Politics
Federal Marijuana Rescheduling Announced By Department Of Justice, Months After Trump Executive Order
The Trump administration is officially moving ahead with the federal reclassification of marijuana.
More than four months after President Donald Trump signed an executive order directing the Department of Justice to expeditiously finish the process of moving cannabis from Schedule I to Schedule III of the Controlled Substances Act (CSA), Acting Attorney General Todd Blanche on Thursday announced that rescheduling is finally happening.
“The Department of Justice is delivering on President Trump’s promise to expand Americans’ access to medical treatment options,” Blanche said. “This rescheduling action allows for research on the safety and efficacy of this substance, ultimately providing patients with better care and doctors with more reliable information.”
The process will happen in phases, DOJ said.
Under an order signed by Blanche, marijuana products regulated by a state medical cannabis license will immediately move to Schedule III, as will any marijuana products that are approved by the Food and Drug Administration (FDA).
Then, beginning on June 29, there will be a new expedited administrative hearing process to consider the broader rescheduling of marijuana from Schedule I to Schedule III.
Terry Cole, administrator of the Drug Enforcement Administration (DEA), said that the agency is “expeditiously moving forward with the administrative hearing process—bringing consistency and oversight to an area that has lacked both.”
DOJ is ending a prior administrative hearing process on the rescheduling proposal that stalled near the end of the Biden administration amid litigation from pro-reform parties that alleged improper agency communications and witness selection decisions.
Rescheduling won’t federally legalize cannabis, but it would remove certain Schedule I research barriers, while benefitting state-licensed marijuana businesses by allowing them to take federal tax deductions they’re currently barred from under an Internal Revenue Service (IRS) code known as 280E.
Because of the way the rescheduling action is being rolled out in phases, state-licensed marijuana companies that serve both the medical and recreational markets may only be able to immediately obtain tax relief for parts of their businesses—though DOJ says it wants that relief to apply retroactively for past tax years.
“Holders of state medical marijuana licenses will no longer be subject to the deduction disallowance imposed” by 280E, Blanche’s order says, adding that it “encourages” the treasury secretary “to consider providing retrospective relief from Section 280E liability for taxable years in which a state licensee operated under a state medical marijuana license.”
Meanwhile, “any form of marijuana other than in an FDA-approved drug product or marijuana subject to a state medical marijuana license remains a schedule I controlled substance, and those who handle such material remain subject to the regulatory controls, and administrative, civil, and criminal sanctions, applicable to schedule I controlled substances set forth in the CSA and DEA regulations,” Blanche wrote.
For now, DOJ is establishing “an expedited review process for entities holding state medical marijuana licenses who seek registration as a marijuana manufacturer, distributor, or dispenser” in order to become federally compliant under Schedule III.
“The Attorney General has determined that incorporating state licensing systems into the federal registration framework represents the most effective and efficient means of achieving the CSA’s objectives with respect to medical marijuana while promoting the medical benefits of marijuana and causing the least disruption for patients and existing state systems. The rule accordingly leverages existing regulatory infrastructure while preserving the Administrator’s authority to deny or revoke registration where specific public-interest concerns arise and to ensure compliance with the Single Convention. This approach reflects the Attorney General’s considered judgment that cooperative federalism best serves the statutory purposes of the CSA in the context of a well-regulated medical marijuana market.”
In order to align with an international drug control treaty “requirement that a government agency serve as the exclusive purchaser of cannabis production,” DOJ is rolling out a process by which the federal government will technically purchase marijuana from producers and then sell it back to them or related entities.
“Registered manufacturers must store crops in a facility to which DEA maintains access until that transaction is complete, and each manufacturer registration must specify the areas in which cultivation is permitted,” Blanche’s filing says.
“All manufacturers registered under this subsection shall establish a nominal price for the purchase of their marijuana crops. The Administration shall then purchase the entity’s crops at that price and sell the crops back to the entity, or a related or subsidiary entity, at the same price with the addition of the administrative fee as calculated under Part 1318.06(a).”
The acting attorney general said state medical cannabis regulatory systems have “matured significantly since California first authorized medical use in 1996, and today the vast majority of States maintain comprehensive licensing frameworks governing cultivation, processing, distribution, and dispensing of marijuana for medical purposes.”
