The 60-day period to register and qualify for the grace period ends June 27, 2026. However, those who choose to register should submit their applications at least 5 business days in advance in case of any technical or other issues. As the window closes, you may be wondering if you should do it. This is a personal decision you need to make based on your own circumstances, but Oaksterdam’s Chair of Legal Lauren Vázquez (aka The Fired Up Lawyer) has provided this helpful list of reasons you may or may not want to. If you’re ready to take the next step, check out our How to Register with the DEA class with Ryan Kocot.
REASONS TO DO IT
Fully Legal
A registered Schedule III business is a fully federally legal cannabis business, with the caveat that there are FDA limitations for some products for now, pending Schedule III implementation (FDA has been hands-off unless a company makes egregious drug claims or creates a severe public health crisis)
Tax Relief
One of the most important changes due to rescheduling is IRS 280E relief, which applies only to Schedules I and II. All licensed medical cannabis businesses are now Schedule III, so 280e no longer applies. The IRS has been ordered to consider retroactive relief. It is unknown how far back this retroactive relief extends, and it may apply only to registered businesses.
The DEA Must Accept State Legal Medical Businesses
The DEA must register an applicant unless doing so would be against the public interest. Factors include prior convictions for cannabis crimes and prior violations of state or local laws, though these are not hard lines and are left up to discretion. Applicants that comply with a state-law regime that contains robust protections against diversion, record-keeping requirements and reporting, and safety and inspection measures are not against the public interest.
Rely on State Laws and Regulations
Registered businesses must comply with existing state operating requirements, not a new comprehensive federal regulatory scheme. Registered businesses may rely on state labeling, packaging, disposal, and physical-security requirements. Additional federal requirements are not onerous and include a federal warning label, federal record-keeping/reporting requirements, and inspections. Cultivators will have more difficult obligations for quotas, the purchase-resale requirement, and DEA inspections.
Interstate Commerce
Registered businesses may engage in interstate commerce subject to forthcoming state and federal regulations. The Dormant Commerce Clause in the Constitution prohibits states from discriminating against other states and may not prohibit interstate commerce. This may require litigation before it is firmly established and implemented.
International Commerce
Registered businesses may engage in International import and export, subject to forthcoming federal regulations and the laws and regulations of the importing/exporting country.
Intellectual Property
Registered businesses are eligible for USPTO Trademarks, pending FDA Schedule III implementation for some products.
Uncertain Enforcement
DEA may ramp up enforcement against unregistered medical cannabis businesses or adult use businesses. However, medical cannabis businesses continue to have some protection from federal prosecution through the federal appropriations rider that prohibits the use of federal funds to prosecute or otherwise interfere with conduct that is fully compliant with state medical cannabis laws.
REASONS NOT TO DO IT
It May Not Be Required
All marijuana, marijuana extracts, and naturally occurring ∆9 THC that is “subject to a state medical marijuana license” is now Schedule III and no longer subject to Schedule I penalties. DEA federal registration is not required. Schedule III penalties are generally administrative, though the DEA may decide to ramp up enforcement against unregistered medical businesses. All marijuana specific penalties separate from Schedule I penalties will still apply, such as mandatory minimums. This is a drastic improvement for businesses that have long been operating under Schedule I.
It May Not Be Necessary for Tax Relief
IRS 280e relief immediately applies to all medical cannabis businesses, and DEA federal registration is not required. Though it may be required for retroactive relief.
Existing Protections
Unregistered medical cannabis businesses continue to have some protection through the federal appropriations rider, as stated above.(See “Uncertain Enforcement” in Reasons to Do It”)
Bifurcated Operations
Any business with both a medical and adult use license will have to bifurcate most operations for each license to avoid 280e application to the medical side of the business, for example, accounting, purchasing, POS processing, and payroll. Additionally, registered businesses will have to bifurcate most operations to comply with Schedule 3 requirements. This may require extensive restructuring of your business and major operational changes. Businesses that are both a registered medical cannabis business and a Schedule I adult use business will have to manage co-locating these businesses, keeping many aspects separate, and DEA inspections that may reveal adult use activities. Enforcement against adult use businesses is uncertain. Businesses that are both a registered medical cannabis business and a Schedule I adult use business will have to manage co-locating these businesses, keeping many aspects separate, and DEA inspections that may reveal adult use activities. Enforcement against adult use businesses is uncertain.
Closed-Loop Supply Chain
Registered businesses must operate within a closed-loop supply chain consisting solely of other DEA-registered businesses. Check with your suppliers and buyers on their plans. Registration may severely limit your options and prove impractical.
Disclosures
The registration application requires certain disclosures, including the names of all employees and their prior convictions. Some businesses may have to make ownership/staffing changes to complete their DEA registration. Do not disclose employee/staff information without their consent. DO NOT LIE on the application.
Denied, and on the DEAs Radar
A business that applies for registration, but is denied will be on the DEA’s radar.
Registration Fees
Applicants must pay a registration fee: Manufacturers: $3,699 annually; Distributors: $1,850 annually; and Dispensers: $888 for a registration valid for 3 years
Quotas
Registered businesses are subject to import and cultivation quotas. It is yet to be decided if these will be aggregate or individual quotas.
DEA in the Middle
To meet international treaty obligations, the DEA must be the sole purchaser of cultivated cannabis. The DEA will set a nominal price purchase-and-resale mechanism in which it purchases the entire crop from each cultivator and resells it back to them at the same price, plus an administrative fee (currently $113 per kg, $51/lb). The DEA must take possession of the cannabis and will do so by having the cultivator designate a storage area on its premises that is fully accessible to the DEA.
FDA Still a Barrier
FDA regulations remain a barrier to registered businesses, and Schedule III implementation may introduce additional requirements and restrictions for some medical cannabis products. Enforcement may focus on unregistered businesses.
Rescheduling is Not Over
All botanical cannabis may be moved to Schedule III in the continued rulemaking process, which would reduce penalties for adult use businesses. All marijuana specific penalties will still apply, like mandatory minimums, until comprehensive federal legislation is passed