U.S. Reclassifies Cannabis in Landmark Policy Shift

In a historic shift for American drug policy, the U.S. Department of Justice has officially reclassified cannabis, moving it from Schedule I to Schedule III. The decision marks a major turning point in how the federal government views the substance and ends months of uncertainty surrounding its status.

On Thursday, April 23, 2026, Acting Attorney General Todd Blanche signed the documents formalizing the change. Cannabis is no longer categorized alongside substances like heroin or LSD. Instead, it now shares cannabis classification with drugs such as ketamine and anabolic steroids. This adjustment represents a significant departure from decades of federal policy that treated cannabis as having no accepted medical use.

Move to Schedule III signals medical recognition, boosts research, and eases tax burdens

The concept of drug “schedules” often causes confusion. Under U.S. law, substances are divided into five categories based on medical use, potential for abuse, and availability. Previously, as a Schedule I substance, cannabis was considered to have no recognized medical value and a very high potential for abuse, making it accessible only for tightly controlled research.

Now, as a Schedule III substance, it is officially recognized as having accepted medical uses, a lower potential for abuse, and availability through prescription.

This shift amounts to a formal acknowledgment by the federal government that cannabis has medical value. It dismantles a long-standing regulatory barrier that has been in place since 1970 and opens the door for broader acceptance within the healthcare system.

One of the primary goals of the reclassification of cannabis is to expand scientific research

Under Schedule I, strict limitations made clinical studies difficult to conduct. Researchers faced numerous regulatory hurdles, slowing progress and limiting the availability of reliable data. Todd Blanche stated that the new classification will enable more rigorous studies on cannabis’ safety and effectiveness, ultimately helping doctors make better-informed decisions and improving patient care.

The financial implications of this decision are also substantial, particularly for the cannabis industry. Although the move does not legalize cannabis at the federal level, it addresses one of the industry’s most significant challenges: taxation. Under Section 280E of the U.S. tax code, companies dealing with Schedule I or II substances have been unable to deduct standard business expenses. This meant cannabis businesses were taxed on total revenue rather than profit, often resulting in effective tax rates as high as 70 to 80 percent.

With cannabis now classified as Schedule III, this restriction no longer applies. Companies can deduct expenses such as rent, salaries, and marketing, potentially saving millions of dollars. This financial relief could prove critical, especially for smaller businesses that have struggled under the previous tax structure. Industry leaders have described the change as one of the most important policy developments in the sector’s history.

Despite these advancements, several key aspects remain unchanged. Reclassification is not the same as full legalization. Transporting cannabis across state lines is still illegal, and cannabis businesses may continue to face challenges accessing traditional banking services. Additionally, the change does not automatically alter the legal status or sentences of individuals previously convicted of cannabis-related offenses.

The decision has also drawn criticism

Some political figures argue that easing restrictions could increase access to potentially harmful substances. Others warn about the risk of a large-scale commercial industry emerging with consequences similar to those seen in tobacco markets.

The path to this decision began under the Biden administration in 2024, but it was ultimately completed during Donald Trump’s presidency. Trump had previously criticized delays in the process and pushed for faster action with input from key advisors.

The process is not yet fully complete. The Department of Justice has scheduled an administrative hearing for June 29, 2026, aimed at accelerating broader changes affecting cannabis products. Once the rule is officially published, it will take effect after 30 days unless legal challenges intervene.

For patients in more than 40 states where medical marijuana is already permitted, this decision represents long-awaited federal recognition of their treatment.

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