Medical marijuana has been reclassified. Is recreational pot next?

President Trump’s administration has made a landmark decision to reclassify state-licensed medical marijuana as a Schedule III drug, easing federal restrictions and creating significant financial benefits for the industry. The move shifts cannabis from Schedule I—reserved for substances with no medical use and high abuse potential—to a less restrictive category, reflecting a major shift in federal drug policy.

The reclassification, announced Thursday, represents the most substantial change in federal cannabis policy in over five decades, though it stops short of full legalization. While marijuana remains illegal under federal law, the new classification acknowledges its medical applications, something advocates have been fighting for since California first legalized medical marijuana in 1996.

“This is a signal that this administration means business on getting this done,” said Jesse Alderman, a Boston-based cannabis attorney with Foley Hoag.

For the medical marijuana industry, the benefits are immediate and substantial. State-licensed medical marijuana businesses can now deduct operating expenses on their federal tax returns—a financial advantage long denied under Schedule I restrictions. The change also removes significant barriers to cannabis research and could potentially open pathways for international export.

The policy shift follows President Trump’s December directive to expedite marijuana reclassification, continuing efforts that began but stalled during the Biden administration. Trump recently expressed frustration at the pace of these changes while signing an unrelated executive order regarding psychedelics.

Even more changes may be on the horizon. A new administrative hearing scheduled for late June could result in broader reclassification that would extend similar benefits to state-licensed recreational cannabis markets.

The reclassification acknowledges how far state-level regulation of medical marijuana has evolved, with comprehensive licensing frameworks governing everything from cultivation to sales across the country. Currently, forty states have established medical marijuana programs, while two dozen states and Washington D.C. have legalized adult recreational use, generating billions in tax revenue.

For longtime advocates who faced prosecution during earlier crackdowns, the federal recognition of marijuana’s medical value represents a vindication decades in the making. Douglas Hiatt, a Seattle marijuana defense attorney, recalled the desperate measures taken during the AIDS epidemic of the 1980s and ’90s to provide cannabis to suffering patients.

“We were watching all these guys die from this horrible disease, and the only thing that helped them keep their pills down was marijuana, and the cops were going after anyone who helped them get it,” Hiatt said. “It was crystal clear from the beginning that it had medical uses. For the feds to admit that now is great. It’s surreal.”

Not everyone views the reclassification as positive. Some health experts have expressed concerns that legitimizing cannabis could further reduce public perception of its risks. Dr. Smita Das, an addiction psychiatrist at Stanford University, noted that cannabis use disorder affects approximately 30 percent of users according to CDC data, and cautioned against implying broad medical applications without sufficient evidence.

“We’ve already had kind of a decrease in risk perception related to cannabis over the years with state legalization,” Das said. “This will probably just add to that.”

The change also creates practical challenges in states where dispensaries serve both medical and recreational markets. Businesses will need to implement complex accounting measures to determine which expenses relate to their medical operations and qualify for tax deductions.

“If this artificial distinction between medical and recreational is maintained, it raises all sorts of questions,” noted sociology professor Josh Meisel, co-founder of the Humboldt Institute for Interdisciplinary Marijuana Research at California State Polytechnic University, Humboldt.

Critics like Kevin Sabet, CEO of Smart Approaches to Marijuana, characterize the move as primarily benefiting large cannabis corporations. “There are many ways to increase our knowledge without giving a tax break to Big Weed,” Sabet argued.

The reclassification stands in stark contrast to Trump’s aggressive stance against other drugs, particularly fentanyl, which has included ordering military actions against vessels suspected of drug trafficking.

For the cannabis industry and its advocates, the reclassification represents significant progress, though it falls short of the comprehensive reform many still seek—including full legalization and measures to address the harms caused by prohibition, particularly in minority communities disproportionately affected by cannabis enforcement.