The U.S. Department of Justice is reclassifying FDA-approved and state-licensed marijuana as a less-dangerous drug. Acting Attorney General Todd Blanche announced this on Thursday. The announcement does not legalize marijuana across the United States. In a post on X, Blanche said the Justice Department was “immediately rescheduling FDA-approved marijuana and state-licensed marijuana from Schedule I to Schedule III.” The department is also initiating an expedited hearing to consider the broader reclassification of marijuana. Therefore, the marijuana reclassification represents a major policy shift.
“This rescheduling action allows for research on the safety and efficacy of this substance,” Blanche said in a statement. “Ultimately, it provides patients with better care and doctors with more reliable information.” The decision to reclassify marijuana represents one of the most significant federal changes to marijuana policy in decades. It removes barriers to researching the drug’s potential use. The move follows a December executive order from President Donald Trump directing the Justice Department to loosen marijuana restrictions.
Industry Impact and Stock Market Reaction
The marijuana reclassification will likely reshape the cannabis industry. It lowers tax burdens for cannabis companies. It also makes it easier for firms to secure funding. This benefits companies like Canopy Growth, Tilray Brands, and Trulieve Cannabis. U.S.-listed shares of cannabis companies jumped following the decision. Shares of Cronos Group, Aurora Cannabis, Canopy, and Tilray jumped between 6% and 13%. Therefore, investors see the marijuana reclassification as a positive development.
Marijuana has for years been classified at the same level as far more potent drugs like heroin. This classification persisted even as nearly half of U.S. states moved to legalize cannabis over the last several years. The Biden administration embarked on a similar move in 2024. However, the measure was not finalized when Trump returned to office. The Trump administration has now completed what Biden started.
Schedule I vs. Schedule III Explained
Schedule I substances have “no currently accepted medical use and a high potential for abuse.” Drugs in this category include heroin, LSD, and ecstasy. Schedule III substances have “a moderate to low potential for physical and psychological dependence.” Drugs in this category include ketamine, anabolic steroids, and codeine with aspirin or Tylenol. Therefore, the marijuana reclassification moves cannabis from the most restrictive category to a less restrictive one.
The practical effects are significant. Schedule I status severely limited research opportunities. Scientists faced numerous bureaucratic hurdles to study marijuana. Schedule III status makes research much easier. Medical professionals will gain better information about potential therapeutic uses. Patients may eventually access FDA-approved marijuana-based medicines more easily. The marijuana reclassification also affects taxation. Section 280E of the Internal Revenue Code prohibits tax deductions for Schedule I or II substances. Schedule III substances do not face this restriction. Cannabis companies can now deduct ordinary business expenses like any other legal business.
Expedited Hearing Process
The Justice Department is initiating an expedited hearing to consider broader reclassification. This hearing will examine whether to move all marijuana, not just FDA-approved and state-licensed products, to Schedule III. The hearing process will involve testimony from experts. It will also include public comment periods. The outcome remains uncertain. However, the initial marijuana reclassification of approved products is already in effect.
The Trump administration’s action represents a compromise position. Full legalization remains a state-by-state issue. Federal law still prohibits recreational marijuana in many contexts. However, the marijuana reclassification recognizes the growing consensus about medical benefits. It also acknowledges that many Americans live in states where cannabis is legal. The policy shift aligns federal law more closely with public opinion. Over two-thirds of Americans support marijuana legalization in some form.
The marijuana reclassification will face legal challenges. Opponents argue that the administration bypassed proper procedures. Supporters say the executive order provided sufficient authority. The expedited hearing may address some of these concerns. Meanwhile, cannabis companies are celebrating. Their tax burdens will decrease immediately. Access to banking and investment will improve. The marijuana reclassification has already transformed the industry’s outlook. Share prices reflect renewed investor confidence. The coming months will determine how broadly these changes apply. For now, the Justice Department has reshaped federal marijuana policy. The marijuana reclassification marks a new era for cannabis in America.
