On April 23, acting Attorney General Todd Blanche issued a final order to move state-legal medical Cannabis from Schedule I to Schedule III, while leaving adult-use, synthetics and hemp untouched. It’s a narrow yet significant move with potentially massive consequences: 280E relief for medical operators, new questions for dual-license businesses and fresh uncertainty around exports and federal enforcement. It does nothing regarding criminalization, expungement, clemency or anything else regarding criminal justice.
To sort out what actually changed and what’s still guesswork, I spoke with Hirsh Jain, the CEO of Ananda Strategy — an advisory firm that works with Cannabis brands, retailers, distributors, testing labs, technology platforms, professional service firms and capital providers.
In this Q&A — originally published in my newsletter, Cannabitch, and edited lightly for clarity — Jain walks through the order and what’s coming next.
Jackie Bryant: What did the Department of Justice and the acting attorney general do, and what do we know for sure?
Hirsh Jain: The attorney general’s order indicates that medical Cannabis — Cannabis sold under state-licensed medical programs — is now Schedule III. It’s worth pointing out that the attorney general used really imprecise language that confused people. Todd Blanche said we are rescheduling cannabis, which some people took to mean adult-use. But really, he meant medical. The other big thing we know is that if medical Cannabis survives legal challenges, state-licensed medical operators are no longer subject to 280E.
What’s actually in there regarding 280E relief?
The attorney general’s order indicates that retroactive 280E relief could apply for prior tax years — the AG is encouraging the treasury secretary and the IRS to consider making 280E relief retroactive for medical operators. It’s the first official government statement that 280E could be retroactive. At the same time, the IRS can ignore the AG if it wants to. Until we get guidance, in theory, this 280E relief could be retroactive for a California operator going back 10-15 years. That would be incredible. I’ll believe it when I see it, but it would be incredible.
What’s the timeline on adult use?
The AG has ordered a new DEA hearing to consider the rescheduling of adult-use Cannabis. It begins June 29 and ends July 15. People like Kim Rivers and Boris Jordan — well-placed CEOs — are publicly saying they expect rescheduling to happen sometime in Q3, before the end of the year. Those folks have been wrong before, so that’s not definitive. But it is notable.
For dual-license operators — someone holding both a medical and adult-use license — how might 280E treatment work?
This is a big, unresolved area. Some people say 280E applies to the taxpayer — if you are a person or a company that is trafficking in Schedule I drugs, your entire operation is subject to 280E. Even if you’re doing both. There is at least one serious theory that says holding a dual license won’t allow you to cleanly separate your operations and say, “These things should not be subject to 280E.” Nobody has a definitive answer yet, but it’s a very real question.
What’s the most important takeaway for operators right now?
Medical is now Schedule III on paper, with real potential 280E relief and even retroactivity — if it survives legal challenge and if Treasury and IRS follow through. Adult use has been kicked into a DEA hearing process with a plausible, but not guaranteed, Q3 timeline for action. The medical/adult distinction is being hardened on paper even as this move exposes how absurd that distinction is in practice.
So there you have it. One more provision worth noting: Buried in the order is a requirement — rooted in U.S. obligations under the 1961 UN Single Convention on Narcotic Drugs — that the DEA nominally “buy” medical Cannabis crops from registered manufacturers and immediately “sell” them back at the same price plus an administrative fee. In practice, growers keep their product, and nothing changes commercially. It’s a paperwork transaction designed to satisfy an international treaty, not, technically, a sign that the DEA is entering the Cannabis business.
What it does do, however, is make the DEA the mandatory intermediary in the medical supply chain, giving the same agency that can raid or prosecute operators a formal chokepoint over the market. Legal experts note the intent is to make the process as frictionless as possible. Whether it stays that way remains to be seen.
