Trump Administration Advances Marijuana Rescheduling 

On April 23, President Donald Trump’s acting attorney general, Todd Blanche, signed an order reclassifying state-licensed medical marijuana from Schedule I to Schedule III under the Controlled Substances Act (CSA). While this action does not legalize cannabis federally, it marks a major shift in how the federal government treats medical marijuana and follows months of delay in implementing the president’s earlier directive to reschedule marijuana.

The order immediately reclassifies state-licensed medical marijuana and Food and Drug Administration (FDA)-approved products containing marijuana, while also accelerating the broader administrative process to consider full rescheduling, with an expedited administrative hearing scheduled for June 29. In doing so, the administration has effectively moved forward on a portion of rescheduling while leaving the more complex, systemwide reclassification to a separate process.

Background

This development builds on a process first initiated under the Biden administration in 2022, when federal agencies were directed to conduct a scientific and legal review of marijuana’s classification. The Department of Health and Human Services (HHS) issued a formal recommendation in August 2023 supporting a move to Schedule III, recognizing marijuana’s accepted medical use and lower potential for abuse relative to Schedule I substances.

In December 2025, President Trump signed an executive order directing the Department of Justice (DOJ) to move forward with rescheduling. Despite these steps, the process stalled for much of the past year. On April 18, President Trump directly expressed frustration with the pace of the process, urging his administration to complete rescheduling after what he described as months of “slow walking.” Acting Attorney General Blanche framed the April 23 decision as delivering on the president’s directive to expand research and improve patient access.

What the Order Does

The policy covers only two categories of marijuana products: those approved by the FDA and those regulated under a state medical marijuana license. By shifting medical marijuana to Schedule III, the administration is formally acknowledging the legitimacy of state medical programs, which now operate in 40 states. The change is expected to ease long-standing barriers to research, clarify that researchers may use state-licensed cannabis without federal penalty, and establish a pathway for medical marijuana operators to register with the Drug Enforcement Administration (DEA).

It also has immediate financial implications, allowing qualifying businesses to deduct standard operating expenses under the federal tax code by removing the application of Section 280E. The order also directs the secretary of the treasury to consider retroactive relief from Section 280E liability for taxable years in which a marijuana business operated within a state-legal medical marijuana program.

Notably, it remains unclear how financial institutions and other third parties will adapt to marijuana’s reclassification to Schedule III. Absent enactment of the Secure and Fair Enforcement (SAFE) Banking Act, the Capital Lending and Investment for Marijuana Businesses (CLIMB) Act, or similar legislation, marijuana companies are likely to continue facing restricted access to banking and credit and will remain ineligible for listing on major U.S. stock exchanges.

What’s Next

While significant on its own, the order leaves key questions unresolved. It does not address adult-use cannabis and provides limited clarity on how federal regulators will treat products in states where medical and adult-use markets are intertwined. The broader rescheduling process, now set for a June administrative hearing, will be critical in determining whether the federal government ultimately moves toward full reclassification.

Significant uncertainty also remains around implementation. The role of the DEA in carrying out the broader rescheduling process is still unclear, and questions persist regarding how the Food and Drug Administration (FDA) will approach regulation of marijuana products under a Schedule III framework. These issues, along with potential political opposition and litigation risk, could shape both the timeline and ultimate scope of reform.

Bottom Line

Although not a full legalization measure, this action represents one of the most consequential federal cannabis policy shifts in decades. It signals a continued move toward aligning federal policy with state-level legalization trends, even as critical regulatory and legislative questions remain unresolved.

Brownstein will continue to monitor developments of this potential regulatory change as well as cannabis-related legislation. For more information on how this possible change could affect your industry and advice on how to get involved in the process, please reach out to the authors of this alert.

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THIS DOCUMENT IS INTENDED TO PROVIDE YOU WITH GENERAL INFORMATION REGARDING THE RESCHEDULING OF CANNABIS BY THE TRUMP ADMINISTRATION. THE CONTENTS OF THIS DOCUMENT ARE NOT INTENDED TO PROVIDE SPECIFIC LEGAL ADVICE. IF YOU HAVE ANY QUESTIONS ABOUT THE CONTENTS OF THIS DOCUMENT OR IF YOU NEED LEGAL ADVICE AS TO AN ISSUE, PLEASE CONTACT THE ATTORNEYS LISTED OR YOUR REGULAR BROWNSTEIN HYATT FARBER SCHRECK, LLP ATTORNEY. THIS COMMUNICATION MAY BE CONSIDERED ADVERTISING IN SOME JURISDICTIONS.