The reclassification, reported by major media outlets, moves medical marijuana from Schedule I—which includes heroin and LSD and is defined as having high abuse potential and no accepted medical use—to Schedule III, alongside drugs like ketamine and some anabolic steroids that have moderate to low dependence potential. The change applies only to state-licensed medical marijuana; recreational marijuana remains a Schedule I substance.
Despite the shift, marijuana remains illegal under federal law. Possession is a federal crime punishable by fines and imprisonment, while selling or cultivating marijuana carries penalties ranging from five years to life, depending on quantity. The order does not legalize medical marijuana or alter federal enforcement priorities, though it changes how the federal government regulates state-licensed medical cannabis.
In a lot of ways, it’s kind of nonsensical because these medical products are the same cannabis, the same methods of creation.
The reclassification is expected to boost research into medicinal uses and improve profitability for the cannabis industry. According to major media reports, the action could facilitate new studies by reducing regulatory barriers. Additionally, federal income tax deductions for business expenses—currently unavailable for enterprises trafficking Schedule I or II drugs—may become accessible for medical marijuana businesses. Changing medical marijuana to Schedule III could save licensed businesses millions of dollars by allowing deductions for expenses such as advertising, marketing, rent, and labor. However, many licensed businesses sell cannabis for both medical and recreational purposes, making it difficult to distinguish deductible costs. According to The Independent - Main, Irina Dashevsky, a Chicago attorney overseeing cannabis-related business for Greenspoon Marder, described the situation as "nonsensical" because medical and recreational products are often identical. Rachel Gillette, a Denver attorney leading the cannabis industry practice at Holland & Hart, told The Independent - Main that from a business perspective, the overlap creates "a lot of complications" and makes things "extremely messy."
The Department of Justice has scheduled a hearing for June 29 to consider the general reclassification of marijuana to Schedule III. The Justice Department has also recommended that the Treasury Department apply tax deductions retroactively to full tax years for state medical marijuana license holders, though it remains unclear whether this will be implemented. The reclassification is seen as a first step toward broader federal acceptance of marijuana, but questions remain about how it will affect federal enforcement against state-licensed businesses and whether it will lead to changes in research regulations. The outcome of the June 29 hearing will be closely watched.
From a business perspective, there’s a lot of complications. It just makes it extremely messy.