The Trump administration has shifted medical marijuana into a less restrictive drug category, marking a significant step toward greater federal recognition of cannabis already approved in most states.
Acting Attorney General signed the directive Thursday, moving state-licensed medical marijuana from Schedule I to Schedule III classification under federal drug regulations.
This change could open new opportunities for scientific research into cannabis treatments and boost profitability for marijuana businesses, though federal prohibition remains in place.
Under current federal law, marijuana possession carries penalties including fines and incarceration. Distribution and growing operations face even harsher consequences, with potential prison terms ranging from five years to life based on quantities involved. Thursday’s directive doesn’t alter these criminal penalties.
Instead, the order modifies how federal agencies oversee state-approved medical marijuana programs.
The reclassification moves medical cannabis from Schedule I status — shared with heroin and LSD as substances with high abuse potential and no accepted medical value — into Schedule III alongside ketamine and certain anabolic steroids. Schedule III substances are considered to have moderate to low dependency risks.
Recreational marijuana remains classified as Schedule I even in states permitting adult use. However, the Justice Department has set a June 29 hearing to evaluate broader marijuana reclassification to Schedule III.
Current tax law prohibits business expense deductions for companies involved in Schedule I or II drug trafficking.
Moving medical marijuana to Schedule III status could generate substantial savings for licensed retailers by allowing deductions for advertising, marketing, facility costs, and employee wages related to sales operations.
However, many licensed operators serve both medical patients and recreational customers, creating challenges in determining which expenses qualify for deductions.
“In a lot of ways, it’s kind of nonsensical because these medical products are the same cannabis, the same methods of creation,” said Chicago attorney Irina Dashevsky, who oversees cannabis-related business for the Greenspoon Marder law firm.
“From a business perspective, there’s a lot of complications,” added Rachel Gillette, a Denver attorney who leads that cannabis industry practice at the Holland & Hart law firm. “It just makes it extremely messy.”
Questions remain about whether tax benefits apply only going forward or retroactively. The Justice Department has urged the Treasury Department to extend deductions back to full tax years when businesses operated under state medical marijuana licenses.
American attitudes toward marijuana have shifted considerably over recent decades, though support varies by political affiliation. Gallup polling shows legalization support climbed from 23% in 1985 to 64% last year.
This represents a slight decrease from 70% support recorded a few years earlier, driven primarily by changing Republican opinions. GOP support for marijuana legalization fell from 55% to 40% since 2023, while Democratic backing remained relatively stable, dropping slightly from 87% to 85%. Independent voter support declined modestly from 69% to 66%.
More than 20 Republican senators, including several close Trump supporters, wrote to the president last year requesting marijuana remain Schedule I. They maintained cannabis poses ongoing dangers and claimed reclassification would “undermine your strong efforts to Make America Great Again.”
Medical marijuana programs currently operate in 40 states plus Washington, D.C. Recreational adult-use laws have expanded rapidly over the past 12 years to include 24 states and the nation’s capital.
Cannabis use has grown alongside state legalization efforts.
Federal surveys from 2024 by the Substance Abuse and Mental Health Services Administration found over 64 million Americans aged 12 and older — representing 22% of the population — used marijuana within the previous year. This marked an increase from 19% in 2021.
The reclassification could drive further increases in usage rates.
Dr. Smita Das, an addiction psychiatrist at Stanford University, noted rising rates of cannabis use disorder nationwide.
“We’ve already had kind of a decrease in risk perception related to cannabis over the years with the state legalization, both for medical and recreational purposes, and this will probably just add to that,” Das said.
