Since President Trump issued an executive order to expedite cannabis rescheduling in December 2025, questions over the legal implications of this route have hung over the industry.
While Acting Attorney General Todd Blanche’s order moving state-licensed medical cannabis to Schedule III successfully pushed the long-awaited reclassification over the line, it raised more questions than it answered in terms of legal process.
Now, the non-partisan Congressional Research Service (CRS) has published a formal legal assessment of the Department of Justice’s rescheduling order, helping clarify the legal limitations of this route, and laying out the legislative path forward for lawmakers on both sides of the debate.
Critically, it highlights precisely where the legal authority of the President and the DOJ ends, and where Congress must step in to take it further.
Part of the Series The Cannabis Rescheduling Hub The definitive 1970–present record of America’s cannabis rescheduling fight — full timeline, DEA process, market reaction, and FAQ.
Read the full record →
Last month’s order, in a nutshell, split the rescheduling process into two parts. Medical cannabis, which is classified as any product falling under a state medical license, alongside FDA-approved products, is now under Schedule III of the Controlled Substances Act (CSA).
While adult-use cannabis, or products traded commercially for recreational purposes, remains under the most restrictive Schedule I, a hearing has been set for June 29, which is expected to consider extending Schedule III classification to the rest of the market.
According to the CRS, there are a number of key issues which could complicate and significantly delay that process. Whether the political will to continue pushing through these structural barriers will be sufficient is questionable.
The treaty-based mechanism the DOJ used to move medical cannabis to Schedule III quickly, bypassing the standard notice-and-comment rulemaking, cannot be extended to adult-use cannabis.
Phase 2 requires the full administrative process, bringing with it exposure to the already fierce legal opposition. litigation exposure that comes with it.
Separately, under the Federal Food, Drug and Cosmetic Act, any drug requires FDA approval before it can enter interstate commerce. Crucially, this applies regardless of whether cannabis is Schedule I or Schedule III. Only Congressional action or a successful FDA approval process can remove that barrier. Currently, the only naturally cannabis-derived product holding FDA approval is Jazz Pharmaceuticals’ epilepsy treatment Epidiolex, and no product sold in the state-legal cannabis market is close to that pathway.
The CRS analysis also confirms that quantity-based mandatory minimum sentences for cannabis offences, which are written specifically into statute rather than based on CSA classification, would remain in place even if adult-use cannabis is moved to Schedule III. Some general CSA criminal penalties would be reduced under Schedule III, but the statutory mandatory minimums are beyond the reach of rescheduling alone.
With all this in mind, the CRS has laid out several legislative paths forward that could achieve what the industry had hoped for with rescheduling.
Congress has the power to reschedule, deschedule, or alter the status of cannabis by legislation, unconstrained by the administrative procedures and factfinding requirements that bind the DEA.
Alternatively, a legislative move to Schedule III could simultaneously amend the FD&C Act, thus removing the FDA-approval barrier that executive action cannot touch, while extending 280E relief to recreational operators. No such legislation is close to passage at the time of publication.
Several proposals in the current 119th Congress would go further still by removing cannabis from the CSA entirely. Others move in the opposite direction, including a current bill that would amend Section 280E specifically to deny deductions for any cannabis business, regardless of schedule.
The CRS notes that more than 20 Republican senators and 26 House Republicans have formally urged the administration to abandon rescheduling entirely.
Foley Hoag attorney Jeff Schultz notes that organised opposition is both well-resourced and strategically patient. Smart Approaches to Marijuana has retained former Attorney General Bill Barr to litigate against any final rescheduling action.
The treaty pathway Blanche used to bypass notice-and-comment rulemaking is legally grounded in DEA precedent but is likely to face Administrative Procedure Act challenges. Opponents may argue that the treaty rationale was invoked as a pretext to avoid scrutiny. The order’s express severability provision signals the DOJ anticipated partial judicial narrowing and structured the document accordingly.
Investor sentiment going into the announcement was, by any measure, depleted. The ATB Cormark Capital Markets Spring 2026 Cannabis Investor Sentiment Survey, conducted 13–21 April, the day before rescheduling was first reported as imminent, found investors had assigned only a 55% probability to rescheduling occurring within 12 months, the second-lowest figure across six surveys since 2023.
ATB described the dynamic as ‘fatigue increasing as regulatory catalysts have yet to materialise.’ Just 17.6% of respondents had increased net exposure to multistate operators in the prior six months.
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The MSOS ETF closed at US$5.11 on 22 April. ATB’s survey found 46.2% of investors had expected it to reach US$10 or above upon rescheduling, projections built on full rescheduling, not the partial order delivered.
ATB’s modelling suggests full rescheduling could push Tier 1 MSO EV/EBITDA multiples from a current average of 5.8x toward 14.1x, with potential equity upside averaging 240% across the major operators.
Todd Harrison, Founding Partner and Chief Investment Officer at CB1 Capital, argued that the partial nature of the order should not be mistaken for failure.
Speaking to Bloomberg the day after the ruling, he described the April order as ‘a thoughtful surgical move’ and characterised it as the opening stage of a structured sequence.
“This is the first step. We just got to the starting gate. This isn’t mission accomplished,” he said.
Harrison argued the industry has always required three things for full normalisation: ‘growth, regulatory parity, and tax clarity’, and that while the April order partially delivers on the latter two for the medical segment, the growth thesis depends on what the June hearings produce for adult-use operators.
The post ‘Not Immediately Compliant’: What the CRS Says America’s Rescheduling Order Actually Delivers appeared first on Business of Cannabis.
