Why It Matters
Federal rescheduling of medical marijuana changed tax and other rules for qualifying businesses and products, but most marijuana-specific criminal penalties and collateral consequences remain unchanged.
A Congressional Research Service (CRS) report examines what changed, and what did not, after the Department of Justice (DOJ) moved qualifying medical marijuana to Schedule III under the Controlled Substances Act (CSA). The April final rule applies to marijuana included in a Food and Drug Administration-approved drug product or subject to a state-issued license to manufacture, distribute, or dispense marijuana for medical purposes. Recreational marijuana remains Schedule I, while the broader rescheduling process DOJ proposed in May 2024 remains ongoing.
The Big Picture
Many CSA penalties are written specifically for marijuana rather than tied to its schedule, meaning they remain applicable. Manufacture, distribution, dispensing and possession remain subject to applicable CSA prohibitions under 21 U.S.C. §§841-844, and the Federal Food, Drug, and Cosmetic Act continues to apply.
CRS reports that in fiscal 2025, 69% of people federally sentenced for marijuana trafficking received less than five years. The number sentenced fell 62%, from 995 in fiscal 2021 to 383 in fiscal 2025. Some consequences changed. CSA advertising offenses under 21 U.S.C. §843(c), which apply specifically to Schedule I substances, no longer apply to marijuana moved to Schedule III.
Internal Revenue Code Section 280E, which bars deductions for businesses trafficking in Schedule I or II substances, also no longer applies to businesses dealing exclusively in marijuana moved to Schedule III. Businesses that also sell recreational marijuana remain unable to deduct costs attributable to those sales.
The report said most collateral consequences involving employment, firearms, federal housing and assistance programs, certain federal benefits and licenses, immigration and postsecondary institutions remain unchanged. Some questions remain unresolved, including how the federal firearm prohibition for unlawful users of controlled substances applies to lawful medical-marijuana use.
The report identified several congressional proposals. H.R. 5068 would deschedule marijuana; H.R. 6807 would ease certain collateral consequences; and H.R. 1447 would maintain the Section 280E deduction prohibition for marijuana despite scheduling changes.
The Bottom Line
The federal change is limited, as qualifying medical marijuana receives Schedule III treatment, affecting taxation and some criminal provisions, while recreational marijuana remains Schedule I and most marijuana-related criminal and collateral consequences remain intact.
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