While the Acting Attorney General’s rescheduling order is likely to face legal challenges, the immediate reality is this: you have a 60-day opportunity to act. As of yesterday, April 28, state medical marijuana licensees may apply for DEA registration to manufacture (this includes cultivation and limited processing), to distribute, and to dispense medical marijuana.

The DEA dispensary application portal is already live, and applications for manufacturing and distribution are expected to follow the standard DEA Form 225 process.

We are not certain whether this framework will survive judicial review, and if so, to what extent. What is clear, however, is that only applicants who submit within this initial 60-day window are positioned for expedited review, which is to occur within six months of an applicant’s submission. The rescheduling order provides no guidance on future application rounds or timelines, leaving significant ambiguity for those who wait.

In practical terms, this creates a first-mover advantage. If DEA registration ultimately becomes the gateway to a federally recognized, and potentially global, medical cannabis market, early applicants will be best positioned to participate.

We describe this as a “lottery ticket” not because it is speculative, but because it requires an upfront investment with uncertain outcomes. Engaging experienced counsel and preparing a compliant application typically involves costs in the range of $10,000 to $15,000 (including the DEA fee), with additional costs depending on complexity, scope, and the number of DEA registrations sought. The bet is $10,000-$15,000 for a potential upside opportunity into the hundreds of thousands or millions of dollars.

For those prepared to move forward, we can help you navigate this process efficiently and strategically. Our team is one of very few that is experienced in DEA registrations. We can:

• Provide a clear overview of the DEA registration framework and historical precedent
• Prepare you for likely DEA follow-up inquiries and supplemental information requests
• Assist in completing and submitting your application
• Develop a comprehensive supporting package to strengthen your submission, should DEA seek supplemental information
• Advise on international treaty obligations and operational compliance considerations referenced in the order

If you are considering pursuing DEA registration during this window, we encourage you to connect with our team to discuss your options. We are available to provide a complimentary consultation and help you evaluate whether this opportunity aligns with your business strategy.

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For recent posts on the rescheduling order, check out the following:

• The U.S. Opens Its Medical Marijuana Market to Global Trade (For Now); Broader Marijuana Rescheduling on Deck
• Marijuana rescheduling and income tax

The post A Calculated Bet: DEA Registration is Open, and the Clock is Ticking appeared first on Harris Sliwoski LLP.

The Order went further than many of us anticipated. It also includes a short section titled “Tax Implications.” Here is that section, in whole:

“The Acting Attorney General further notes that, as a consequence of this rule, state licensees will no longer be subject to the deduction disallowance imposed by Section 280E of the Internal Revenue Code, which applies only to businesses engaged in ‘trafficking in controlled substances . . . in a schedule I or II,’ 26 U.S.C. § 280E. Nothing in this rule constitutes a determination regarding federal tax liability, and qualifying state licensees should consult with tax counsel regarding the applicability of Section 280E to their specific circumstances.”

There is plenty to unpack in that paragraph.

“State licensees”

The Order doesn’t define “state licensee.” However, “state medical marijuana license” is now defined at 21 CFR § 1300.01 as:

“a license issued by a state entity (or by a District of Columbia entity or a federal territorial entity) authorizing the licensee to manufacture, distribute, and/or dispense marijuana or products that contain marijuana for medical purposes.”

Taxpayers holding these licenses, presumably, are “state licensees.” Many of these medical marijuana sellers may finally escape the stifling grasp of Section 280E.

Reader, I said “may.”

In states that allow only medical marijuana (e.g. Florida, Oklahoma, Pennsylvania), things appear straightforward: that is, state-licensed operators have become 280E-exempt under the Order. The marijuana being produced, processed, transferred and sold in these states all goes to cardholders—at least theoretically—and all of that marijuana is now in schedule III.

In states with adult-use programs, the analysis could be complex. All states with adult-use marijuana programs also have medical marijuana programs. Most of these states have blended their programs to varying degrees. In some states, a plant may begin in adult-use CTS, grown by a non-medical licensee, but evolve into a medical marijuana item somewhere along the supply chain. The resulting product may or may not be more potent, will likely be packaged differently, and may or may not be taxed. Invariably, though, it is transferred or sold to a medical marijuana cardholder. It has undergone a definitional transformation, if not a physical one.

The licensees in these mixed supply chains may be adult-use licensees, with “endorsements” or “registrations” or other permissions to create or handle medical marijuana products. At the grow level, the distinction is virtually meaningless—a marijuana plant is just a marijuana plant, after all. But, are these hybrid operators “state licensees” within the meaning of the Order? They handle medical marijuana, but they also traffic in non-medical marijuana. They may or may not segregate inputs; they may or may not segregate outputs. You can see where I’m going with this.

“Nothing in this rule constitutes a determination regarding federal tax liability”

In this respect, DOJ stays in its lane. Further along, though, the Order repeats the paragraph on Section 280E that I quoted above, adding one striking sentence:

“The Administrator encourages the Secretary of the Treasury to consider providing retrospective relief from Section 280E liability for taxable years in which a state licensee operated under a state medical marijuana license.”

Retrospective relief from Section 280E would be the ultimate prize for many marijuana businesses, short of an entrée to interstate commerce. The possibility is utterly tantalizing. Could it actually happen?

