Trump AG Dodges Question on Further Marijuana Rescheduling Beyond Medical Use

AG Nominee Sidesteps Adult-Use Rescheduling Question

The Attorney General nominee avoided committing to further marijuana rescheduling during Senate testimony, stating only that the administration would "follow the science" on cannabis policy. The exchange occurred during questioning by Senator Cory Booker (D-NJ), who pressed the nominee on whether the Department of Justice would support moving marijuana to Schedule IV or V to accommodate adult-use programs operating in 24 states.

The nominee's response marks a departure from campaign-trail signals that suggested openness to broader reform. On a strict reading of the Controlled Substances Act, Schedule III placement—currently under DEA review—would permit medical use under prescription but wouldn't resolve the federal-state conflict for recreational markets. Schedule III drugs require FDA approval for prescription use. Adult-use sales would remain technically unlawful under federal law even after rescheduling.

The DEA's pending rulemaking to move marijuana from Schedule I to Schedule III has been in administrative limbo since October 2024. The Drug Enforcement Administration published a Notice of Proposed Rulemaking following a Health and Human Services recommendation, but the final rule hasn't been issued. Industry observers had anticipated final action by Q2 2026.

Schedule III vs. Schedule IV: The Tax and Banking Gap

Schedule III reclassification would eliminate IRC §280E tax burdens for state-licensed operators but wouldn't resolve FDIC banking access or interstate commerce restrictions. Internal Revenue Code Section 280E prohibits businesses trafficking in Schedule I or II controlled substances from deducting ordinary business expenses. Moving marijuana to Schedule III would restore standard corporate tax treatment, reducing effective tax rates for multi-state operators from 70-80% to 25-35%.

Schedule III doesn't trigger automatic changes to banking policy. The Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency have maintained that depository institutions may not service businesses violating the Controlled Substances Act, regardless of state licensing. FinCEN guidance from 2014 remains in effect but doesn't create a safe harbor. Banks continue to cite reputational risk and compliance costs as barriers to cannabis accounts.

Schedule IV or V placement would bring marijuana closer to the regulatory framework governing alcohol, but the AG nominee offered no timeline or policy position on that outcome.

Schedule IV drugs—benzodiazepines, tramadol—have lower abuse potential and accepted medical use. Schedule V includes cough preparations with limited codeine. Neither schedule requires the same level of DEA production quotas or security protocols as Schedule III. For cannabis operators, the practical difference is marginal in terms of federal enforcement risk but significant for state-level regulatory alignment.

Political and Industry Implications

The nominee's non-answer leaves the $35 billion state-legal cannabis industry without clarity on federal enforcement priorities or regulatory roadmap. Multi-state operators including Curaleaf, Trulieve, Green Thumb Industries, and Verano Holdings have structured expansion plans around the assumption that Schedule III reclassification would be finalized by mid-2026. Equity analysts at Viridian Capital Advisors and Stifel had modeled 280E relief into 2027 earnings projections.

The Senate Judiciary Committee is expected to vote on the nomination within 10 days. Confirmation requires a simple majority in the full Senate. If confirmed, the Attorney General would oversee the DEA and could direct the agency to expedite or delay the rescheduling rulemaking. The Controlled Substances Act grants the Attorney General authority to initiate rescheduling proceedings, but HHS recommendations carry significant weight in the administrative record.

State-level reforms continue independent of federal action. Ohio launched adult-use sales in January 2026. Pennsylvania's legislature passed a legalization bill in June 2026 awaiting the governor's signature. Twenty-four states and the District of Columbia have legalized adult-use marijuana; 38 states permit medical cannabis. The federal-state conflict persists regardless of scheduling, but Schedule III would remove the most punitive tax penalty.

For background on the DEA's rescheduling timeline and HHS recommendation, see the CannIntel topic hub on DEA Rescheduling.

What to watch: Senate confirmation vote timing, DEA final rule publication date, and whether the administration issues a formal cannabis policy statement in its first 100 days. The next procedural checkpoint is the Senate Judiciary Committee markup, scheduled for July 28, 2026.