On Friday, October 30, the Justice Department announced the issuance of federal registrations for medical marijuana dispensaries. Simultaneously, DEA released its Timely Applicant information, outlining operational requirements for applicants that sought registration during the expedited application window between April 28 and June 26, 2026. The Timely Applicant information defines a “Timely Applicant” as a state licensed medical marijuana operators who applied during the expedited window and has either been registered by DEA, has not withdrawn its application, or has not been denied by DEA.
That same day, news broke that DEA had issued an Order to Show Cause to at least one Minnesota dispensary, seeking to deny registration because aspects of Minnesota’s marijuana laws were allegedly inconsistent with federal public-interest requirements and international treaty obligations.
Needless to say, it was a busy weekend trying to understand these developments, answer clients’ questions, and somehow maintain the appearance of being on vacation (which started for me last Wednesday).
So what does all of this mean?
What isn't surprising about all of this
Overall, the only surprising aspect of DEA’s announcement was its timing and approach. I expected DEA to maintain the status quo and defer registration decisions until the D.C. Circuit litigation concluded. I also expected any new substantive requirements to be implemented through proposed rulemaking or another process authorized under the Administrative Procedure Act (APA) (i.e. a Memorandum of Agreement), rather than through non-binding guidance/information.
The substance of DEA’s decisions, however, was largely predictable and relied on three factors.
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Dual licenses
The industry hoped DEA would overlook adult-use operations and allow applicants to obtain medical marijuana registrations while continuing adult-use sales through separate supply chains. From the beginning, I warned dual-licensed clients that this was unlikely. I expected DEA to require applicants to discontinue their adult-use operations or restructure them, much like Trulieve did (by transferring control of their adult-use operations, while retaining an economic interest).
The industry’s expectation that DEA would approve businesses simultaneously operating medical and adult-use programs was always overly optimistic. Yes, many DEA inspections included statement by DEA that they don’t care about adult-use right now but would revisit that at registration renewal. There was always a clock on dual licenses.
Consequently, DEA’s position that Minnesota’s combined medical and adult-use licensing framework presents a barrier to registration is disappointing but unsurprising. Minnesota operators face a particular problem because the state issues a single license authorizing both activities. They cannot simply surrender an adult-use license while retaining a medical license. This creates an issue for DEA because there is no way, under state law, to know whether the marijuana is medical or adult use until the point of sale. Such obscurity provides clear potential for a violation of the Single Convention and the DEA Final Order.
Operators in dual-license states issuing separate licenses may have more flexibility. Especially if DEA allows dual operators to separate their operations, much like Trulieve did. DEA’s Order to Show Cause provides an opportunity to submit a Corrective Action Plan, potentially allowing applicants to transfer or discontinue their adult-use operations. Whether DEA would accept such restructuring remains uncertain, but relinquishing the adult-use license would eliminate the operator’s authority to handle adult-use marijuana, potentially alleviating DEA’s concerns.
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Patient certifications and the Single Convention
DEA also objected to Minnesota’s allowance for veterans to self-certify for medical marijuana, arguing that dispensing without written certification violates the Final Order and the Single Convention. This position is consistent with DEA’s interpretation of the treaty, although I disagree with the policy implications. Minnesota’s accommodation recognizes that veterans receiving care through the Department of Veterans Affairs face federal restrictions on obtaining medical marijuana recommendations from VA physicians. Even discussing medical marijuana use can have detrimental effects on a veteran’s status and benefits.
A Timely Applicant might address this concern through a Corrective Action Plan agreeing not to dispense to self-certified patients, assuming state law permits that limitation. However, doing so would not resolve DEA’s broader objections to Minnesota’s licensing framework.
DEA relies on Article 30(2) of the Single Convention, which generally requires medical prescriptions for dispensing controlled substances to individuals, subject to an exception involving duly authorized therapeutic functions. The treaty language is confusing, particularly because its exception could appear to encompass physician-authorized therapeutic use. However, the Commentary to the Single Convention, while nonbinding, supports a narrower interpretation and describes prescriptions containing information identifying the physician, patient, drug, quantity, and date. All of which are accounted for in 21 CFR 1301.13(k)(5).
