"Cancellation", "Canceled", "Canceling" — US usage

Solution 1:

These words were all originally spelled with two l's (in British English, which is why the English Oxford dictionary will not recognize the single-L spelling).

Webster was one of the first to publish Americanized (more phonetic) spellings in his dictionary in the late 1800s (which is why you did find it in the Webster dictionary).

An American committee for simplified spelling published the Handbook of Simplified Spelling to record these changes in the early 1900s. One of the rules dictated that VERBS with double consonants, preceded by short vowels would drop their second consonant. Since cancellation is not a verb, the rule did not apply.

Solution 2:

The simple answer is that cancellation is directly derived from the Latin cancellatio.

Solution 3:

The vowel before L in cancellation is unstressed, so its being spelled with double L isn't explainable in terms of the English rule of doubling consonants after stressed single short vowels. The doubling in cancellation is instead based on etymology, as Steve B's answer says. Many words with different etymologies, such as consolation, regulation, inoculation, circulation, correlation, are written with non-doubled L despite having the same stress pattern as cancellation.

Many words of Latin origin have double letters that aren’t required by any rule of English spelling or pronunciation: we spell them with double letters simply because of the etymology. Another example would be the double c in desiccation.

The original double L of Latin cancello was simplified to single L in English cancel, due to being at the end of the word.

Solution 4:

Also consider syllable stress. I just read on Wikii that the original rule generally requires the doubling of the consonant (specifically a consonant following an 'e') ONLY WHEN THAT CONSONANT IS PART OF THE STRESSED SYLLABLE. For example, 'refer', 'referring', 'referral', or 'compel', 'compelling'. 'Cancel', however, is not stressed on that final syllable, and therefore in theory should not have the doubling of that 'l'. Hence 'canceled', and 'canceling'. So based on that, my guess is that maybe the American simplification mentioned above did not include the noun 'cancellation' because in this case that noun actually has it's main pronounced stress on the syllable containing the consonant in question, therefore requiring its doubling. Just a thought.