The Trump administration moved Thursday to reclassify cannabis under federal law, which could significantly expand scientific research into the drug’s medical uses.
The change would not legalize the drug at the federal level, but would move cannabis from its current status as a Schedule I substance to Schedule III under the U.S. Drug Enforcement Administration’s controlled substances framework.
In a statement, the Justice Department said it would immediately move FDA-approved marijuana products as well as items regulated by a state medical marijuana license to Schedule III. He also announced an expedited hearing in June to consider the official reclassification of cannabis to Schedule I at the federal level.
“Together, these actions provide immediate and long-term clarity for researchers, patients, and providers while maintaining strong federal controls against illicit drug trafficking,” the DOJ said.
Schedule I drugs, which include heroin and LSD, are considered to have no accepted medical use and a high potential for abuse. Schedule III drugs, such as Tylenol with codeine and testosterone, on the other hand, are recognized as having medical applications and are subject to fewer regulatory restrictions.
The reclassification lowers long-standing barriers that have made it difficult for researchers to study cannabis in clinical settings.
The financial implications are also significant. This would exempt cannabis companies from Section 280E of the IRS code, allowing them for the first time to deduct standard expenses such as rent and payroll, and open the door to banking access that was previously prohibited.
Investors showed some skepticism about the move as cannabis stocks pulled back from early gains and turned negative. Critics fear the policy would create a two-track system for drug development that would allow developers to bypass the FDA process entirely in favor of state-level pathways.
The move nonetheless marks one of the most significant federal changes in marijuana policy in decades, signaling a growing desire in Washington to reconsider how the drug is categorized and studied in the United States.
The move could benefit companies like Tilray, known for its recreational cannabis products but which is expanding its medical segment. Tilray’s medical operations have served hundreds of thousands of patients in more than 20 countries, according to the company.
“We have the research to get into the FDA. We have the research to get into the DEA and show them what we’re doing,” said Irwin Simon, CEO of Tilray.
Simon told CNBC he expects to hear from pharmaceutical companies interested in U.S. partnerships, similar to the surge in outreach among alcohol companies following the surge in demand for hemp-based beverages.
Tilray currently partners with Novartis in Canada.
Scientists have faced strict approval processes, limited access to supplies, and onerous compliance requirements when attempting to examine cannabis for therapeutic purposes, including chronic pain, PTSD, and neurological disorders. These federal barriers have remained in place even though about half the states have legalized marijuana for recreational use, and even more have approved it for medical use.
“While operators would still face a fragmented system on a state-by-state basis, the improved cash flow resulting from rescheduling would support reinvestment, enhance stability and help build momentum toward more consistent standards over time,” said Wendy Bronfein, co-founder and chief brand officer at Curio Wellness, a Maryland-based cannabis company.
The action follows an executive order issued last year directing federal agencies to begin the reclassification process, which typically takes place over several years and involves scientific review, interagency coordination and rulemaking procedures.
“This rescheduling is not the finish line, it’s the final step in a race we’ve been on for decades,” said Shawn Hauser, a partner at cannabis law firm Vicente LLP.
In 2024, the Biden administration initiated this process and submitted the reclassification to the public for a 60-day comment period. After this window, hearings to examine potential obstacles to transfer between administrations were blocked.
The move also comes just days after President Donald Trump signed an executive order on psychedelics aimed at speeding up research, clinical trials and “right to try” access for drugs like psilocybin, MDMA and ibogaine.