DEA Marijuana Rescheduling to Schedule III — Where It Stands in 2026

The push to move marijuana from Schedule I to Schedule III has been one of the biggest cannabis stories of the last two years. It started with a historic federal health recommendation, moved through DEA review, survived legal challenges, got complicated by a change in administration, and has gone through more twists than anyone expected. Here is where everything actually stands right now.

The Timeline So Far

On August 30, 2023, the Department of Health and Human Services officially recommended that the DEA reschedule marijuana from Schedule I to Schedule III. This was the first time a federal health agency formally acknowledged that marijuana does not belong in the same category as heroin and LSD. The recommendation came after an FDA scientific review that HHS Secretary Xavier Becerra had requested back in October 2022.

The DEA took months to respond. On May 21, 2024, the DEA published a proposed rule in the Federal Register to reschedule marijuana to Schedule III. This opened a 60-day public comment period that drew over 43,000 comments — an overwhelming majority in favor of rescheduling or going further.

An administrative law judge hearing was scheduled to review the proposal. But on January 13, 2025, DEA Chief Administrative Law Judge John J. Mulrooney II canceled the evidentiary hearing, citing the incoming Trump administration and the need to allow new leadership to assess the situation.

On December 18, 2025, President Trump signed an executive order directing federal agencies to review marijuana scheduling. However, Attorney General Pam Bondi has shown little urgency in moving the process forward. As of February 2026, the rescheduling process appears stalled — not officially dead, but not actively progressing either.

What Schedule III Actually Means

Moving marijuana to Schedule III does not legalize it. It does not create a federal right to buy or sell recreational cannabis. What it does:

Removes the 280E tax penalty. This is the biggest practical impact. Under current law, IRS Section 280E prevents cannabis businesses from deducting normal business expenses on their federal taxes. Schedule III removes that penalty, potentially saving the legal cannabis industry billions of dollars annually. Some estimates put the industry-wide 280E burden at over $1.8 billion per year.
Opens the door for more research. Schedule I status has made it extremely difficult for researchers to study marijuana. Getting DEA Schedule I research approval is a lengthy, bureaucratic process. Schedule III makes it significantly easier to get approval for clinical studies.
Does not change state laws. States that have legalized recreational or medical marijuana are not affected. States where marijuana is still illegal also are not affected. Rescheduling is a federal classification change, not a legalization measure.
Does not create interstate commerce. Cannabis still cannot legally cross state lines, even between two legal states. That does not change with rescheduling.

Where It Stands Right Now

As of early 2026, the rescheduling process is effectively on hold. The DEA’s proposed rule from May 2024 has not been finalized. The canceled ALJ hearing has not been rescheduled. The Trump administration has sent mixed signals — the December 2025 executive order acknowledged the issue but did not direct any specific timeline for completion.

Legal challenges have also complicated things. Several parties filed suits — some arguing rescheduling goes too far, others arguing it does not go far enough. The combination of administrative delay and legal uncertainty means nobody in the industry is counting on a specific date anymore.

The cannabis industry is operating with cautious optimism. Companies are planning for the 280E tax relief but not making major financial decisions based on a timeline that keeps shifting.

What This Does Not Fix

Rescheduling to Schedule III still leaves major problems unsolved:

Banking access. Most banks still will not serve cannabis businesses due to federal risk. The SAFE Banking Act, which would protect banks that serve cannabis companies, has passed the House seven times but stalled in the Senate every time.
Criminal records. Rescheduling does not automatically expunge or reduce sentences for people convicted of marijuana offenses under the old classification. Thousands of people remain incarcerated for marijuana offenses that are now legal in their states.
The hemp loophole. The legal distinction between hemp and marijuana — based on the 0.3% THC threshold from the 2018 Farm Bill — remains a mess. Rescheduling marijuana does not address the booming market of hemp-derived THC products that exist in a legal gray area.
Veterans and federal employees. Even with Schedule III status, marijuana use may still be grounds for employment termination or loss of security clearances for federal workers and military personnel.

What to Watch For

The next key milestone is whether the DEA moves to finalize its proposed rule or lets it die quietly. If finalized, legal challenges will follow immediately. Industry analysts now expect this process could extend well into 2027.

Meanwhile, the real action continues at the state level. As of 2026, 24 states plus Washington D.C. have legalized recreational marijuana, and 38 states have medical marijuana programs. The federal government is increasingly out of step with where the states and the public already are.

Sources

Written by the team at Marijuana Union — cannabis community, reviews, and real talk from Humboldt County, California.