Introduction
In October 2022, President Joe Biden asked the U.S. Department of Health and Human Services (HHS) and the Drug Enforcement Administration (DEA) to review how marijuana is scheduled under the Controlled Substances Act (CSA). In August 2023, HHS recommended to DEA that marijuana be moved from Schedule I to Schedule III, based on HHS’ scientific and medical evaluation. In May 2024, DEA proposed a rule that, if finalized, would transfer marijuana to Schedule III.
Advocates have varied opinions, with some opposing the proposal, some supporting the proposal, and others calling for complete descheduling. Reflecting the strong public interest in marijuana rescheduling, DEA received over 42,000 public comments on its proposal and, in August 2024, DEA announced that it would hold a hearing on the proposal. The DEA rulemaking process is ongoing, awaiting the hearing, and marijuana is still currently a schedule I substance.
To better illuminate this process, DEPC has produced a timeline highlighting key moments in the recent effort to reschedule marijuana at the federal level, provided answers to likely questions regarding the process and impact of rescheduling, gathered key documents relevant to the rescheduling process thus far, and assembled the center’s papers and webinars on the interactions between federal reforms and state marijuana laws and businesses.
Timeline of Federal Marijuana Rescheduling 2022-2025
Explore our timeline highlighting key moments in the recent efforts to reschedule marijuana at the federal level.
What agencies are involved in the federal rescheduling process?
The Drug Enforcement Administration (DEA) and the Department of Health and Human Services (HHS) are the agencies involved in the federal rescheduling process.
In the federal Controlled Substances Act (CSA), Congress authorized the Attorney General, the head of the Department of Justice (DOJ), to schedule substances, move substances between schedules, or deschedule substances. That authority is delegated to DEA, which is within DOJ. This means that, in practice, DEA is the agency that determines whether to schedule a substance and into what schedule a substance will be placed. This placement is based on the substance’s medical use, potential for abuse, and safety or dependence liability.
While DEA is the agency that makes the decision about scheduling, HHS also plays a significant role. Before DEA initiates proceedings to schedule, reschedule, or deschedule a substance, the CSA requires DEA to request from HHS a scientific and medical evaluation of the substance and a recommendation about what schedule, if any, the substance should be placed in. HHS’ scientific and medical determinations are binding on DEA at the stage when it proposes to schedule, reschedule, and deschedule a substance, and are owed significant deference at the stage when DEA is finalizing its decision.
How does the federal rescheduling process work?
The federal rescheduling process is a “formal rulemaking” under the Controlled Substances Act (CSA) that involves several steps:
- Initiating the rescheduling process: The Drug Enforcement Administration (DEA), the Department of Health and Human Services (HHS), or a petition from any interested party, including a drug manufacturer, medical association, or individual person, can initiate the rescheduling process.
- HHS Scientific and Medical Evaluation: Before DEA can propose to reschedule a substance, HHS must provide a scientific and medical evaluation of the substance and its recommendation about what schedule, if any, the substance should be placed in.
- DEA Notice of Proposed Rulemaking: After receiving the HHS recommendation and if DEA determines rescheduling is warranted under the CSA, DEA publishes a notice of proposed rulemaking in the Federal Register, to propose the rescheduling and invite public comment.
- Public Comment Period: There is a period during which the public can submit comments on the proposed rule. This feedback is considered by the DEA before making a final decision.
- Hearing on the Record: Under the Controlled Substances Act (CSA), any interested party can request a hearing on the proposal.
- Final Rule: After reviewing public comments and conducting any necessary hearing, and if DEA determines the substance should be rescheduled, DEA publishes a final rule in the Federal Register. This rule determines the new scheduling status of the substance.
Where are we now in the rescheduling process for marijuana?
As of March 2025, the federal marijuana rescheduling process is in a holding pattern awaiting a hearing.
In October 2022, President Biden asked the U.S. Department of Health and Human Services (HHS) and the Drug Enforcement Administration (DEA) to review how marijuana is scheduled under the federal Controlled Substances Act (CSA).
In August 2023, HHS recommended to DEA that marijuana be transferred from schedule I to schedule III, based on HHS’ scientific and medical evaluation. As part of that evaluation, HHS used a new, two-part inquiry to determine that marijuana has a “currently accepted medical use” under the CSA.
In April 2024, the Office of Legal Counsel, within the Department of Justice, issued an opinion concluding that the two-part test that HHS used is sufficient to establish that a drug has a “currently accepted medical use” under the CSA.
In May 2024, the Attorney General issued a proposed rule that, if finalized, would move marijuana from schedule I to schedule III. Numerous parties submitted requests for hearings, and in August 2024 DEA announced that it would hold a hearing on the proposal.
