Cannabis Schedule III Classification Explained

In December of 2025, President Trump signed an executive order that directed the Attorney General to expedite the process of changing marijuana from Schedule I to Schedule III. While this is a process that has taken years to arrive, this blog outlines how we got here and what to expect for the future of cannabis.

What is the difference between Schedule I and III?

Currently, there are two categories that cannabis and its derivatives fall under: hemp and marijuana. Hemp is the legal classification of cannabis that is defined in the 2018 Farm Bill by containing no more than 0.3% of delta-9 THC by dry weight. All other forms of cannabis that do not meet this delta-9 requirement is considered marijuana, which has been classified as a Schedule I substance since the creation of the Controlled Substances Act in 1970. 

The CSA created five categories, called Schedules, with the lower the scheduling number meaning the greater the amount of restrictions. Schedule I has the strictest limitations on a substance which are considered to be a high potential for abuse and without an accepted medical use. The definition for Schedule III means the substance has a “moderate to low potential for physical and psychological dependence.” While substances in Schedule III are still illegal, there are big differences in their accessibility.

Schedule III Accessibility Takeaways:

• Legality: Schedule III substances have lower legal penalties associated with their distribution and possession, though penalties such as mandatory minimum sentencing placed specifically on marijuana will remain.

• Research: While there have been laws aimed at benefiting cannabis research, it is far easier to apply for Schedule III research licenses and faster processes for New Drug Applications that contain Schedule III substances.

• Taxes and Banking: Tax codes such as Internal Revenue Code Section 280E would no longer apply, meaning businesses would be able to claim deductions on their tax returns; meanwhile banks would be able to lessen their restrictions on financial services.

• Drug Testing: Many government agencies, such as the Department of Transportation, only test their employees for substances on Schedule I & II, which would mean that marijuana would no longer be tested.

What Will Change For Customers?

As noted previously, this change from Schedule I to III impacts the classification of illegal cannabis: marijuana. So, while the changes outlined above are a positive impact for both consumers and businesses, they do not alter the current state of retail hemp that you buy in stores such as Hemp Generation. Due to the passage of HR 5371 in November of 2025, the definition of legal retail hemp has changed from the previously mentioned less than 0.3% delta-9 thc on a dry weight basis to instead 0.3% total thc concentration, rather than only looking at delta-9. This change would effectively ban all of our products and goes into effect in less than a year on November 12th, 2026.

If you would like to know more about efforts to save our access to safe hemp, we have various methods outlined here.