DEA Guidance on Timely Applicants for Schedule III Medical Marijuana

As we were preparing this article, more critical news broke—and the latest development does not look good for dual-purpose licensees. In an Order to Show Cause signed on October 27, 2026, DEA proposed to deny the application of a Minneapolis dispensary licensed under Minnesota’s dual-purpose system. DEA gives three independent grounds:

1. Dual-purpose licensing. Because Minnesota allows a single licensee to serve both medical and adult-use customers, DEA concluded that the state regime fails to provide “robust protections” against diversion and falls outside DEA’s definition of a “state medical marijuana license.” DEA characterizes dispensing for recreational use as “per se diversion” under the Controlled Substances Act and states that it “cannot permit any applicant operating under” Minnesota’s regime to access the federal closed system.
2. Dispensing without a certification. Minnesota lets veterans obtain medical cannabis with veteran identification and an attestation rather than a practitioner’s written certification, which DEA says conflicts with U.S. treaty obligations and its regulations.
3. Synthetic cannabinoids. Minnesota permits medical dispensaries to sell artificially derived cannabinoid products, while synthetic THC remains in Schedule I.

The applicant has 30 days to request a hearing (currently set for January 19, 2027) or may submit a corrective action plan.

The first ground is the most significant for our dual-purpose license holders in states like Minnesota and Washington because DEA’s reasoning is not specific to Minnesota; it applies to any state that authorizes the same licensee to sell for both medical and adult-use purposes. Licensees in dual-purpose states should expect similar scrutiny of their applications, and should also review whether their state permits any of the other practices DEA cited. The Order is a charging document, not a final decision, and the applicant may contest it, but it is the clearest signal yet of DEA’s position on operators with both adult use and medical lines of business.

The second basis for denial is also interesting in that DEA just recently issued denial letters to applicants in the District of Columbia, reportedly because DEA views the District’s “self-certification” medical program as inadequate to meet its expectations. Presuming this emerging trend solidifies into an objective requirement (i.e., express prescription from a physician is required), it begs the question: How in the world could adult-use operations ever have fit into Schedule III?

We are currently reviewing this Order to Show Cause in relation to the other orders we’ve seen recently. There are potentially severe consequences based on this order for dual purpose licensees, and there is a broad array of factors and circumstances that could inform what to do. For example, if you have licensees in a state like Oklahoma, but also have licenses in Minnesota, based on the MedPharm Research Order from October 7, 2026 and this new Order to Show Cause, you could be denied for having affiliated businesses that conduct adult-use activity. If you are a licensee in a dual purpose state, contact an attorney to discuss how this impacts you and your business.

For those who get through these newly emerging registration hurdles, DEA also released non-binding guidance as to the allowable limits of medical registrant activity and, as one would expect, the implications of that guidance are unclear. For more on this “blessing or curse” dichotomy, continue reading below.

DEA Guidance on Timely Applicants for Schedule III Medical Marijuana

On October 30, 2026, the Drug Enforcement Administration (DEA) issued informal, non-binding guidance titled Timely Applicant Information for Medical Marijuana Applicants to address what state medical marijuana licensees may do while their applications for DEA registration under the April 28, 2026 Final Rule remain pending. Unfortunately, the guidance raises many more questions than it answers, and its practical impact will vary widely depending on each licensee’s state regulatory structure.

We are still digesting the guidance and are seeking further clarification from the DEA. The analysis below is preliminary and may change as more information becomes available, but for now, we worry that some of the concerns we highlighted a few months ago may be coming true.

What the Guidance Says

According to the DEA’s guidance, under 21 CFR 1301.13(k)(7) a state medical marijuana licensee is a “Timely Applicant” if it submitted a complete application for DEA registration, with fee, between April 28 and June 26, 2026. A Timely Applicant may continue to dispense, manufacture, or distribute Schedule III medical marijuana “pursuant to its state medical marijuana license” while its application is pending. That status ends if the application is withdrawn or denied, or if the applicant loses its state license.

