DOJ Officially Reschedules Marijuana to Schedule III in Historic Shift

The Day the Schedule Changed

On April 22, 2026, Acting Attorney General Todd Blanche signed an order that will echo through the cannabis industry for decades: marijuana is officially being reclassified from Schedule I to Schedule III of the Controlled Substances Act. The move ends marijuana's half-century classification alongside heroin and LSD and places it in the same regulatory tier as ketamine, anabolic steroids, and certain codeine formulations.

The order, issued by the Department of Justice in coordination with the Drug Enforcement Administration, applies immediately to two categories of cannabis products: those that have received FDA approval and those regulated under a qualifying state-issued medical marijuana license. A broader administrative hearing, set to begin June 29, 2026, will evaluate the rescheduling of all marijuana — including adult-use products sold in the 24 states (plus Washington, D.C.) that have legalized recreational cannabis.

How We Got Here

The path to this moment stretches back years, but the immediate catalyst was President Trump's December 18, 2025, executive order instructing the attorney general to expedite the rescheduling process that had been grinding through federal bureaucracy since 2022. That year, President Biden asked the Department of Health and Human Services to review marijuana's scheduling. HHS concluded in 2023 that cannabis should be moved to Schedule III, and the DEA proposed a rule to do so in 2024 — but the process stalled amid public comment periods and legal challenges.

Trump's executive order cut through the remaining red tape. Four months later, the DOJ delivered.

What Schedule III Actually Means

Understanding what just happened requires understanding what Schedule III is — and what it is not.

Schedule I substances are defined as drugs with "no currently accepted medical use" and a "high potential for abuse." Schedule III substances, by contrast, are recognized as having accepted medical applications and a moderate-to-low potential for physical and psychological dependence.

Moving marijuana to Schedule III does several concrete things. First, it acknowledges what 40 states have already decided through their own medical cannabis programs: marijuana has legitimate therapeutic value. Second, it opens the door to dramatically expanded federal research, since Schedule I restrictions have historically made it extraordinarily difficult for scientists to study cannabis. Third, and perhaps most consequentially for the industry's bottom line, it eliminates the punishing effects of Internal Revenue Code Section 280E.

The 280E Tax Relief Bombshell

For cannabis businesses, the most immediate and tangible impact of rescheduling is tax relief. Under IRC Section 280E, businesses trafficking in Schedule I or Schedule II controlled substances cannot deduct ordinary business expenses — things like rent, payroll, marketing, and utilities that every other legal business in America writes off. The result has been effective tax rates that sometimes exceed 70 percent for cannabis companies.

With marijuana moved to Schedule III, 280E no longer applies. Cannabis businesses will finally be able to deduct the same expenses as any other legal enterprise. Industry analysts estimate this could save the sector billions of dollars annually and transform the financial viability of companies that have been operating on razor-thin margins — or deep in the red — for years.

Banking and Financial Services

Rescheduling also reduces the perceived legal risk for banks and financial institutions. While the SAFE Banking Act has languished in Congress for years, the practical reality of Schedule III classification means that serving cannabis businesses no longer carries the same stigma or legal exposure. Industry observers expect more banks and credit unions to begin offering services to licensed cannabis operators, though explicit safe-harbor legislation would still provide the strongest protections.

Credit card processing, commercial loans, and standard business banking — luxuries that most industries take for granted — could become significantly more accessible to cannabis companies in the months ahead.

Research Opens Up

The research implications cannot be overstated. Schedule I classification has forced scientists through an obstacle course of federal approvals, limited their supply to a single government-approved grow facility at the University of Mississippi (until recently), and generally made cannabis one of the most difficult substances in America to study legally.

Schedule III removes many of these barriers. Researchers will be able to source cannabis from a wider range of suppliers, design studies with fewer bureaucratic hurdles, and access federal R&D tax credits that were previously unavailable. The timing is significant: over 70 cannabis-related studies have already been published in 2026 alone, and the pace is only expected to accelerate.

What This Is Not

It is critical to understand what rescheduling does not do. Schedule III classification is not legalization. Marijuana remains a controlled substance under federal law. Recreational use is not federally sanctioned. The patchwork of state laws — where cannabis is fully legal in some states, medically legal in others, and entirely prohibited in a few — remains unchanged.

The order also does not resolve the fundamental tension between federal and state law. A cannabis business operating legally under state license is still, technically, operating in violation of federal law — though the practical risk of federal enforcement has been minimal for years and is now even lower.

What Comes Next

The June 29 hearing will be the next major milestone. That proceeding will evaluate whether to extend Schedule III classification to all marijuana, not just FDA-approved and state-licensed medical products. The outcome could determine whether the 24 adult-use states see any direct federal benefit from rescheduling.

Meanwhile, the bipartisan STATES 2.0 Act continues to work its way through Congress. The DEA hearing that opened the path to this moment is detailed separately. That bill would go further than rescheduling by explicitly ending federal prohibition and deferring to state law — effectively creating the legal framework that the industry has been seeking for years.

For now, the cannabis industry is celebrating a historic milestone while keeping its eyes on what remains to be done. Schedule III is a beginning, not an end. But after 50 years of Schedule I classification, it is a beginning that many thought would never come.