete Rulemaking Process to Reschedule Marijuana Expeditiously (Dec. 19, 2025), https://www.jacksonlewis.com/insights/potus-orders-doj-complete-rulemaking-process-reschedule-marijuana-expeditiously-three-employer-considerations (“The DEA has classified marijuana as a Schedule I drug since the inception of the CSA in 1970.”).

⁴ 21 U.S.C. § 812(b)(1); Congressional Research Service, Legal Consequences of Rescheduling Marijuana, supra note 1, at 1.

⁵ I.R.C. § 280E.

⁶ Marijuana Policy Project, What Is 280E?, https://www.mpp.org/policy/federal/what-is-280e/ (describing 1981 Tax Court decision and Congress’s enactment of § 280E in 1982); Congressional Research Service, The Application of Internal Revenue Code Section 280E to Marijuana Businesses, R46709 (2021), https://www.congress.gov/crs-product/R46709.

⁷ Current Federal Tax Developments, Tax Alert: Executive Action on Marijuana Scheduling and the Potential Sunset of IRC Section 280E (Dec. 19, 2025), https://www.currentfederaltaxdevelopments.com/blog/2025/12/19/tax-alert-executive-action-on-marijuana-scheduling-and-the-potential-sunset-of-irc-section-280e; Marijuana Policy Project, supra note 6 (“tax rates often end up being 70% or higher”).

⁸ 31 U.S.C. § 5318(g); 18 U.S.C. §§ 1956–1957.

⁹ Cogent Law, The State of Cannabis Banking for 2026 (Dec. 19, 2025), https://cogentlaw.com/the-state-of-cannabis-banking-for-2026/.

¹⁰ Cannabis Business Times, 32 Attorneys General Tell Congress to Pass SAFER Banking for Cannabis, https://www.cannabisbusinesstimes.com/safe-banking-act/news/15754062/32-attorneys-general-tell-congress-to-pass-safer-banking-for-cannabis; SAFER Banking Act, Multistate AG Letter (July 25, 2025), https://www.attorneygeneral.gov/wp-content/uploads/2025/07/2025-07-25-SAFER-Banking-Act-Multistate-AG-letter.pdf — approximately 425,000 jobs and projected $34 billion in annual sales confirmed.

¹¹ Saul Ewing LLP, President Trump Issues Executive Order Directing DOJ to Expedite Rescheduling (Dec. 18, 2025), https://www.saul.com/insights/alert/president-trump-issues-executive-order-directing-doj-expedite-rescheduling-marijuana.

¹² MJBizDaily, supra note 2 (“California was the first state to legalize medical marijuana in 1996.”).

¹³ Id.; Ctrs. for Disease Control & Prevention, supra note 2.

¹⁴ Consolidated Appropriations Act, 2015, Pub. L. No. 113-235, § 538, 128 Stat. 2130, 2217 (Dec. 16, 2014) (Rohrabacher-Farr Amendment, first enacted); Congressional Research Service, Legal Consequences of Rescheduling Marijuana, supra note 1 (“Rescheduling marijuana would not affect the medical marijuana appropriations rider.”).

¹⁵ U.S. Dep’t of Justice, Memorandum from Deputy Att’y Gen. James M. Cole re Guidance Regarding Marijuana Enforcement (Aug. 29, 2013), https://www.justice.gov/iso/opa/resources/3052013829132756857467.pdf; ArentFox Schiff, Oops, We Did It Again? Executive Action Revives Federal Marijuana Rescheduling Efforts (Dec. 29, 2025), https://www.afslaw.com/perspectives/alerts/oops-we-did-it-again-executive-action-revives-federal-marijuana-rescheduling (describing Cole Memorandum history and its 2018 rescission).

¹⁶ Ohio State Univ. Drug Enforcement & Policy Ctr., Federal Marijuana Rescheduling: Process and Impact, https://moritzlaw.osu.edu/faculty-and-research/drug-enforcement-and-policy-center/research-and-grants/policy-and-data-analyses/federal-marijuana-rescheduling.