Accordingly, DEA has a plausible treaty-based argument for requiring written medical authorization, even if its interpretation creates significant practical problems for existing state programs.
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Synthetic cannabis
The Attorney General’s Final Order expressly preserved Schedule I treatment for synthetic THC. DEA’s refusal to allow medical marijuana registrants to distribute those products is therefore consistent with the Final Order.
Why DEA has this authority
The Final Order contains what amounts to a Trojan horse, preserving substantial DEA discretion over registration decisions. Although the Attorney General directed DEA to register Timely Applicants, that obligation is conditioned on consistency with the public-interest factors under 21 U.S.C. § 823 and the Single Convention. Section 823 permits DEA to consider additional factors relevant to public health and safety. Combined with the Final Order’s express preservation of federal statutory and treaty obligations, this gives DEA considerable room to determine which applicants qualify.
Some argue that the Final Order elevated state regulatory compliance above traditional federal requirements. That interpretation goes too far. The Attorney General concluded that state regulatory systems, “taken as a whole”, demonstrate the capacity to achieve the Controlled Substances Act’s public-interest objectives. That finding does not mean every provision of every state’s marijuana laws satisfies federal requirements.
Moreover, the Final Order expressly preserves federal statutory and treaty obligations while accepting state regulatory requirements to the maximum extent permissible. Therefor, the Final Order leaves room for some state laws not being compliance, and granting DEA authority to scrutinize individual applications. The more important question is whether it has exercised that authority lawfully and consistently.
DEA’s problem with similarly situated applicants
From what I am hearing, DEA appears to be treating similarly situated Timely Applicants differently. Minnesota and Washington, for example, both have licensing structures that combine medical and adult-use authorization. Yet not all applicants operating under these frameworks have received Orders to Show Cause. Some reportedly received only the Timely Applicant information, suggesting they may continue operating under the federal framework while others face potential denial. If accurate, this raises serious questions about DEA’s inconsistent treatment of similarly situated applicants.
Under the Administrative Procedure Act, 5 U.S.C. § 706, courts may set aside agency action that is arbitrary, capricious, an abuse of discretion, or otherwise contrary to law. The Supreme Court has also recognized equal protection constitutional limits on irrational and wholly arbitrary government treatment of similarly situated parties. However, proving unlawful disparate treatment is difficult. Differences between state programs, including Minnesota’s self-certification provisions, could provide DEA with a "rational basis" (the prescribed standard) for distinguishing applicants.
Further, different enforcement timing does not necessarily establish unlawful discrimination. DEA could argue that it intends to apply the same standards to all applicants but has not completed its review. Though, you would assume that since DEA's denial is based on state law, there wouldn’t be much a review for DEA to conduct.
DEA’s Trulieve problem
Trulieve presents a particularly interesting inconsistency.
The company appears to have received registrations after restructuring its operations to separate medical marijuana licenses from adult-use businesses. However, according to its July 2026 investor presentation, Trulieve retained approximately 90% of the economic benefits associated with those adult-use operations.
In Minnesota’s Order to Show Cause, DEA argues that authorization of nonmedical dispensing presents unacceptable diversion risks and conflicts with the public-interest objectives underlying the CSA. But if DEA considers adult-use marijuana activity fundamentally inconsistent with federal registration, why is retaining substantial economic benefits from those operations acceptable?
Legal control and economic ownership are different concepts, and Trulieve’s restructuring may satisfy the formal requirements of the Final Order. Nevertheless, DEA’s rationale raises questions about whether it is applying a consistent standard.
If an applicant cannot simultaneously operate adult-use and medical businesses because adult-use operations are federally unlawful and violate the Single Convention, then DEA should explain why a registrant may retain substantial economic exposure to that same activity through another entity.
Over the years, DEA has expressed concerns about drug cartels exploiting state-legal marijuana programs to, among other things, launder money. In essence, money laundering involves taking proceeds from illegal activity and funneling them through legitimate businesses to make those proceeds appear lawful. But how is that fundamentally different from Trulieve retaining substantial economic interests in adult-use operations that DEA itself considers federally illegal? If DEA views revenue generated from adult-use marijuana sales as proceeds of unlawful activity, shouldn't it also be concerned when those revenues ultimately benefit a federally registered medical marijuana operator?
