Federal Marijuana Legalization: Bills, Penalties, and Schedule III

Federal marijuana legalization has not happened. Marijuana remains illegal under federal law as a Schedule I controlled substance, the same tier as heroin and LSD, even though 24 states have legalized it for recreational use. The Justice Department did move FDA-approved marijuana products and state-licensed medical marijuana to Schedule III in 2025, and the DEA has set a June 29, 2026 hearing on rescheduling marijuana more broadly, but recreational marijuana is still Schedule I. Removing marijuana from the Controlled Substances Act entirely would take an act of Congress.

Where Marijuana Stands Under Federal Law

The Controlled Substances Act sorts drugs into five schedules based on medical use, abuse potential, and safety. Marijuana (“marihuana” in the statute’s spelling) sits on Schedule I, reserved for substances the federal government treats as having high abuse potential and no accepted medical use.¹ The DEA and the Attorney General can add, remove, or move substances between schedules under 21 U.S.C. § 811.²

Federal law applies everywhere in the country, so this classification overrides state legalization as a matter of law. A dispensary operating lawfully under state law is still violating federal law. Federal prosecutors and DEA agents keep the authority to bring charges for possession, distribution, or cultivation in any state. In practice, the federal government has largely avoided targeting people and businesses that follow state rules, but that is a policy choice, not a legal guarantee, and it can shift with any new administration.

What the 2025 DOJ Order Changed

The push toward rescheduling has moved unevenly. The Department of Health and Human Services recommended a move to Schedule III in 2023 after a scientific review. The DEA published a proposed rule in May 2024 and scheduled an administrative hearing, but the incoming administration withdrew the hearing and terminated those proceedings to pursue what it described as a faster path.

In 2025, the Justice Department issued an order placing two categories of marijuana directly into Schedule III: FDA-approved drug products containing marijuana, and marijuana products regulated under a qualifying state medical license.³ The Acting Attorney General relied on existing authority under the Single Convention on Narcotic Drugs to make the change without waiting for the full rulemaking process to conclude.

Everything else stayed on Schedule I. Recreational marijuana, and any medical marijuana that doesn’t fall under the 2025 order, remains a Schedule I substance. For broader rescheduling of marijuana generally, the DEA has set an administrative hearing beginning June 29, 2026.³ Until that process produces a final rule, the Schedule I classification stands for everything outside the 2025 order.

Rescheduling Is Not Legalization

The terms get mixed up in casual conversation, and they matter here. Rescheduling moves marijuana to a less restrictive schedule while keeping it under DEA oversight. Schedule III would put marijuana in the same tier as drugs like testosterone or ketamine: federally regulated, requiring prescriptions and DEA registration for manufacturers, but no longer classed with heroin. Descheduling removes marijuana from the Controlled Substances Act entirely, taking it out of the DEA’s jurisdiction. Only Congress can deschedule a substance.

What Schedule III Would and Would Not Do

A move to Schedule III would not legalize recreational use. Manufacturing, distributing, and possessing marijuana would still carry federal criminal penalties under the Controlled Substances Act.⁴ Any marijuana-based drug would still need FDA approval before it could be sold lawfully in interstate commerce. The change would matter in several concrete ways:

Cannabis businesses would get out from under Section 280E of the Internal Revenue Code, which blocks businesses trafficking in Schedule I or II substances from deducting ordinary expenses like rent, payroll, and marketing. Treasury has confirmed that rescheduling “generally removes section 280E as a bar to claiming deductions and credits” for businesses no longer dealing in Schedule I or II substances, and has signaled 280E relief will apply for the full taxable year that includes the effective date of the 2025 order for businesses now covered by it.⁵⁶
Research would get easier. Schedule I imposes heavy bureaucratic requirements on researchers, and Schedule III would reduce those hurdles.
Maximum penalties for Schedule III violations are generally lower than for Schedule I, though the practical difference for most users would be modest because simple-possession penalties under 21 U.S.C. § 844 apply regardless of schedule.
State-legal recreational dispensaries would still be violating federal law. Rescheduling does not create a legal framework for commercial recreational sales.

The Bills That Would Actually Legalize Marijuana

Full federal legalization requires Congress to pass a law removing marijuana from the Controlled Substances Act. Two bills have carried most of that effort across recent sessions. Neither has reached the President’s desk.

The MORE Act

The Marijuana Opportunity Reinvestment and Expungement Act, most recently H.R. 5601 in the 118th Congress, would deschedule marijuana entirely.⁷ The bill also provides for expunging federal records tied to nonviolent marijuana offenses and imposes a federal excise tax on commercial sales, starting at 5% of manufacturer value, rising to 8% over five years, then shifting to a per-ounce rate.

The Cannabis Administration and Opportunity Act

Introduced as S. 4226 in the 118th Congress, the Cannabis Administration and Opportunity Act would also deschedule marijuana and add a federal excise tax, and it goes further by building a full regulatory framework.⁸ Regulatory oversight would shift toward the FDA and the Alcohol and Tobacco Tax and Trade Bureau, handling product safety, labeling, and advertising much the way they do for alcohol and tobacco.

Both bills pair market creation with restorative-justice provisions. Neither has advanced past committee in any session so far, though they continue to be reintroduced with minor revisions.

