Acting Attorney General Todd Blanche signed an order Thursday moving FDA-approved marijuana products and those sold under state medical licenses to Schedule III of the Controlled Substances Act, loosening a federal classification that has stood since 1970 and delivering the cannabis industry its biggest Washington win in decades.

The shift pulls state-regulated medical cannabis out of Schedule I, the tier reserved for drugs the government treats as having no accepted medical use, and places it alongside substances such as Tylenol with codeine. Operators that fall under the new category gain federal tax deductions long denied to them and a clearer path to mainstream banking. Marijuana sold outside FDA-approved products or state medical programs remains Schedule I.

What the order covers

The Justice Department said the reclassification applies to marijuana, marijuana extracts and marijuana-derived compounds including delta-9 THC when they are part of FDA-approved drug products or subject to state medical licenses. Handlers of Schedule III material must register with the Drug Enforcement Administration and follow rules on disposal, security and labeling. The department said the order 'recognizes the longstanding regulation of medical marijuana by state governments and the need for a common-sense approach.'

Blanche framed the action as a research unlock, writing that the order would enable 'more targeted rigorous research into marijuana's safety and efficacy, expanding patients' access to treatments, and empowering doctors to make better-informed health care decisions,' according to PBS NewsHour.

The wider hearing

The Justice Department and DEA have scheduled an expedited hearing for late June to weigh moving all marijuana, including recreational product, from Schedule I to Schedule III. The Biden administration pursued a similar reclassification but never finalized the rule. Twenty-four states and the District of Columbia permit adult recreational use; 38 states run medical programs.

Adam J. Smith, executive director of the Marijuana Policy Project, said 'Rescheduling cannabis is a historic move towards sanity in cannabis policy,' while noting the change stops short of full descheduling. Smith said the reclassification should ease medical research and deliver fairer federal tax treatment.

The counterweight

Critics cast the move as a windfall for large cannabis companies, which stand to deduct operating expenses that Internal Revenue Service rules had blocked under Section 280E. PBS NewsHour's William Brangham said some critics 'have called this move a giveaway to big pot,' and cautioned that lower scheduling does not mean the drug is benign. Brangham said polls in recent years show more Americans using marijuana than smoking cigarettes, and that 'increasing evidence that heavy chronic use, especially among young people, can be very detrimental to their brains and their emotional and mental development' complicates the public-health picture.

The DEA hearing in late June will determine whether the narrow medical carve-out becomes the template for a blanket rescheduling, or the ceiling of what the Trump administration is willing to concede.