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Medical cannabis moved to Schedule III in April. Illinois adult-use sales didn't. Here's the line, and what's still open.

The short answer: No. The Justice Department's April 28, 2026 rule moved only FDA-approved marijuana drugs and marijuana under a state medical license to Schedule III. Illinois adult-use marijuana remains Schedule I. The rule mainly creates a DEA registration path for state medical licensees, and it says nothing in it determines federal tax liability.

We read the 10-page federal rule end to end. The short version: medical is in, adult-use is out, and the bigger rescheduling case is paused.

By Monsaur OthmanPublished October 19, 2026Last updated October 28, 20268 sources linked

File photo: Robert F. Kennedy Department of Justice Building in Washington, D.C. Photo: APK / Wikimedia Commons, CC BY 4.0 (cropped) · Creative Commons Attribution 4.0 International (CC BY 4.0)

What changed

The rule took effect April 28, 2026, and places in Schedule III marijuana, marijuana extract and naturally derived delta-9-THC that are in an FDA-approved drug product or subject to a state medical marijuana license. Sources below

On April 28, 2026, the Justice Department published a final rule and order that moved some marijuana from Schedule I to Schedule III of the Controlled Substances Act, effective that day (federal rule text: Federal Register 2026-08176). For Illinois, the first question is whether it covers adult-use stores. The rule answers that directly: it doesn't.

What moved

Only two categories went to Schedule III: FDA-approved drug products containing marijuana, and marijuana "subject to a state medical marijuana license." The rule defines that license as one issued by a state, D.C. or territorial agency authorizing a business to manufacture, distribute or dispense marijuana "for medical purposes." Marijuana extract and naturally derived delta-9-THC are covered on the same terms.

Everything else stays where it was. The rule says any marijuana outside those two categories "remains a schedule I controlled substance." Synthetic THC stays in Schedule I, and hemp is untouched.

What the rule builds

Most of the text is a new DEA registration lane for state medical licensees:

A state license counts as "conclusive evidence" of state authorization. DEA must register an applicant unless that would be against the public interest or conflict with the treaty the rule is built on, the 1961 Single Convention.
Businesses that applied within 60 days of publication could keep operating under their state license while DEA reviewed them. Foley Hoag, a law firm tracking the rule, put the end of that window at June 26, the last business day before the 60-day mark (Foley Hoag client alert).
State rules on labeling, packaging, disposal and security can stand in for federal ones, plus the federal warning label. A state medical certification can stand in for a prescription if it is dated and signed on the day it is issued, gives the patient's full name and address, and gives the certifying practitioner's name, address and state license number.
To satisfy the treaty, each registered manufacturer sets a nominal price for its crop; DEA buys the crop at that price and sells it back at the same price plus an administrative fee, and DEA keeps access to the storage facility until that's done.
A federal registration is automatically suspended if the state license is suspended, revoked or expires.

The rule also says state medical licensees "will no longer be subject" to Section 280E, the tax provision that blocks ordinary business deductions for Schedule I and II sellers. It also encourages the Treasury Secretary to consider retrospective relief from 280E for years a business operated under a state medical license. In the same passage it says nothing in the rule is a determination of federal tax liability and tells licensees to consult tax counsel. We'd add the same: this is not tax advice.

The adult-use line

The rule draws the line in one sentence: registrations "do not authorize the manufacture, distribution, dispensing, or use of marijuana or products containing marijuana for non-medical purposes." Adult-use sales in Illinois are state-legal, but under this rule they are still Schedule I activity.

That matters more in Illinois than in a medical-only state. IDPH counted 55 medical cannabis dispensaries in FY26, and SB 3222, signed in June, lets all Illinois dispensaries opt in to selling medical cannabis (2026 Annual Cannabis Report, pages 9 and 83). That raises a question none of the documents we read answers: how does a store with both medical and adult-use sales fit a federal registration that covers only the medical side? We haven't found state guidance on it.

What's still open

The broader case, which would move marijuana itself to Schedule III, is a separate proceeding. DEA reopened it with a new hearing notice the same day (Federal Register 2026-08177). The hearing ran June 29 to July 15. On September 29 the chief administrative law judge stayed the case while he considers a motion to add a September 23 GAO report on drug scheduling to the record (stay order). The Government filed its opposition on October 9, objecting to more briefing but deferring to the judge on whether to admit the report. On October 12 the same parties asked the judge to reopen the hearing for limited discovery and testimony if the report is admitted. In an October 14 order, the judge said he has not yet ruled on admitting the GAO report, ordered the Government to respond to the reopening request by October 21, and kept the case on hold in the meantime (October 14 order). Update, Oct. 28: In an October 22 order, Chief Administrative Law Judge Derek C. Julius denied the request to reopen the hearing for more testimony and discovery, admitted the GAO report into the record, and invited optional briefs of no more than 10 pages on how much weight the report deserves: initial briefs by October 29, replies by November 5. He called requests for more briefing "disfavored," and said the stay ends when that briefing closes, as reported by Marijuana Moment and The Marijuana Herald. We could not open the order itself on DEA's site, which blocks automated reads. No date has been set for the judge's recommended decision.

What we're watching: the Oct. 29 and Nov. 5 briefs and the judge's recommended decision that follows, Treasury and IRS guidance on 280E, and any word from IDFPR on how Illinois licenses map to the federal definition.

Sources

Track the rules: our federal rules tracker and Illinois rules tracker log each verified change. Background: Illinois' FY26 cannabis report.

Drafted with AI assistance from primary sources and reviewed by Monsaur Othman before publication. Read how we use AI, our editorial policy and our corrections policy.

For adults 21+. News and education only. Nothing here is a health claim, legal or tax advice, or an offer to sell.

Key facts and where they come from

The rule took effect April 28, 2026, and places in Schedule III marijuana, marijuana extract and naturally derived delta-9-THC that are in an FDA-approved drug product or subject to a state medical marijuana license. source 1 · source 2
Registrations under the new pathway do not authorize manufacture, distribution, dispensing or use for non-medical purposes; marijuana in any other form remains Schedule I. source 1
Applicants filing within 60 days of publication could keep operating under their state license while DEA reviewed the application; Foley Hoag put the close of that window at June 26, 2026. source 1 · source 2
The rule says state medical licensees are no longer subject to IRC section 280E, but says it makes no determination of federal tax liability. source 1 · source 2
The DEA hearing on rescheduling marijuana generally ran June 29 to July 15, 2026, and was stayed Sept 29 pending a motion over the GAO report, with the Government's response due Oct 13. source 1 · source 2
On Oct. 22, 2026 the chief ALJ denied reopening the hearing, admitted the Sept. 23 GAO report, and allowed optional briefs of up to 10 pages due Oct. 29, with replies due Nov. 5; the stay ends when briefing closes. source 1 · source 2
IDPH counted 55 medical cannabis dispensaries in FY26, and SB 3222 lets all Illinois dispensaries opt in to selling medical cannabis. source 1