The guidance then turns to who a Timely Applicant may do business with:

• Permitted counterparties. Timely Applicants may transact with other Timely Applicants and with DEA registrants authorized to handle Schedule III medical marijuana.
• Prohibited counterparties. Timely Applicants and DEA registrants may not transact with any entity that did not timely apply, even if that entity holds a valid state license. In DEA’s words, “Timely Applicants and DEA registrants may not lawfully engage in any schedule III medical marijuana activities with entities that did not complete an application for DEA registration between April 28, 2026, to June 26, 2026, or that have not applied for a DEA schedule III medical marijuana registration, until those entities become DEA registrants.” DEA states this conduct “could be potential grounds” for denial of a pending application or revocation of a registration. Notably, the restriction is framed around defined Schedule III medical marijuana activities, not necessarily every business relationship between the parties, and DEA has not said where that line falls.
• Due diligence. DEA expects counterparties to collect and verify DEA submission confirmations and document control numbers (DCNs), DEA certificates, and active state licenses, and to keep records of that diligence (please note that the list identified in the guidance is “at a minimum”).
• Testing labs. Licensees may send de minimis quantities to non-DEA-registered labs in the same state, but only where no DEA-registered lab is available or state law bars sending samples out of state.
• Transition period. Timely Applicants must have compliant supply chains in place by November 29, 2026. Timely dispensers and distributors may continue to sell existing inventory, including product acquired from non-qualifying sources; the carve-out does not expressly extend to Timely Manufacturer Applicants.

The Guidance Is Not Binding

The guidance states on its face that it does “not have the force and effect of law and [is] not meant to bind the public in any way.” It was not issued through notice-and-comment rulemaking. It reflects DEA’s current view of how it reads 21 CFR 1301.13(k)(7) and how it intends to exercise enforcement discretion.

That cuts both ways. The guidance does not create new legal obligations, and courts are not required to defer to it. But it is a clear signal of how DEA intends to evaluate pending applications and existing registrations. DEA also frames the guidance as clarifying existing requirements rather than creating new ones, so it may argue the counterparty restriction simply restates the closed system of distribution already required under the Controlled Substances Act. Licensees that ignore it do so at their own risk.

DEA’s Applicant List

DEA has also published a list of applicants on its Diversion Control website. As of the writing of this article it reflects 6,983 applications: 4,197 dispensaries, 2,076 manufacturers, and 710 distributors. Oklahoma accounts for 2,442, followed by Florida (812), California (771), Maine (320), and Pennsylvania (227). Among the states with the least applicants are Kansas (2), Alabama (3), Nebraska (3), Iowa (4), and Rhode Island (5). Washington State, despite having dual purpose licenses, only has 108 applicants, which may be the result of the chilling effect resulting from the Washington State Liquor and Cannabis Board’s June 16, 2026 statement that DEA registration may not apply to Washington licensees, though the Board has since agreed to pursue rulemaking that would verify licensees’ medical marijuana activities.

The list is a useful starting point for mapping counterparties, but it is not a list of approved registrants. The Final Rule’s six-month target for processing timely applications passed on October 28, 2026, and DEA has not said when it will issue decisions on those applications.

The bottom line is that the universe of applicants on DEA’s list is much smaller than the existing state-licensed markets. If the guidance is accurate that Timely Applicants may do business only with other Timely Applicants and DEA registrants (see below), the pool of permissible trading partners will be a fraction of today’s markets. That could be catastrophic for existing licensees whose suppliers and customers are not on the list.

How to Read the Guidance: A Wide Range of Outcomes

The guidance is notable for what it does not say: it limits activity by the federal status of the counterparty, not by geography but neither expressly authorizes nor prohibits interstate transactions.

The most generous, but unlikely, reading is that Timely Applicants may continue their existing state-compliant activity with any state licensee in their own state, whether or not that licensee is a Timely Applicant or DEA registrant, and may now also transact across state lines with Timely Applicants and DEA registrants in other states, because the guidance authorizes those relationships without any geographic limit. Under this view, the guidance continues to permit existing state-legal intrastate commerce and opens the door to a federally sanctioned interstate medical marijuana market among qualifying entities.

We urge caution before relying on that reading. A Timely Applicant’s authority runs “pursuant to its state medical marijuana license,” and most state programs prohibit importing or exporting cannabis. The guidance’s own testing carve-out is limited to labs “located in the same state,” which suggests DEA expects state-law geographic limits to keep operating. Interstate activity would also need to satisfy every other federal requirement, including registration for each location and full Part 1304 recordkeeping. Most importantly, nothing in the guidance or the Final Rule changes your obligation to comply with state law. Unless and until your state authorizes interstate transfers, you are almost certainly still prohibited from making them under state law, whatever federal law may permit.

That leads us to the worst case interpretation: Licensees whose supply chains run through state-licensed businesses that did not timely apply may have to stop otherwise state-compliant activity by November 29, 2026, or bear the risk of, denial of a pending application or revocation of a DEA registration. This is precisely the outcome we warned about in May, when we flagged that DEA’s closed system of distribution could leave registrants unable to transact with state-compliant licensees outside it.

