Marijuana Moment: Marijuana Rescheduling Is A ‘Transitional’ Step That Must Be Followed By Banking, Commerce And Justice Reforms, New Analysis Says

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Federal marijuana rescheduling would represent a historic policy change with major implications for cannabis research and industry—but it should be viewed as a “transitional” step that must be followed up with comprehensive reform to better align state and federal law while promoting equity, a new academic paper argues.

Professors at the University of California published the analysis in the journal Cannabis & Cannabinoid Research, focusing on the impacts and limitations of moving marijuana from Schedule I to Schedule III of the Controlled Substances Act (CSA) as federal agencies recommended following a scientific review.

To be sure, rescheduling “would be the most significant federal cannabis policy shift in more than five decades, yet its legal and practical consequences are widely misunderstood,” the paper says, noting that the move has the potential to “expand research capacity and strengthen incentives for [Food and Drug Administration, or FDA] compliant development.”

But the reform would not federally legalize marijuana or legitimize state cannabis markets, and confusion around the continued legal disconnect could prove problematic as the reform movement continues to expand, it points out.

The authors also emphasized that “rescheduling does not expunge records, repair past harms, or ensure equitable participation and may accelerate consolidation absent protective safeguards.”

“We conclude that Schedule III should be treated as a transitional status, with agencies prioritizing research access and public health surveillance while Congress addresses banking, interstate commerce, and durable criminal justice and equity reforms,” the paper says.

The analysis—which is based on documentation from federal agencies, reports from the Congressional Research Service (CRS) and independent studies on rescheduling—is broken down into two key sections: What moving cannabis to Schedule III does do, and what it doesn’t do.

On a surface level, rescheduling would finally recognize the medical value of marijuana, consistent with the definition of a Schedule III drug. Such substances hold relatively low abuse potential with some currently accepted medical use. As a Schedule I drug, marijuana is currently considered medically useless and uniquely dangerous under federal law.

The report also says that “perhaps the most consequential long-term impact of rescheduling is its effect on research,” removing certain barriers associated with studying Schedule I drugs that have deterred scientists from taking on the added costs and logistical requirements to research marijuana.

“Rescheduling would also mitigate the chilling effect that Schedule I stigma has had on academic and clinical participation, thereby enabling broader institutional engagement,” the authors said. “Recent executive actions directing federal agencies to prioritize medical cannabis and cannabidiol research reinforce this shift.”

Another impact of rescheduling is that, while it wouldn’t mean automatic FDA approval of cannabis products available in state markets across the country, it would clarify “regulatory incentives for product development.”

The paper also explains that “one of the most immediate commercial effects of rescheduling would be relief” from the Internal Revenue Service (IRS) code known as 280E, which currently prevents state-licensed cannabis businesses from taking federal tax deductions that are available to other traditional industries.

“This shift would improve reinvestment capacity, debt service, and financial stability for many operators,” the authors said. “However, increased capital availability may also accelerate consolidation if effective equity-protective measures are not put in place. This dynamic could have negative public health consequences, as the history of tobacco use suggests.”

Rescheduling would not mean that marijuana would be federally legalized, the paper stresses, nor would it allow for interstate marijuana commerce or “confer FDA approval on existing products.”

“State-legal cannabis would remain federally unlawful unless specific statutory exemptions or FDA approval pathways are in place,” it says. “Banking access would remain constrained without congressional action, such as the enactment of the SAFE or SAFER Banking Act, which would provide statutory protections allowing banks and credit unions to offer financial services to state-legal cannabis businesses without exposure to federal penalties. These limitations reflect structural features of federal law rather than regulatory oversight.”

Further, rescheduling “does not resolve the legal paradox in state markets: compliance with state law does not guarantee federal legality,” it continues, stating that the resulting tension “may persist for years, underscoring the need for legislative clarity.”

As many advocates have explained, moving marijuana to Schedule III on its own also “does not advance social equity,” despite the fact that criminalization “has inflicted significant harm on disadvantaged communities through arrests, convictions, and collateral consequences.”

