.webp)
.webp)
.webp)
.webp)
Regulation for controlled substances is a two-part process that involves both State and Federal licensing.
It’s common for a facility to submit a registration application with the DEA and then realize they must first obtain the proper licenses at the state level, whether it’s through the Boards of Pharmacy or other state licensing agencies.
However, state regulation of controlled substances is more intricate than simply obtaining state licensure based on federal controlled schedules; states can control drug products more stringently than the federal government, even if the DEA hasn't scheduled it federally. There's often surprisingly little guidance on where a company's added obligations begin.
Gabapentin, xylazine, and List I chemicals like pseudoephedrine are the most current examples of products that are more stringently controlled by some states, though they're far from the only ones.
Gabapentin has no federal scheduling at all. As far as the DEA is concerned, distributing it is no different from distributing any other non-controlled prescription drug.
States see it differently, however. Roughly half have adopted some kind of gabapentin policy: regulation spans scheduling it as a Schedule V substance, to just requiring that sales be reported via a prescription drug monitoring program (PDMP) without formal scheduling.
The specifics vary and shift often enough that states have both added and dropped gabapentin from their schedules in recent years. For a distributor operating nationally, that's a patchwork of obligations that federal registration simply doesn't address, and when it's missed, it's typically a state board that finds out first, one that moves more slowly than a federal regulator but hits harder when it does.
Xylazine is the same problem in sharper form. It's an FDA-approved veterinary sedative, not a controlled substance federally, which means manufacturers have historically been able to manufacture and ship without DEA registration, quotas, or any of the usual tracking infrastructure.
Due to its potential for abuse, states have stepped into that vacuum inconsistently: states like Florida have gone as far as considering it Schedule I, other states consider it a Schedule III. Each state attaches its own registration, storage, and recordkeeping rules to transactions within its borders.
A company shipping into one of these states may need a state controlled-substance registration that doesn't exist anywhere else in its operations, because there's no federal baseline to fall back on.
Federal legislation is trying to catch up. The Combating Illicit Xylazine Act (S. 545/H.R. 1266) would schedule it nationally as Schedule III and exempt existing manufacturers from the capital costs that scheduling would normally trigger. It cleared the Senate Judiciary Committee in March 2026 and is waiting on a full Senate vote. Until that happens, this stays a state-by-state problem, and more states are likely to act before Congress does.
List I chemicals like pseudoephedrine and ephedrine already carry real federal weight, including:
States build on top of that anyway, due to the significant role it plays in the illegal manufacturing of methamphetamine. Several classify pseudoephedrine as Schedule V, and a handful have gone as far as requiring a prescription for it, effectively converting an over-the-counter drug into a prescription-only drug (that particular requirement has since been walked back where it was tried, but it illustrates how far states are willing to go).
Some states create entirely separate licensing categories for this.
Arkansas is a good example: any company shipping pseudoephedrine into the state needs a dedicated Wholesale Distributor of List I Chemicals permit from the Arkansas State Board of Pharmacy, distinct from a standard wholesale drug distributor license, with its own application, fees, storage requirements, and suspicious-order monitoring obligations.
Alabama handles it a bit differently, folding precursor chemical handling into a distinct category within its wholesale distributor permitting requirements.
Either way, a company operating only under its DEA registration and a standard wholesale license isn't covered, even if it's doing everything else right.
This is exactly the kind of requirement that slips through: it won't show up on a standard license renewal checklist, federal registration status won't flag it, and it applies the moment a qualifying product ships into the state, regardless of where the shipping company is actually located.
Propofol sits in a unique position. It isn't federally scheduled, and the DEA's own drug fact sheet says so plainly.
The agency proposed adding it to Schedule IV back in 2010. That rule was never finalized, and more than a decade later, propofol remains unscheduled at the federal level.
Alabama, Georgia, and North Dakota didn't wait. All three already treat it as Schedule IV, with the registration and recordkeeping burden that implies, for a drug with no federal scheduling anywhere else in the country.
Plenty of hospitals also treat propofol like a controlled substance as a matter of internal policy, which is sensible practice but not a legal requirement, and that distinction matters a great deal the moment a licensing board asks to see the paperwork.
Promethazine follows a similar logic. Alone, it's not federally controlled, and distributing it carries no different obligation than any other non-controlled prescription drug. Combine it with codeine, though, and promethazine-codeine becomes federally Schedule V.
States then add their own layer: most require Schedule V drugs to be reported to a prescription drug monitoring program, but not all of them. Oregon and several others exclude Schedule V medications from PDMP reporting entirely.
So a distributor tracking these transactions needs to know both the federal schedule and which states actually want that data reported, because the answer isn't uniform.
None of this is unique to these five substances. It's actually a pattern.
State licensing boards enforce state law, and a company can be fully compliant federally while still violating the terms of its state license, simply because nobody tracked where the two diverged.
That risk is highest for multi-state operations: companies distributing, selling, or dispensing into states where they have no physical footprint. The compliance obligation travels with the product to wherever it ends up, not with the company's home address.
The practical challenge is that state rules change faster than most compliance programs are built to track, and the gap usually doesn't surface until a licensing review or audit finds it first. Federal compliance is the baseline. It was never meant to be the whole picture.
Controlled substance licensing requirements shift constantly at the state level, often with little warning and even less guidance.
Contact LighthouseAI to get expert guidance on your state licensing obligations for controlled substances. Contact Us Today
About the Author
Sandy Carter is the Director of Intelligence, Research and Development with LighthouseAI and has over 10 years of experience in the pharmaceutical life sciences industry, specializing in high-quality compliance research across manufacturers, wholesalers, and 3PLs.
.svg){kind=small}
