Marijuana Rescheduled from Schedule I to Schedule III
In an order from the Drug Enforcement Administration (DEA) on April 23, state-licensed medical cannabis has been moved from Schedule I to Schedule III of controlled substances. This move comes as a follow up to the Executive Order on Increasing Medical Marijuana and Cannabidiol Research that was issued on December 18, 2025 by President Trump. In addition to moving medical cannabis from Schedule I, which contains drugs like heroin and LSD, to Schedule III, which includes drugs like Tylenol and steroids, the order from the DEA also started an expedited hearing process for a broader rescheduling of marijuana to Schedule III. The hearing is slated to begin on June 29, 2026, and it is expected to provide a pathway for the broader federal legalization of marijuana.
Even though it is not the end of the battle, this move provides the momentum needed to break down barriers in the cannabis industry by legitimizing medical marijuana programs in 40 states, including the areas where CEED members work: New York, New Jersey, Pennsylvania, and Connecticut. For example, the reschedule of medical marijuana allows cannabis researchers to obtain state-licensed products for their research without worries of federal penalties. This will not only help advance the amount of research that can be done on the positive medical effects of cannabis, but it also helps ensure the safety of consumers by allowing the Food and Drug Administration (FDA) to conduct more research of the products to more effectively regulate and monitor them.
The order from the DEA also allows companies that sell state-licensed medical marijuana to deduct business expenses from their federal taxes, as they will no longer be subject to the 280E tax restrictions that apply to businesses that manufacture, distribute, or dispense Schedule I and II drugs. This will greatly help in lowering costs of having a business in medical cannabis, which will in turn help improve patient access to these products by lowering their cost to consumers. Outside of patient access and affordability, it can help encourage smaller companies to expand by opening more locations since the cost to do so will be lower.
In terms of the 280E tax restrictions, companies no longer being forced to use cost of goods sold (COGS) to determine their taxable income will eliminate confusion and legal challenges for business owners. Income estimates made using the COGS method were allowed to be challenged in Tax Court based on the Sixteenth Amendment, but deductions and tax credits used by other business types are not subject to such scrutiny. This removal of unfavorable tax treatment will allow medical cannabis businesses to operate with the same tax rights as other businesses, increasing revenue potential and lessening tax losses.
Even with these great changes, there is still plenty that needs to be done at the federal level to support the growth of the cannabis industry. As of right now, there has been no mention of record expungement or clemency for non-violent charges involving cannabis – a change that could have life-changing effects for many people who have previous or current charges on their record in relation to growing, selling, or distributing the plant. There is also currently no protection that ensures working in the cannabis industry does not cause someone to be barred from citizenship or have a harder time when applying for citizenship.
Furthermore, the order does not address many issues that are more prominent in the adult-use business market for cannabis, which is the sector of the industry within which most of the small, individually owned cannabis companies operate. These businesses are not considered to be part of the medical marijuana program and do not have the same benefits in the banking and tax systems as other business types because of the lack of federal legalization. With adult-use cannabis still being considered a Schedule I drug, it prevents any opportunities for interstate commerce or banking since it is still illegal on the federal level. Moreover, banks are hesitant to service cannabis businesses because it could potentially result in a money-laundering investigation since the business is not federally legal, but banks are still required to adhere to federal protections. Instead, many cannabis businesses must default to cash-based operations, which provides extra overheard costs due to the need for more security requirements to protect larger amounts of cash than most other businesses typically need to handle. State legality is not enough to protect businesses from being subject to federal charges and penalties, leaving businesses that operate legally in their state and follow state laws and licensing in a legal limbo.
Lack of federal legalization also mean that many cannabis companies that are doing well enough to have multiple locations can only operate in one state. Even if adult-use cannabis sale is legal in both states, due to federal jurisdiction being the main authority in interstate business, they cannot send their business revenue across state lines without violating federal law. This obstacle unintentionally limits the amount of locations that can be opened as well as the number of jobs that can be created and supported in the industry.
In this time of uncertainty for the cannabis industry, CEED continues to work to help cannabis workers achieve the same protections afforded to workers in other industries, such as higher wages, job security, and a voice in their workplace. These protections serve as a safeguard while the industry is constantly undergoing legal changes. CEED Secretary-Treasurer Guy James says, "At CEED, IUJAT, we work proudly to provide our members with strong benefits and protection so that they can more confidently pursue their passions in an industry they love. The rescheduling provides a little more stability to the foundation of this ever-changing industry, and we aim to further solidify that foundation with our representation."
We know that our CEED cannabis workers take great pride in the work that they have been able to do and have deep understanding and knowledge of their craft, so we hope to see them have opportunities for growth and stable careers in their industry. CEED is committed to helping our members through every stage as the cannabis industry continues to grow and take shape, and we are committed to standing with workers to help them fight for the industry and ensure their jobs stay protected.