This is the ninth of 13 posts describing the impacts of marijuana’s rescheduling. An homage to Phish’s historic run at Madison Square Garden in the Summer of 2017, Budding Trends Baker’s Dozen will address how rescheduling affects various areas of the law and our daily lives. Enjoy the run.
On April 22, 2026, Acting Attorney General Todd Blanche issued a final order immediately placing both FDA-approved marijuana products and state-regulated medical marijuana products in Schedule III of the Controlled Substances Act. What happens to interstate commerce and the Dormant Commerce Clause when medical marijuana becomes a federally lawful article of commerce for the first time?
In short, we don’t know. The longer answer requires us to work through some foundational constitutional doctrine, trace the fault lines that have been quietly developing in state marijuana law for years, and reckon honestly with the genuinely unsettled questions that rescheduling leaves in its wake. Interstate commerce and marijuana have been on a slow-motion collision course since the first state medical programs came online. Rescheduling didn’t create that collision — it just moved it from a distant theoretical concern to something that will generate real litigation with real consequences for operators, state regulators, and the long-term structure of the industry.
The Commerce Clause and Interstate Commerce Concepts
The cornerstone of any discussion about interstate commerce and the Dormant Commerce Clause is the Commerce Clause of Article I, Section 8 of the U.S. Constitution. That provision grants Congress the power to “regulate Commerce… among the several States.” Congress can regulate (1) the channels of interstate commerce, (2) the instrumentalities of interstate commerce, and (3) activities that have a substantial effect on interstate commerce — but not purely local, non-economic activity. States can regulate commerce within their borders even if that intrastate commerce can, in the judgment of Congress, impact interstate commerce in that industry. The Supreme Court has held that even purely intrastate medical marijuana regimes can be regulated by the federal government pursuant to the Commerce Clause. Although the current judicial interpretation provides a wide net for federal regulation, that leeway has its limits.
Dormant Commerce Clause Primer
The Dormant Commerce Clause, also referred to as the “Negative Commerce Clause,” derives its authority (albeit by negative implication) from Article 1, Section 8, Clause 3 of the Commerce Clause. Simply stated, if the federal government can regulate interstate commerce, the Dormant Commerce Clause prohibits states from treating in-state business interests differently from out-of-state business interests in a discriminatory way, without providing a sufficient state interest for doing so.
The Dormant Commerce Clause rears its head in the marijuana industry because most state marijuana regimes favor in-state operators over foreign operators. Courts examining whether such policies run afoul of the Dormant Commerce Clause have reached various conclusions.
What Rescheduling Changes
The collision of rescheduling, interstate commerce, and the Dormant Commerce Clause is a fascinating occurrence with few, if any, examples in our jurisprudence.
Schedule III status means that FDA-approved cannabis products and state-licensed medical marijuana are now federally lawful controlled substances. They are, for the first time since at least 1970, legitimate articles of commerce under federal law — controlled, heavily regulated commerce, but commerce nonetheless. The foundational premise that some courts have used to insulate discriminatory state cannabis laws from a Dormant Commerce Clause challengebegins to erode the moment federal lawfulness attaches.
Consider the implications. A state-licensed medical marijuana operator in Mississippi that holds a DEA registration and operates in compliance with Schedule III requirements is now engaged in federally lawful commerce. If that operator wants to ship product to a DEA-registered dispensary in New Mexico — another state with a medical program — what exactly is the broad, federal legal barrier? The CSA and FDCA still regulate that transaction, but it is no longer categorically prohibited as when it was in Schedule I. Also, most state medical marijuana regimes prohibit interstate import/export of medical marijuana, and the rescheduling rule conditions DEA compliance on compliance with state laws.
Why Cannabis Has Been a Dormant Commerce Clause Puzzle
A frequently encountered component of state marijuana programs is some form of a residency requirement, in-state licensing preferences, or restrictions on interstate transactions that would be textbook Dormant Commerce Clause violations if marijuana was a lawful article of interstate commerce. Examples include:
- Requiring that marijuana be grown within state borders
- Limiting certain licenses to state residents or entities with significant in-state presence or ownership
- Prohibiting the importation of marijuana from other states even where it is legally produced
- Requiring vertical integration within state borders
- Preferencing local applicants in licensing lotteries
The reason these provisions haven’t been struck down en masse is that courts have held — sometimes explicitly, sometimes implicitly — that the Dormant Commerce Clause doesn’t protect commerce in federally illegal goods. The rule follows that if one can’t lawfully ship marijuana across state lines under federal law, there’s no legitimate interstate commerce to protect, and states are essentially filling a regulatory vacuum created by federal prohibition.
The leading case in point is Tennessee Wine & Spirits Retailers Association v. Thomas, where the Supreme Court reaffirmed that the Dormant Commerce Clause applies to alcohol despite the 21st Amendment’s grant of state authority over alcohol regulation. This decision has been on the radar of those in the marijuana law space due tothe analytical parallel to a post-rescheduling marijuana market. But we currently have a circuit split on whether the Dormant Commerce Clause applies to Schedule I marijuana. The First Circuit has applied the Dormant Commerce Clause to invalidate discriminatory state residency laws related to marijuana, but the Second Circuit has not (Compare Ne. Patients Grp. v. United Cannabis Patients & Caregivers of Me., 45 F.4th 542, 547-48, 551 (1st Cir. 2022), with Variscite NY Four, LLC, 152 F. 4th at 62-63).That analysis may be very different with marijuana in Schedule III.
What This Means for State Legislatures
State legislatures with medical cannabis programs should pay close attention to this issue. The Dormant Commerce Clause’s vulnerability in existing state cannabis laws is going to generate litigation. Even states that seek the most protective regimes for their in-state operators would be wise to begin reviewing their regulatory frameworks for provisions that would be most vulnerable to Dormant Commerce Clause challenge and thinking carefully about how to restructure those provisions in ways that serve legitimate local interests without facially discriminating against interstate commerce. A state’s failure to take these steps could lead to a court overturning protectionist provisions and lead to far more foreign-friendly policies than would have been the case if the state put in the work on the front end.
The Practical Impact
Notwithstanding everything above, we find it extremely unlikely that the final order means that marijuana can be transported across state lines. In fact, it would be contrary to more than a decade of federal policy making it clear that even if a state permits marijuana sales, those sales must remain in-state. It is one thing to allow patients to access marijuana for medical purposes, but it is an entirely different thing to upend the industry by allowing states with a marijuana surplus to dump that excess on other states.
Summed Up
Interstate commerce and the Dormant Commerce Clause implications of rescheduling are real, significant, and almost entirely unaddressed in the public conversation about what Schedule III means for the industry. This is going to generate litigation — serious, well-funded, constitutionally sophisticated litigation — and the outcomes will shape the structure of the cannabis industry for decades.
This constitutional analysis certainly does not end here. We’ll be following the Dormant Commerce Clause, because this is one of the most important and underappreciated legal stories in cannabis right now.