What Happened?
The federal move of qualifying medical marijuana to Schedule III changed tax and other rules for qualifying businesses and products, but a Congressional Research Service (CRS) report found that most marijuana-specific criminal penalties and collateral consequences remain intact. [](#ngr-99615b3b-70ff-4f4a-a6cf-9b9b338af311)
The U.S. Department of Justice (DOJ) moved qualifying medical marijuana to Schedule III under the Controlled Substances Act (CSA), according to a CRS report. 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.
The report examines what changed, and what did not, after the DOJ moved qualifying medical marijuana to Schedule III under the Controlled Substances Act. Recreational marijuana remains Schedule I, and the broader rescheduling process DOJ proposed in May 2024 is still ongoing.
Why Does it Matter to Me?
A tax code provision, which bars deductions for businesses trafficking in Schedule I or II substances, no longer applies to businesses dealing exclusively in marijuana moved to Schedule III, according to the Congressional Research Service. Businesses that also sell recreational marijuana still cannot deduct costs tied to those sales.
The CRS report said most collateral consequences involving employment, firearms, federal housing and assistance programs, certain federal benefits and licenses, immigration and postsecondary institutions remain unchanged. Federal criminal penalties for marijuana manufacture, distribution, and possession also stay in place, because many CSA penalties are written specifically for marijuana rather than tied to its schedule.
Both Sides, Now
The report found that rescheduling changed some rules: Internal Revenue Code Section 280E no longer bars tax deductions for businesses dealing exclusively in marijuana moved to Schedule III, and Controlled Substances Act advertising offenses that apply specifically to Schedule I substances no longer apply to that marijuana.
Critics argue the change falls short because most penalties and collateral consequences remain intact. A May 2024 Truthout report documented tenants being evicted from federally subsidized housing for cannabis use in states where it is legal, a consequence the rescheduling does not address. In June 2024, a federal judge rejected a lawsuit by medical marijuana users arguing that denying them Section 8 housing benefits was discriminatory, ruling that marijuana's federal illegal status controlled.
What Happens Next?
The Congressional Research Service 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 deduction prohibition for marijuana despite scheduling changes.
Will Congress act to close the gap between state marijuana laws and the federal penalties that still follow users into housing, jobs, and immigration proceedings?
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