What the April 2026 Schedule III order changes for dual-license books.

Summary. In April 2026 the DOJ and DEA moved state-licensed medical marijuana to Schedule III. Adult-use stayed in Schedule I. If you hold both licences, your books now have two tax regimes running through the same store, the same shelf and often the same package — and the thing that decides which regime a dollar belongs to is the licence the ticket was rung under. Tag every receipt by licence type now, while the tickets are still being written, because you cannot reconstruct it later.

What actually changed

The order of 22–23 April 2026 placed FDA-approved marijuana products and state-licensed medical marijuana into Schedule III. The Federal Register notice followed on 28 April. Two consequences matter for a retailer's books:

• §280E stops applying to qualifying medical activity. The deduction disallowance in §280E is written against trafficking in a Schedule I or II controlled substance. Move the substance to Schedule III and the sentence stops reaching it. Ordinary and necessary business expenses become deductible against that activity.
• Adult-use is untouched. It remains Schedule I, and §280E continues to apply to it in full.

For a medical-only operator this is a tax event and not much of an accounting one. For an adult-use-only operator, nothing changed. For a dual-licence operator — which in Michigan, California and New York is most of the market — it is primarily an accounting event, and the tax benefit is only as good as the records that support it.

The split is a recordkeeping problem before it is a tax problem

Regulators asked dual-licence operators to separate medical and adult-use activity in operations and recordkeeping. That phrasing is doing a lot of work. It is not asking for two sets of financial statements. It is asking that any given dollar of revenue, and any given dollar of cost, can be attributed to one regime or the other on evidence.

Three places where that gets difficult, in the order you will meet them:

1. Revenue. Easy in principle: the ticket knows which licence it was rung under. Hard in practice if your POS treats medical and adult-use as a customer attribute rather than a ticket attribute, or if a patient buys under adult-use because the medical queue was long. The attribute you need is on the transaction, not the person.

2. Cost of goods. The same package can serve both counters. A case of pre-rolls received once, under one manifest, sells out across both regimes. So COGS has to be allocated at the unit level — which is only possible if each sale is already tied to a package tag and a licence. If you allocate at month end by revenue ratio, you have an estimate, and an estimate is what an examiner will take apart first.

3. Shared overhead. Rent, the GM's salary, the security contract, the utilities. These genuinely serve both. Allocation is unavoidable, so what matters is that the method is written down before the period, applied consistently, and documented on the journal itself rather than living in someone's spreadsheet. A defensible allocation is not the one with the best ratio. It is the one you can explain without improvising.

What this looks like in a ledger

The shape we settled on is: licence type is a property of the receipt, carried through every downstream number.

• Each sale carries the licence it was rung under, from the POS or from the Metrc receipt, never inferred from the customer record.
• COGS is computed per package tag, so the allocation between regimes falls out of which units actually sold where rather than being apportioned afterwards.
• Cohorts, promo ROI and any repeat-rate analysis exclude or separate medical tickets, because mixing them produces a number that means nothing and, in some states, an analysis you are not permitted to run on patient data at all.
• The close produces per-licence journals, with the shared-overhead method recorded next to the allocation it produced.

In our Michigan pack this is rule LC-MI-02: medical and adult-use tickets kept separate in cohorts, promo ROI and the close, for dual-licence operators, from April 2026. It is enforced before a draft exists rather than checked afterwards, because the alternative is discovering in March that ten months of analysis pooled two tax regimes.

The trap: retroactivity you cannot support

The tempting move is to go back through the year and split it. Sometimes that is possible — if your POS recorded the licence on the ticket all along, you are extracting data that already exists.

Often it is not. If the licence was implied by which register was used, or by a customer flag that people forgot to set, then reconstructing it is not extraction. It is estimation dressed as evidence, and it is the weakest possible position: a number that looks precise, produced by a method you invented after you knew what answer you wanted.

Where the record does not support a split, say so, allocate on a stated method, and document the limitation. That is a much better conversation than a confident number that falls apart under one question.

What to do this month

1. Check where licence type lives in your POS — on the transaction, or on the customer. If it is on the customer, fix the capture now; every day you wait is a day you cannot split later.
2. Stop pooling medical and adult-use in any analysis you would put in front of a buyer or a lender. Cohort and promo numbers that mix the two are not comparable to either.
3. Write down the shared-overhead method before the quarter closes, not after you have seen what it produces.
4. Ask your CPA what they need, specifically, to take a position on the medical side — and get it in writing. The rescheduling is recent, the broader hearing is ongoing, and the profession's position is still forming.

The operators who will find this easy in twelve months are the ones whose tickets carried a licence type in month one. It costs almost nothing to start and cannot be backfilled.

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Sources: US Department of Justice, Justice Department places FDA-approved marijuana products and products containing marijuana in Schedule III (April 2026); Federal Register, Schedules of Controlled Substances: Rescheduling of Marijuana, 2026-08177 (28 April 2026). Practitioner alerts from Saul Ewing and Holland & Knight informed the recordkeeping discussion.

This is not tax or legal advice. §280E positions are fact-specific and the broader rescheduling proceeding is ongoing. Confirm any treatment with your CPA and counsel before relying on it.