“Although rescheduling acknowledges medical use, it does not expunge records, repair past harms, or ensure equitable participation in legal markets,” the paper says. “Sequencing reforms to include targeted capital access, technical assistance, and protections against predatory acquisitions is essential.”

“Federal agencies should treat Schedule III as a transitional status. Priorities should include expanding research access, strengthening public health surveillance, and protecting equity operators. Congress retains responsibility for resolving issues related to interstate commerce, banking, and criminal justice reform. Reform sequencing should explicitly guard against displacement caused by consolidation.”

“Rescheduling cannabis to Schedule III would mark a historic recalibration of federal drug policy. It aligns statutory classifications with contemporary medical evidence without legalizing cannabis, approving products, or resolving equity concerns,” the authors conclude. “Properly understood, Schedule III is a starting point—an opportunity to replace absolute declarations with evidence and to pursue a coherent, equitable cannabis policy grounded in science and law.”

What the paper doesn’t address is the current rulemaking status of the rescheduling proposal, which resulted from a review mandate under the Biden administration. President Donald Trump subsequently signed an executive order in December that directed the attorney general to expeditiously finalize the rescheduling process, but that’s yet to materialize.

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Meanwhile, the first-ever White House drug czar recently said that while he loves Trump and “almost everything he does,” that affection doesn’t extend to the pending proposal to federally reschedule marijuana, which he described as a “gateway drug” that’s harming youth.

A White House spokesperson defended the administration’s rescheduling push in an earlier interview with Fox News Digital, stating that it’s part of his “pledge to expand medical research into applications of marijuana and cannabidiols.”

“The president’s historic action paved the way for the development of promising new treatments for American patients, especially veterans—and the presence of several leaders from law enforcement and veterans groups at the Oval Office signing is indicative of how President Trump continues to push the envelope to support our nation’s heroes,” White House spokesperson Kush Desai said.

The rescheduling plan has been met with mixed reactions on Capitol Hill. For example, prohibitionist Rep. Andy Harris (R-MD) half-jokingly told Marijuana Moment last month that he felt the Justice Department should “take about 20 years” to finish the rescheduling process.

In December, Harris separately said Trump doesn’t have the authority to unilaterally reschedule marijuana via executive order. But while lawmakers could overrule any administrative move to enact the reform, it would be a “heavy lift” in the Republican-controlled Congress, he acknowledged.

Another GOP lawmaker on the other side of the debate, Congressional Cannabis Caucus co-chair Rep. Dave Joyce (R-OH), recently told Marijuana Moment that while marijuana rescheduling might not be at the top of the agenda for the Justice Department or White House amid competing interests, he and bipartisan colleagues will be ready when “opportunity does present itself.”

Joyce separately said in January that he doesn’t think the attorney general would seek to undermine the president’s executive order to move marijuana to Schedule III despite any personal reservations she may have about the policy change.

Former Rep. Matt Gaetz (R-FL), Trump’s first pick for attorney general this term who ultimately withdrew his nomination, raised eyebrows after posting on X that he’s been told the Drug Enforcement Administration (DEA) is actively drafting a rescheduling rule and intended to issue it “ASAP.”

There’s some confusion around that point, however, as a rule is already pending before the Justice Department—and a new rule would presumably be subject to additional administrative review and public comment.

A Democratic senator told Marijuana Moment in January that it’s “too early to tell” what the implications of Trump’s cannabis order would be—saying that while there are “things that look promising” about it, he is “very concerned about where the DOJ will land.”

“The ability of the Trump administration to speak out of both sides of their mouth is staggering,” Sen. Cory Booker (D-NJ) said. “So I’m just going to wait and see right now. Obviously, there’s things that look promising—to end generations of injustice. I really want to wait and see.”

In January, two GOP senators filed an amendment to block the Trump administration from rescheduling cannabis, but it was not considered on the floor.

Meanwhile, DEA recently said the cannabis rescheduling appeal process “remains pending” despite Trump’s executive order.

Bondi, the attorney general, separately missed a congressionally mandated deadline in January to issue guidelines for easing barriers to research on Schedule I substances such as marijuana and psychedelics.

Photo courtesy of Chris Wallis // Side Pocket Images.

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