DEA Finalizes Schedule III Reclassification for Medical Marijuana

DEA Issues Final Rule After Public Comment Period

The DEA published the final rule in the Federal Register on May 30, 2026, following a 60-day public comment period that closed in March 2026. The agency received more than 43,000 public comments on the proposed rulemaking, which was first published in January 2026. Acting DEA Administrator Louis Milione signed the final order on May 28, 2026, according to the Federal Register notice.

Reclassification takes effect 30 days after publication, on June 29, 2026. Schedule III substances are defined under the Controlled Substances Act as drugs with moderate to low potential for physical and psychological dependence and accepted medical use in treatment in the United States.

The move places cannabis alongside ketamine, anabolic steroids, and certain formulations of codeine and testosterone. Schedule I substances, by contrast, are defined as having no accepted medical use and a high potential for abuse.

Tax and Research Implications for Cannabis Operators

The reclassification removes the federal tax penalty imposed by Internal Revenue Code Section 280E, which has barred cannabis businesses from deducting ordinary business expenses since 1982. Section 280E applies only to trafficking in Schedule I and Schedule II controlled substances. With cannabis now in Schedule III, state-licensed operators can deduct payroll, rent, marketing, and other standard business expenses on federal tax returns beginning in tax year 2026.

Research pathways expand as well. The Department of Health and Human Services can now approve additional cannabis cultivation facilities for federally funded research without requiring a separate DEA manufacturing registration. Until now, the University of Mississippi held the sole federal contract to grow cannabis for research purposes.

The National Institute on Drug Abuse, which controls the federal research supply, said in a May 30 statement that it will accept applications from additional growers beginning July 1, 2026. NIDA Director Nora Volkow said the agency expects to approve at least three additional cultivation sites by the end of 2026.

State Programs Remain Unchanged; Federal Prohibition Continues

The rescheduling does not legalize cannabis under federal law or alter state-level medical and adult-use programs. Cannabis remains a controlled substance. The DEA retains enforcement authority over unlicensed cultivation, distribution, and possession. Federal criminal penalties for trafficking in Schedule III substances carry maximum sentences of 10 years for first offenses and 20 years for subsequent offenses, compared to life imprisonment under Schedule I.

State medical marijuana programs in 38 states and the District of Columbia will continue to operate under existing frameworks. The reclassification does not grant federal legal protection to patients or providers in those states, though it removes a key rhetorical barrier to federal acceptance of medical cannabis.

Congressional efforts to pass comprehensive legalization bills, including the MORE Act and the SAFE Banking Act, remain stalled in the Senate as of May 2026. The next legislative session begins in January 2027, and we'll be watching whether the rescheduling decision shifts the political calculus on Capitol Hill. For full background on this development, see the CannIntel topic hub on Federal Medical Marijuana Recognition.