It could, although the Treasury need not heed the “retrospective relief” suggestion—it operates independent of DOJ in the executive branch. That said, the IRS has granted retrospective relief to taxpayers on numerous occasions, most recently last month in relation to OBBA tax credits. OBBA was signed into law in July of 2025, yet the IRS will allow taxpayers to amend returns as far back as 2022 for purposes of making certain elections.

However the Service proceeds, marijuana taxpayers would be wise to heed the Order’s advice to consult with tax counsel. An exception involves tax counsel who argue that Section 280E doesn’t apply to any marijuana businesses whatsoever. In that case, please read this.

What’s next for marijuana rescheduling, and tax

I’ll be watching three things.

First, I’ll be watching for Treasury guidance. On Thursday, April 23, the Treasury and IRS promptly announced such guidance is forthcoming. The press release forecasts:

“a transition rule providing that, for purposes of Section 280E, rescheduling generally will be considered to first apply for a business’s full taxable year that includes the effective date of the Final Order…”.

For most marijuana businesses, that will be calendar year 2026.

Second, I’ll be watching for litigation. The Order will be litigated. The fundamental question is whether DOJ exceeded its authority in issuing the Order. Challengers will argue, inter alia, that: 1) the Order undercut an ongoing rescheduling process, not yet withdrawn; 2) that the Order’s heavy reliance on international treaty compliance, and specifically, its permissive reading of a 2024 Office of Legal Counsel opinion on that issue, is flawed; and 3) that the bifurcation of marijuana into medical and non-medical channels by DOJ, outside of FDA purview, is statutorily incoherent.

Third, I’ll be watching for adult use rescheduling. In its press release announcing the Order, DOJ announced it would also “expedite the ongoing rulemaking process required to fully remove marijuana from Schedule I and place it in Schedule III under the Controlled Substances Act.” This rulemaking would apply to all marijuana, and not just medical marijuana. DOJ says DEA will “commence a new administrative hearing beginning June 26, 2026.” How that would work in an agency that no longer has an administrative law judge is a very good question. We’ll save it for another day.

For now, medical marijuana is in schedule III. State licensees should watch these further developments, but also focus on things they can control. These include: 1) consulting with tax counsel; 2) revisiting accounting practices, especially where allocations to medical marijuana may be distinguishable from allocations to non-medical marijuana; and 3) recall that local tax laws still apply—including state laws limiting certain deductions for all marijuana businesses.

The post Marijuana Rescheduling and Income Tax appeared first on Harris Sliwoski LLP.

The U.S. has joined much of the world in acknowledging medical marijuana. Let international trading begin!

Effective April 28, 2026, the acting Attorney General “hereby order[s] that FDA-approved drug products containing marijuana, as well marijuana in any form covered by a state medical marijuana license, be placed in schedule III of the CSA.” Based on this order, the United States acknowledges medical marijuana and has a fully functioning medical marijuana program (via state licensees). The final order applies to: (a) marijuana as listed in 21 CFR 1308.11(d)(23), (b) marijuana extracts as defined in 21 CFR 1308.11(d)(58), and (c) naturally occurring Delta-9-THC derived from the marijuana plant (other than the mature stalks and seeds). The order does not reschedule all marijuana. Any marijuana or marijuana extract not covered by this order (i.e. state-legal adult-use marijuana) remains in schedule I and will be subject to a new rescheduling hearing scheduled for June 29, 2026 at 9 a.m. ET.

This order went much further than expected. I wrote last year about the limits of moving marijuana to schedule III, and how such a move would not legalize state-licensees without regulatory change. This order does just that. It amends DEA regulations to legalize state licensees. Whether such amendments will withstand judicial scrutiny remains to be seen.

How the order was issued

As I wrote about previously, all it took to reschedule was a press release and stroke of a pen. Although, it was not so much a stroke of a pen as a 23-page order outlining the current move and future process. This move does not appear to place marijuana in Schedule III; rather, it places certain formulations of marijuana in schedule III–namely FDA approved products and, more impactfully, medical marijuana products that “are subject to a state-issued license to manufacture, distribute, and/or dispense marijuana products containing marijuana for medical purposes.”

It is important to note that this is a final order being issued under 21 USC 811(d)(1) and not a proposed rule. Section 811(d)(1) allows the Attorney General to reschedule a substance if doing so would place the U.S. in better alignment with its international treaty obligations. I have written about this many times over the years, and provided position papers to DEA on utilizing this mechanism. Using 811(d)(1), the DOJ and DEA are not required to obtain a recommendation from HHS, though one was provided in 2023.

In its order, DEA also takes pains to highlight the HHS findings in its 2023 recommendation, supporting today’s move, even though such support is not needed. The acting Attorney General stated that “[a]lthough I am not required to consider this HHS recommendation when issuing an order under section 811(d)(1), because I believe there are several legally viable scheduling options that would satisfy the United States’ obligations under the Single Convention . . . . I exercise my discretion in determining the most appropriate schedule by choosing the option that most closely aligns to HHS’s findings and best position the United States to carry out its obligations under the Single Convention.”