¹⁷ Rachel L. Levine, Assistant Sec’y for Health, HHS, Letter to Anne Milgram, Administrator, DEA (Aug. 29, 2023), https://www.hhs.gov/sites/default/files/signed-ash-to-dea-letter-marijuana.pdf.

¹⁸ Id.; The FDA Law Blog, Joint Basis for FDA/HHS Marijuana Rescheduling Recommendation Unveiled (Jan. 19, 2024), https://www.thefdalawblog.com/2024/01/joint-basis-for-fda-hhs-marijuana-rescheduling-recommendation-unveiled/.

¹⁹ Exec. Order No. 14370, Increasing Medical Marijuana and Cannabidiol Research, § 1 (Dec. 18, 2025), https://www.whitehouse.gov/presidential-actions/2025/12/increasing-medical-marijuana-and-cannabidiol-research/.

²⁰ Vicente LLP, Cannabis Rescheduling Explained (Dec. 23, 2025), https://vicentellp.com/insights/cannabis-rescheduling-explained/ (describing DOJ OLC April 2024 opinion).

²¹ Schedules of Controlled Substances: Rescheduling of Marijuana, 89 Fed. Reg. 44,597 (proposed May 21, 2024) (DEA Docket No. DEA-1362).

²² Ohio State Univ. Drug Enforcement & Policy Ctr., supra note 16; DLA Piper, EO Accelerates Marijuana Rescheduling (Dec. 2025), https://www.dlapiper.com/en-us/insights/publications/2025/12/eo-accelerates-marijuana-rescheduling-framework-for-hemp-derived-cannabinoids (“nearly 43,000 comments”).

²³ Schedules of Controlled Substances: Rescheduling of Marijuana (General Notice of Hearing), 89 Fed. Reg. 70,148 (Aug. 29, 2024).

²⁴ Cannabis Business Times, DEA Judge Grants Interlocutory Appeal, Cancels Cannabis Rescheduling Hearing, https://www.cannabisbusinesstimes.com/cannabis-rescheduling/news/15712039/dea-judge-grants-interlocutory-appeal-cancels-cannabis-rescheduling-hearing — Chief ALJ Mulrooney’s January 13, 2025 order canceling hearing and staying proceedings confirmed; ex parte communication allegations confirmed.

²⁵ Ohio State Univ. Drug Enforcement & Policy Ctr., supra note 16 — 90-day joint status update requirement confirmed.

²⁶ Cannabis Business Times, DEA’s Likely Administrator Refuses to Commit to Schedule III Proposal for Cannabis, https://www.cannabisbusinesstimes.com/cannabis-rescheduling/news/15744461/deas-likely-administrator-refuses-to-commit-to-schedule-iii-proposal-for-cannabis — Cole’s April 30, 2025 confirmation hearing statement confirmed.

²⁷ Id. — Cole’s “I need to understand more” statement confirmed.

²⁸ Cannabis Business Times, Cannabis Industry Stakeholders React to DEA Head Terrance Cole’s Confirmation, https://www.cannabisbusinesstimes.com/cannabis-rescheduling/news/15751251/cannabis-industry-stakeholders-react-to-dea-head-terrance-coles-confirmation — 50-47 Senate vote on July 22, 2025 confirmed.

²⁹ Cannabis Business Times, Trump Publicly Addresses Cannabis Rescheduling, https://www.cannabisbusinesstimes.com/cannabis-rescheduling/news/15752702/trump-publicly-addresses-cannabis-rescheduling-decision-coming-in-next-few-weeks — Cole “omitted rescheduling from his priority list” after confirmation confirmed; fentanyl crisis as stated No. 1 priority confirmed.

³⁰ The Marijuana Herald, Newly Confirmed DEA Chief Terrance Cole to Take Over Marijuana Rescheduling Case Following Judge’s Retirement, https://themarijuanaherald.com/2025/07/newly-confirmed-dea-chief-terrance-cole-to-take-over-marijuana-rescheduling-case-following-judges-retirement/ — Mulrooney’s retirement effective August 1, 2025 confirmed.

