Fennemore’s Industry Analysis of the Rescheduling of Medical Marijuana

On April 22, 2026, the U.S. Department of Justice (DOJ) and the U.S. Drug Enforcement Administration (DEA) issued an order (Order) placing both U.S. Food and Drug Administration (FDA)-approved products containing marijuana and marijuana and marijuana products subject to a state medical marijuana program in Schedule III of the Controlled Substances Act.  DOJ  also initiated an expedited administrative hearing process to consider the broader rescheduling of recreational (or adult use) marijuana from Schedule I to Schedule III.  The hearing process will begin on June 29, 2026 and end on July 15, and will provide a timely and legally complaint path to evaluate broader changes to marijuana’s status under federal law. This landmark order  represents one of the most significant shifts in U.S. drug policy in decades.

This Order does not apply to recreational cannabis, nor is recreational cannabis legal under federal law even if a state permits its possession or use.

The regulatory landscape is actively evolving. State license holders, service providers to license holders, healthcare providers, investors, and other stakeholders across the cannabis industry are closely watching and waiting to see the opportunities and challenges that may unfold.

Fennemore’s Cannabis Business Law team, chaired by Janet Jackim, includes attorneys across multiple practice areas. They are monitoring these developments and analyzing what they may mean for clients navigating compliance requirements, operational challenges, federal and state regulations, taxation and new business opportunities. Read on for their insights into the legal and business implications of this historic policy shift

Health Care
By: Heather Macre

For healthcare providers, the reclassification of state-licensed medical marijuana from Schedule I to Schedule III raises important questions about prescribing and fulfillment authority, clinical responsibility, patient safety, insurance coverage and reimbursement, and institutional compliance concerning two classes of medical cannabis.

The first, referred to in the Order as FDA-approved marijuana products such as Epidiolex, continues to be highly regulated by the U.S. Controlled Substances Act. There are very few of these products, but more may be developed as a result of rescheduling, which permits easier paths to conducting research on marijuana in the drugs. The second class is comprised of medical marijuana and medical marijuana products that are subject to regulation by a state agency whose program requires licensure and oversight of dispensaries, cultivators, transporters and manufacturers. The rescheduling Order put great faith in the breadth and operational functionality of the existing forty state medical marijuana programs and essentially incorporated those state programs into the federal cannabis regime.

Critically, the Order finds that marijuana has a medical use, is relied upon by practitioners in treating numerous medical conditions such as persistent pain and chemotherapy-induced nausea, and has a moderate to low potential for dependence,  acknowledging growing scientific and clinical evidence supporting marijuana’s therapeutic potential. For healthcare providers, rescheduling will likely reshape both clinical practice and healthcare operations.

Not only should we see new formulations of medical marijuana drug applications, we should also see  increased institutional prescription of such drugs in nursing homes, rehabilitation clinics, and post-surgery therapies. Medicare, Medicaid, and private insurance programs may voluntarily, or through further legislative or administrative action, provide coverage of medical marijuana products in their insurance programs.  Wellness clinics may thrive with the expansion of their product portfolio. And researchers will now be permitted to conduct their research on products already being sold in dispensaries across the U.S.

In response to the Order, healthcare providers should  begin preparing now by monitoring DEA and FDA developments, updating their cannabis-related treatment and employment policies, expanding clinician and university education, developing interdisciplinary guidance, and reviewing controlled-substance compliance procedures. Please consult with a healthcare compliance attorney for guidance. 

Agribusiness
By: Anton Bortolussi

Last month’s announcement delivers meaningful and targeted movement on medical marijuana’s federal status.

From an agribusiness perspective, the distinction matters enormously. This is not blanket federal legalization or full descheduling. Adult-use cannabis remains in the higher-risk federal category of Schedule I for now, hemp continues under its separate 2018 Farm Bill/USDA regime, and the FDA’s restrictions on THC/CBD in food, feed, and animal products are unchanged. The principal near-term beneficiaries of the Order are state-licensed medical operators and their upstream/downstream agricultural partners, including cultivators, greenhouse and genetics suppliers, equipment providers, processors, landlords, and lenders. Investors in this benefitted group should also experience indirect benefits via tax relief.

The most tangible near-term effect is tax relief under IRC § 280E. Qualifying medical marijuana businesses should now be able to claim ordinary business deductions, materially improving EBITDA, cash flow, and borrowing capacity. This benefit should flow directly to their agribusiness counterparties through stronger credit profiles and higher valuations. That said, mixed operators with both medical and adult-use lines must proceed carefully. Shared facilities, management, or inventory will invite scrutiny on segregation, entity structure, and transfer pricing. For many, one of the first waves of work after this Order will involve restructuring to cleanly separate qualifying medical operations. For suppliers, landlords, investors, and financiers, diligence must now go beyond “Are you in cannabis?” to “Which channel, under what license, and how well segregated?” And the first question should be “Have you registered with the DEA?”

It is important to note that the recent Order only applies to medical marijuana products; hemp producers will see no direct change because the USDA framework remains the governing regime. Food, feed, pet, and animal agriculture participants should also continue treating FDA compliance as the primary gatekeeper, because the Order does not yet open the door to interstate THC or CBD-infused products. The opportunities of the Order are real, especially for the state-licensed medical-marijuana supply chain, but there are still many pitfalls and unknowns with respect to operators with dual licenses (i.e. medical and adult use operators), and specific outcomes will depend on your business model, license structure, and state law. 