Registration requirements

State-licensed medical marijuana operators

The final order establishes an expedited registration process under 21 CFR 1301 for state-licensed medical marijuana entities to register for a DEA license to manufacture, distribute, and dispense marijuana for medical purposes under federal law. This means that state licensed medical marijuana operators will be permitted to apply for DEA registrations, something DEA has prohibited in the past.

The Attorney General determined that state-licensed regulatory systems have developed robust infrastructure for preventing diversion, ensuring product safety, proper record retention, and proper facility inspections, all of which fulfill the objectives of federal registration and recordkeeping requirements. Taken as a whole, these systems “demonstrate a sustained capacity to achieve the public-interest objectives that underlie the CSA’s registration framework, including protecting public health and safety and preventing the diversion of controlled substances into illicit channels.” As such, the Attorney General determined that “incorporating state licensing systems into the federal registration framework represents the most effective and efficient means of achieving the CSA’s objectives.” The Attorney General and DEA preserve authority, however, to deny or revoke registration where specific public interest concerns arise, and to ensure compliance with the Single Convention.

Based on this state-federal partnership, DEA will amend part 1301 of its regulations to provide an expedited review process under which state licensees may submit their existing state credentials as conclusive evidence of state authorization to receive DEA registration for manufacturing, distribution, and dispensaries. Importantly, the DEA must grant registration unless doing so would be inconsistent with the public interest under 21 USC 823 factors or under the Single Convention. Applications submitted within 60 days of publication must be processed within six months, and early applicants may lawfully operate under their state-issued license during the pendency of review.

State registrants may also rely on state-law labeling, packaging, disposal, and physical security requirements in lieu of the federal requirements, subject to inclusion of the statutory warning label required by 21 USC 825(c).

FDA-approved marijuana operators

The following outlines the schedule III regulatory requirements that now apply “for those who handle marijuana exclusively in the form of an FDA-approved drug product”:

1. Any person who handles FDA-approved drug products containing marijuana must be registered with the DEA to conduct such activities for a schedule III substance.
2. Entities that transfer marijuana to patients, including dispensaries, must register with the DEA as “practitioners” under 21 USC 823(g).
3. Schedule III FDA-approved drug products containing marijuana must be disposed of in accordance with 21 CFR 1317, in addition to other applicable state and federal requirements.
4. DEA registrant applicants must pay the annual DEA fee for registration, which are: (1) Manufacturer: $3,999 annually; (2) Distributors: $1,850 annually; and (3) Dispensaries, including pharmacies: $888 for a registration valid for 3 years.
5. Prescriptions are required to be issued prior to dispensing FDA approved marijuana drugs and must contain specific information.
6. All DEA registrants must maintain records as required by federal law and submit reports with respect to FDA-approved drugs.
7. All DEA registrants must comply with DEA security requirements, labeling and packaging, and inventory requirements.

International trade and import/export and DEA authority

Imports and exports

As I have argued along with colleagues, this move to schedule III will also require amending DEA’s regulations to account for US obligations under the Single Convention with marijuana being moved into Schedule III. In DOJ’s final order, it acknowledged the same, stating that “DEA must simultaneously amend the regulations to require a permit to import or export such products.”

This order specifically states that “this order amends the DEA regulations (21 CFR 1312.30) to add FDA-approved drug products containing marijuana and state-licensed medical marijuana to the list of nonnarcotic schedule III through V controlled substances that are subject to the import and export permit requirement.” Registering with the DEA will allow state licenses to potentially access the international market, as DEA registrants can apply for and receive import and export licenses. Another important amendment is that DEA addressed its regulatory definition of “medicinal cannabis,” which DEA created out of thin air, to exempt state legal medical marijuana from the requirement that medicinal cannabis be FDA approved and legal to market under the Food, Drug, and Cosmetic Act.

DEA will become a part of the state medical marijuana supply chain

Registration with the DEA will be essential for state medical marijuana licensees, because DEA will be responsible for purchasing and selling the marijuana grown by state licensees as required by DEA’s regulations and the Single Convention. “By maintaining in schedule I all unlicensed marijuana, bulk marijuana, and any marijuana or marijuana extract that has not yet been incorporated into a FDA-approved drug product, and by requiring that state-licensed marijuana satisfy the requirements relating to the purchase and sale of marijuana by DEA, the United States will continue to meet these obligations without disruption or delay.”

The rule also establishes a nominal price purchase-and-resale mechanism through which the DEA acquires and resells registered manufacturers’ marijuana crops, to satisfy Single Convention requirements. Query: do we really expect DEA to take possession of all flower sales within state systems? As the order is written, registered manufacturers must store crops in DEA maintained facilities until the transaction is complete, and each registrant must provide DEA information on the exact location where medical marijuana is cultivated.

Research

Researchers who obtain marijuana or marijuana derived products from state licensees for use in scientific research are shielded from civil and criminal liability under the CSA, provided that the researcher is registered with the DEA. This now allows for state medical marijuana and products to be researched.

I.R.C. 280E

The order acknowledges that state medical licensees will no longer be subject to I.R.C. 280E, but does not make a determination on their tax status and suggests they speak to a tax consultant when making their tax determination. It goes on further to encourage the “Secretary of Treasury to consider providing retrospective relief from Section 280E liability for taxable years in which a state licensee operated under a state medical marijuana license.” Importantly, 280E will likely be a nightmare for those operating in dual licensing states where both adult-use and medical often operate under once license. Many operators, including the large multi-state operators, do not keep distinct records. Since only licensed medical operations qualify for 280E relief, unless these companies can separate their books–and in some cases their licenses–they will likely remain subject to 280E.

