DOJ Reclassifies Medical Marijuana from Schedule I to Schedule III; Formal Hearing Set for June 29

Acting Attorney General Todd Blanche signed an order reclassifying state-licensed and FDA-approved medical marijuana products from Schedule I (no accepted medical use, high abuse potential) to Schedule III under the Controlled Substances Act, effective immediately. The order does not federally legalize recreational marijuana but opens major pathways: cannabis companies are now exempt from IRS Section 280E, which had barred deductions on most business expenses; research on FDA-approved marijuana expands; and the measure opens pathways for banks to serve cannabis businesses without federal forfeiture risk. A formal Schedule III reclassification hearing is scheduled for June 29 to codify the change through administrative rulemaking. The rescheduling follows a DEA recommendation submitted in 2024, a Biden-era process that had stalled. Industry analysts estimated the 280E exemption alone would save cannabis companies approximately $2 billion annually in taxes. Congressional Democrats and Republicans offered mixed reaction — some celebrated the bipartisan policy outcome while others raised concerns about public health implications.