Trump Moves to Reschedule Marijuana to Schedule III as Soon as Wednesday

Trump Administration Prepares Marijuana Rescheduling to Schedule III as Soon as Wednesday

The Trump administration is preparing to reclassify marijuana from Schedule I to Schedule III under the Controlled Substances Act as soon as Wednesday, April 22, 2026, according to Axios and The Washington Post, citing administration officials. The Drug Enforcement Administration is expected to announce a new administrative hearing, a required procedural step in the marijuana rescheduling process.

The move would place cannabis alongside common prescription painkillers — Schedule III also includes ketamine, anabolic steroids, and Tylenol with codeine — rather than heroin and LSD, easing federal research limits and potentially reshaping the economics of the U.S. cannabis industry. Markets moved quickly on the reports: the AdvisorShares Pure US Cannabis ETF (ticker: MSOS), the benchmark vehicle for U.S. multi-state operators, jumped from $4.28 at Tuesday's close to trade around $5.24 on Wednesday, a roughly 22% gain on the session, according to Investing.com pricing data.

Section 280E Tax Relief Is the Real Prize for Multi-State Operators

For multi-state operators, the bigger prize is tax relief: Schedule III status would lift the IRS Section 280E burden (a tax-code provision that bars businesses "trafficking" in Schedule I or II substances from deducting ordinary operating expenses) that currently bars cannabis companies from deducting ordinary business expenses. Some operators have reported effective federal tax rates of 70% or more under the rule. Removing it would materially improve operating margins for publicly listed operators tracked by the AdvisorShares Pure US Cannabis ETF.

President Biden's Justice Department formally recommended the same reclassification in 2024, but the process stalled in legal disputes and a pending DEA administrative hearing. An administrative law judge postponed the hearing in January 2025 pending an interlocutory appeal, and presiding Judge John Mulrooney later retired in August 2025, leaving the DEA without a sitting administrative law judge to hear the matter. The Trump administration plans to terminate those proceedings and restart the process, the Post reported.

Trump had signed Executive Order 14370, "Increasing Medical Marijuana and Cannabidiol Research," on December 18, 2025, directing Attorney General Pam Bondi to "take all necessary steps to complete the rulemaking process related to rescheduling marijuana to Schedule III of the CSA in the most expeditious manner." Four months later, Trump told policy officials on Saturday they were "slow-walking" him on rescheduling while signing a separate executive order loosening restrictions on psychedelics such as psilocybin, MDMA, and ibogaine.

What Schedule III Status Does — and Does Not — Change

Public support for legalization has softened since the Biden-era push. A recent Economist/YouGov poll conducted April 10–13, 2026 found 53% of adults in favor of making marijuana use legal, down from 60% in an April 2024 YouGov survey taken just before the Biden administration announced its rescheduling plan.

The cannabis rescheduling stops well short of federal decriminalization. State-legal recreational markets remain federally illegal, interstate commerce remains barred, and Nasdaq and NYSE listing restrictions on plant-touching U.S. operators are not expected to change. The Section 280E tax relief is also conditional on how the final rule treats non-FDA-approved recreational products — an open legal question that prohibitionist group Smart Approaches to Marijuana, which has retained former Attorney General Bill Barr, has signaled it will challenge in court the moment a final rule is issued.