What the order does not cover

This order does not apply to: (1) anything that does not fall into the FDA-approved marijuana; (2) any products and operators not licensed by a state’s medical marijuana program; (3) synthetically derived THC (e.g. delta-10 THC) which remains in schedule I; and (4) Any hemp product exceeding 0.4mg after November 12^th. Anyone dealing with non-FDA approved medical marijuana or state licensed medical marijuana will remain in violation of federal law as it relates to a schedule I controlled substance.

It appears that current DEA registrants manufacturing bulk marijuana will also remain in Schedule I, since they are neither FDA approved nor legalized under state legal medical marijuana programs.

Outstanding issues

Some outstanding questions remain. For instance, as a discuss above re: 280E, how will dual licensees that provide both adult-use and medical marijuana be treated? For example, in Arizona marijuana sold as adult-use or medical is not designated as such until the point of sale. How will medical marijuana versus the adult-use be tracked for schedule III, and more importantly, 280E purposes? One thing is likely certain: those operating in these dual licensed states that comingle medical and adult-use marijuana (whether through inventory or via the company’s books) will almost certainly be ineligible for the early expedited DEA registration discussed above.

Upcoming DEA administrative law hearing

The Attorney Generals order does not reschedule all marijuana. Anything not included in this order will be subject to a new administrative law hearing, which is scheduled to commence on June 29, 2026, at 9 a.m. ET. The result of this hearing will determine whether all “marijuana” is moved into schedule III.

Certain legal challenges

DEA does acknowledge in footnote thirty-nine that if any of the order is found illegal, the rest of the provisions shall remain. This acknowledges the reality that litigation will certainly ensue–if it hasn’t already. Smart Approaches to Marijuana will certainly bring litigation challenging the Attorney general and DEA’s authority to issue this order and the rules related to it. While the Attorney General’s Authority to reschedule a substance under 811(d)(1) is clear, its ability to amend operational and registration regulations under the same authority is not as clear. We will be keeping a close eye on this as things progress and will publish updates as they occur.

In the meantime, if you are a state licensed medical marijuana operator, please don’t hesitate to reach out to our team about DEA registration. Further, if you are a foreign medical marijuana operator looking to explore US opportunities, they finally exist (at least for now).

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For previous insights on marijuana rescheduling, please check out these blog posts:

• Marijuana to Schedule III is Necessary, But Let’s Be Honest About Its Limits
• One Signature Could Remove Marijuana From Schedule I Tomorrow
• Trump’s Cannabis Plays, Explained
• Is Marijuana Rescheduling Finally Happening? What to Know, Now
• President Trump Issues Executive Order Directing the Attorney General to Reschedule Marijuana

The post The U.S. Opens Its Medical Marijuana Market to Global Trade (For Now); Broader Marijuana Rescheduling on Deck appeared first on Harris Sliwoski LLP.

Christian is widely recognized as a leading voice in cannabis law and policy. He has worked at the forefront of the industry’s development, advising clients on business formation, corporate governance, real estate, financing, and regulatory compliance in an evolving legal landscape. His experience spans both domestic and international markets, allowing him to guide clients navigating cross-border opportunities and challenges.

In addition to his client work, Christian has played a meaningful, public role in shaping cannabis policy in the United States and abroad. He has held numerous leadership roles, including: serving on the board of the National Cannabis Industry Association; serving as Chairman of the Board and Interim CEO of the Cannabis Trade Federation; and serving as Chairman of the Board of the United States Cannabis Council. In 2010, he also co-founded Vicente Sederberg LLP (now Vicente LLP) and served as its managing partner for more than a decade.

At Harris Sliwoski, Christian will continue advising entrepreneurs, established companies, and international operators on strategic growth, compliance, and risk management. His addition further strengthens the firm’s cannabis and regulatory practices–particularly as global markets continue to expand and mature.

Welcome, Christian!

The post Harris Sliwoski Welcomes Christian Sederberg appeared first on Harris Sliwoski LLP.

Why ICBC Berlin Matters for the Global Cannabis Market

As the global cannabis market continues to expand, ICBC Berlin has become one of the leading forums for discussing international cannabis business, cross-border investment, and regulatory developments. The conference consistently brings together the operators, policymakers, and investors actively shaping the future of the global cannabis industry.

Key issues expected to dominate conversations this year include evolving European cannabis frameworks, cross-border capital flows, and supply chain development as more countries move toward regulated markets.

The U.S. and the Global Cannabis Opportunity Gap

As Jason has previously written about, the United States is missing a golden opportunity to join and affect the global marijuana market. While other countries are building cultivation, manufacturing, and export infrastructure, U.S. operators are still unable to meaningfully participate in international cannabis commerce. With the global cannabis market projected to reach $82.3 billion by 2027, the U.S. risks missing a significant economic opportunity unless federal policy evolves.

