Federal Cannabis Policy Just Changed Forever, Here’s What Rescheduling Order Really Means And What To Expect

The U.S. cannabis industry may be on the verge of its most significant, structural shift yet. However, according to Steven Schain, Of Counsel at Malkin Law, the reality is far more nuanced than the headlines suggest.

The April 23, 2026, medical cannabis rescheduling order issued by acting Attorney General Todd Blanche is “self-implementing,” as it automatically moves certain cannabis products from Schedule I to Schedule III under the Controlled Substances Act.

“At a threshold level,” Schain told IgniteIt in an interview, the order requires “no further governmental action.”

What Rescheduling Order Actually Changes And What It Doesn’t

Putting its historic nature aside, the immediate impact of “the single most significant development” toward federal legalization is narrowly focused. The order removes the burden of Section 280E of the tax code, a provision that has long prevented cannabis businesses from deducting ordinary expenses. That is, for state-licensed medical cannabis and FDA-approved products only.

“Unlike every other legitimate industry,” Schain said, cannabis operators have been unable to deduct “wages, rent, utilities, and insurance,” making them “vastly more expensive, and dramatically less profitable” to run.

But key limitations remain.

“Rescheduling to Schedule III does not make Cannabis federally legal, nor remove §280E’s prohibition for Adult-Use Cannabis, nor alleviate banking issues,” Schain emphasized. The policy change also does not extend to recreational cannabis markets nationwide, nor does it clarify whether interstate commerce or pharmacy distribution will be permitted, he added.

Next Stop: The June 2026 Hearing

Yet Schain remains optimistic that broader changes are on the horizon.

“AG Order also scheduled a June 29, 2026, expedited administrative hearing process to weigh cannabis broader rescheduling (ex. down-scheduling past Schedule III, expanding to encompass adult-use cannabis, amending the Financial Recordkeeping and Reporting of Currency and Foreign Transactions Act of 1970, 31 U.S.C. 5311, Et. Seq (“Bank Secrecy Act”) to redefine money laundering and facilitate banking of cannabis proceeds,” Schain explained.

What Operators Should Do Right Now

For cannabis operators, this policy shift creates both opportunity and urgency. To capture the new tax deductions, operators in both the medical and cannabis markets should separate their bookkeeping for both sides of their businesses, Schain advised.

Filing protective claims could allow companies to amend prior returns if rules change retroactively. At the same time, future tax credits may be possible depending on how regulators implement post-rescheduling guidance, he continued.

Investor Optimism Meets Regulatory Reality

For investors, the potential impact could be game-changing.

“Marijuana Related Business investment should skyrocket,” Schain said, highlighting improved profitability and growing public acceptance.

“As a result of federally-funded research, wider public acceptance, and higher profitability, reclassifying to Schedule III will enhance Cannabis investment,” he continued. “Beset by a lack of investment capital, a mishmash of 3 conflicting regulatory bodies, and an inability to meet exceedingly optimistic performance goals, reclassification will enhance the valuation of this promising. but underperforming, industry.”

At the executive level, Schain advises not to rush, adding that leadership teams within the cannabis market should focus on “keeping their powder dry” as the industry stabilizes.

“After peaking at the end of Q1 2021, Cannabis valuation and profitability plunged, causing the bulk of operators to renegotiate both their equity percentage and debt obligations to increasingly unattractive terms,” Schain said. “As a result, MRB leadership teams should not be making material decisions until the industry retrenches and their company’s valuation and profitability stabilize.”

The Industry’s Next Growth Driver: Talent And Education

In addition to regulation and finance, talent and education will be what the industry’s future will depend on.

Programs like the cannabis-focused degree at Stockton University are beginning to shape a new workforce. Schain said these programs extend beyond cannabis itself, applying to broader agricultural innovation.

That said, investors, stakeholders, operators, and policymakers should brace for the next cannabis chapter that heavily depends on the details around the historic policy change that will unfold.