Federal Marijuana Rescheduling: Process and Impact

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 expressed varied opinions during the rescheduling process, 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, though various administrative matter delayed the hearing through 2024 and 2025.

On December 18, 2025, President Trump issued an executive order instructing the U.S. Attorney General to "take all necessary steps to complete the rulemaking process related to rescheduling marijuana to Schedule III of the CSA in the most expeditious manner in accordance with Federal law.”  On April 23, 2026, Acting Attorney General Todd Blanche issued an order which (1) immediately placed both FDA-approved products containing marijuana and marijuana products regulated by a state medical marijuana license in Schedule III, and (2) provided for initiation of an expedited administrative hearing process to consider the broader rescheduling of marijuana from Schedule I to Schedule III to begin on June 29, 2026.

To better illuminate the rescheduling 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 2022-2026

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:

1. 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.
2. 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.
3. 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.
4. 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.
5. Hearing on the Record: Under the Controlled Substances Act (CSA), any interested party can request a hearing on the proposal.
6. 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?

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.

Then, on December 18, 2025 President Trump issued an executive order instructing the attorney general to expedite and complete the process of rescheduling marijuana from Schedule I to Schedule III. For more details, see the special callout on the executive order and the timeline above.

In response to President Trump's Executive Order, on April 23, 2026, Acting Attorney General Todd Blanche issued an order which (1) immediately placed both FDA-approved products containing marijuana and marijuana products regulated by a state medical marijuana license in Schedule III, and (2) provided for initiation of an expedited administrative hearing process to consider the broader rescheduling of marijuana from Schedule I to Schedule III to begin on June 29, 2026.

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:

1. Legislation: Congress could pass a new law or amend the CSA to directly reschedule or deschedule marijuana, without the DEA formal rulemaking process.
2. Oversight: Congressional committees can hold hearings or members of Congress can send inquiries about the rescheduling of marijuana.
3. 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.
4. 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. Consequently, after President Trump issued an executive order calling for expediting the rescheduling process, one of his appointees, Acting Attorney General Blanche, moved forward with the partial rescheduling of some marijuana products.

What does 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 will be some changes, which could include:

1. Legal Consequences: The April rescheduling order only addressed the rescheduling of marijuana products regulated by a state medical marijuana license to schedule III. Thus, the possession of medical marijuana products by people with the proper documentation (i.e. doctor recommendation under existing state medical program), and the manufacturing and distribution of medical marijuana by businesses registered with the DEA would no longer be federally illegal. Also, criminal penalties for manufacturing, distributing, and possessing schedule III substances without the proper license/recommendation can be less severe than for schedule I substances. Recreational marijuana businesses and products remain under Schedule I, meaning that they continue to be federally illegal to possess, manufacture and distribute. However, 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.
2. Research: It will 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 may also mean that people will have more opportunities to participate in research.
3. Drug Development: If pharmaceutical companies are more inclined to develop marijuana-based medications, people may have more options for treatment in the future.

What does rescheduling marijuana from Schedule I to Schedule III mean for businesses?

While there are still many unknowns, rescheduling marijuana from Schedule I to Schedule III could impact state businesses in several ways:

1. Tax Benefits: One of the most significant changes is 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. In his order rescheduling some medical marijuana products to Schedule III, Acting Attorney General Blanche noted that 280E tax relief should be provided to qualifying businesses that registered with the DEA. His order even suggested the possibility of retrospective tax relief for some businesses.
2. 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.
3. 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.
4. Research and Development: While rescheduling doesn'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.
5. Market Expansion: There are multiple interpretations of how rescheduling will 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.
6. Interstate Commerce: Even though marijuana has been rescheduled, 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 does rescheduling marijuana from Schedule I to Schedule III mean for state medical marijuana programs?

It is not currently clear what rescheduling marijuana will mean for state medical marijuana programs. While marijuana is still a federally controlled substance, meaning its manufacture, distribution, and possession is still 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 does 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.