16 Oct 2026
On December 18, 2025 President Trump signed an executive order directing federal agencies to begin expediting the process of rescheduling marijuana from Schedule I to Schedule III under the Controlled Substances Act.[1] This decision follows years of federal review and empty promises from multiple administrations as medical and retail sales of marijuana have expanded to 40 states and the District of Columbia. Updates since Trump’s announcement have been sparse.
In a bit of a surprising turn of events, on April 23, 2026, theJustice Department and DEA announced a final order moving both FDA-approved and state-licensed medical marijuana products to Schedule III of the Controlled Substances Act, in accordance with the December 18, 2025 Executive Order.[2] The DOJ utilized the United States’ obligations under the Single Convention on Narcotic Drugs to execute the reclassification, recognizing the role of the states in regulating medical marijuana. Alongside the immediate rescheduling, the DEA withdrew the prior notice of hearing and terminated those proceedings and set an expedited administrative rescheduling hearing session which began on June 29, 2026. The DOJ framed the dual action as providing immediate clarity to researchers, patients, and providers while maintaining the federal stance against illicit drug trafficking. While the broader hearing session concluded in July and post-hearing briefs were due on August 17th, no final orders have been made by the DEA as of today, with most expecting an order in late 2026 or early 2027.
The two major areas that will take a step forward are marijuana related research and taxes. Marijuana’s classification as a Schedule I substance has always limited its availability for research and study. Rescheduling to Schedule III will allow for a massive increase in marijuana research both in volume and breadth of sources and purpose. Reclassification simplifies DEA registration for marijuana research, it recognizes marijuana as having medical uses which expands the possibility for clinical trials, and increases the sources where marijuana can be obtained for research purposes, which had previously been limited to a handful of FDA approved cultivators. On taxation, rescheduling will make IRS Code Section 280E inapplicable for state-licensed medical businesses. This will primarily impact dispensaries, which have historically been prohibited from deducting ordinary business expenses under the code.
The stop and go nature of this policy shift has created a wave of different responses from those both in support and against this move, as well as industry insiders attempting to prepare for what appears to be one of the bigger shifts in the marijuana industry in years. Just in the last year, we’ve seen legal action aimed at preventing this rescheduling from groups opposed to marijuana outright. Other groups oppose this rescheduling because they want the federal government to legalize marijuana entirely, both for medical and retail use, instead of simply rescheduling, arguing that the reclassification doesn’t go far enough to reverse the damage that the current Schedule I status has caused for decades. Those attempts gained little momentum and failed to get the traction necessary to cause the current course to change.[3] Expect a flurry of activity around the industry as researchers and providers alike begin to update their business practices and prepare for expanded opportunities and incentives that rescheduling provides.