NE Monthly Puff: Nebraska Medical Cannabis Program Takes Slowly Taking Shape

NE Cannabis retail market update – May 2026

May 2026 is a turning point for Nebraska medical cannabis. The legislature passed LB 1235, a narrow first bill funding the Medical Cannabis Commission and granting it fee authority, by 46-2, while the state Supreme Court heard a challenge that could reshape the program, and a federal DOJ order moved state-licensed medical marijuana to Schedule III with 280E relief attached. A proposed FY2027 spending bill would also add Nebraska to the federal noninterference list for the first time.

Top Headlines This Month

• 🏛️ DOJ final order moves medical marijuana to Schedule III
• 📋 Nebraska completes cultivation tier as next licensing rounds remain undated
• ⚖️ FY2027 spending bill would shield Nebraska from federal interference
• ⚖️ Supreme Court weighs taxpayer standing challenge to program
• 🏛️ Legislature passes narrow medical cannabis funding bill 46-2

🏛️ FEDERAL: DOJ FINAL ORDER MOVES STATE-LICENSED MEDICAL MARIJUANA TO SCHEDULE III

On April 23, 2026, the Department of Justice issued a final order signed by Acting Attorney General Todd Blanche moving medical marijuana from Schedule I to Schedule III under the Controlled Substances Act. The order covers FDA-approved drug products containing marijuana and marijuana subject to state-issued medical licenses. State-licensed medical marijuana businesses can now apply for federal DEA registration through an expedited pathway – applications submitted within 60 days of publication will be processed within six months, and early applicants may continue operating under their state licenses during that review period. The order also removes the Section 280E tax deduction disallowance for state-licensed medical marijuana businesses, meaning those businesses can now deduct standard business expenses on federal tax filings. At the same time, DOJ announced a new administrative hearing on full rescheduling of marijuana to begin June 29, 2026. The order does not affect unlicensed bulk marijuana, which remains in Schedule I, and does not alter the status of hemp.

The 280E removal is the most direct financial change for licensed medical cannabis businesses – state-licensed dispensaries and cultivators can now claim standard business deductions on federal returns. The DEA registration pathway also means compliant state-licensed businesses now have a route to federal legitimacy, though registration requires meeting applicable CSA regulatory requirements once approved.

Source: https://congress.gov/crs-product/LSB11424

📋 NEBRASKA: CULTIVATION TIER COMPLETES, BUT NEXT LICENSING ROUNDS REMAIN UNDATED

Nebraska’s medical cannabis market structure rests on emergency regulations the Medical Cannabis Commission (MCC) adopted in September 2025, not on statute. Those regulations cap the state at 12 dispensary licenses with one per judicial district, four cultivation licenses, four product manufacturing licenses, and 12 transporter licenses. Vertical integration is prohibited. The program bans smokable flower, vaporization products, and traditional edibles; permitted forms include tablets, capsules, tinctures, oils, topicals, patches, nebulizer liquids, and suppositories. Each cultivator is capped at 1,250 flowering plants at any given time.

The MCC awarded its first two cultivation licenses on October 7, 2025 – Patrick Thomas of Raymond received an average score of 73.33, and Midwest Cultivators Group LLC of Omaha (CEO Nancy Laughlin-Wagner) received 72.00, both clearing the required 70-point threshold. Those two were among four applications randomly selected from a lottery pool of 39 for full scoring. As of April 13, 2026, the commission has issued all four cultivation licenses, and one cultivator has already requested and received a grow-plan variance to be ready for an October 1 harvest. At the May 11, 2026 commission meeting, regulators approved a path for cultivator inspections but did not set a timeline for the next round of licensing — product manufacturers, transporters, and dispensaries — which Crista Eggers of Nebraskans for Medical Marijuana flagged as a continuing source of delay.

The one-license-per-judicial-district structure limits competition statewide but creates high-stakes races in densely populated districts like Omaha and Lincoln. The 4-year Nebraska residency requirement – at least 51% of ownership must be held by U.S. citizens who have lived in the state for four consecutive years – sets a firm threshold for outside capital seeking entry into the dispensary round whenever it opens.

