Justice Department Moves State-Licensed Medical Marijuana to Schedule III

WASHINGTON — Acting Attorney General Todd Blanche on Thursday signed an order moving state-licensed medical marijuana and FDA-approved marijuana products from Schedule I to Schedule III of the Controlled Substances Act, the most significant federal shift on cannabis in decades.

The order places those products in the same category as some pain medications, ketamine and testosterone. The Justice Department and the Drug Enforcement Administration also began an expedited administrative process to consider rescheduling all marijuana to Schedule III, with a hearing set to begin June 29.

What Changes

Schedule I is reserved for drugs defined as having no currently accepted medical use and a high potential for abuse. Schedule III covers drugs with a moderate to low potential for physical and psychological dependence.

The order does not legalize marijuana at the federal level, remove it from the controlled substances list or permit recreational use nationwide. However, the change could expand research opportunities and ease some of the tax and regulatory burdens on businesses operating under state medical marijuana programs.

Blanche said the action would allow for more targeted research into marijuana’s safety and effectiveness, expand patients’ access to treatments and help doctors make better-informed decisions. He acted under his authority to carry out U.S. obligations under the Single Convention on Narcotic Drugs, according to the Justice Department.

Following a Trump Executive Order

The move implements an executive order signed by President Donald Trump on Dec. 18, 2025, directing efforts to increase medical marijuana and cannabidiol research. Trump announced late last year that his administration would seek to reclassify marijuana without legalizing it, and he recently appeared frustrated with the pace of the effort, according to ABC News.

Years in the Making

The rescheduling process began under President Joe Biden, who in October 2022 asked federal health and law enforcement officials to review how marijuana is classified. In August 2023, HHS recommended that the DEA move marijuana to Schedule III. That effort stalled amid a lengthy administrative process before the end of Biden’s term.

Impact on the Industry

Cannabis businesses have long been barred from deducting ordinary business expenses on federal taxes because of marijuana’s Schedule I status. Analysts have said rescheduling could significantly improve the finances of state-licensed operators, though the scope of the relief will depend on how the new rules are applied and whether broader rescheduling is approved after the June hearing.

Most U.S. states have legalized marijuana for medical use, and many also allow recreational use, creating a long-standing conflict with federal law. Thursday’s order narrows that gap for medical programs but leaves recreational markets under the existing federal prohibition.

Advocates welcomed the step but said full descheduling would be needed to resolve conflicts between state and federal law, while opponents warned about health risks associated with high-potency cannabis products.