³¹ Cannabis Business Times, DEA’s Likely Administrator Refuses to Commit, supra note 26 — Cole’s sole discretion over briefing schedule, oral arguments, and binding written decision confirmed.

³² Exec. Order No. 14370, supra note 19; Federal Register, FR Doc. 2025-23846 (confirming EO 14370 designation).

³³ Exec. Order No. 14370, supra note 19, § 2(a).

³⁴ Congressional Research Service, Legal Consequences of Rescheduling Marijuana, supra note 1; Dickinson Wright, Marijuana Rescheduling Pending Despite New Executive Order (Dec. 2025), https://www.dickinson-wright.com/news-alerts/client-alert-cannabis-law-marijuana-rescheduling (“The Executive Order directs the AG to move that process forward, but it does not alter the statutory requirements governing how or when rescheduling will occur.”).

³⁵ Exec. Order No. 14370, supra note 19, § 1; White House, Fact Sheet: President Donald J. Trump Is Increasing Medical Marijuana and Cannabidiol Research (Dec. 18, 2025), https://www.whitehouse.gov/fact-sheets/2025/12/fact-sheet-president-donald-j-trump-is-increasing-medical-marijuana-and-cannabidiol-research/.

³⁶ Exec. Order No. 14370, supra note 19, §§ 2(b)–(c); DLA Piper, supra note 22.

³⁷ Marijuana Moment, DEA Says Marijuana Rescheduling Appeal Process ‘Remains Pending’ Despite Trump’s Executive Order (Jan. 5, 2026), https://www.marijuanamoment.net/dea-says-marijuana-rescheduling-appeal-process-remains-pending-despite-trumps-executive-order/ — joint status report language “remains pending with the Administrator” and “no briefing schedule has been set” confirmed.

³⁸ Id. — fourth joint status report with largely identical language confirmed.

³⁹ National Law Review (Sheppard Mullin), Cannabis in 2026 – Part I – Marijuana Rescheduling (Jan. 2026), https://natlawreview.com/article/cannabis-2026-part-i-marijuana-rescheduling-whats-moving-what-wont-and-why-it — three procedural pathways identified; Vicente LLP, Cannabis Rescheduling Explained, supra note 20 — treaty exception and standard rulemaking pathways described.

⁴⁰ Saul Ewing LLP, supra note 11 (“Organizations such as Smart Approaches to Marijuana have already previewed arguments that the rescheduling rule is procedurally flawed, substantively unsupported, or both.”); Marijuana Moment, supra note 37 (noting Smart Approaches to Marijuana has retained former Attorney General Bill Barr to sue to reverse federal marijuana rescheduling if the pending rule is finalized).

⁴¹ Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026, Pub. L. No. 119-37, § 781 (Nov. 12, 2025); Arnold & Porter, Major Changes to Federal Regulation of Hemp-Derived Products (Dec. 2025), https://www.arnoldporter.com/en/perspectives/advisories/2025/12/major-changes-to-federal-regulation-of-hemp-derived-products.

⁴² Regulatory Oversight, Congress Narrows Federal Definition of ‘Hemp,’ Effectively Banning Most Intoxicating Hemp Products (Dec. 10, 2025), https://www.regulatoryoversight.com/2025/12/congress-narrows-federal-definition-of-hemp-effectively-banning-most-intoxicating-hemp-products/ — 2018 Farm Bill delta-9 THC-only standard and loophole description confirmed; Congressional Research Service, Change to Federal Definition of Hemp, IN12620 (2025), https://www.congress.gov/crs-product/IN12620.

⁴³ P.L. 119-37, § 781; Perkins Coie, Shutdown Legislation Brings New Hemp Rules, https://perkinscoie.com/insights/update/shutdown-legislation-brings-new-hemp-rules — 0.3% total THC dry weight standard and 0.4 mg per-container cap confirmed.

⁴⁴ DLA Piper, New Federal Restrictions on Hemp and Hemp-Derived Products, https://www.dlapiper.com/en-us/insights/publications/2025/11/new-federal-restrictions-on-hemp-and-hemp-derived-products — synthetic cannabinoid exclusion confirmed.