Source: Nebraska Public Media

⚖️ NEBRASKA: PROPOSED FY2027 SPENDING BILL WOULD ADD STATE TO FEDERAL NONINTERFERENCE LIST

The U.S. House Appropriations Subcommittee on Commerce, Justice, Science, and Related Agencies released its fiscal year 2027 spending bill in late April 2026, and the text includes Nebraska under Section 531 – the annual provision barring DOJ from using federal funds to interfere with state medical marijuana laws. When the previous spending bill passed in January, Nebraska was left off the list despite voters having approved medical cannabis in 2024, making it the first state not added after voters or state leaders acted. That bill covered 47 states; the only other jurisdictions not included — Kansas, Idaho, and the U.S. territory of American Samoa — lack state or territorial medical cannabis programs. The proposed FY2027 bill also contains Section 591 language that would block any appropriated federal dollars from being used to reschedule marijuana under the Controlled Substances Act. Nebraska’s Republican congressional delegation has not explained why the state was omitted from the previous bill. Sen. Pete Ricketts and Rep. Mike Flood have opposed federal rescheduling, while Rep. Don Bacon said he supports it to allow for further research.

The full House Appropriations Committee approved the bill 32-28 on May 13, 2026, moving Nebraska’s Section 531 protection one step closer to enactment. It still needs to pass both chambers of Congress before it can reach the President’s desk. Until it does, Nebraska’s Medical Cannabis Commission is moving forward with licensing and regulations without the congressional shield that covers the rest of the country’s state medical cannabis programs.

Source: WOWT

⚖️ NEBRASKA: SUPREME COURT HEARS CHALLENGE TO VOTER-APPROVED MEDICAL CANNABIS PROGRAM

The Nebraska Supreme Court heard arguments on April 27, 2026 in a case that could affect the future of the state’s medical cannabis program. Former State Senator John Kuehn of Heartwell filed the appeal after a Lancaster County judge dismissed his lawsuit, ruling he lacked the legal standing to bring the case because he could not demonstrate direct harm. Kuehn’s attorneys argue that taxpayers should be able to challenge what they consider an unlawful use of public funds or a matter of significant public concern. Attorneys representing state officials and members of the Nebraska Medical Cannabis Commission countered that expanding taxpayer standing in this way could open the door to widespread legal challenges any time government employees carry out their duties, and that such standing should apply only when there is a direct and specific expenditure of public funds. The underlying claim in Kuehn’s lawsuit is that Nebraska’s voter-approved medical cannabis laws conflict with federal law, which classifies marijuana as a controlled substance. The court has not indicated when it will issue a decision.

State leaders have said the regulatory process will continue while the legal questions are resolved. If the Supreme Court reverses the lower court’s standing ruling and allows the case to proceed on its merits, the federal conflict argument would get a full hearing, adding another layer of uncertainty to the program’s rollout.

Source: KNLV Radio

🏛️ NEBRASKA: LEGISLATURE PASSES FIRST MEDICAL CANNABIS BILL IN 46-2 VOTE

Nebraska lawmakers voted 46-2 on April 1, 2026 to pass Legislative Bill 1235, the state’s first bill implementing the voter-approved Nebraska medical cannabis licensing program, nearly two years after the ballot measures passed. As introduced, the 28-page bill would have substantially expanded MCC authority over patients, caregivers, and providers and added a patient registry and seed-to-sale tracking framework, but General Affairs Committee Chair Sen. Rick Holdcroft stripped most of that out before advancement. What passed is a narrow three-page measure with four medical cannabis components: it sets annual salaries of $12,500 for commission members, creates a dedicated state cash fund to receive fees and other revenue, authorizes the MCC to set application fees for dispensaries, manufacturers, and other licensees at up to $50,000, and requires fingerprint background checks for applicants. Crista Eggers of Nebraskans for Medical Marijuana called the passage “one very small step” but “something to celebrate.” She has also raised concerns about proposed MCC regulations — including restrictions on THC content and which parts of the plant can be used, along with Rule 013.08, which prohibits dispensary refills on the same written order and effectively requires patients to obtain a new physician’s order every 30 days — and flagged the $50,000 fee cap as a potential access issue if the commission sets fees at the maximum.

A companion bill, LB 933, would have granted medical practitioners immunity from criminal, civil, or disciplinary action for recommending cannabis. After advancing through first-round debate 30-7 on March 20, the bill was passed over at Sen. John Cavanaugh’s request on April 7, 2026 — Cavanaugh told the chamber the measure had been “hijacked” by amendments unrelated to medical cannabis and would no longer achieve its purpose. The bill is unlikely to be scheduled for further debate this session, leaving practitioner protections — which advocates have called essential for a functional in-state physician registry — unresolved heading into the 2027 session.

Source: Nebraska Public Media

The Bottom Line

Nebraska medical cannabis is moving forward this month, with narrow legislative funding, court scrutiny over taxpayer standing, a completed cultivation tier, and federal rescheduling all landing at once. The downstream rounds — product manufacturers, transporters, and dispensaries — still lack a commission timeline as of May 11, leaving the supply chain stalled at cultivation under a Schedule III federal posture, and the state’s broader regulatory framework still relies on MCC emergency regulations rather than statute.