DOJ Finalizes Schedule III Classification for Certain Marijuana Products

On April 22, the U.S. Department of Justice (DOJ) issued a final administrative order placing certain marijuana products into Schedule III of the Controlled Substances Act (CSA). The action, which is effective immediately, follows DOJ’s 2024 Notice of Proposed Rulemaking seeking to reschedule marijuana, but is narrower in scope

Under federal law, marijuana has historically been classified as a Schedule I controlled substance, meaning it is deemed to have no currently accepted medical use and a high potential for abuse. The final order does not eliminate marijuana’s Schedule I status in all contexts, but instead reclassifies narrowly defined categories of marijuana products.

What Does the Final Order Cover?

The final order applies only to:

• FDA‑approved drug products containing marijuana or delta‑9‑tetrahydrocannabinol (THC) derived from Cannabis sativa L. (excluding mature stalks and seeds) and
• Marijuana manufactured, distributed, or dispensed pursuant to a qualifying state‑issued medical marijuana license.

In issuing the order, DOJ relied in large part on existing state medical marijuana regulatory programs, which impose licensing, recordkeeping, reporting, and oversight requirements for medical marijuana activity.

Why DOJ Took This Approach

DOJ issued the order pursuant to 21 U.S.C. § 811(d)(1), which authorizes rescheduling of controlled substances when necessary to comply with U.S. obligations under international treaties, including the 1961 Single Convention on Narcotic Drugs.

Since the order was issued under this treaty‑compliance authority, the U.S. Drug Enforcement Administration (DEA) was not required to obtain a scientific and medical evaluation from the U.S. Department of Health and Human Services, which would otherwise be required in a traditional scheduling rulemaking.

What Will Change?

For health care providers, life sciences companies and state‑licensed medical marijuana operators, the final order results in several notable changes:

• Covered marijuana products are no longer treated as Schedule I substances under federal law.
• DEA has established an expedited registration pathway for entities holding qualifying state medical marijuana licenses to register with the DEA as manufacturers, distributors, and/or dispensers.
• Federal controls applicable to Schedule III controlled substances now apply to covered products, subject to additional requirements necessary to comply with U.S. treaty obligations.
• Entities holding qualifying state medical marijuana licenses will no longer be subject to Section 280E of the Internal Revenue Code, which disallows deductions for business expenses when trafficking in Schedule I or II controlled substances.

What Will Stay the Same?

As was the case under the proposed rule, many aspects of federal marijuana law remain unchanged:

• Marijuana remains a controlled substance under federal law.
• Adult‑use (recreational) marijuana remains illegal under the CSA.
• Marijuana for medical use is not fully legalized at the federal level. State restrictions and licensing schemes continue to apply.
• DEA registration, inspection, recordkeeping, quota, and security requirements continue to apply.
• Import and export of covered marijuana products still require DEA permits.
• The final order applies only to FDA‑approved products and qualifying state‑licensed medical marijuana activity.

In short, the final order represents a targeted reclassification rather than comprehensive federal marijuana reform.

Key Takeaways

Health care providers, pharmaceutical manufacturers, and cannabis businesses should evaluate whether their operations fall within the scope of the final order and review their DEA registrations and compliance programs accordingly.

State-licensed medical marijuana businesses will need to apply for registration under the DEA’s new pathway. Businesses operating outside FDA‑approved or qualifying state‑licensed medical marijuana frameworks remain subject to Schedule I restrictions under federal law.

Please contact Matt Harrell, Beau Haynes, or any member of the Phelps health care team if you have questions or would like guidance on how this development may affect your business.