What the DOJ's Historic Cannabis Rescheduling Means for California — and for You

A message from Perfect Union on one of the most significant days in cannabis policy history

Today was a big day for cannabis in America — and an especially big day for California.

This morning, the U.S. Department of Justice issued an order immediately placing FDA-approved marijuana products and state-licensed medical marijuana into Schedule III of the Controlled Substances Act. The DOJ also initiated an expedited process to consider broader rescheduling of cannabis, with federal hearings set to begin June 29.

For those of us who have spent years working in California's legal cannabis industry — and for all of you who have shopped with us, supported us, and stuck with the legal market through some of its toughest stretches — this moment is worth pausing on. It's the single most consequential piece of federal cannabis policy in more than 50 years.

Why This Matters

For years, California's legal dispensaries have operated under a federal tax code provision called IRS Section 280E — a rule that prohibits cannabis businesses from deducting ordinary business expenses like rent, payroll, and utilities. Every other retailer in America gets to deduct those costs. Cannabis businesses have not. The result? Effective federal tax rates north of 70% for many California operators, on top of some of the highest state and local cannabis taxes in the country.

That's a big reason so many legal dispensaries across the state have closed their doors over the last three years, and a big reason the illicit market — which pays nothing — has been able to undercut the legal one.

The recent DOJ order significantly alters the landscape. By reclassifying state-licensed medical cannabis as a Schedule III substance, it effectively shields licensed operators from the application of 280E. In plain English: California's legal dispensaries can finally be taxed like the regulated, legitimate businesses they are.

Industry analysts expect this change to free up hundreds of millions of dollars annually across the California market — money that can now go back into people, product quality, safety, and — yes — better prices for you.

A Moment That Arrives on the Heels of Our Biggest 4/20 Ever

The timing of this news is not lost on us.

Just this past weekend, our community showed up for us in a way we'll never forget. Across our eleven California stores, our two-day 4/20 sale event (April 19–20, 2026) delivered 38% more transactions, 42% more units sold, and 27% higher gross sales than 2025 — with gross receipts up more than 28% year-over-year.

At our flagship store in Northside Sacramento — now ranked by BDSA as the highest daily revenue-generating dispensary storefront in California year-to-date in 2026 — unit sales over 4/20 weekend grew 25% year-over-year, and net sales grew 7% over the same store's record 2025 performance.

None of that happens without you. And the fact that federal cannabis reform is landing in the same week as the biggest 4/20 in our company's history is, we think, more than a coincidence. It's a sign.

A Word From Our CEO

"Today's announcement from the Department of Justice is the most meaningful federal acknowledgment California's legal cannabis industry has received in a generation," said Thomas Sheridan, CEO of MWG Holdings Group Inc., the parent company of Perfect Union.

"For years, dispensaries in this state have been taxed in an unsustainable way under 280E — unable to deduct basic business expenses like rent, payroll and utilities that every other retailer in America takes for granted. Moving state-licensed medical cannabis to Schedule III finally breaks that penalty. The tax relief this unlocks is real, it is immediate, and it could be the difference between survival and closure for small and mid-sized California operators who have been fighting just to keep their doors open.

We just closed the biggest 4/20 in our company's history — double-digit growth across every store and every meaningful metric, on the single most important weekend of the year for our industry. That's the story of an operator that has already proven it can grow in the hardest market in the country. Now imagine what California's legal operators can do when the federal tax code finally treats us like the legitimate, regulated businesses we are."

But Let's Be Honest: This Is a First Step, Not the Finish Line

We want to be straightforward with you about what today's news does and doesn't do.

It does:

• Remove state-licensed medical cannabis operators from 280E
• Unlock real, immediate tax relief for California dispensaries
• Open the door to expanded federal research into cannabis
• Formally acknowledge — for the first time in 55 years — that cannabis has legitimate medical uses

It does not:

• Federally legalize cannabis
• Resolve the ongoing conflict between state and federal law
• Fix the banking problem that forces so much of our industry to operate in cash
• Shut down the illicit market that continues to undercut every legal operator in California

Rescheduling is a first step. A really important one — but still a first step. There is more work ahead, and we'll be in the rooms where that work happens, advocating for the reforms California's legal cannabis industry and its customers deserve.

What This Means for Perfect Union — and for You

Here's our promise.

The financial breathing room this rescheduling creates is not going to disappear into a spreadsheet. We intend to put it to work on the very things you've told us matter most:

• Better prices — so the legal market can actually compete with the illicit one
• Safer products — tested, tracked, and trusted
• A stronger team — because the people behind our counters are the reason you come back
• Deeper community investment — in the eleven cities and towns where we operate

We've built Perfect Union over more than a decade by betting on California, on the legal cannabis industry, and on our customers. Today, the federal government took a meaningful step toward betting on us too.

Thank you for being part of this community. Thank you for choosing the legal market. And thank you for an unforgettable 4/20.

We'll see you at the shop.

— The Perfect Union Team

Perfect Union operates eleven licensed dispensaries across California and is owned and operated by MWG Holdings, Inc. Find your nearest store at perfect-union.com.

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