Federal Penalties Are Still on the Books

Federal penalties for marijuana offenses remain enforceable regardless of state law. Simple possession carries up to one year in prison and a minimum $1,000 fine for a first offense. A second conviction raises the floor to 15 days in jail, with a ceiling of two years and a minimum $2,500 fine. Three or more convictions mean at least 90 days, up to three years, and a minimum $5,000 fine.⁹ Distribution and manufacturing carry steeper sentences depending on quantity.

President Biden issued executive proclamations in 2022 and 2023 granting full pardons to U.S. citizens and lawful permanent residents convicted of simple marijuana possession under federal law.⁹ Those pardons covered offenses committed on or before the dates of the proclamations. They did not change the underlying law, so new federal possession charges can still be brought, and the pardons did not reach distribution, manufacturing, or state convictions.

Federal decriminalization, which would replace criminal penalties with civil fines for small-amount possession, has been discussed as a middle path. No federal decriminalization law has been enacted.

How Federal Prohibition Still Reaches You in a Legal State

Because federal law still classifies marijuana as illegal, people who use it lawfully under state law can lose federal rights and benefits they may not know are at stake.

Firearms

Federal law bars anyone who is an “unlawful user of or addicted to any controlled substance” from possessing firearms or ammunition.¹⁰ Marijuana is still a controlled substance under federal law, so any regular marijuana user is a prohibited person under this statute, even in a state where recreational use is legal. ATF Form 4473, filled out by every buyer at a licensed dealer, asks directly about controlled substance use. Answering falsely is a federal crime.

Federal Employment and Security Clearances

Executive Order 12564 requires a drug-free federal workplace, and the Office of Personnel Management has made clear that state legalization does not change federal policy. Federal employees are expected to refrain from marijuana use whether on or off duty, and current use is grounds for finding an applicant unsuitable for federal employment.¹¹ Security clearances follow the same logic: past or current marijuana use can lead to denial, even where it was legal in the applicant’s state. The Drug-Free Workplace Act of 1988 extends similar requirements to federal contractors and grant recipients.

Federally Assisted Housing

HUD requires owners of federally assisted properties to deny admission to anyone determined to be using a controlled substance illegally. Because marijuana use remains illegal under federal law regardless of state status, tenants in public housing or Section 8 properties can face eviction over marijuana use in states where it is fully legal.

Veterans’ Health Care

VA physicians are prohibited from recommending medical marijuana or helping veterans obtain it, even in states with a medical marijuana program. The VA follows federal law, and as long as marijuana is Schedule I, VA providers cannot participate in its use as medicine.¹² Veterans who use marijuana on their own will not lose their VA benefits, but their VA doctor cannot discuss it as a treatment option.

Immigration

For non-citizens, the federal status of marijuana carries some of the sharpest consequences. The Immigration and Nationality Act makes a person inadmissible if they have been convicted of, or even admit to committing, a violation of any controlled substance law, and federal law controls the definition of “controlled substance” regardless of state legalization.¹³ A tourist who truthfully answers a border agent’s question about past marijuana use can be found inadmissible and turned away.

The reach goes past personal use. Anyone who has worked in the marijuana industry, invested in cannabis companies, or profited from marijuana-related activity can be deemed an illicit trafficker under INA § 212(a)(2)(C), even where every part of their involvement was legal under the laws of their home country or the U.S. state where they operated.¹³ A single act of participation can be enough. Consequences can include a lifetime ban on entering the United States, which may only be overcome by a discretionary waiver from CBP. Professionals who cross the border regularly for work, such as truck drivers or nurses, can lose those commuting privileges over a marijuana-related finding. Someone who legally ran a dispensary in Colorado or legally bought edibles in Amsterdam can face permanent exclusion. Until federal law changes, non-citizens, and anyone who might apply for a visa or green card in the future, should treat marijuana involvement as a serious immigration risk.

1
Office of the Law Revision Counsel. 21 USC 812 – Schedules of Controlled Substances
2
Office of the Law Revision Counsel. 21 USC 811 – Authority and Criteria for Classification of Substances
3
U.S. Department of Justice. Justice Department Places FDA-Approved Marijuana Products and Products Containing Marijuana in Schedule III
4
Congressional Research Service. Rescheduling Marijuana – Implications for Criminal and Collateral Consequences
5
Office of the Law Revision Counsel. 26 US Code 280E – Expenditures in Connection with the Illegal Sale of Drugs
6
U.S. Department of the Treasury. Treasury, IRS Announce Process for Tax Guidance Following DOJ Final Order on Medical Marijuana Rescheduling
7
Congress.gov. HR 5601 – 118th Congress (2023-2024) – MORE Act
8
Congress.gov. S 4226 – Cannabis Administration and Opportunity Act
9
Office of the Law Revision Counsel. 21 USC 844 – Penalties for Simple Possession
10
Office of the Law Revision Counsel. 18 US Code 922 – Unlawful Acts
11
Office of Personnel Management. Assessing the Suitability/Fitness of Applicants or Appointees on the Basis of Marijuana Use
12
U.S. Department of Veterans Affairs. VA and Marijuana – What Veterans Need to Know
13
U.S. Department of State. 9 FAM 302.4 – Ineligibility Based on Controlled Substance Violations