What International Cannabis Businesses Should Be Watching

Still, there is reason for cautious optimism. If federal policy shifts to allow exports or broader international participation, U.S. businesses could eventually become meaningful players in the global cannabis market. In the meantime, emerging federal initiatives around CBD products may provide a limited pathway for U.S. companies to begin engaging in international cannabis business, particularly in jurisdictions where hemp-derived products are permitted. Until then, conferences like ICBC Berlin remain an important reminder that the future of cannabis is international.

Events like ICBC Berlin highlight a simple reality: the future of cannabis is increasingly global, and businesses that understand cross-border regulatory and investment dynamics will be better positioned to compete.

Whether your U.S. company is looking to invest in a global cannabis operator, you are an international operator looking for U.S. investment, or you simply want to understand where a particular country’s cannabis policies are headed, reach out to Jason Adelstone at jason@harris-sliwoski.com to schedule a time to connect.

The post Jason Adelstone to Attend the International Cannabis Business Conference in Berlin appeared first on Harris Sliwoski LLP.

The FDA Memo is welcome guidance as to the Substance Access BEI. The memo was anticipated by some of us, but there is more at play here.

The FDA Memo on cannabis enforcement in the Substance Access BEI program

The FDA Memo is only two pages. It traces federal hemp regulation back to the 2018 Farm Bill, as reined in by P.L. 119-37, a spending bill passed in November of 2025. As we explained at the time, P.L. 119-37 closed the perceived loophole on intoxicating hemp products by re-defining “hemp.”

The FDA Memo notes that the 2018 Farm Bill “explicitly preserved FDA’s authority to regulate products containing cannabis . . . . under the Federal Food, Drug, and Cosmetic Act [‘FDCA’].” FDA issued a similar proclamation when 2018 Farm Bill broadly legalized hemp, and it has continued to assert authority over hemp-derived products ever since.

But the agency is mostly just talk. Its efforts have been limited to sending (and bragging on) sporadic warning letters to select CBD sellers, who make the wildest health claims. All the while, the U.S. hemp cannabinoids market has blossomed into a $20 billion behemoth, with scrupulous and unscrupulous parties selling their wares in a regulatory vacuum. After several years of this, in 2023, FDA concluded that it wouldn’t adopt rules to allow CBD to be marketed as a dietary supplement in conventional food products. States have been left to fend for themselves.

The FDA Memo proceeds to discuss President Trump’s Executive Order 14370 of December 18, 2025, which directed the Attorney General to reschedule marijuana as a Schedule III substance under the Controlled Substances Act (CSA); and more pertinently for this exercise, for the National Institutes of Health to “develop research methods and models… to improve access to hemp-derived cannabinoid products in accordance with Federal law and to inform standards of care.” That’s where Substance Access BEI comes in.

FDA concludes its milquetoast memo with a policy statement, included here in full:

The FDA does not intend to enforce sections 502(f)(1) or 505 of the [FDCA] with respect to an orally administered, hemp-derived CBD product solely on the basis that it contains CBD, provided that the product (1) is manufactured, marketed, and labeled in a manner that would be consistent with the dietary supplement framework, including bearing a supplement facts panel and structure/function claims, (2) is not contaminated, (3) is not packaged or labeled in a manner that would be attractive to or marketed for children, and (4) is provided to a beneficiary through a program of medical items or services payable under Title XVIII of the Social Security Act, under the direction of the patient’s treating physician, in a manner ancillary to the covered items or services furnished under such program.

In other words, FDA will continue not enforcing federal law, due to conflicting developments, in this one specific context. Old cannabis industry heads may see parallels here with the Cole Memorandum. Once again, a branch of government has deferred enforcement of cannabis-related commerce on a prerogative basis.

Open questions for CBD and hemp-derived products, inside and outside the Substance Access BEI program

The biggest question, I think, is whether the FDA will continue non-enforcement of the FDCA as to hemp-derived products outside this specific, Medicare context—either now, or after the hemp products ban takes effect this November. My bet is FDA won’t do much prior to November, and, assuming the ban sticks, it won’t do much after. A related prediction is that FDA will maintain its position that CBD hasn’t been proven safe and effective (outside of the approved drug Epidiolex), notwithstanding the Substance Access BEI program.

Another question relates to potential tension between the “hemp threshold” adopted in the Substance Access BEI program, and the FDA Memo. This a difference was quickly noted by Jonathan Havens, on LinkedIn. He observed that the FDA Memo references a 0.4 mg-THC-per-container threshold (in keeping with P.L. 119-37), while this new Medicare program permits up to 3 mg of THC per serving in certain contexts. The question becomes whether a CBD product could be program-compliant, yet fall outside of FDA’s enforcement discretion policy due to THC content.

Interestingly, the answer to that question may lie with FDA. Last November, P.L. 119-37 gave the agency 90 days to further define the term “container” in relation to hemp products. The Congressional deadline of February 10, 2026 quietly passed, and we still don’t have a proposed definition of “container” to my knowledge. They don’t call it the Foot Dragging Agency for nothing, I guess.

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For related posts, check out the following:

• Notes on the Federal Prohibition of Intoxicating Hemp Products
• Will the Feds Enforce the Ban on Intoxicating Hemp Products, and Seed Sales?
• Hemp Companies Have One Year to Get Marijuana Genetics Into or Out of the U.S…. But a Loophole May Still Exist
• Federal Cannabis Policy is More Confusing Than Ever
• The November 12 Cliff: How the Hemp Ban Threatens Bankruptcy Eligibility 
• What the 2026 Federal Hemp Ban Means for Unsold Hemp Inventory
• Are CBD Food and Drinks Really Not Legal? Really?
• Is it Legal, or Not? What to Make of All These DEA Position Letters

The post CBD, Medicare, and the New FDA Enforcement Memo appeared first on Harris Sliwoski LLP.