This raises a questions about DEA’s apparent inconsistency in its reasoning. If DEA considers the financial integration of federally illegal marijuana operations with legitimate businesses a public-interest concern, it needs to explain why Trulieve's continued economic interest in adult-use operations does not raise similar concerns. Where exactly does DEA draw the line between prohibited involvement in adult-use marijuana operations and permissible economic benefits derived from those same operations?
Without a clear distinction, its treatment of similarly situated applicants becomes more vulnerable to challenge. Moreover, if DEA considers Trulieve's restructuring sufficient to satisfy federal registration requirements, any similarly situated Timely Applicant that adopts the same approach should be permitted to retain its Timely Applicant status or obtain DEA registration.
The Timely Applicant information and the broken supply chain
The supply-chain problem was predictable from the moment the Final Order was issued. DEA registration operates through a closed-loop system in which controlled substances generally move between appropriately registered entities. With no requirement to register some state licensees were going to register and others were not. This inherently creates a dual medical marijuana system.
Timely Applicant information requires applicants to establish compliant supply chains by November 29, 2026, effectively limiting transactions between only Timely Applicants. That creates serious problems in states where only a fraction of medical marijuana businesses applied for DEA registration. Or, alternatively, only a fraction did not.
In Iowa, for example, the applicant list appears to identify only two applicants. Those businesses will face significant supply-chain constraints because they cannot purchase products from, or otherwise transact in marijuana, with state-licensed operators that lack Timely Applicant status, potentially leaving them unable to obtain sufficient inventory to meet patient demand.
The reverse problem arises where most businesses applied but a small number did not. Nonapplicants could find themselves excluded from much of their existing supply chain. More troubling are states where no cultivators or manufacturers applied. Without registered cultivators, dispensaries will lack a lawful source of marijuana. Without registered manufacturers, processed products will become unavailable within the federal framework. All of this assume no interstate transport (see below), which won’t occur anytime soon – certainly not before November 29th.
The result is a fragmented market in which DEA registration could disrupt rather than stabilize existing medical marijuana programs. This outcome was foreseeable. What surprised me was not that DEA imposed closed-loop requirements, but how quickly its Timely Applicant information required compliance.
Interstate transport is not automatically permitted
The Timely Applicant information does not authorize unrestricted interstate marijuana transportation. State law remains critical, and all existing state medical marijuana programs prohibit importing or exporting marijuana through their licensed supply chains. An operator attempting interstate transfers without state authorization risks suspension or revocation of its state license, which would result in a suspension of its DEA registration or Timely Applicant status.
That said, enforcement will depend heavily on state regulators. If states decline to act against unauthorized transfers, businesses may test the limits of the new framework. Some states, including California, Oregon, Washington, and Nebraska, have enacted laws contemplating interstate marijuana commerce under specified conditions. Whether those provisions become operative, and whether states are willing to permit imports that threaten domestic producers, remains uncertain.
What Is DEA’s end game?
Marc Hauser recently suggested that DEA appears to be looking for ways to limit the scope of DOJ’s rescheduling initiative. I agree. By denying entire categories of applicants based on state regulatory structures, DEA substantially reduces the number of registrations it must process and supervise. Managing approximately 900 registrants is considerably easier than managing thousands.
DEA also appears to have recognized that the Final Order gives it significant discretion and has used that discretion aggressively. The problem is how DEA has implemented these requirements. Rather than undertaking formal rulemaking, DEA issued Timely Applicant information outlining obligations with substantial operational consequences. That raises questions under the Administrative Procedure Act, particularly if the guidance/information imposes substantive requirements beyond those already established by the Final Order and applicable law.
During President Trump’s first administration, an executive order addressing agency information emphasized that agencies should not use ostensibly nonbinding information to impose new legal obligations without appropriate procedures. Although administrations can change policies (and Biden rescinded that Executive Order during his administration), the underlying APA question remains. Is DEA merely explaining existing legal obligations, or is it establishing new binding requirements without rulemaking?
