Archive · 2026-05-08

On April 22, 2026, Acting Attorney General Todd Blanche officially declared medical marijuana a Schedule III substance. This reclassification includes “marijuana as defined in the CSA, marijuana extracts, and delta-9-tetrahydracannabinol and other compounds derived from the marijuana plant.” For many across the cannabis industry, the announcement marks a historic shift in federal policy. However, rescheduling does not mean cannabis is federally legal across the board. Significant restrictions, compliance requirements, and unanswered questions still remain for operators, consumers, and regulators alike.

How Cannabis Got Here: A Decades-Long Fight

The entire cannabis industry has waited decades for the DEA’s cannabis rescheduling news. Marijuana has been effectively prohibited at the federal level since 1937’s Marihuana Tax Act. This measure imposed severe import taxes and stopped recreational use. In 1970, Congress classified cannabis as a Schedule I substance under the Controlled Substances Act, placing it alongside drugs considered to have no accepted medical use and a high potential for abuse. Since then, cannabis has been demonized through propaganda and misinformation, including campaigns and initiatives like Reagan’s War on Drugs and the “Just Say No” movement of the 1980s. From the mid-1990s, public sentiment began to shift, particularly for medical use. As states began establishing their own allowances for medical and recreational cannabis use, public awareness and understanding evolved, putting pressure on federal leadership to reconsider marijuana’s Schedule I classification. A DOJ notice of proposed schedule transfer was announced in May 2024, receiving “numerous comments and requests for hearing from interested persons.” The hearing was scheduled, delayed, then cancelled until Trump issued Executive Order 14370, Increasing Medical Marijuana and Cannabidiol Research, on Dec. 18, 2025. This order directed the Attorney General to “take all necessary steps … in the most expeditious manner” to make rescheduling official.

What the Reclassification of Marijuana Actually Means

A Schedule III classification indicates “marijuana has a potential for abuse less than the drugs or other substances in schedules I and II” which include drugs such as heroin and oxycodone. It also states marijuana “produces a wide range of positive subjective responses” and opens additional pathways for scientific and medical research. While the announcement is a major milestone, legal cannabis operators still face substantial regulatory hurdles. Businesses operating legally under state law do not automatically become federally compliant under Schedule III. Operators must still apply for DEA registration, navigate extensive paperwork, pay nonrefundable fees, and wait through potentially lengthy approval timelines. We noticed one particular caveat current state-approved businesses should note: On the DEA’s application to register for a license as an approved medical cannabis cultivator, manufacturer, testing lab, or distributor, a self-incriminating question poses a huge risk. Under ‘Liabilities,’ the last question asks, “Has anyone who will be involved in the ownership or operation of the firm previously manufactured, distributed, and/or dispensed any controlled substance without a DEA registration authorizing such activity?” A ‘yes’ confirms prior federally-illegal activity, and a false ‘no’ could cost four years in prison plus a $250,000 fine. After being questioned by Cannabis Business Times, the DEA Media Affairs team noted the question “reflects standard application structure used to collect information related to regulatory compliance considerations. Its inclusion in this section does not, by itself, indicate that a particular response will carry determinative weight or result in an adverse outcome.” Tricky, tricky.

Key Implications of the Schedule III Classification

One of the most significant benefits is relief from U.S. Code 280E, which prohibited cannabis-related businesses from deducting standard business expenses like cost of goods, rent, labor, marketing, utilities, and more. Rescheduling also “encourages the Secretary of the Treasury to consider providing retrospective relief from Section 280E liability for taxable years in which a state licensee operated under a state medical marijuana license.” As cannabis businesses often pay up to 90% of their revenue in taxes, this inclusion can allow significantly larger portions of revenue to remain in-house. More banking and financing opportunities may become available because of marijuana rescheduling. While new cannabis classification does not inherently ratify the SAFER Banking Act, the move adds legitimacy to the industry and may encourage more financial institutions to work with cannabis operators. Expanded banking access could create a huge range of opportunities for both small businesses and large corporations. Another major implication is the lowered barrier to scientific and medical research. Increased access to cannabis for research purposes could significantly improve understanding of the plant’s therapeutic potential. As chronic pain researcher Kevin Boehnke, Ph.D. said, “This federal acknowledgment may embolden institutions and leaders who were previously concerned about engaging in cannabis research to start working in this space.” As legitimacy and research expands with Schedule III classification, there is increasing potential for marijuana’s new status to influence policies on CBD and hemp-derived cannabis products. With new hemp-product bans looming, it will be interesting to see how reclassification shifts the cannabis industry moving forward.

Who Does Rescheduling Apply To - and Who's Left Out?

Though recent action does mean marijuana is reclassified, make no mistake - substances in Schedule III remain illegal; federal control has simply loosened. Reclassification only applies to those operating with a “state medical marijuana license.” It does not extend to adult-use cannabis businesses or recreational consumers. That said, broader cannabis rescheduling may be on the horizon. The DOJ plans to hold a hearing to reclassify marijuana into Schedule III beginning June 29, 2026. If this proposed rescheduling is approved, applications could expand beyond licensed medical operators into recreational, adult-use businesses and consumers. Broad cannabis rescheduling would still mean a high level of federal control. Consumers may not notice dramatic immediate changes, but adult-use cannabis operators could see major financial relief through the removal of IRS Code 280E restrictions. For now, the cannabis industry will be closely watching future rescheduling developments and potential federal legalization efforts. While legislation such as the MORE Act is gaining traction, those regulations may be a bit further down the road.

Follow the Rescheduling Story at CannaCon

Stay up-to-date on cannabis rescheduling developments and other industry news at CannaCon! The nation’s leading business-to-business cannabis conference is coming to St. Paul, MN June 26-27 and to St. Louis, MO on Aug. 28-29. The conversation is big, and more than ever, now’s the time to be a part of it. CannaCon is dedicated to growing the cannabis industry by educating cannabis business owners and enthusiasts on all things related to cannabis and hemp. Visit cannacon.org to stay current with the latest cannabis business news and register to attend an upcoming CannaCon B2B cannabis tradeshow.