What Happens Next If Cannabis Is Rescheduled?
By Jeff Eckenrode
Image credit: Jinsoo Choi
Quick Answer: Federal cannabis rescheduling from Schedule I to III would reduce tax burdens by eliminating Section 280E, improve banking access, and enable more research—but won’t legalize cannabis nationwide or allow interstate sales. Washington consumers may see lower prices, better financial stability for retailers, and a more mature, regulated market.
The Latest News on Cannabis Rescheduling
For the first time in more than 50 years, the federal government appears ready to move cannabis out of Schedule I (the category reserved for substances with no medical use and high potential for abuse) and into Schedule III.
Cannabis Business Times reports that:
“President Trump is expected to direct his cabinet to move forward with a proposal to reclassify cannabis to Schedule III, though the decision is not yet final.”
Image credit : Sebastian Pichler
Does this mean Cannabis will be federally legal?
In short: Cannabis would still be federally restricted, but no longer treated as the “worst of the worst.” as a Schedule I drug.
But this shift has been the focus of multiple federal reviews, political conversations, and industry discussions.
Reports now indicate that rescheduling may be introduced by executive order or finalized through ongoing agency processes.
“Legal experts note that, while a rescheduling effort is underway, ‘no final decisions have been made’ around federal marijuana rescheduling.”
If this happens, cannabis would officially join substances like ketamine and certain prescribed stimulants — still federally controlled, but with recognized medical use.
Image credit: Scott Graham
What Will Rescheduling Change for Cannabis Businesses?
1. Section 280E Would No Longer Apply
This is the single largest impact. Under today’s rules, cannabis businesses cannot deduct ordinary expenses on their federal taxes, which dramatically inflates effective tax bills.
So what is 280E?
Section 280E is a U.S. federal tax provision that strictly forbids cannabis businesses from making the same ordinary tax deductions as any other business.
“Under current law cannabis is a Schedule I drug, so Section 280E prevents businesses from deducting ordinary business expenses like rent and payroll — potentially inflating effective tax rates to 70–90%. Rescheduling would remove the Section 280E bar, allowing cannabis businesses to deduct normal expenses.”
Currently, cannabis businesses cannot deduct ordinary expenses like rent, payroll or utility bills from their federal taxes because cannabis is classified as a Schedule I substance under the Controlled Substances Act.
But if cannabis moves to Schedule III:
Federal tax burdens would drop significantly.
Businesses could deduct payroll, rent, utilities, marketing, and other normal expenses.
Cash flow, margins, and long-term stability would all improve.
For small retailers like Hashtag Redmond, this is more than a policy change — it’s the kind of shift that strengthens local businesses and helps them survive in a very competitive marketplace.
Image credit: Louis Droege
2. Better Access to Banking and Financial Services
Rescheduling doesn’t legalize cannabis federally, but it does reduce the risk profile for banks and credit unions.
A Canna Advisors report states that:
“Although rescheduling does not automatically legalize cannabis or fully enable banking access, it would reduce risk perceptions among banks and could encourage financial institutions to serve cannabis businesses more readily.”
However, it’s reasonable to suggest that cannabis businesses can expect gradual improvements in:
Business checking and merchant services
Access to loans or credit lines
Lower-cost electronic payment systems
Fewer cash-only operational bottlenecks
This won’t happen overnight, and not every bank will jump in immediately, but the direction is positive.
Image credit: Cova Software
3. Possible Operational and Compliance Changes
Moving to Schedule III creates room for federal agencies like the FDA and DEA to influence testing, labeling, research, and product standards.
This does not mean Washington stores would suddenly become pharmacies. Instead, retailers may eventually see:
Updated testing and packaging standards
Greater consistency across states
New expectations around manufacturing and tracking
Much of this remains unknown and dependent on future rule-making.
Image credit: RoseBox رز باکس
Will cannabis be legal to ship between states?
Not yet, unfortunately.
Rescheduling alone does not authorize interstate commerce.
Cannabis would remain federally controlled, and state-regulated products would still be limited to in-state sales unless new federal laws or FDA pathways are created.
For now, Washington cannabis must stay in Washington.
Image credit: Christophe Laurenceau
Will the FDA regulate cannabis products?
Possibly — but the timeline is unclear.
FDA involvement could range from light-touch guidance to full oversight of production, labeling, and medical claims.
Image credit: Tim Mossholder
Will the industry consolidate?
Lower taxes and better financing may attract larger companies or accelerate national investment.
This could help stabilize the market — but it could also increase competition for independent shops.
Image credit: David Gabrić
What Happens Next If Cannabis Is Rescheduled?
Rescheduling cannabis to Schedule III would be the biggest federal shift the industry has ever seen. The impacts will be substantial — especially for small businesses — but rescheduling is not legalization, not interstate commerce, and not a complete regulatory overhaul.
Still, it represents real progress for the industry, and an opportunity for Washington stores like ours to better serve customers with stability, innovation, and more predictable operations.
Where can I Find Legal Cannabis?
At Hashtag Redmond, we provide a full selection of cannabis products with knowledgeable staff ready to answer your questions about safe and responsible use.
Stop by or browse our online menu to find the right products for your lifestyle.
Want to learn more?
Then check out our related posts here!
Need help picking out a product? Then ask our friendly budtenders!
Whether you’re shopping in Redmond or online, we’re here to help you find what you need, when you need it.