Justice Department Eases Marijuana Classification

A worker trims leaves of young cannabis plants in a greenhouse in Indiantown, Fla. (Eva Marie Uzcategui/Bloomberg)

The U.S. Justice Department reclassified state-regulated marijuana as a less dangerous drug, a major shift that could increase legal cannabis sales and help a struggling industry.

The directive signed by acting Attorney General Todd Blanche moved licensed marijuana products from Schedule I — the same federal category as heroin and LSD — to the less strictly controlled Schedule III. The action stops short of fully legalizing the drug for recreational use nationwide, but it meets the demands of many advocates who have long argued for looser restrictions. 

American Trucking Associations has long voiced concern about how a potential change might affect safety across the transportation sector.

“We are reviewing DEA's announcement and assessing what near- and long-term impacts it could have on USDOT’s drug and alcohol testing program," ATA Vice President of Safety Policy Brenna Lyles said in an April 24 statement. "The American Trucking Associations does not take a formal position on marijuana legalization. However, we are concerned about the safety risks of rescheduling it without clear safeguards to preserve USDOT’s testing authority for safety-sensitive workers."

The move is likely to make operations easier for cannabis companies, including potentially gaining greater access to the banking system and reducing taxes, and bolster medical research with the drug. The U.S. industry, which includes public firms, has been trying to revive growth in recent years after an initial surge last decade. 

Shares of firms that sell marijuana products initially gained after the announcement, but then reversed course. The AdvisorShares Pure U.S. Cannabis ETF declined as much as 14%.

The order narrowly applied to medical use of cannabis only, rather than broadly addressing adult recreational usage, which “might also be causing some confusion,” said Aaron Grey, an analyst with Alliance Global Partners.

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Lyles 

“A safe driver is a qualified driver," Lyles continued in ATA's statement. "And a qualified driver is drug- and alcohol-free. As we've seen with recent events and the increase in enforcement from USDOT, it's critically important that drivers of 80,000-pound vehicles are unimpaired and fit to operate that equipment.

“Absent clear protections for USDOT’s marijuana testing authority, a policy shift could undermine the department’s drug- and alcohol-testing program and weaken highway safety. That risk is compounded by the lack of a reliable, widely accepted standard to measure marijuana impairment, whether roadside or before a driver gets behind the wheel.

“We appreciate USDOT’s continued focus on safety and efforts to strengthen driver qualification and enforcement standards. Now it must work with [the Department of Health and Human Services], DOJ and Congress to ensure any policy change preserves the authority, tools, and technical capacity needed to keep impaired and unqualified drivers off our roads.”

Broader Reclassification

Blanche’s order set a hearing process to begin in late June to review a broader reclassification of marijuana. That creates the possibility of a future move applying to all legal, state cannabis programs, Grey said.

RELATED: Trucking Reacts to DEA Proposal to Downgrade Marijuana

“The Department of Justice is delivering on President Trump’s promise to expand Americans’ access to medical treatment options,” Blanche said in a statement. “This rescheduling action allows for research on the safety and efficacy of this substance, ultimately providing patients with better care and doctors with more reliable information.”

The move is likely to appeal to young men who backed Trump in the 2024 election, but whose support has wavered amid the Iran war and high consumer prices. However, it’s also likely to rankle more traditional conservatives and might become a fracture for the Republican party in upcoming elections.

The Justice Department under President Joe Biden formally recommended reclassification in 2024, but progress stalled.

In December, Trump ordered the department to finish the process of moving cannabis from Schedule I under the Controlled Substances Act to Schedule III, a group that includes less-addictive drugs such as codeine, ketamine and testosterone. 

Trump criticized the lack of movement on rescheduling marijuana last week while he was signing an executive order to expedite research and access to psychedelics. 

“Will you get the rescheduling done, please?” Trump said, pointing to the government officials and civilians assembled behind him. “They’re slow walking me on rescheduling.”

The April 23 action should help the financial performance of cannabis companies, but it’s unlikely to drive further consumer demand, according to Green Thumb Industries Inc. CEO Ben Kovler. It provides some clarification, but isn’t likely to attract additional buyers it’s narrowly focused on medical use, which requires a prescription, he said.

But the reclassification also raises the prospect of more states legalizing cannabis. 

“The states that don’t currently have a comprehensive medical program are gonna be much more likely to implement one,” Grey said. “That could open up the door for more consumers to have access to medical cannabis across the U.S.”