Sudden Cannabis Reclassification Leaves Maryland Industry, Regulators Confused

By Rhiannon Evans, Maryland Matters

April 24, 2026

A surprise reclassification of medical marijuana to a less dangerous drug on Thursday has left many Marylanders with more questions than answers.

Acting Attorney General Todd Blanche signed an order Thursday that would move medical marijuana from a Schedule I to a Schedule III drug, moving it from the category of drugs like heroin and LSD to the same category as some pain medicine, ketamine and testosterone.

“This rescheduling action allows for research on the safety and efficacy of this substance, ultimately providing patients with better care and doctors with more reliable information,” Blanche said in a press release announcing the change.

The announcement represents perhaps the biggest change in 50 years for cannabis since the passage of the Controlled Substances Act. It also came without warning or advance notice, said Maryland regulators and businesses, who are scrambling to understand the changes.

“While the federal government pursues rescheduling, Maryland law remains fully operative and unchanged, and state licensing and enforcement continue as enacted by Maryland General Assembly,” said an emailed statement from the Maryland Cannabis Administration, the state’s cannabis regulatory agency.

“The Maryland Cannabis Administration is currently reviewing the federal action in coordination with legal counsel and state leadership and will provide further guidance to Maryland medical patients, consumers, and licensed businesses,” the statement said.

In calls to cannabis shops around the state Thursday, the answers were virtually identical: Employees said they’re not sure what the changes mean to Maryland, they’re waiting for guidance from the Cannabis Administration and, in the meantime, they plan to conduct business as usual.”

Part of the problem is that Blanche’s order applies only to medical marijuana, which is allowed in 40 states. But Maryland is one of 24 states and the District of Columbia that have also legalized marijuana for recreational use for adults 21 and older.

“We are still figuring out some of these answers ourselves as we speak with partners across other states and federally,” said Maryland Cannabis Administration Director Tabatha Robinson in an interview Thursday.

Blanche said the change was also designed to allow for more research on cannabis. But questions remain for some about whether the order will make research easier. Research on Schedule III drugs is still subject to stringent regulations.

The biggest benefit of the change comes in the form of a tax break.

Even as states moved to legalize the sales of medical and recreational cannabis, the substance remained illegal at the federal level, where provisions in the federal tax code impose a penalty on the sales of Schedule I drugs.

Businesses typically pay taxes on the gross income minus expenses. Corporations pay about 21%, with small businesses paying less, according to the Marijuana Policy Project. Cannabis businesses in Maryland, though legal and licensed in the state, are not eligible to claim the federal deduction.

“The industry has suffered underneath that provision, especially dispensaries, because they can write almost nothing off, you know, the way, the way it’s structured,” said Jake Van Wingerden, owner of Cecil County-based SunMed Growers.

The General Assembly fixed the law on the state level so cannabis businesses can claim the write-off on their state tax returns.

“My tax returns are a big, complicated mess, because we file one set based on state taxes for profits versus the federal, which is based on sales,” Van Wingerden said.

Changing the classification of cannabis eliminates the federal tax penalty on medical marijuana.

“So the entire industry is now not penalized with taxes,” Van Wingerden said. “They’re treated just like every other business in America for taxes, where they’re taxed on their actual profits.”

The state’s medical cannabis program began in earnest in 2014. But it would be two years before the first licenses were issued, and the first medical sales did not happen until December 2017.

When the state legalized the drug for recreational use, it relied on the existing system of licensed growers, manufacturers, and dispensaries. The medical dispensaries at the time were transitioned over into a hybrid license model that sold to both medical and recreational users. The only difference was that medical cannabis cardholders were exempt from the taxes paid by recreational users.

It’s not clear if or how cannabis sold for recreational use would be tracked or how the order would apply.

The order also contains a provision that appears to require manufacturers to sell their product to the federal government for a nominal fee. The Federal government would then sell the product to a “registered purchaser” at the same price.

Bringing in the federal government as a mid-level distributor of sorts sets up a potential federal cannabis tax or surcharge. Cannabis growers would be required to pay an “administrative fee for such transactions,” according to the order.

Even with the uncertainties and confusion, Van Wingerden said the order “represents the next step in legitimacy for the industry.”

It may also open the door to changes in federal banking laws. Federal restrictions and a lack of clear federal policy in the face of a patchwork of laws across the country have hamstrung business in the cannabis industry. Many banks are hesitant to help cannabis businesses with financing or even corporate banking accounts.

“Now that rescheduling has been done, some of those other legislative steps have momentum now to get done,” Van Wingerden said.

Maryland Matters is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501(c)(3) public charity. Maryland Matters maintains editorial independence. Contact Editor Steve Crane for questions: scrane@marylandmatters.org. Follow Maryland Matters on Facebook and Twitter.