Their session, “Legal Reality Check: Cannabinoids, Compliance, and Enforcement in a Shifting U.S. Landscape,” will take place this Thursday, March 26th, at 4:20 p.m. MST. The panel will focus on one of the most uncertain areas of hemp regulation: the likelihood that Congress extends current hemp-related restrictions, and the nature of the regulatory and commercial landscape if it does not.

The discussion will also address practical enforcement challenges, particularly around inputs like seeds, where oversight is inherently difficult. With each panelist bringing a distinct perspective, attendees can expect a candid and substantive conversation on the legal and business realities rapidly reshaping the hemp industry.

For related posts on this topic, check out the following:

• Notes on the Federal Prohibition of Intoxicating Hemp Products
• Will the Feds Enforce the Ban on Intoxicating Hemp Products, and Seed Sales?
• Hemp Companies Have One Year to Get Marijuana Genetics Into or Out of the U.S…. But a Loophole May Still Exist
• Federal Cannabis Policy is More Confusing Than Ever
• The November 12 Cliff: How the Hemp Ban Threatens Bankruptcy Eligibility 
• What the 2026 Federal Hemp Ban Means for Unsold Hemp Inventory

The post Jason Adelstone to Moderate Compliance and Enforcement Panel at Industrial Hemp International Conference appeared first on Harris Sliwoski LLP.

HB 4139 (FAILED)

This was the session’s omnibus cannabis bill, which I explained had a rough start due to various disagreements between the marijuana and hemp lobbies. On February 16^th, HB 4139 was shuttled to the Ways and Means Committee and never heard from again—a fate that befalls many bills in that committee, especially in short sessions.

The upshot is that we won’t see a variety of new police powers arrogated to state agencies, and we won’t get key definitions on hemp terms. Nor will we see a tax on the sale of intoxicating hemp items in Oregon. For a fuller description of what was at stake here, check out my prior post, or the engrossed version of HB 4139 that died in Ways and Means.

HB 4142 (PASSED)

This one was referred to as the “hospice bill” and also “Ryan’s Law.” It was named for Ryan Bartell, a terminal cancer patient who found relief through medical cannabis. I previously explained that HB 4142 expands the definition of “debilitating medical condition” for the medical use of marijuana, to include “the need for hospice, palliative care, comfort care or other symptom management, including [comprehensive] pain management.” That language stayed intact, with the only addition being the word “comprehensive.”

The law applies to hospice programs, residential facilities and palliative care settings, but exempts hospitals and their affiliated clinics. It also protects facilities and staff from state criminal liability for possessing, delivering, or manufacturing medical marijuana for patients. And it prohibits the Oregon State Board of Nursing from disciplining nurses for discussing medical cannabis with patients. All good stuff.

Assuming Governor Kotek either signs or doesn’t veto this bill, it becomes operative on January 1, 2027. Qualifying facilities are required to have written policies in place by June 30, 2027 for the procurement, storage and administration of medical marijuana. By December 31, 2027, facilities must make educational training available to staff. I have no reason to believe Governor Kotek won’t support this bill. It follows similar legislation in California from 2021, and it sailed through the session without controversy.

HB 4162 (PASSED)

Here’s what I wrote on LinkedIn some three weeks ago, regarding this bill:

True story 🙄🙄. HB 1462 was brought by the Local UFCW 55. They are attempting to repeal a law that took effect via a ballot measure that the Union itself initiated. Read that again.

UFCW first tried to push the law through legislatively, a few years back. But the Union couldn’t get traction due to Office of Legislative Counsel findings that the concept was UNCONSTITUTIONAL.

UFCW then pushed a recall effort against one of the opposing legislators, and started gathering signatures for a ballot measure to pass the unconstitutional law.

Oregon voters approved it, not appreciating the flaws. I and others criticized the measure for obvious reasons and said it should be challenged. That predictably happened, and UFCW/Oregon was routed at District Court. Case is now on appeal for some reason.

Now, rather than face another unfavorable ruling (Ninth Circuit), UFCW is asking the legislature to unwind what lawmakers and others told it not to do in the first place.

You don’t have to be anti-union (I’m not) to appreciate how asinine this is. Big waste of time and taxpayer money here in Oregon. I would like this to get some press.

That’s enough said, probably. We can expect a dismissal of the pending Ninth Circuit appeal sometime soon.

SB 1548A (FAILED)

This was styled as a “public health” bill that proffered additional edibles packaging and dispensary siting requirements. I viewed the bill as unnecessary and wasteful, which I imagine was the industry consensus. I also wasn’t surprised to see it falter, even as it got some traction in its journey through a few committees.

As with any of these failed bills, SB 1548A could always pop up again next session, as a stand-alone bill or in some other format. Hopefully it doesn’t, though.