That distinction could become central to future litigation.
Where do we go from here?
There are many legitimate questions that operators and regulators are asking. Below are some predictions that I believe answer some of the questions I have been hearing.
Will adult-use marijuana enter the Final Order framework?
No. I believe there is a zero percent chance that happens.
One misconception needs to be addressed immediately. The pending DEA ALJ rescheduling proceedings will not open the Final Order’s medical marijuana registration framework to adult-use operators. Even if it ends up with marijuana in schedule III. The Final Order was expressly constructed around compliance with the Single Convention, which limits controlled substances such as marijuana to medical and scientific purposes. Non-medical use is prohibited.
Consequently, adult-use cannot be incorporated into the medical marijuana regulatory framework without confronting the treaty restrictions underlying its creation. Dual-license operators should not assume that further rescheduling proceedings will resolve an Orders to Show Cause. Because it will not hold up in the long run (an agency can do what it wants, but that would certainly fail in litigation).
Litigation is coming
I expect litigation from affected licensees and potentially states. The strongest arguments may involve DEA’s authority, compliance with APA procedures, and disparate treatment of similarly situated applicants. There is, however, a strategic complication. The more successfully the industry demonstrates that DEA’s implementation is legally defective, the more ammunition it may provide to Smart Approaches to Marijuana and other challengers contesting the Attorney General’s Final Order in the D.C. Circuit.
Another potential argument involves the constitutional implications of relying on international treaty obligations to restrict domestic rights. Shane Pennington and Matt Zorn have examined constitutional concerns surrounding the CSA’s delegation of authority through international treaty mechanisms. Applicants who received temporary federal protections but subsequently face denial based on treaty obligations might explore a narrower as-applied constitutional challenge (I might write another blog post on why a facial challenge could kill the Final Order at the DC circuit). That argument remains untested and carries substantial litigation risk. A broader facial challenge could also undermine the legal foundation of the Final Order itself.
The D.C. Circuit challenge
DEA’s implementation problems may strengthen the pending challenge to the Final Order. The combination of uncertain registration standards, potentially inconsistent treatment, and operational requirements announced through guidance/information creates an appearance of regulatory improvisation. Challengers may argue that the federal government adopted a regulatory structure without adequately resolving its legal and practical consequences. DEA’s recent actions have introduced additional vulnerabilities into an already contested framework.
States may respond, but probably not quickly
States could amend their programs to accommodate DEA’s requirements by separating medical and adult-use licenses, eliminating self-certification provisions, or excluding synthetic products. They might also attempt to address supply-chain fragmentation through new licensing or transaction requirements (which could in turn make applicants ineligible for DEA registration).
I suspect most states will hesitate to undertake substantial restructuring while the Final Order remains under judicial challenge. Why overhaul an established medical marijuana program to accommodate a federal framework that may not survive?
What will Timely Applicants Do?
With the November 29 deadline approaching, I expect many applicants to withdraw their DEA applications or surrender registrations already issued, depending on their litigation strategies. In dual-license states, the medical marijuana market simply does not generate enough demand to justify abandoning adult-use operations in favor of a federal medical marijuana registration. Combined with the fragmented supply chains in many states, the economic incentives for maintaining DEA registration become even less compelling. Relief from IRC 280E applies to every state legal medical operator whether it applied for registration or not, so why deal with all of this hassle. For many operators, the juice simply may not be worth the squeeze.
For larger operators such as Trulieve, Curaleaf, and GTI, however, maintaining DEA registration may be worth the wait. Especially for those operating in medical only states. Dual-license operators that prioritize their medical operations over adult-use sales may ultimately struggle to survive, particularly if states are slow to authorize interstate transportation. Larger, well-capitalized companies could then acquire distressed medical marijuana licenses at significant discounts.
