President Donald Trump’s administration is in the midst of loosening restrictions for cannabis businesses, but after decades of federal prohibition, a sense of distrust remains among many state-licensed operators.
Those operators, specifically medical cannabis dispensary owners, are now weighing whether to apply for an expedited Schedule III registration with the federal government after the Drug Enforcement Administration’s (DEA) Diversion Control Division opened its application portal on April 29.
It’s unclear if a separate registration portal will open for medical cannabis manufacturers (to cultivate, produce, process, package, label and transfer cannabis) and distributors (to receive and transfer cannabis), or if they’re expected to use a standard DEA form to complete the process.
The dispensary portal opened after U.S. Acting Attorney General Todd Blanche announced on April 23 that he had signed an order to “immediately” reschedule FDA-approved cannabis products and state-licensed medical cannabis from Schedule I to Schedule III under the Controlled Substances Act (CSA) pursuant to his authority under an international drug treaty – the United Nations Single Convention on Narcotic Drugs.
Under that order, state-licensed medical cannabis businesses wishing to take advantage of the Schedule III status, including Section 280E tax relief and recognition that their products have currently accepted medical use, are to register their operations with the DEA.
Those who apply for registration by June 26 will receive an expedited review within six months, by which time the federal government “must grant registration unless doing so would be inconsistent with public interest under 21 U.S.C. 823.”
This U.S. Code outlines registration requirements for manufacturers and distributors of controlled substances in Schedule I or II, calling on the U.S. attorney general to register applicants handling these substances after considering certain controls, such as diversion, compliance with state and local laws, prior conviction records, past experience handling controlled substances, and other factors relevant to public health and safety.
“The attorney general has determined that incorporating state licensing systems into the federal registration framework represents the most effective and efficient means of achieving the CSA’s objectives with respect to medical marijuana while promoting the medical benefits of marijuana and causing the least disruption for patients and existing state systems,” Blanche wrote in the order. “The rule accordingly leverages existing regulatory infrastructure while preserving the administrator’s authority to deny or revoke registration where specific public-interest concerns arise and to ensure compliance with the Single Convention.”
Registering with the DEA as a Schedule III business provides potential protections and benefits for state-licensed medical cannabis companies. According to law firm Foley Hoag, these likely benefits include:
- Potential access to export licenses
- Interstate commerce, if and when permitted by federal and/or state law
- A necessary compliance measure for banking, exchange listing, current or future credit facilities, and/or mergers and acquisitions
While federal registration may represent recognition and protection to some, it also represents a calculated risk for others, including cannabis businesses that operate dual-use facilities in states where both medical and adult-use cannabis are legal.
The seven-section registration application includes five liability questions, with one specifically raising a red flag for some businesses:
- Has anyone who will be involved in the ownership or operation of the firm previously manufactured, distributed, and/or dispensed any controlled substance without a DEA registration authorizing such activity?
The resounding answer is a likely “yes” for all applicants, as operating a state-licensed cannabis business means being involved in a controlled substance, and without a DEA registration, which wasn’t available until now. Those who answer yes need to provide the names of people involved and a “brief” explanation.
Cannabis Business Times reached out to the DEA seeking clarity on this question and the potential liability for applicants who answer yes: Will it hinder/help their application, or have no impact at all?
Another question under the “activity” section of the application asks:
- Will your firm be handling or dispensing recreational marijuana?
Those who answer yes are admitting to a federally illegal activity, the trafficking of a Schedule I controlled substance, to the federal government.
With the DEA unlikely to guide individual cannabis businesses through the application process – providing only a disclaimer and instructions page – many state-licensed operators are left weighing the risk-reward aspects of seeking the expedited federal registration.
And before hitting that submit button, the DEA reminds applicants of the penalties for intentionally furnishing false information: up to four years of imprisonment, a $250,000 fine, or both.
mmapplication.diversion.dea.gov
Jason Adelstone, an attorney with Harris Sliwoski, called the registration process a “calculated bet” that could position businesses that take advantage of the expedited review window with a first-mover advantage for “future interstate and even global” trade.
“The rescheduling order provides no guidance on future application rounds or timelines, leaving significant ambiguity for those who wait,” he wrote. “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.”
Adelstone indicated that the “bet” involves $10,000 to $15,000 in legal fees for those who engage with counsel to prepare their applications, with additional costs based on the complexity, scope and number of registrations an operator seeks. The “potential upside opportunity” goes into the “hundreds of thousands or millions of dollars,” he said.
Florida-based multistate operator Trulieve didn’t wait to put its chips on the table.
The company, which operates more than 200 medical-only cannabis dispensaries, announced on April 29 that it filed its applications for DEA registration shortly after the portal opened that afternoon.
“DEA registration for our medical business marks a historic step forward for Trulieve and the patients we serve,” CEO Kim River said. “Trulieve is uniquely positioned to set the bar as a responsible operator in U.S. cannabis.”
While the majority of Trulieve’s footprint lies in Florida’s medical-only marketplace, Rivers previously told CBT that roughly 85% of the company’s nationwide footprint is medical, by store count.
RELATED: Trulieve CEO ‘Not Concerned’ by DEA’s Middleman Role in Schedule III Order
In addition to activities and liabilities, the DEA registration form asks applicants to provide personal and business details, as well as information on state license(s) and compliance, before using either an electronic, bank-to-bank transfer through an automated clearing house or PayPal for the $794 nonrefundable application fee.
The 60-day window for state-licensed medical cannabis businesses to apply for expedited review closes three days before the Department of Justice plans to commence an expedited hearing process on June 29 to broadly reschedule all cannabis to Schedule III.
That new administrative hearing, to debate the merits of the same proposed rescheduling rule that was issued under President Joe Biden’s administration, will conclude no later than July 15, 2026, per a separate order from Blanche.
In other words, medical cannabis companies that apply for expedited registration won’t know if the federal government follows through on rescheduling adult-use cannabis until after they submit their forms.
