On April 23, the Acting Attorney General of the U.S. Department of Justice issued a final order moving certain marijuana-related products from Schedule I to Schedule III under the Controlled Substances Act. The move is narrowly focused, but it is a meaningful shift in federal treatment of medical marijuana.

Final Order

Under the order, marijuana, marijuana extracts, and naturally derived delta‑9 THC are placed in Schedule III, but only when they are either: (1) in a Federal Drug Administration (FDA)‑approved drug product, or (2) manufactured, distributed, or dispensed under a qualifying state medical marijuana license. Bulk, unlicensed marijuana and purely recreational state programs remain Schedule I. The Drug Enforcement Administration (DEA) is also creating an expedited federal registration pathway for state‑licensed medical marijuana businesses, effectively layering a federal license on top of state medical licensing.

Our Take

One immediate consequence is tax: the order acknowledges that state medical marijuana licensees will no longer be subject to Internal Revenue Code § 280E, which disallows deductions for businesses trafficking in Schedule I or II substances. For payments, the change removes one of the sharpest legal barriers: card issuers and acquiring banks will now be dealing, at least for state‑licensed medical marijuana, with a Schedule III product under a DEA registration regime, rather than pure Schedule I conduct. In principle, that makes it easier for financial institutions and card networks to support electronic payments, including credit and debit card acceptance, for medical marijuana transactions, because the underlying activity can be characterized as federally authorized, medically supervised, and tightly regulated. However, this is not a flip of a switch. The order does not legalize all marijuana sales, recreational programs remain untouched, and it does not require banks or card networks to change their current policies.