Show notes
Send us Fan Mail
Same jar. Same batch. Same licensed supply chain. What puts marijuana covered by a qualifying medical license back in Schedule I—the cash register? Show me the legal change.
Request a Howard East consultation:
https://www.cannabisindustrylawyer.com/280e-license-supply-chain-review/
The federal rule puts marijuana “subject to a state medical marijuana license” in Schedule III. My position: if that qualifying coverage continues through the supply chain, selling it to an adult does not, by itself, put it back in Schedule I. That coverage is disputed. We have to follow the actual licenses and the actual batch.
In this episode, I read the rule, test the GHB comparison, examine DEA’s crop purchase and sale-back requirement for registered medical manufacturers, and confront Medpharm and Hello Farms. Then we read §280E’s actual Schedule I/II language and work through what the classification question means for a cannabis business.
At Howard East, we read the law, examine your licenses and follow your supply chain with your tax professionals. Request a consultation to discuss whether a scoped legal review or formal opinion makes sense for your operation.
We read the laws around here—subscribe for more analysis on them.
PRIMARY SOURCES
April 2026 final rule—tax discussion, pp. 6–7; operative license definition and rules, pp. 8–9:
https://www.govinfo.gov/content/pkg/FR-2026-04-28/pdf/2026-08176.pdf
Schedule III—21 CFR 1308.13(g)(2); GHB approved products, (c)(6):
https://www.ecfr.gov/current/title-21/chapter-II/part-1308/section-1308.13
Schedule I—21 CFR 1308.11(d), including its opening exception:
https://www.ecfr.gov/current/title-21/chapter-II/part-1308/section-1308.11
State medical marijuana license—21 CFR 1300.01:
https://www.ecfr.gov/current/title-21/chapter-II/part-1300/section-1300.01
Registration limits and crop purchase/sale-back—21 CFR 1301.13(k)(1)(iv), (6)(i):
https://www.ecfr.gov/current/title-21/chapter-II/part-1301/section-1301.13
Tax statute—26 USC 280E:
https://uscode.house.gov/us/usc/119-120/t26/s280E/
Congress’s GHB legislation—Public Law 106-172, §3:
https://www.govinfo.gov/content/pkg/PLAW-106publ172/pdf/PLAW-106publ172.pdf
DEA’s GHB fact sheet—scheduling, p. 2:
https://www.dea.gov/sites/default/files/2025-08/GHB-Drug-Fact-Sheet_0.pdf
Missouri facility and inventory rules—19 CSR 100-1:
https://www.sos.mo.gov/CMSImages/AdRules/csr/current/19csr/19c100-1.pdf
Illinois Cannabis Regulation and Tax Act—410 ILCS 705, including §55-85:
https://my.ilga.gov/legislation/ILCS/details?ActID=3992&ActName=Cannabis+Regulation+and+Tax+Act.&ChapAct=410&Chapter=PUBLIC+HEALTH&ChapterID=35&MajorTopic=HEALTH+AND+SAFETY
Medpharm Research—DEA decision and order, October 7, 2026:
https://www.govinfo.gov/content/pkg/FR-2026-10-07/pdf/2026-20553.pdf
Hello Farms—Sixth Circuit opinion, September 10, 2026:
https://www.opn.ca6.uscourts.gov/opinions.pdf/26a0260p-06.pdf
Treasury/IRS announcement on rescheduling and §280E:
https://home.treasury.gov/news/press-releases/sb0471
Attorney Advertising—Howard East. General information, not legal or tax advice for your return. No outcome is guaranteed. An inquiry does not create an attorney-client relationship. Keep confidential records and patient information out of public comments and the initial inquiry.
Support the show
Get our newsletter: https://bit.ly/3VEn9vu