Historic Step Forward? Cannabis To Be Rescheduled to Schedule III—What It Means and What’s Next

Yesterday, President Trump issued an Executive Order directing completion of the rulemaking process started under the Biden Administration to move marijuana from Schedule I to Schedule III under the Controlled Substances Act “in the most expeditious manner in accordance with Federal Law.” While this is a significant policy shift that should be widely recognized, the Order largely advances an already-pending process and does not, on its own, immediately resolve many core legal and regulatory barriers facing patients, providers, or the cannabis industry.

The Order follows years of federal review acknowledging credible scientific support for medical uses of marijuana, including treatment of epilepsy, multiple sclerosis, intractable pain, including from migraines, cancer, degenerative disc disease, central pain syndrome and rheumatoid arthritis, anorexia related to certain medical conditions, and chemotherapy-induced nausea and vomiting. This Order does not itself complete the process of rescheduling cannabis, nor does it reconcile the state and federal tension around legality versus illegality by any means, but it does represent a path forward for innovation and potential access to much-needed therapeutics.

Why this matters:

• Federal recognition of accepted medical use: HHS, FDA, and DOJ have all already acknowledged that marijuana has a currently accepted medical use, with recent concurrence from the National Institute on Drug Abuse and The National Academies of Sciences, Engineering, and Medicine.
• Immediate Tax Relief: Companies burdened by Section 280E could soon see tax relief, enabling them to deduct normal business expenses and the change will also permit the federal government to extend tax credits and incentives to encourage compliance, investment, and other policy goals.
• Alignment with actual practice: More than 30,000 licensed healthcare practitioners across 43 jurisdictions are already recommending medical marijuana for over 6 million registered patients through state-legal programs. 
  
• Pathway to improved research: Rescheduling reduces barriers to research, enabling expanded infrastructure within the United States to inform doctors and patients on safety, efficacy, and appropriate utilization.
• Administrative follow-through: The Attorney General has been directed to expeditiously complete rescheduling to Schedule III, accelerating a timeline that was paused earlier this year following the new administration’s transition. 

The Executive Order also directs the White House to work with Congress to modernize the legal definition of hemp-derived cannabinoid products, with the goal of ensuring Americans have access to appropriate full-spectrum CBD products while preserving Congress’s intent to restrict products that pose serious health risks. As a result, the most recent hemp definition changes scheduled to take effect on November 12, 2026 are likely to be further refined to more clearly address issues such as serving-size limits, per-container caps, and cannabinoid ratio requirements.

As major as the Executive Order announcement is, there remain ongoing challenges. Among them:

• The DOJ’s rescheduling process has involved a proposed rule and is proceeding through administrative steps, including an administrative law hearing, before finalization. 
  
• Congress is trying to quietly remove a long-standing budget rule that protected state-legal medical marijuana from federal interference. That means patients and businesses who followed their state’s rules could once again be fair game for federal enforcement.
• Product compliance landscape remains complex, particularly for hemp-derived cannabinoids and full-spectrum CBD products that may trigger CSA control depending on THC thresholds and forthcoming statutory updates.    
  
• Continued need for clear federal standards to safeguard patients, address labeling accuracy, and mitigate drug interaction risks, especially for seniors and vulnerable populations.   
  
• Banking will likely remain a challenge due to the structure of state licensing schemes, which will still not align with Federal law.

While neither this Order, nor final rescheduling of cannabis to schedule III, will effect the legalization of cannabis at the federal level or the immediate cessation of countless cannabis-related arrests, INCBA applauds each step that brings these realities closer and facilitates medical research related to cannabis. INCBA is proud of the role that its members have played in advocating on behalf of numerous parties engaged in this years-long process, as well as the role that the organization has played in educating our members, and the larger community regarding the nuances of this complicated process.

INCBA will continue to monitor the developments and educate and connect cannabis industry lawyers to deliver excellent, ethical, and advanced legal assistance to the evolving cannabis industry. INCBA also offers an ethics hotline to assist those practicing or considering practicing in cannabis and/or hemp with up-to-date professional guidance without judgment.

INCBA is a 501(c)(3) whose members shape the future of cannabis law and policy, access premier education and resources, and engage with a global network of practitioners leading the industry through this historic transition. You can find more information about the organization, at incba.org. Look ahead to a special webinar focusing on the legal landscape for the legalization of medical cannabis nationwide.