Trump administration plans to reschedule marijuana, easing federal restrictions and taxes

A move to place marijuana in Schedule III would do more than soften the drug’s federal label. It could erase one of the cannabis industry’s harshest tax burdens, make federally backed medical research easier to justify, and still leave marijuana controlled under federal law rather than legal.

Marijuana now sits in Schedule I, the same category as heroin. The Justice Department and Drug Enforcement Administration proposed on May 21, 2024, to transfer it to Schedule III, a class that would recognize accepted medical use while keeping the drug regulated under the Controlled Substances Act. Until a final rule is published, marijuana remains Schedule I.

The financial stakes are immediate. The Internal Revenue Service said in June 2024 that Section 280E still applies while marijuana remains Schedule I, blocking the ordinary deductions and credits that most businesses take for granted. The Congressional Research Service has said that if marijuana is rescheduled to Schedule III, the biggest change would be the end of that tax penalty for marijuana businesses, a shift that could improve margins across an industry long squeezed by federal prohibition.

The policy move also carries weight for medicine. The Food and Drug Administration has said it supports scientifically based research into cannabis-derived products and, in 2023, found scientific support for cannabis use in treating anorexia related to a medical condition, nausea and vomiting, and pain. That matters in a country where the White House has said chronic pain affects nearly 1 in 4 U.S. adults and more than 1 in 3 seniors, and where 6 in 10 people who use medical marijuana say they do so to manage pain.

The rescheduling process has already moved through a formal federal channel, not a quick announcement. President Joseph R. Biden Jr. asked the attorney general and the secretary of health and human services on Oct. 6, 2022, to review marijuana’s federal scheduling. The DEA later set Dec. 2, 2024, as the commencement date for in-person hearings, underscoring that the change was being weighed through the administrative record.

Even if the rule is finalized, the shift would not settle every conflict. The DEA has said Schedule III would still bring regulatory controls and marijuana-specific requirements. Marijuana would remain federally controlled, criminal exposure would not disappear, and federal law would still clash with state programs that already operate in 40 states plus the District of Columbia. The result would be a major federal shift, but not an end to the legal limbo that has shaped the cannabis market for years.