Over time, assuming the program survives litigation, the number of DEA-registered medical marijuana operators may shrink, but the market opportunities could expand as states begin permitting interstate commerce, whether through legislation or successful Dormant Commerce Clause challenges. For operators with sufficient capital and patience, maintaining DEA registration could become a long-term strategy for consolidating the medical marijuana market at a fraction of its current cost.
DEA enforcement
Whether or how DEA will commence enforcement actions are difficult questions. Both the Timely Applicant information and the Orders to Show Cause discuss potential federal enforcement against illicit marijuana operations. The Rohrabacher-Farr Amendment remains in effect, limiting DOJ's ability to use appropriated funds to interfere with state medical marijuana programs. However, that restriction does not prohibit all DOJ enforcement activity and likely offers little protection to operators participating in adult-use markets, particularly with respect to those operations.
Large-scale federal enforcement would require substantial personnel, time, and resources. However, Timely Applicants have already provided DEA with considerable information, including their business addresses, ownership structures, and employees. Dual-license operators may have either disclosed their adult-use activities or provided inaccurate information on their applications. Either scenario could make enforcement considerably easier by giving DEA a roadmap to investigate potential violations. DEA could also pursue civil asset forfeiture against adult-use operators, potentially generating substantial proceeds. Although forfeiture proceedings would require time and resources, information disclosed in registration applications could strengthen the government's cases.
Another potentially devastating enforcement strategy would involve targeting marijuana testing laboratories in states where testing is mandatory. There are far fewer testing facilities than marijuana operators, making them a more concentrated enforcement target. If DEA shut down enough laboratories, entire state markets could effectively grind to a halt. Without access to required testing, operators could not lawfully bring new inventory to market. States would need to respond quickly, within the limits of their existing statutory and regulatory authority, to restore operations. In the meantime, the resulting disruption could force businesses to close.
Do I think DEA will pursue these strategies? Probably not. Large-scale enforcement would still be costly, politically contentious, publicly problematic, and subject to legal challenges. But could DEA use targeted enforcement to inflict substantial damage on state marijuana markets without pursuing every operator individually? Absolutely.
What should the cannabis industry do?
I have questioned the durability of the Final Order since its issuance. DEA’s registration decisions, Orders to Show Cause, and Timely Applicant information have only reinforced those concerns. The industry should seriously reconsider whether defending this particular medical marijuana framework (or litigating against DEA) is the best use of its resources. Instead of investing heavily in preserving a regulatory structure that excludes adult-use operators, fragments supply chains, and depends on uncertain legal interpretations, the industry should consider focusing its efforts on the separate DEA administrative rescheduling process.
That proceeding presents its own legal and political challenges, but it offers an alternative path to Schedule III without requiring the industry to defend every aspect of the Attorney General's Final Order. Although it would not establish a federally lawful regulatory framework for state-licensed marijuana operators, it would provide a more durable path to eliminating the burden of Section 280E. Unlike the medical marijuana Final Order--which I believe won’t survive past next summer--broader rescheduling would remove that burden across the state-legal marijuana industry, so long as the ALJ does not recommend Schedules I and II.
Conclusion
DEA’s recent actions demonstrate the fundamental weakness of the Final Order. What was presented as a pathway toward federal legitimacy for state-licensed medical marijuana businesses has become a fragmented registration system with uncertain eligibility standards, disrupted supply chains, and substantial litigation risk.
Some of DEA’s decisions are legally understandable. The Single Convention imposes real constraints and the Final Order never promised that every state-licensed operator would qualify. But understanding DEA’s legal rationale does not mean its implementation is sound. The agency must explain why comparable applicants receive different treatment, how its requirements can coexist with existing state programs, and whether its Timely Applicant information imposes obligations that should have been established through formal rulemaking.
Meanwhile, the industry faces a difficult strategic choice. It can spend substantial resources defending a medical-only framework that may ultimately be invalidated, or redirect those resources toward a broader rescheduling effort. I believe the latter is the better course, especially given the composition of the incoming Congress.
The cannabis industry should stop treating the Final Order as the solution to federal marijuana reform. Its implementation has exposed too many structural and legal problems to ignore. Schedule III remains worth pursuing. This particular pathway to Schedule III, however, may not be worth saving.