Conclusion

Stay tuned for Governor Kotek’s signature on HB 4142 and HB 4162. If Kotek doesn’t sign or veto either bill by April 17^th, 2026, each bill becomes law automatically. We’ll also see some agency rulemaking around HB 4142, likely beginning this fall. As always, we’ll continue to update on any major developments. Onward!

The post Oregon’s New Cannabis Laws: 2026 Edition appeared first on Harris Sliwoski LLP.

I recently discussed another consequence operators should be considering as the deadline approaches: bankruptcy eligibility. But focusing only on insolvency planning misses a much more immediate operational problem: inventory.

Many hemp operators are currently holding large volumes of unsold material. At the same time, portions of the domestic cannabinoid manufacturing sector are already contracting. Some manufacturers are shutting down, others are reducing intake, and many are unlikely to purchase new raw material as November approaches. The closer we get to November without any change or extension to the law, the more unsold inventory will be at risk of destruction rather than sale. The predictable result is that a significant amount of compliant hemp may have no viable domestic buyer before the legal landscape changes.

There is, however, a potential solution receiving far less attention than it should: exporting that material to markets where demand still exists.

Why November 12 creates a domestic market failure

The November 12 deadline is not just a regulatory change. It is a market-structure event.

If the law takes effect as written, hemp plant material exceeding the new statutory threshold of 0.4 mg of total THC will effectively become unlawful to transport across state lines. In addition, operators in states without a closed-loop internal (intrastate) hemp market may be unable to participate in local commerce at all. Even for material cultivated lawfully beforehand, downstream purchasers will not want to hold inventory that may soon become legally risky to process, store, transport, or resell. Businesses operating in states without intrastate markets will be particularly exposed, and even robust state markets are likely to prioritize in-state sourcing to ensure supply stability after November 12.

Recent reporting that Chicago’s United Center has begun selling Señorita and RYTHM hemp-derived THC beverages at certain events illustrates the point. Those products are associated with Illinois cannabis operator, Green Thumb Industries, and their production and distribution appears structured to occur entirely within a single state. As long as Illinois and local law remain unchanged, those beverages can continue to be sold because no interstate transport is required (assuming no other applicable federal law will prohibit sales at the United Center). Opportunities like these will only be available to cultivators and producers that operate in states with intoxicating hemp programs. Those that operate in states that prohibit such products won’t be so lucky.

For operators whose business model depends on interstate distribution, this creates a classic end-of-regulatory-cycle dynamic:

• processors stop buying
• manufacturers draw down existing inventory
• wholesalers delay purchases
• prices collapse
• cultivators hold unsold stock

In other words, the problem for many operators will not be compliance but liquidity. Starting material that was lawful to grow may simply become commercially stranded.

Why the EU matters

Unlike the rapidly changing U.S. consumable hemp market, many European Union jurisdictions regulate hemp differently. Several EU countries permit the importation of raw hemp plant material. Once imported, goods may circulate within the EU and, in some cases, move into non-EU markets such as the United Kingdom.

These markets often value U.S. hemp for consistency and production scale. As domestic U.S. demand contracts, lawful foreign demand may still exist, but primarily for certain categories of raw material.

Important limits

This strategy is narrow and operators should understand its boundaries.

The opportunity primarily concerns:

• hemp flower
• hemp biomass
• hemp kief

It does not apply to:

• finished products
• consumable goods, especially those that contain any measurable amounts of THC
• vapes, edibles, or retail extracts

It also does not address exporting THCa plant material. That presents a separate and substantially higher-risk legal analysis involving both U.S. enforcement interpretation and destination-country controlled-substance law.

The discussion here concerns exporting raw agricultural hemp material, not cannabinoid consumer products.

Why timing matters

The operational point is straightforward: the legal window may close before many operators act. After November 12, exporting hemp plant material that no longer qualifies as federally lawful hemp will become unlawful, even if the crop was cultivated prior to the deadline. Once the material is treated as non-compliant cannabis under federal law, cross-border shipment, even between U.S. states, becomes problematic simultaneously under federal controlled substances law, customs export procedures, carrier policies, and foreign import certification requirements.

At that stage, inventory may not merely be unsellable but effectively immovable.

The practical implications

The industry has been treating November 12 primarily as a future compliance date. For many operators, it is more accurately a sales deadline.

If, by late summer or early fall, domestic processors shift to in-state sourcing or stop purchasing raw material altogether, cultivators may be left holding product that was lawful when grown but has no viable domestic buyer before the regulatory change takes effect.

Exporting to the EU or other countries may therefore function as a bridge strategy – a way to monetize inventory that might otherwise go unsold. Unlike restructuring strategies, this approach cannot wait for legislative certainty. Exporting agricultural material requires documentation, phytosanitary compliance, logistics planning, import-country regulatory verification, customs coordination, and buyers. Each step requires lead time, and the regulatory deadline is fixed.

Start planning now

Congress may amend the law, delay implementation, or do nothing. Operators should not base operational strategy on legislative uncertainty. If the deadline remains, the purchasing slowdown will likely begin well before November 12, meaning the practical deadline for selling inventory may arrive months earlier.

For some hemp businesses, the question is no longer simply whether they can remain compliant after November. It is whether they can convert existing inventory into revenue before the market disappears.

If you interested in learning more about exporting hemp material, corporate structuring, regulatory compliance, or evaluating how the November 12 deadline may affect your operations, please contact me to discuss your specific situation.