⁴⁵ P.L. 119-37, § 781 — one-year effective date (November 12, 2026) confirmed.

⁴⁶ Arnold & Porter, supra note 41 — FDA 90-day list publication requirement confirmed.

⁴⁷ Cannabis Observer, WA Legislature (February 24, 2026) Update, https://cannabis.observer/observations/112686-wa-legislature-february-24-2026-update/ — FDA missed 90-day deadline (February 10, 2026) confirmed.

⁴⁸ Akerman LLP, Congress Enacts Sweeping Recriminalization of Hemp-Derived THC Products (Nov. 2025), https://www.akerman.com/en/perspectives/congress-enacts-sweeping-recriminalization-of-hemp-derived-thc-products-in-federal-spending-bill-ending-government-shutdown — $28 billion intoxicating hemp market figure; majority of ingestible products and delta-8/THCA products affected confirmed.

⁴⁹ Congressional Research Service, Changes to the Federal Definition of Hemp: Legal Considerations Under the Controlled Substances Act, LSB11381 (2026), https://www.congress.gov/crs-product/LSB11381 — cross-reference mechanism pushing excluded products into Schedule I status confirmed.

⁵⁰ Id. — interaction with marijuana rescheduling process confirmed.

⁵¹ Marijuana Moment, Bipartisan Senators Discuss Marijuana Industry Banking Issues (Dec. 16, 2025), https://www.marijuanamoment.net/bipartisan-senators-discuss-marijuana-industry-banking-issues-as-trump-strongly-considers-rescheduling/ — legislative fix advocacy for 2026 confirmed.

⁵² Exec. Order No. 14370, supra note 19 — EO language on full-spectrum CBD and hemp definition confirmed; Congressional Research Service, Changes to the Federal Definition of Hemp, LSB11381, supra note 49.

⁵³ Goodwin, Bye-Bye 280E: New Executive Order Concerning Cannabis Rescheduling (Dec. 23, 2025), https://www.goodwinlaw.com/en/insights/publications/2025/12/alerts-practices-can-bye-bye-280e.

⁵⁴ I.R.C. § 280E (disallowing deductions for trafficking in “controlled substances (within the meaning of Schedule I and II of the Controlled Substances Act)”).

⁵⁵ Current Federal Tax Developments, supra note 7 (quoting NPRM Regulatory Flexibility Act analysis: “If marijuana is ultimately transferred to schedule III, section 280E would no longer serve as a statutory bar to claiming deductions for those expenses.”).

⁵⁶ ArentFox Schiff, supra note 15 (“The most immediate business impact of a final rescheduling rule would be relief from Internal Revenue Code Section 280E … reducing effective tax rates and improving cash flow.”).

⁵⁷ Cherry Bekaert, Navigating IRC Section 280E After Marijuana Reclassification (Oct. 11, 2024), https://www.cbh.com/insights/articles/navigating-irc-section-280e-after-marijuana-reclassification/.

⁵⁸ AAFCPAs, Executive Order to Reschedule Cannabis: What It Means for IRC 280E (Dec. 19, 2025), https://www.aafcpa.com/2025/12/19/executive-order-to-reschedule-cannabis-what-it-means-for-irc-280e/.

⁵⁹ Krieg DeVault LLP, President Trump’s Executive Order on Cannabis Rescheduling (Dec. 23, 2025), https://www.kriegdevault.com/insights/president-trumps-executive-order-on-cannabis-rescheduling-what-does-it-mean (“Even as a Schedule III substance, cannabis will remain largely illegal federally.”).

⁶⁰ Cogent Law, supra note 9 — FinCEN guidance “more than a decade old”; reluctance to revise confirmed.

⁶¹ Id. — continued SAR filing and enhanced due diligence confirmed.