The hearing was scheduled to begin on January 21, 2025. But, on January 13, 2025, the administrative law judge for the hearing postponed it while an appeal by an involved party is resolved. For more details, see the timeline above.
How can Congress or the President affect rescheduling?
Congress plays a significant role in how substances are scheduled. Congress created the current rescheduling process by passing the federal Controlled Substances Act (CSA). Congress could also take additional steps specific to marijuana, including:
- Legislation: Congress could pass a new law or amend the CSA to directly reschedule or deschedule marijuana, without the DEA formal rulemaking process.
- Oversight: Congressional committees can hold hearings or members of Congress can send inquiries about the rescheduling of marijuana.
- Appointments: For the President’s nominees for the heads of the federal agencies involved in the rescheduling process to be appointed, the Senate must consider and confirm them. These appointees can influence the policy priorities of their agencies.
- Funding: Congress controls federal funding and can allocate resources to support or hinder the rescheduling process.
The President can also play a role in influencing rescheduling processes, including for marijuana. For example, the President can ask that HHS and DEA review the scheduling of a particular substance, as President Biden did for marijuana. Additionally, subject to confirmation by the Senate, the President appoints people to serve as heads of the federal agencies involved in rescheduling.
What would rescheduling marijuana from Schedule I to Schedule III mean for consumers?
Rescheduling marijuana from Schedule I to Schedule III, without other reforms, may not significantly change things for people who purchase and use marijuana. But there would be some changes, which include:
- Legal Consequences: Marijuana would still be a federally controlled substance, meaning its manufacture, distribution, and possession would still be illegal under the Controlled Substances Act. But the criminal penalties for manufacturing, distributing, and possessing schedule III substances can be less severe than for schedule I substances. Additionally, Congress has prohibited DOJ from using federal funds to prosecute state-legal medical marijuana activity. As long as Congress continues to do that, such activity is shielded from federal prosecution, and that would be unchanged if marijuana is rescheduled.
- Research: It could become easier for researchers to study marijuana, as research with Schedule III substances are subject to less-burdensome DEA requirements compared to Schedule I substances. This might mean that people would have more opportunities to participate in research.
- Drug Development: If pharmaceutical companies are more inclined to develop marijuana-based medications, people may have more options for treatment in the future.
What would rescheduling marijuana from Schedule I to Schedule III mean for businesses?
While there are many unknowns, rescheduling marijuana from Schedule I to Schedule III could impact state businesses in several ways:
- Tax Benefits: One of the most significant potential changes could be the ability to deduct business expenses on federal tax returns. Currently, under Internal Revenue Code Section 280E, businesses dealing with Schedule I substances cannot deduct these expenses. That said, some tax professionals believe the government is unlikely to forfeit 280E tax revenue and may find other ways to retain it.
- Marketing: If businesses are able to deduct expenses from their federal taxes, marketing efforts and spending could increase, though state policies often heavily regulate advertising.
- Banking Access: While rescheduling might not fully resolve banking issues, it could improve access to financial services. Banks might be more willing to work with cannabis businesses if marijuana is classified as a Schedule III substance.
- Research and Development: While rescheduling won't change many requirements governing research or allow researchers to source high-THC products from state-legal businesses, demand for research could grow and DEA requirements related to research would be less burdensome.
- Market Expansion: There are multiple interpretations of how rescheduling could affect the market. With reduced legal and financial barriers, some predict growth and expansion, but others predict that rescheduling could lead to more concentration and decreased competition.
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Interstate Commerce: If marijuana is rescheduled or even fully descheduled, other federal laws may still apply, particularly to products distributed interstate (or with components distributed interstate). The U.S. Food and Drug Administration has relevant authorities related to food, dietary supplements, and drugs, which may affect which operators market products and present challenges for small, state-licensed operators.
Overall, it is likely that rescheduling will benefit businesses, especially when it comes to tax implications, but continuing unknowns mean the process could also pose significant challenges.
What would rescheduling marijuana from Schedule I to Schedule III mean for state medical marijuana programs?
It is not currently clear what rescheduling marijuana would mean for state medical marijuana programs. While marijuana would still be a federally controlled substance, meaning its manufacture, distribution, and possession would still be illegal under the CSA, the criminal penalties could be less severe. That said, Congress has prohibited DOJ from using federal funds to prosecute state-legal medical marijuana activity. As long as Congress continues to do that, such activity is shielded from federal prosecution. Rescheduling would not change that.
Rescheduling still could have some impacts on state medical marijuana programs. For example, states might benefit from more robust scientific evidence about the effects of marijuana if less-burdensome DEA requirements lead to more research. Additionally, if marijuana were to have a “currently accepted medical use” under the CSA, medical marijuana companies may find more success lobbying for insurance coverage.