The post What the 2026 Federal Hemp Ban Means for Unsold Hemp Inventory appeared first on Harris Sliwoski LLP.

What is IRC 280E?

IRC 280E is a federal tax provision that prohibits businesses engaged in the “trafficking” of Schedule I or Schedule II controlled substances from deducting ordinary and necessary business expenses on their federal tax returns. This rule applies to state-legal marijuana businesses, and it forces many of them to pay federal income tax on gross income (revenue minus cost of goods sold) rather than net income (profit). It’s harder on some businesses than others, but overall IRC 280E is a scourge for any marijuana taxpayer.

Has IRC 280E been challenged?

Yes, cannabis businesses have challenged the law repeatedly over the past decade or so, on constitutional and “as applied” grounds. We have supported those efforts, including in litigation brought by clients of this law firm. Still, I’ve explained that “except for Champ v. Commissioner, no cannabis taxpayer has won an IRC 280E case (and there have been a bunch of them).”

I stand by the statement, while acknowledging that parties have achieved limited successes via COGS adjustments and refund requests. Overall, though, courts have consistently upheld the validity of IRC 280E as applied to marijuana businesses, and they have cast aside every constitutional challenge to date. It’s just a very difficult situation.

The current litigation to watch is a tax court case known as New Mexico Top Organics, Inc. d/b/a Ultra Health v. Commissioner (“NMTO”), filed last October. The primary argument is that marijuana is no longer “within the meaning” of Schedule I of the CSA, despite being listed there. The case relies on a 2023 determination by the Department of Health and Human Services (HHS) that marijuana should be placed in Schedule III. It also relies on Congressional spending bills, and finally, on the proposed rescheduling that began under President Biden.

I don’t find the arguments persuasive. Without analyzing the merits, though, it’s important to note that the NMTO plaintiff is a medical marijuana business. The plaintiff is not arguing that IRC 280E doesn’t apply to generalized adult-use sales (which are most sales nationwide, at this point). It’s also important to note that any decision by the tax court could be appealed by either party to the Tenth Circuit, and a ruling likely would not grant immediate relief to anyone—let alone non-litigants.

What advice are marijuana businesses getting these days on IRC 280E?

I’d like to think that most of advice is along the lines of what we tell our clients, viz. that marijuana is still a Schedule I controlled substance, unfortunately, and IRC 280E still applies. And I think that is what a clear majority of attorneys and CPAs are saying. That said, we’ve seen outlying and aggressive advice from professionals on whether marijuana businesses are still subject to IRC 280E, and even on whether marijuana remains in Schedule I (it does). Here’s a prominent example:

I’m not sure what the law firm there was thinking, and to be fair, they deleted the post following my comment. On the CPA side, the position I first vetted last year parrots the arguments in NMTO. The CPA I spoke with argued that marijuana is no longer “within the meaning of Schedule I” (despite its placement there), and that NMTO’s arguments apply equally to income from adult-use sales. The kindest thing I can say, euphemistically, is that it’s an interesting position.

What does the IRS say? What about Congress?

In June of 2024, following the HHS recommendation that marijuana be moved to Schedule III, the IRS published a memo titled “Marijuana remains a Schedule I controlled substance; IRC 280E still applies.” The Service stated that this would be true “until a final federal rule is published.” That never happened under the Biden administration’s flawed rescheduling process, and still hasn’t occurred following Trump’s executive order.

For good measure, the IRS followed on its memo six months later with another straight-ahead publication, observing that “some taxpayers have taken the position of disregarding the section 280E limitation using a variety of rationales that do not constitute reasonable basis.” The term “reasonable basis” is a relatively high standard of tax reporting (see 26 CFR 1.6662-3(b)(3)), and a myriad of penalties may ensue where the standard is not met. Straight talk.

For its part, Congress has failed to pass legislation to nullify the effects of IRC 280E, and every bill to de- or reschedule marijuana has ultimately failed. However, the Congressional Research Service, which I like, issued relevant guidance on IRC 280E earlier this month. The February 6 report is titled: “The Application of Internal Revenue Code Section 280E: Selected Legal Issues.” Notwithstanding the IRS publications discussed above, the CRS report maintains there is “little tax guidance concerning the application of Section 280E.” It then discusses a series of proposals that, if enacted, “would no longer prohibit marijuana businesses from taking deductions and credits.” In other words, without the enactment of any of these proposals, IRC 280E still applies.

Conclusion

I’m sure any business paying tax on gross receipts would love to enjoy the same deductions as other U.S. taxpayers. For this reason, and because certain advisors have jumped the shark with rescheduling in the air, we’ve seen more cannabis businesses filing returns that ignore IRC 280E. We’ve also had clients file amended returns seeking refunds for taxes paid under the IRC 280E regime, contrary to IRS warnings (and not to give anyone any ideas!). Some of these refunds have been processed, and our best advice is “set that cash aside, at least through the audit window.”

Let’s hope the rules change for tax year 2026, and that the Department of Justice picks up the ball with President Trump’s rescheduling order. Specifically, let’s hope for a final rule, or better. For now, though, I believe the correct advice is that IRC 280E still applies to marijuana businesses. Unfortunately.

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