U.S. to Reclassify Certain Cannabis Products as Less Hazardous Drugs
The U.S. Department of Justice announced on Thursday that it will reclassify medical cannabis products approved by the Food and Drug Administration or state-licensed as Schedule III substances—a lower hazard category—from Schedule I under the Controlled Substances Act. Acting Attorney General Todd Blanche stated that this move aims to expand Americans’ access to medical options and provide doctors and patients with more reliable information on drug safety and efficacy.
Policy Background and Impact
Since 1970, cannabis has been classified as a Schedule I substance, alongside heroin and LSD, considered to have “no medical use and a high potential for abuse.” This reclassification marks the first time the federal government has formally acknowledged the medical value of cannabis. However, it is important to clarify that this move does not legalize cannabis at the federal level, and remains limited to state-licensed medical cannabis products.
Significant Boost for the Industry
The new regulations provide substantial commercial benefits to the cannabis industry. Related businesses will no longer be restricted by Section 280E of the Federal Tax Code—which prohibits businesses related to Schedule I and Schedule II substances from claiming tax deductions. Industry estimates suggest this alone could save large operators tens of millions of dollars annually. Furthermore, this move will help businesses more easily access banking services and financing channels.
Following the announcement, cannabis stocks generally surged. Tilray Brands stock rose approximately 14%, and Canopy Growth rose 21%.
Next Steps
The Department of Justice has also initiated an expedited hearing process, with an administrative hearing scheduled for the end of June to consider broader cannabis reclassification issues. Analysts point out that this is one of the most significant shifts in federal cannabis policy in decades and is expected to accelerate clinical research and improve medical standards.
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