Medicinal marijuana products that are legal at the state level will see looser federal regulation under an order the U.S. Department of Justice published Thursday, while a process that could remove the drug in all forms from the federal list of the most dangerous drugs is set to begin in late June.

The order, signed by acting Attorney General Todd Blanche, shifts many marijuana products from Schedule I — the Drug Enforcement Administration’s list of drugs with the greatest potential for abuse and least legitimate use — to Schedule III. 

That will open the door to greater research and provide an effective tax break for businesses that sell medicinal marijuana that is legal under state law.

The move follows President Donald Trump’s executive order last year directing the DOJ to move toward rescheduling.

“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 order applies to state-licensed medical marijuana products in the states that allow medicinal use of the drug.

The move means those businesses can deduct business expenses from their federal taxes and researchers have access to state-legal products. As a Schedule I drug, only cannabis grown in a federal facility could be studied, severely limiting the supply available to researchers.

The DEA also scheduled a hearing on broader reclassification to begin June 29 and end no later than July 15. That hearing will explore the possibility of rescheduling marijuana products that could include recreational use.

The order likely has no immediate impact on the difficulty marijuana businesses have had accessing the banking system. Institutions that lend to even state-legal businesses could be prosecuted on federal money laundering charges for offering banking services to businesses that violate federal drug laws.

‘Historic’ shift

Moving a limited number of products from Schedule I, which includes drugs such as heroin and cocaine, to Schedule III, which includes highly regulated prescription drugs such as acetaminophen with codeine, does not satisfy advocates who have called for complete legalization. 

But it does represent a major shift in the federal government’s official position on cannabis, several pro-legalization groups said.

“It’s historic because the federal government, historically, has denied the existence of medical cannabis, even as a concept,” Paul Armentano, the deputy director of the advocacy group the National Organization for the Reform of Marijuana Laws, said in an interview. 

The federal government was in recent memory “outright hostile” to medicinal marijuana, Armentano added. The order “finally acknowledges and recognizes not only the legitimacy of marijuana as a medicine, but also the legitimacy of these state programs, and it is trying now to integrate these state programs into our own existing federal regulatory schemes.”

Forty states and the District of Columbia allow medicinal marijuana.

Jasmine Johnson, CEO of Florida-based cannabis company GŪD Essence, wrote in an email that the federal government’s acknowledgement of cannabis’ legitimate medical value was the most important part of the order. 

“That shift alone helps move the industry out of decades of stigma and opens the door for expanded research, more institutional participation, and a more rational regulatory framework,” she wrote.

Medicinal vs. recreational

Recreational use will see no immediate changes from the order. In the 24 states in which recreational use, also called adult use, is legal, businesses that sell both medicinal and recreational products may experience confusion.

Chuck Smith, the CEO of Colorado Leads, an industry group, said in a statement that for Colorado cannabis businesses, “the immediate effects of this order are significant but relatively narrow.”

“Hybrid businesses should expect a transitional period in which federally covered medical activity and federally non-covered adult-use activity may be treated differently for registration, tax, and compliance purposes,” Smith said.

Such businesses would likely not see a tax benefit “when it comes to producing and selling, arguably, the products that consist of the majority of their business,” Armentano said.

Ryan Hunter, the chief revenue officer for Colorado-based marijuana company Spherex, called the DOJ order “a very silly announcement,” noting that it created a third regulatory category of a single plant species.

“Though this is all the same plant,” hemp and medical marijuana “are now considered Schedule III substances under the Controlled Substances Act (similar to Tylenol + Codeine),” while non-medical use is still considered Schedule I, he wrote in a statement. “My mind boggles at these arbitrary and artificial distinctions, but here we are.”

Eventual changes

Johnson, the Florida CEO, said she expected regulators to eventually merge how they treat different uses of the drug.

“The distinction between medicinal and recreational use has always been more regulatory than practical. From an operator’s standpoint, the same plant, supply chain, and compliance standards exist regardless of how it’s categorized,” she wrote. 

“Over time, we’ll likely see a continued shift toward a more unified framework that reflects how consumers actually engage with cannabis, rather than maintaining rigid distinctions that complicate operations.”

