“The only clearly understood consequence of moving cannabis to Schedule III is ending the unfair, excessive tax burden, providing a financial benefit for all marijuana companies and a windfall for the largest ones. The rosy prospect of this windfall is fueling dangerous myths: that rescheduling would legalize state cannabis programs, make research easier, or lead to insurance coverage for medical cannabis. These widely held misconceptions are wishful thinking at best and intentionally misleading at worst.”
That warning from Shaleen Title, longtime regulator, attorney, and founder of the Parabola Center, goes straight to the core of today’s rescheduling debate.
When the Department of Justice’s comment portal closed in 2024, nearly 42,925 people and organizations had weighed in. According to a report by the Drug Policy Alliance, close to 70% explicitly supported descheduling, which is a full removal of cannabis from the Controlled Substances Act. Only a fraction backed rescheduling. That split shows that the people most impacted by prohibition are not asking for half-measures but for full reform.
And yet the Biden administration put Schedule III on the table. A move that, after legal challenges and the return of Trump to the White House, remains stalled in limbo. Tax relief is still delayed for businesses, while federal criminalization remains intact.
In this context, a question is gaining increased attention: is cannabis better off in Schedule III, or does Schedule I, at least, keep the fight honest?
Why Schedule III Emerged
Although Biden campaigned on reform, his administration never aimed to fully end prohibition. Instead, Schedule III was crafted near the last elections as an incremental gesture to show that the administration that had promised legalization was finally doing something about that oath (and many cannabis-related others that were also broken). It let the White House claim progress without forcing Congress to confront legalization.
But the waters quickly muddied. With Trump back in the White House, reform dimmed. Just as the DEA hearings were set to begin, major cannabis operator Village Farms International and Hemp for Victory filed a motion to reconsider, accusing the DEA of improper ex parte communications with anti-rescheduling participants. That motion, and the appeal it triggered, led DEA Chief Administrative Law Judge John Mulrooney to cancel the January 2025 hearings and put the process on hold. Months later, the DEA still has no timeline. A total stalemate under Trump.
The Case for Schedule III
Supporters of rescheduling point to two main benefits.
The first is taxes. Section 280E of the Internal Revenue Code bars cannabis businesses from deducting ordinary expenses. That rule has destroyed balance sheets, driving effective tax rates as high as 70%. Moving cannabis to Schedule III would end 280E’s reach. That is a tangible benefit, even though many cannabis companies (especially the larger ones) already find ways around taxes, and some states have built specific regulations to ease the burden, even with cannabis still in Schedule I.
The second is research, as Schedule III would recognize cannabis medical benefits (yeah, like we are still discussing that in 2025…). Schedule I has long strangled science, with researchers forced through endless hoops just to study the plant. Schedule III wouldn’t end all barriers, but it would mark an opening, more trials, more evidence, and eventually more legitimacy for medical cannabis.
Neither of these aspects is trivial. They explain why multi-state operators, investors, industry members, and some policymakers favor Schedule III over the status quo. Although skepticism regarding its potential impact in research persists, as reflected in Title’s commentary above.
The Problem Beneath the Surface
But as Chelsea Higgs Wise, director of Marijuana Justice, argues, tax breaks don’t erase criminalization. “Medical and adult use in legal states would still be illegal under federal law,” she explains. “There would still be penalties for personal use and selling marijuana with or without a license. This includes mandatory minimum sentences. Noncitizens could still be deported simply for working in the marijuana industry, even in legal states.”
Relief would also flow unevenly.
Large operators with lobbying muscle are positioned to benefit most from 280E’s repeal. Small growers, equity licensees, and patients may gain far less. Critics fear that under Schedule III, FDA approval could become a gatekeeper, favoring big pharma, alcohol, and tobacco actors and putting community-based businesses at risk of being squeezed out.
“Rescheduling would open the door for pharmaceutical companies to seek FDA approval for their cannabis products, leaving existing federally illegal businesses in a precarious position,” Higgs Wise warns. And the FDA, she adds, could become the deciding factor: “All cannabis products, including plant products, edibles, and topicals, will remain illegal unless individually approved by the FDA.”
Let me say, much as happens in every other major economic sector.
The Equity Mirage
By now, no one in the cannabis space is oblivious to the fact that the communities most harmed by prohibition — disproportionately Black, Brown, and working-class — remain criminalized. The same people denied housing or deported for marijuana today will still face those consequences tomorrow.
Cat Packer, Director of Drug Markets and Legal Regulation at the Drug Policy Alliance, warns that the rebranding of Schedule III might also leave behind those who have been at the center of the cannabis political dispute for decades. “Schedule III may sound like a major regulatory shift, but in reality it would keep marijuana criminalized under the full weight of federal law,” she explains. “In practice, marijuana won’t be regulated like other Schedule III drugs but more harshly, and in some ways, I expect marijuana to be regulated just as strictly as it was under Schedule I.”
Schedule I is intolerable. It denies medical value, blocks research, and punishes businesses. But Schedule III may be worse: “There are lessons to be learned from many state programs that have legalized and regulated adult use marijuana in a way that only benefits a small handful of deep-pocketed investors and corporations at the expense of the common good.“
“Instead of being a step forward, it could be a side step,” she adds.
Beyond Schedule III: Real Alternatives
“There are so many better incremental steps we could pursue as a united movement that wouldn’t require Congressional action.” Title’s remark cuts through the fog.
Marijuana Justice has pushed for guidance from the Department of Justice to cover not only businesses but individuals, including deprioritizing prosecutions, reducing sentences, and ending marijuana-related deportations. High Wise also calls for expanding pardons and restoring benefits denied to those with past convictions, as does Packer, who points to alternative frameworks like the and MORE Act and CAOA, which pair descheduling with expungement, reinvestment, and equity protections.
The consensus across this shaken landscape is that cannabis should not be scheduled at all.
Descheduling is the one solution that satisfies science, public opinion, and justice.
Once the rescheduling hearing process was launched, cannabis stakeholders reacted with tremendous speed. Thousands of comments poured in from corporations, grassroots advocates, patients, and ordinary consumers, all demanding to be heard.
Everyone who is someone in the cannabis space took the chance to occupy an unusual open arena. The participation was overwhelming, but many did not ask for S3, but to express that what was needed was descheduling. Even with doubts about the process itself, the sheer level of participation showed something important: the fight for recognition and legalization still unites everyone.
The debate now runs not only between industry and community representatives, but also within those very groups.
And yet, for all the noise, the real stalemate sits at the state level, where licensing bottlenecks, tax regimes, and enforcement decisions will continue to shape the future of cannabis regardless of federal action.
Photo by Carla Quario on Unsplash
The post It’s a Trap! Why Schedule III Could Be Worse Than Standing Still on Cannabis Reform first appeared on High Times.