Key Documents
The CSA is the statute establishing federal U.S. drug policy under which the manufacture, importation, possession, use, and distribution of certain substances is regulated.
President Biden asked that HHS and DEA review marijuana's scheduling under the CSA.
Based on its scientific and medical evaluation, HHS recommended to DEA that marijuana be placed in Schedule III of CSA. In making this recommendation, HHS used a new, two-part test to determine whether marijuana has a "currently accepted medical use" under the CSA.
The Office of Legal Counsel (OLC), within the Department of Justice, published an opinion on several legal questions related to the rescheduling of marijuana in which it concluded hat the two-part test that HHS used for its recommendation is sufficient to establish that a substance has a currently accepted medical use under the CSA.
DEA issued a proposed rule that, if finalized, would transfer marijuana to schedule III and solicited public comment.
DEA announced it would hold an administrative hearing on the rescheduling of marijuana.
DEA wrote to Chief Judge John Mulrooney, the administrative law judge who is presiding over the hearing, to provided him a list of the 25 hearing participants that DEA selected.
Chief Judge John Mulrooney issued an order regarding each participant's standing, explaining which parties are allowed to participate and why.
Hemp for Victory and Village Farms International, as part of prehearing proceedings, filed a joint motion to remove the DEA from the rescheduling process. In this order, Chief Judge Mulrooney describes the parties' motion and sets a deadline for DEA to respond.
Village Farms International and Hemp for Victory filed a motion for supplementation of the record and the removal of DEA from the role of proponent of the rule alleging ex parte communication between DEA and Kevin Sabet of Smart Approaches to Marijuana (SAM). ALJ Chief Judge Mulrooney denied the motion.
This order describes hearing proceedings and sets the hearing start date as January 21, 2025.
The Motion for Reconsideration requested a series of relief related to alleged improper ex parte communications between DEA and other actors. In this Order, Chief Judge Mulrooney directs the Government to file a response by January 13, 2025.
This DEA filing explains DEA's reasons for opposing Village Farms International et al's motion for reconsideration.
Chief Judge Mulrooney denied the Village Farm International et al's Request for Reconsideration. But he granted leave to file an interlocutory appeal, canceled the hearing that was scheduled to begin on January 21, 2025, and suspended proceedings pending resolution of the appeal. Chief Judge Mulrooney also ordered that the parties provide a joint status update 90 days from the issuance of the order and every 90 days thereafter.
Policy Resources
On August 30, 2023, the U.S. Department of Health and Human Services (HHS) concluded a scheduling review of psychoactive cannabis and recommended that the Drug Enforcement Administration “reschedule” psychoactive cannabis from Schedule I to Schedule III under the Controlled Substances Act. The next 6 to 12 months could be among the most transformative for the U.S. cannabis industry, but progress is unlikely to come without regulatory confusion, conflicts of federal laws, and unintended consequences. This paper, authored by Benton Bodamer, member at Dickinson Wright PLL and adjunct professor of law at the Drug Enforcement and Policy Center, aims to answer major questions that remain following the release of HHS’s statement, including why psychoactive cannabis was on Schedule I given its medical uses, whether a move to Schedule III effectively legalizes existing state-compliant cannabis companies, if relief from 280E tax or advertising restrictions are likely, and whether a move to Schedule III opens up banking for existing cannabis companies. The paper ends with a look at the road ahead.
This paper, authored by Cat Packer, DEPC Distinguished Cannabis Policy Practitioner and Drug Policy Alliance Director of Drug Markets and Legal Regulation, examines the Biden Administration’s executive orders on equity, its position on marijuana reform before and after President Biden’s related October 2022 statement, and it's repeated statements acknowledging both cannabis criminalization’s disproportionate impact on Black and Latino communities and marijuana reform as an opportunity to advance equity. Moreover, this paper critiques the omission of marijuana reform within the Biden Administration’s Equity Action Plans and highlights the opportunity for the Biden Administration to use its existing executive orders on equity as a framework to understand and address how marijuana laws and policies create barriers for underserved communities through the development of an equity action plan for marijuana reform.
This paper from DEPC Distinguished Cannabis Policy Practitioner in Residence Shaleen Title and coauthors focuses on a key challenge of creating a legal, sensible cannabis industry from the ground up: how the federal government should rectify the ongoing conflict between state and federal law by regulating the interstate commerce of cannabis. This paper presents different perspectives on how the federal government should respond. The authors agree that federal legalization is perhaps inevitable. They also agree that the current patchwork of state legalization isn’t tenable. Some disagree on nuances and what mechanisms should be tweaked to ensure that the industry is built in a way that’s both fair and competitive for everyone.