“These state regimes have developed robust infrastructure for preventing diversion, ensuring product safety, maintaining records, and conducting facility inspections—functions that fulfill the objectives of federal registration and recordkeeping requirements, Blanche said in his order. “The Attorney General has reviewed the operation of these state systems and finds that, taken as a whole, they demonstrate a sustained capacity to achieve the public-interest objectives that underlie the CSA’s registration framework, including protecting public health and safety and preventing the diversion of controlled substances into illicit channels.”
On Wednesday, several news outlets reported that action on the cannabis rescheduling proposal was imminent.
There has been some uncertainty about how DOJ would navigate the issue. While the department faced a mandate from the president, top officials have been notably silent on the issue in the months since receiving that directive—even as the White House touted Trump’s order as an example of a policy achievement during the first year of his second term.
Trump himself complained last weekend that federal officials were “slow-walking” following through on his cannabis order.
“You’re going to get the rescheduling done, right, please? Will you get the rescheduling done, please?” Trump said during a signing ceremony for a separate order on psychedelics, seeming to speak to a Department of Justice or White House official during an event in the Oval Office on Saturday. “You know, they’re slow-walking me on rescheduling. You’re going to get it done, right?”
A Justice Department spokesperson told Marijuana Moment in January that they had no “comment or updates” to share on the topic. However, an agency official more recently said that DOJ was “working to identify the most expeditious means of executing the EO.”
That phrasing was notable, signaling that the department was uncertain about the administrative pathway to finalize rescheduling. The hope among advocates and industry stakeholders was that the process would be more simple, with a final signature on the existing reform proposal that was released following a scientific review initiated under the prior Biden administration.
When Trump issued the rescheduling order late last year, Pam Bondi was attorney general. She opposed cannabis reform as Florida’s attorney general and she didn’t attend the president’s signing ceremony for the rescheduling executive order.
Now, the process is being overseen by Blanche, who said in response to a written question about marijuana rescheduling during his confirmation process to become deputy attorney general that he would “give the matter careful consideration after conferring with all relevant stakeholders, including DEA personnel.”
DEA and reform proponents earlier this month submitted a joint status report on an interlocutory appeal that concerns allegations of agency bias and improper communications with anti-rescheduling parties during the review process on the proposal.
“To date, Movants’ interlocutory appeal to the Administrator regarding their Motion to Reconsider remains pending with the Administrator,” the filing from attorneys representing DEA and cannabis reform proponents challenging the process says. “No briefing schedule has been set.”
The president’s rescheduling directive was overwhelmingly popular among cannabis consumers, according to a recent poll from the cannabis telehealth platform NuggMD.
About 83 percent of respondents said they support the executive order, compared to 7 percent who expressed opposition and 10 percent who said they didn’t have an opinion about the proposed reform.
The cannabis rescheduling process was initiated by then-President Joe Biden, under whom the Department of Health and Human Services (HHS) published a 252-page report finding that marijuana does not meet the criteria to remain classified as a Schedule I drug.
The Department of Justice later issued a proposed rule to move cannabis to Schedule III, which then led to the stalled administrative hearing process.
Former Rep. Matt Gaetz (R-FL), Trump’s first pick for attorney general this term who ultimately withdrew his nomination, recently raised eyebrows after posting on X that he’s been told that DEA is actively drafting a rescheduling rule and intended to issue it “ASAP.”
There was some confusion around that point, however, as a rule was already pending before the Justice Department—and a new rule would have presumably been subject to additional administrative review and public comment.
A Democratic senator told Marijuana Moment in January that it’s “too early to tell” what the implications of Trump’s cannabis order would be—saying that while there are “things that look promising” about it, he is “very concerned about where the DOJ will land.”
“The ability of the Trump administration to speak out of both sides of their mouth is staggering,” Sen. Cory Booker (D-NJ) said. “So I’m just going to wait and see right now. Obviously, there’s things that look promising—to end generations of injustice. I really want to wait and see.”
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Also in January, two GOP senators filed an amendment to block the Trump administration from rescheduling cannabis, but it was not considered on the floor.
A recent Congressional Research Service (CRS) report discussed how DOJ could, in theory, reject the president’s directive or delay the process by restarting the scientific review into marijuana.
The Department of Justice separately missed a congressionally mandated deadline in January to issue guidelines for easing barriers to research on Schedule I substances such as marijuana and psychedelics.