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While Acting Attorney General Todd Blanche’s order moving state-licensed medical cannabis to Schedule III successfully pushed the long-awaited reclassification over the line, it raised more questions than it answered in terms of legal process.
Now, the non-partisan Congressional Research Service (CRS) has published a formal legal assessment of the Department of Justice’s rescheduling order, helping clarify the legal limitations of this route, and laying out the legislative path forward for lawmakers on both sides of the debate.
Critically, it highlights precisely where the legal authority of the President and the DOJ ends, and where Congress must step in to take it further.
Part of the Series The Cannabis Rescheduling Hub The definitive 1970–present record of America’s cannabis rescheduling fight — full timeline, DEA process, market reaction, and FAQ.
Read the full record →
What Blanche’s order can and cannot do
Last month’s order, in a nutshell, split the rescheduling process into two parts. Medical cannabis, which is classified as any product falling under a state medical license, alongside FDA-approved products, is now under Schedule III of the Controlled Substances Act (CSA).
While adult-use cannabis, or products traded commercially for recreational purposes, remains under the most restrictive Schedule I, a hearing has been set for June 29, which is expected to consider extending Schedule III classification to the rest of the market.
According to the CRS, there are a number of key issues which could complicate and significantly delay that process. Whether the political will to continue pushing through these structural barriers will be sufficient is questionable.
The treaty-based mechanism the DOJ used to move medical cannabis to Schedule III quickly, bypassing the standard notice-and-comment rulemaking, cannot be extended to adult-use cannabis.
Phase 2 requires the full administrative process, bringing with it exposure to the already fierce legal opposition. litigation exposure that comes with it.
Separately, under the Federal Food, Drug and Cosmetic Act, any drug requires FDA approval before it can enter interstate commerce. Crucially, this applies regardless of whether cannabis is Schedule I or Schedule III. Only Congressional action or a successful FDA approval process can remove that barrier. Currently, the only naturally cannabis-derived product holding FDA approval is Jazz Pharmaceuticals’ epilepsy treatment Epidiolex, and no product sold in the state-legal cannabis market is close to that pathway.
The CRS analysis also confirms that quantity-based mandatory minimum sentences for cannabis offences, which are written specifically into statute rather than based on CSA classification, would remain in place even if adult-use cannabis is moved to Schedule III. Some general CSA criminal penalties would be reduced under Schedule III, but the statutory mandatory minimums are beyond the reach of rescheduling alone.
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Could Congress step in?
With all this in mind, the CRS has laid out several legislative paths forward that could achieve what the industry had hoped for with rescheduling.
Congress has the power to reschedule, deschedule, or alter the status of cannabis by legislation, unconstrained by the administrative procedures and factfinding requirements that bind the DEA.
Alternatively, a legislative move to Schedule III could simultaneously amend the FD&C Act, thus removing the FDA-approval barrier that executive action cannot touch, while extending 280E relief to recreational operators. No such legislation is close to passage at the time of publication.
Several proposals in the current 119th Congress would go further still by removing cannabis from the CSA entirely. Others move in the opposite direction, including a current bill that would amend Section 280E specifically to deny deductions for any cannabis business, regardless of schedule.
The CRS notes that more than 20 Republican senators and 26 House Republicans have formally urged the administration to abandon rescheduling entirely.
Foley Hoag attorney Jeff Schultz notes that organised opposition is both well-resourced and strategically patient. Smart Approaches to Marijuana has retained former Attorney General Bill Barr to litigate against any final rescheduling action.
The treaty pathway Blanche used to bypass notice-and-comment rulemaking is legally grounded in DEA precedent but is likely to face Administrative Procedure Act challenges. Opponents may argue that the treaty rationale was invoked as a pretext to avoid scrutiny. The order’s express severability provision signals the DOJ anticipated partial judicial narrowing and structured the document accordingly.
What does all this mean for investors?
Investor sentiment going into the announcement was, by any measure, depleted. The ATB Cormark Capital Markets Spring 2026 Cannabis Investor Sentiment Survey, conducted 13–21 April, the day before rescheduling was first reported as imminent, found investors had assigned only a 55% probability to rescheduling occurring within 12 months, the second-lowest figure across six surveys since 2023.
ATB described the dynamic as ‘fatigue increasing as regulatory catalysts have yet to materialise.’ Just 17.6% of respondents had increased net exposure to multistate operators in the prior six months.
Live Market Data The Cannabis Stocks Tracker Live prices, market caps and performance data across the cannabis-listed universe — North American MSOs, Canadian LPs, European producers and biotech.
Open the tracker →
The MSOS ETF closed at US$5.11 on 22 April. ATB’s survey found 46.2% of investors had expected it to reach US$10 or above upon rescheduling, projections built on full rescheduling, not the partial order delivered.
ATB’s modelling suggests full rescheduling could push Tier 1 MSO EV/EBITDA multiples from a current average of 5.8x toward 14.1x, with potential equity upside averaging 240% across the major operators.
Todd Harrison, Founding Partner and Chief Investment Officer at CB1 Capital, argued that the partial nature of the order should not be mistaken for failure.
Speaking to Bloomberg the day after the ruling, he described the April order as ‘a thoughtful surgical move’ and characterised it as the opening stage of a structured sequence.
“This is the first step. We just got to the starting gate. This isn’t mission accomplished,” he said.
Harrison argued the industry has always required three things for full normalisation: ‘growth, regulatory parity, and tax clarity’, and that while the April order partially delivers on the latter two for the medical segment, the growth thesis depends on what the June hearings produce for adult-use operators.
The post ‘Not Immediately Compliant’: What the CRS Says America’s Rescheduling Order Actually Delivers appeared first on Business of Cannabis.
Continue reading...