It is recommended that Agribusiness clients map their cannabis exposure by category, revisit their management, financing, supply, and employment contracts, tighten representations and covenants, and reassess tax, lending, and M&A assumptions.

International Trade and Customs
By: Les Glick

Since the April 22, 2026 Order, medical marijuana can legally be imported if a party holds a cannabis import export permit pursuant to 21 CFR section 1312.30. Licensing of imports of marijuana are required under article 31 of the 1961 United Nations “ Single Convention on Narcotic Drugs,” as amended in 1972 (Single Convention), which the US and its businesses must adhere to.

Customs and Border Protection (CBP) has taken a narrow interpretation of the Order. It continues to treat all marijuana as subject to federal control and restrictions on importation and it continues to seize what is considered to be unauthorized cannabis shipments at the border, regardless of whether the border is in a state where medical cannabis is legal!  These enforcement actions often  include medical cannabis legally purchased in the U.S., taken outside the country, and then brought back to the U.S. without a permit. However, entities registered with the DEA with import permits are considered “authorized” and will potentially be subject to more flexible treatment. It is too soon to draw conclusions on actual enforcement post issuance of the Order, but some commentators are speculating that prosecution of unlicensed individual possession of medical cannabis as a Schedule III drug might draw lower sentences than those imposed pre-Order issuance.

Only a few  cannabis derived medications  have been FDA-approved including Epidiolex, for which Fennemore has been consulted on import and tariff issues.

It is recommended that importers of licensed commercial shipments and/or their counsel meet with customs officials at the port of entry in advance of importation to ensure a seamless import process.

Immigration
By: Alycia Moss

From an immigration perspective, the order is only a partial and limited change. United States Citizenship and Immigration Services (USCIS) has long maintained that marijuana-related conduct can bar a finding of good moral character and make someone inadmissible and deportable. USCIS policy specifically states that marijuana conduct may create immigration consequences even where state law permits the activity. Even admissions of use, possession, or employment in the cannabis industry can trigger serious consequences for noncitizens because immigration law follows federal controlled-substance rules, not state legalization alone.  

Critically, the Order still does not solve the core problem for noncitizens. Outside the limited categories identified by the DOJ, marijuana remains federally controlled, and noncitizens in states where marijuana is still illegal remain exposed under both state and federal law. Even in the medical context, caution remains essential: while Schedule III status contemplates lawful medical use in certain federally recognized channels, most marijuana products sold in state dispensaries are not individualized FDA-approved prescription drugs, and existing immigration guidance does not clearly establish that using those products is safe for noncitizens. For that reason, so-called “medical marijuana” use will likely continue to carry immigration risk unless and until federal immigration authorities expressly change their policies or Congress removes marijuana-related conduct from the immigration penalty structure.

The practical advice, therefore, remains the same: noncitizens should assume that any kind of marijuana use, possession, or industry involvement can still jeopardize naturalization, adjustment, admission, or other immigration benefits.  

This is a rapidly developing situation, and we’ll continue monitoring it closely. As soon as there are meaningful updates, we’ll bring them to your attention.

Questions? Fennemore’s Cannabis Business Lawteam, chaired by Janet Jackim, collaborate to provide proactive and integrated strategies across all aspects of business operations, including regulatory matters, corporate formation, mergers and acquisitions, debt and equity financing, fund formation, real estate, intellectual property, and tax for marijuana and hemp businesses nationwide, regardless of the size of the operation.

This content is for general educational purposes only and does not constitute legal advice. If legal advice is needed, please consult with an attorney.

Authors

Heather Macre leads Fennemore’s Health Care practice group, and she is a Director in Fennemore’s Business Litigation practice group. Her clients, ranging from huge multinational companies to small business owners, rely on her counsel for matters including breach of contract, confidentiality issues, business partnership dissolvements, and patent disputes. In the healthcare arena, Heather’s practice encompasses all aspects of healthcare agreements, such as hospital recruitment agreements, employment agreements, non-compete covenants, and office-sharing agreements. She can be reached at hmacre@fennemorelaw.com.

Anton Bortolussi is a Director in our Business & Finance practice. Based in Fresno, Anton works in the agribusiness industry. His work centers on mergers and acquisitions, real estate and business transactions, estate planning, trust and estate administration law, and related tax matters. He advises both buyers and sellers across a wide variety of business transactions.  He can be reached at abortolussi@fennemorelaw.com.

Les Glick is a Director in Fennemore’s Business & Finance practice group. He is based in Washington, D.C., and his practice focuses on international trade and customs law, representing clients before the U.S. International Trade Commission, Department of Commerce, Office of the U.S. Trade Representative, and the Court of International Trade. He has been widely consulted for his ability to develop “tariff mitigation” strategies and has been a frequent speaker before various trade associations. Les can be reached at lglick@fennemorelaw.com.

Alycia Moss is a Director and leads Fennemore’s Immigration practice group, focusing her practice on guiding businesses, families, and individuals through the complexities of U.S. immigration law. You can contact Alycia at amoss@fennemorelaw.com. Find more information about Fennemore’s Immigration services here.

Janet Jackim, Chair of the Cannabis Business Industry Group, is a well-seasoned cannabis and business attorney whose practice focuses on cannabis transactions, litigation, commercial real estate, mergers and acquisitions, and litigation involving the foregoing. She can be reached at jjackim@fennemorelaw.com.