A grand jury indicted the Southern Poverty Law Center on charges of wire fraud, bank fraud and money laundering brought by the U.S. Department of Justice, which alleges payments the organization made to informants in extremist groups functioned as financial support for them.

Acting U.S. Attorney General Todd Blanche told reporters in Washington, D.C., on Tuesday that a federal grand jury in the Middle District of Alabama returned an 11-count indictment against the SPLC, a civil rights nonprofit based in Montgomery, Alabama, that helped take down some of the most prominent white supremacist groups in the country.

“As the indictment describes, the SPLC was not dismantling these groups,” Blanche said. “It was instead manufacturing the extremism it purports to oppose by paying sources to stoke racial hatred.”

SPLC interim CEO Bryan Fair said in a statement Tuesday evening that the organization was “outraged by the false allegations levied against SPLC — an organization that for 55 years has stood as a beacon of hope fighting white supremacy and various forms of injustice to create a multi-racial democracy where we can all live and thrive.” 

“Taking on violent hate and extremist groups is among the most dangerous work there is, and we believe it is also among the most important work we do,” Fair said. “To be clear, this program saved lives.”

Fair said in a video released earlier on Tuesday that SPLC was the subject of a criminal probe and that he believed it was connected with a now-discontinued paid informant program, which Fair said provided information and intelligence on extremist groups that was passed to law enforcement.

The indictment characterizes those payments, dating back to the 1980s, as funding for leaders and organizers of racist groups including the Ku Klux Klan, the Aryan Nation and the National Alliance.

No individuals were named in the indictment, but Blanche at the news conference, referred to one individual who was paid $270,000 over eight years. In total, according to the indictment, between 2014 and 2023, SPLC paid at least $3 million to eight people.

The indictment also pointed to an imperial wizard of the United Klans of America, as well as an alleged member of the online leadership chat group that planned the “Unite the Right” rally in Charlottesville, Virginia, in 2017.

Additionally, the indictment accuses the organization of funneling money to violent extremist groups by using the informants SPLC recruited.

FBI Director Kash Patel said at the news conference that SPLC tried to hide criminal activity from banks.

“They set up shell companies and entities around America so that the financial institutions that we rely on as everyday Americans were deceived in believing that the money was not coming from the Southern Poverty Law Center in perpetuation of this scheme and fraud, but rather fictitious entities they stood up to perpetuate this ongoing fraud,” Patel said.

The indictment includes  six counts of wire fraud, alleging SPLC defrauded donors; three counts of making false statements to a federally insured bank and one count of money laundering.

Fair said earlier on Tuesday that the paid informant program operated “in the shadow of the height of the Civil Rights Movement, which had seen bombings at churches, state-sponsored violence against demonstrators, and the murders of activists that went unanswered by the justice system.”

The interim CEO said that SPLC did not “share our use of informants broadly with anyone to protect the identity and safety of the informants and their families.”

“And while we no longer work with paid informants, we continue to take their safety seriously,” he said.  

A spokesperson for the organization said Tuesday that the program “predates me and a lot of people here. Most people who were involved are not even with the organization, because it has been a very long time since it has ended.”

Fair accused President Donald Trump and the DOJ of targeting SPLC for political purposes.

“Today, the federal government has been weaponized to dismantle the rights of our nation’s most vulnerable people, and any organization like ours that stands in the breach,” Fair said. “We stood in the vanguard then, and we stand in the vanguard today. We will not be intimidated into silence or contrition, and we will not abandon our mission or the communities we serve.”

The SPLC, founded in 1971, rose to prominence by bringing lawsuits against the Klan and other organizations that forced them to declare bankruptcy. Members of the Klan bombed the organization’s headquarters in Montgomery, Alabama, in July 1983. The group has also done work on voting rights, immigration and labor issues.

The group has often been outspoken and critical of Trump, and Republicans and conservatives have made it a target for years, saying it lumps right-wing groups in with extremist organizations. The Republican-controlled House Judiciary Committee held a hearing on the SPLC in December.

Updated at 6:37 p.m. with details of indictment, comments from DOJ press conference and reaction from SPLC.