The short answer
Cannabis sits in Schedule I of the Controlled Substances Act. That has not changed. In August 2023, HHS recommended a move to Schedule III. In May 2024, DEA published a proposed rule to make that move. The public comment period closed July 22, 2024. DEA then set an administrative hearing. That hearing is paused. No final rule exists.
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Timeline of the rescheduling docket
- Oct. 6, 2022: President Biden pardoned federal simple-possession offenses and directed HHS and DOJ to review cannabis scheduling.
- Aug. 29, 2023: HHS sent DEA a recommendation to place cannabis in Schedule III. FDA staff ran the review using the eight-factor test in the CSA.
- May 2024: DEA published the proposed rule in the Federal Register. The text keeps federal control and moves the drug to Schedule III.
- July 22, 2024: Comment period closed.
- Aug. 27, 2024: DEA announced an administrative hearing before DEA Administrative Law Judge John Mulrooney, set for Dec. 2, 2024 in Arlington, Virginia.
- December 2024: The hearing moved to Jan. 21, 2025.
- January 2025: The ALJ granted a stay. The Jan. 21 hearing was vacated. No new date has been set.
What Schedule III would change
- Tax code. Section 280E of the Internal Revenue Code blocks deductions and credits for businesses that traffic in Schedule I and Schedule II drugs. Schedule III removes that block. Cannabis operators could deduct payroll, rent, and other ordinary costs.
- No full legalization. Schedule III does not legalize adult-use sales under federal law. Possession without a prescription stays a federal offense.
- FDA role. A Schedule III drug can be dispensed by prescription. FDA would write the rules for a pharmaceutical cannabis product. State-licensed flower sold in dispensaries would not become an FDA-approved drug.
- Banking. Rescheduling alone does not open banking. Federal banking guidance and the SAFE Banking Act are separate tracks.
Steps left in the process
- Finish the administrative hearing.
- ALJ sends a recommendation to the DEA Administrator.
- DEA Administrator signs a final order.
- Final rule publishes in the Federal Register and takes effect on a set date.
What does not change
State programs run under state law. License requirements, testing rules, possession limits, and state taxes stay in place. Descheduling, which would remove federal control of the plant, is a different action from rescheduling.
Questions we get
Is cannabis legal under federal law now?
No. Schedule I status is in force.
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Can a dispensary deduct expenses today?
Section 280E applies while cannabis is in Schedule I or Schedule II. Relief comes only after a final rule takes effect.
Was the rescheduling rule withdrawn?
No public withdrawal has been published. The hearing is in abeyance and the docket stays open.