For decades, cannabis has occupied one of the most restrictive positions in federal drug policy, classified as a Schedule I substance under the Controlled Substances Act (CSA), alongside drugs deemed to have no accepted medical use and a high potential for abuse. That classification has long stood in tension with the reality on the ground: widespread state legalization, a rapidly growing regulated industry, and evolving public attitudes toward cannabis.

However, April 23, 2026, marks a significant change where the U.S. Department of Justice (DOJ) announced and issued an order that it is reclassifying certain cannabis-related products under federal law.

Specifically, the order moves the following substances from Schedule I to Schedule III of the CSA:

• FDA-approved marijuana products, and 
• Marijuana products regulated under state medical programs.

While this move stops short of legalization, it represents a significant recalibration of federal policy and one that could reshape the legal and economic landscape for businesses, healthcare providers, and investors alike.

“The Department of Justice is delivering on President Trump’s promise to expand Americans’ access to medical treatment options,” said Acting Attorney General Todd Blanche. “This rescheduling action allows for research on the safety and efficacy of this substance, ultimately providing patients with better care and doctors with more reliable information.”

The goal of the administration and DOJ is to expedite the rescheduling process. The DOJ announced procedural changes to accelerate the rulemaking process to reschedule marijuana from Schedule I to Schedule III under the CSA. The Drug Enforcement Administration (DEA) is withdrawing the previously issued notice of hearing and terminating those proceedings to streamline the process. The new administrative hearing is scheduled to begin June 29, 2026, with an updated notice of hearing to be published in the Federal Register. These steps are intended to expedite review while maintaining compliance with federal law and establish clearer timelines for final action.

About the DEA Process

The CSA classifies drugs into five schedules based on medical use, potential for abuse, and safety. Marijuana has long been listed as a Schedule I substance, alongside drugs such as heroin and LSD.

The authority to formally change a drug’s classification rests with the DEA which operates within the DOJ.  DOJ attorneys work alongside DEA officials to translate scientific findings into a rule that satisfies the requirements of federal law. That includes navigating the procedural demands of the Administrative Procedure Act that includes drafting the proposed rule, managing public comment, and preparing for the near certainty of legal challenges.

In this context, the DOJ serves two critical functions.

First, it acts as a gatekeeper. Any proposed rescheduling must withstand rigorous internal legal review to ensure it aligns with the statutory framework of the CSA. Given the history and political sensitivity surrounding cannabis, the margin for error is slim; procedural missteps could delay or derail the rule entirely.

Second, the DOJ acts as defender. Once a rule is proposed, or ultimately finalized, it is likely to face legal challenges in federal court. Whether those challenges come from industry stakeholders, advocacy groups, or state governments, it will be DOJ litigators tasked with defending the agency’s decision and preserving the rule.

Potential Effects of Rescheduling

Rescheduling marijuana to Schedule III would have the following immediate and tangible effects.

1. Expanded Medical Research Opportunities

Rescheduling is expected to significantly ease restrictions on scientific and medical research involving cannabis. Currently, Schedule I status imposes strict limitations on study design, sourcing, and funding.

2. Tax Relief for Cannabis Businesses

One of the most immediate impacts may be tax related. Cannabis businesses are currently subject to Internal Revenue Code §280E, which prohibits standard business deductions for Schedule I and II substances.

If marijuana is moved to Schedule III, businesses may be able to deduct ordinary expenses such as rent and payroll, potentially transforming profitability and compliance strategies.

3. Improved Access to Capital and Banking

Although not a complete solution, rescheduling could improve access to financial services and investment capital for businesses. We are monitoring how this could affect federal bankruptcy laws.

This may open up greater opportunities for businesses to file cannabis intellectual property with the U.S. Patent and Trademark Office.

Businesses and stakeholders in the cannabis industry should begin preparing for regulatory and tax changes, including reassessing tax planning strategies, evaluating corporate structure and compliance frameworks, and monitoring federal agency guidance and rulemaking developments

Healthcare providers, researchers, and investors should also be aware of expanded opportunities, but proceed with caution pending final regulatory action.

The Limitations of Rescheduling

Equally important is what rescheduling will not do. Despite its significance, rescheduling has important limitations:

• No federal legalization: Marijuana would remain a controlled substance.
• No automatic change to state laws: State regulatory frameworks remain in place.
• Continued federal oversight: Production, distribution, and retail sale would still be regulated.

Federal enforcement risks may also persist in certain contexts, particularly outside of approved medical or regulatory channels.

What Happens Next?

The anticipated rescheduling of marijuana marks a pivotal moment in U.S. drug policy. While not equivalent to legalization, it represents a meaningful shift toward recognizing cannabis’s medical utility and reducing longstanding regulatory burdens.

For those operating in or adjacent to the cannabis industry, the coming months will be critical, including how this could affect recreational marijuana. Careful legal planning and close monitoring of federal developments will be essential to navigating this evolving landscape.

Contact the Ice Miller Cannabis group if you have questions about the DOJ’s announcement.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.