West Coast Interstate Commerce “Trigger” Laws

The guidance does raise an interesting question for those West Coast states that have already passed laws that would let their governors sign agreements with other states to allow licensed cannabis to cross state lines once a federal trigger occurs:

• Oregon (SB 582, 2019) allows agreements once federal law permits interstate transfer of marijuana or the U.S. Department of Justice issues an opinion or memorandum allowing it.
• California (SB 1326, 2022) can be triggered by a change in federal law, DOJ guidance permitting interstate commerce, or a determination by the California Attorney General that interstate commerce will not result in significant legal risk to the state. In a December 2023 opinion, the Attorney General concluded that such agreements would create significant legal risk under then-existing federal law.
• Washington (SB 5069, 2023) takes effect when federal law is amended to allow interstate transfer of cannabis or DOJ issues an opinion or memorandum “allowing or tolerating” it.

Medical rescheduling does not, by itself, amend federal law to allow interstate transfers, and we are not aware of any of these states treating the April 28 Final Rule as a trigger. However, the DEA guidance is a DOJ-component statement that permits Timely Applicants to transact with other Timely Applicants and DEA registrants without any stated geographic limit. Some will argue it is the kind of DOJ “memorandum” these statutes contemplate, at least for medical marijuana. That argument is untested, and we have reached out to contacts in state government for more information. Watch this space for movement from these states’ governors and attorneys general.

Your State’s Regulatory Structure Will Drive the Impact

How this guidance affects any particular licensee will depend heavily on how its state structures cannabis licensing.

Medical-only licensees. These licensees seem to have a more straight-forward path. Mapping which counterparties are Timely Applicants or DEA registrants, and rebuilding the medical supply chain around them, should be manageable.

Licensees holding dual-purpose licenses (for example, Washington State). These licensees face a difficult road ahead. Where a single license or endorsement covers both medical and adult-use activity, medical product often moves through the same producers, processors, and retailers as adult-use product. Many of those upstream businesses may never have applied for DEA registration; DEA’s list shows only 108 Washington applicants (74 dispensaries, 22 manufacturers, and 12 distributors). It is not yet clear how DEA will view a Timely Applicant whose medical activity depends on, or is commingled with, an adult-use supply chain made up of non-qualifying entities. These licensees may face the hardest choices before the November 29 deadline.

Medical and Adult-Use licensees. Only weeks ago, certain client contacts presently going through DEA inspections in the North-East told us that their field agents communicated DEA’s current disinterest in adult-use operators/operations, but that medical operators who do not register will face a “reckoning” eventually. Yet, in the October 7, 2026 decision in MedPharm Research, LLC, DEA denied an application based on the applicant’s relationship with affiliated businesses that conducted adult-use operations. That suggests DEA may look beyond the relevant medical license under which an applicant operates to its broader corporate family (including affiliates in other states) and those entities’ adult-use activities. It also suggests DEA may not be so unconcerned with adult-use operations in the course of evaluating registrations. There is an important caveat: MedPharm applied under the registration structure that existed before the Final Rule, and DEA noted in a footnote that the denial “does not prohibit Applicant from submitting an application through the new framework established for issuing registrations based on state licenses to handle marijuana for medical purposes, if applicable.” Whether DEA will apply the same affiliate-based reasoning under the new framework remains an open question, and businesses with any adult-use operations or affiliates should review their structure with counsel.

What to Do Now

We are continuing to analyze the guidance alongside the Final Rule and we are seeking further information on several open questions, including interstate activity and dual-purpose licenses. In the meantime, we recommend that licensees:

1. Confirm your own status. Make sure your application was complete and paid within the April 28 to June 26 window, and keep your DEA submission confirmation and DCN on hand.
2. Map your counterparties. Identify every supplier, distributor, and customer, and check each against DEA’s applicant list as a first step.
3. Begin the due diligence DEA describes. Collect confirmations, certificates, and state license verifications for your supply chain, and document each step.
4. Hold off on interstate transactions. Do not begin interstate activity based on this guidance alone until the questions above are better understood.
5. Plan for November 29, 2026. Identify where your supply chain will need to change and what contingencies are available.

We will provide updates as we learn more. Please contact us with questions about how this guidance applies to your operations.

Special thanks to Lead Compliance Analyst Jessica Kaiser for her contribution to this article.

This alert is for general informational purposes only and is not legal advice.