On April 22, 2026, Acting Attorney General Todd Blanche signed an order moving two categories of marijuana from Schedule I of the Controlled Substances Act to Schedule III: FDA-approved drug products containing marijuana, and marijuana subject to a qualifying state medical marijuana license. The order was published in the Federal Register on April 28, 2026. Adult-use marijuana stayed in Schedule I.
Headlines called it rescheduling. For an operator's books it is something narrower and more awkward: a line drawn through the middle of the industry, and in many cases through the middle of a single company, partway through a tax year. This piece sets out what has been confirmed, what has not, and what to do in the ledger while the rest is pending. It is educational, not tax or legal advice.
What is confirmed
Each item below comes from the order itself as summarized by the law firms cited at the end, or from the Federal Register listing.
| Item | Status |
|---|---|
| Marijuana under a qualifying state medical license | Schedule III, from the April 22, 2026 order |
| FDA-approved products containing marijuana | Schedule III, same order |
| Adult-use (recreational) marijuana | Still Schedule I |
| DEA registration for state medical licensees | Required. A valid state medical license serves as evidence of state authorization, and, per Saul Ewing's summary, operators who apply within 60 days of Federal Register publication can keep operating while DEA reviews the application |
| Federal tax | The order says it is not a determination of federal tax liability, and it encourages the Treasury Department to consider relief for earlier years |
Why it matters for 280E
Section 280E disallows deductions for a business that traffics in Schedule I or II controlled substances. Its text names those two schedules and no others. Marijuana that is now in Schedule III is outside that text. That is why the law firms that have written about the order, including Saul Ewing, read it as removing the 280E bar for qualifying state-licensed medical operators going forward.
Three cautions keep that from being the end of the story.
- "Going forward" is doing a lot of work. The order took effect in April. For a calendar-year business, the months before it and the months after it may be treated differently. The order asks Treasury to consider retrospective relief; it does not grant it.
- The order says it is not a tax ruling. The IRS has not, as of this writing, published guidance on how it will treat 2026 returns for medical operators. The IRS cannabis industry page was last reviewed in February 2026, before the order, and does not address it.
- Adult-use businesses are unchanged. A dispensary selling to adult-use customers under a recreational license is trafficking in a Schedule I substance as far as federal law is concerned, and 280E applies exactly as before.
What is pending
Several pieces are still open. These are pending, not predictions.
- Adult-use rescheduling. A DEA administrative hearing on moving the rest of marijuana to Schedule III ran from June 29 to July 15, 2026, before Chief Administrative Law Judge Derek C. Julius, with 11 days of testimony (Morgan Lewis, September 24, 2026). The judge's recommended decision, and then the DEA Administrator's final decision, are pending. Vicente LLP reported in late September that the judge paused the proceeding to consider a motion about a new GAO report.
- IRS guidance on how 280E applies to medical operators for 2026 and on any relief for earlier years.
- DEA rules on production quotas, recordkeeping, order forms, security and labeling for newly registered medical operators.
- Interstate commerce, which the law firm summaries say requires Congress.
- Litigation. A court challenge to the order could change its effect.
What to do in the books now
You cannot know today how every question will be answered. You can keep records that will support whatever position you and your CPA take, under any of the outcomes. That means keeping the information separated now, while it is cheap, instead of reconstructing it later, when it is not.
1. Split activity by license type
Operators that hold both medical and adult-use licenses, or sell to both kinds of customer from one location, need revenue, cost of goods sold and operating expenses tracked by license type. In the general ledger that can be a class, a department or a location dimension. What matters is that each transaction carries it.
2. Split activity by date
Mark the cutover. Keep a clean record of activity before April 22, 2026 and after it. Inventory on hand at the cutover deserves its own count and valuation, because product grown under one regime may be sold under another.
3. Keep the 280E allocation running
Do not stop allocating costs between inventoriable and non-deductible piles just because some of the business may be out of 280E. You still need the allocation for adult-use activity, for the months before the order, and in case guidance or litigation narrows the relief. Run it with a switch: one view with 280E applied, one without.
4. Talk to your CPA about protective refund claims
Saul Ewing's summary suggests operators consider filing protective claims for refund for earlier years, given the order's call for retrospective relief. The general federal time limit for a refund claim is three years from when the return was filed or two years from when the tax was paid, whichever is later, under section 6511, so the oldest open year can close while you wait. Whether a claim makes sense is a decision for you and your CPA.
5. Do not count on a refund in your cash forecast
Model it as zero until it is in the bank. If relief comes, it is upside. If you have already spent it, it is a hole.
Where AI helps, and where it does not
The work above is mostly tagging and reconciliation, which software handles well:
- Tagging transactions by license and by date, from POS data, invoices and state track-and-trace records.
- Building the two views of the books, with and without 280E, from one set of tagged transactions.
- Watching for guidance. An agent can check the Federal Register, IRS newsroom and DEA announcements and summarize anything new for your CPA.
It cannot decide your tax position, interpret an order your lawyer has not read, or tell you whether to file a protective claim. And because language models sometimes state legal conclusions with more confidence than the sources support, anything an AI tool says about the order gets checked against the order.
Tools for the work
The 280E Cost Allocation Worksheet ($79) has the switch described above: set "Does 280E apply to this entity and period?" to Yes or No and the split recalculates, so you can keep both views side by side. For the cost accounting background, start with 280E cost accounting basics.
If you want the tagging and the two-view reporting automated, Agor AI builds back-office automations for small finance teams. Start with the $250 AI Automation Audit, credited toward a build.
This is part of a weekly series on AI for finance and back-office work. Get it by email, including an update when the pending pieces above are decided.
This article is educational and is not tax, legal or accounting advice. The rescheduling order, its effect on federal tax, and the pending proceedings are developing. Talk to a CPA and a lawyer who work with cannabis businesses before you change how you file.
Sources
- Saul Ewing: DEA Reschedules FDA-Approved Marijuana Products and State-Licensed Medical Marijuana to Schedule III (April 23, 2026)
- Federal Register: Schedules of Controlled Substances: Rescheduling of Food and Drug Administration Approved Products Containing Marijuana From Schedule I to Schedule III (April 28, 2026)
- Morgan Lewis: High Time for a Change? Post-DEA Hearing, Broader Marijuana Rescheduling Questions Remain (September 24, 2026)
- Vicente LLP: DEA Judge Pauses Marijuana Rescheduling Hearing Over New GAO Report
- 26 U.S. Code 280E (Cornell LII)
- 26 U.S. Code 6511, Limitations on credit or refund (Cornell LII)
- IRS: Cannabis industry (last reviewed February 6, 2026)