⁶² Reason Foundation, That SAFE Banking Act for Legal Cannabis Companies Stalls in the Senate, Again (Aug. 22, 2023), https://reason.org/commentary/that-safe-banking-act-for-legal-cannabis-companies-stalls-in-the-senate-again/ (“The U.S. House of Representatives first passed the bill in 2019 and has passed it seven times in total. The U.S. Senate has never held a vote on the SAFE Act.”).

⁶³ Marijuana Moment, Bipartisan Senators Discuss Marijuana Industry Banking Issues, supra note 51 — SAFER Banking Act pending with no floor vote as of early 2026 confirmed.

⁶⁴ Id. — Chairman Tillis “not quite there on the SAFER Banking Act” statement confirmed.

⁶⁵ Id. — Senator Rosen’s statement confirmed.

⁶⁶ Cogent Law, supra note 9 — banks reassessing hemp client risk profiles confirmed.

⁶⁷ Saul Ewing LLP, supra note 11.

⁶⁸ Jackson Lewis P.C., supra note 3 (noting Schedule III drugs include ketamine, buprenorphine, and Tylenol with codeine).

⁶⁹ DLA Piper, EO Accelerates Marijuana Rescheduling, supra note 22 (“Rescheduling marijuana does not change legal requirements for FDA-regulated products.”); Ropes & Gray LLP, Blowing Smoke? White House Orders Completion of Marijuana Rescheduling (Jan. 14, 2026), https://www.ropesgray.com/en/insights/alerts/2026/01/blowing-smoke-white-house-orders-completion-of-marijuana-rescheduling-but-significant-hurdles-remain.

⁷⁰ Marijuana and Cannabidiol Research Expansion Act, Pub. L. No. 117-215, 136 Stat. 2257 (Dec. 2, 2022); Ropes & Gray LLP, supra note 69.

⁷¹ Congressional Research Service, Legal Consequences of Rescheduling Marijuana, supra note 1 (“Moving marijuana from Schedule I to Schedule III, without other legal changes, would not bring the state-legal medical or recreational marijuana industry into compliance with federal controlled substances law.”).

⁷² Id.; DLA Piper, supra note 22 (“Recreational use of marijuana would still be prohibited without further legislative action.”).

⁷³ Congressional Research Service, Legal Consequences of Rescheduling Marijuana, supra note 1 (“Rescheduling marijuana would not affect the medical marijuana appropriations rider.”).

⁷⁴ Krieg DeVault LLP, supra note 59 (“Moving marijuana to a Schedule III controlled substance does not fully legalize its production, distribution, sale, possession and use under federal law.”).

⁷⁵ Saul Ewing LLP, supra note 11 (“The New York Stock Exchange (NYSE) and Nasdaq have previously indicated that a movement to Schedule III alone would not be sufficient to permit the listing of plant-touching cannabis companies.”).

⁷⁶ Id.; Goodwin, supra note 53.

⁷⁷ Cannabis Administration and Opportunity Act, S.4226, 117th Cong. (2022) (introduced by Sen. Schumer; not enacted); ArentFox Schiff, supra note 15.

⁷⁸ DISA, Here’s What DOT-Regulated Employers Must Do About Marijuana’s Reclassification to Schedule III (Dec. 22, 2025), https://disa.com/news/heres-what-dot-regulated-employers-must-do-about-marijuanas-reclassification-to-schedule-iii/; SAFER Banking Act, S.2860, 118th Cong. (2023–2024), https://www.congress.gov/bill/118th-congress/senate-bill/2860.

⁷⁹ Exec. Order No. 14370, supra note 19 — EO directive to work with Congress on hemp-derived CBD definition confirmed; Marijuana Moment, Bipartisan Senators, supra note 51 — Sen. Van Hollen advocacy for legislative fix confirmed; Akerman LLP, supra note 48 — industry plans to press for legislative fix in 2026 confirmed.

⁸⁰ Marijuana Moment, Trump Signs Executive Order (Dec. 18, 2025), https://www.marijuanamoment.net/trump-signs-executive-order-to-reclassify-marijuana-by-removing-it-from-schedule-i/ (noting the change “may also spur additional states to modernize their own policies on cannabis”).