# DOJ Moves Medical Cannabis to Schedule III in Historic Federal Reclassification
**State-licensed medical cannabis and FDA-approved marijuana products now sit alongside Tylenol with codeine under federal law, while recreational cannabis stays on Schedule I.**
*By CBDWorldNews Editorial Staff | April 27, 2026*
The Department of Justice issued an Order on April 23 that immediately placed cannabis “subject to a state medical marijuana license” into Schedule III of the Controlled Substances Act. The move marks the first time since 1970 that the federal government has formally downgraded marijuana’s legal classification.
## What the Order Actually Does
The DOJ drew a sharp line between medical and recreational cannabis. Products covered by state medical marijuana licenses and FDA-approved drug products containing marijuana now fall under Schedule III. State-approved recreational marijuana stays on Schedule I.
That distinction matters for two reasons. First, it relieves the Section 280E tax burden on qualifying medical operators. Under 280E, cannabis businesses could not deduct ordinary business expenses because they trafficked in a Schedule I substance. Moving medical cannabis to Schedule III removes that barrier and could open the door to retroactive tax relief for companies that overpaid.
Second, researchers will face fewer regulatory hurdles. Schedule III substances carry less-burdensome DEA requirements than Schedule I, which should accelerate the pace of clinical trials and observational studies across the country.
## The Two-Phase Approach
The DOJ structured its rescheduling agenda in two stages. Phase one — the immediate reclassification of state-licensed medical cannabis — took effect the moment the Order was published. Phase two kicks off on June 29, 2026, when a new administrative hearing begins to consider full rescheduling of all cannabis from Schedule I to Schedule III.
> “The DOJ is restarting the formal administrative process to consider full rescheduling, with firm procedural deadlines designed to prevent the kind of stalling that characterized the prior process.” — Foley Hoag LLP analysis
The hearing will examine whether recreational cannabis should follow the same path. Legal experts expect the process to take months, not years, given the accelerated timeline the DOJ has imposed.
## Trump Administration’s Role
President Trump drew attention to hemp and cannabis regulation in the days surrounding the announcement. The White House Domestic Policy Council sent policy suggestions to Rep. Andy Barr, who has been leading efforts to create a regulatory framework for hemp products as an alternative to outright prohibition.
The timing suggests coordination between the executive branch and congressional allies working on parallel hemp legislation, including Barr’s Lawful Hemp Protection Act and Sen. Rand Paul’s Hemp Safety Enforcement Act.
## Industry Reactions Split Along Familiar Lines
Medical cannabis operators and their investors welcomed the news. The Section 280E relief alone could save qualifying businesses millions in annual tax obligations. Publicly traded cannabis companies with medical licenses saw share prices jump in after-hours trading on April 23.
Hemp industry advocates had a more cautious response. While the rescheduling signals broader federal acceptance of cannabinoids, it does nothing to address the November 2026 deadline when the revised hemp definition takes effect under the Continuing Appropriations Act. That deadline would render most hemp-derived cannabinoid products currently on the market federally unlawful.
## What Comes Next
The June 29 administrative hearing will determine whether recreational cannabis joins medical products in Schedule III. Meanwhile, [CBD product manufacturers](https://cbdproducts.com/medical-cbd-products) are watching closely to see how the reclassification affects consumer perceptions and retail demand.
For companies that rely on [third-party lab testing and compliance standards](https://safecbd.com/lab-testing-standards), the rescheduling could eventually simplify the testing landscape if federal and state requirements begin to align.
The hemp-derived CBD sector remains in a separate regulatory lane, but the cultural and political signal is clear: the federal government is moving away from treating cannabinoids as dangerous substances with no medical value.
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*These statements have not been evaluated by the Food and Drug Administration. CBD products are not intended to diagnose, treat, cure, or prevent any disease.*
