A Dual Framework Emerges: Marijuana’s Schedule III Reclassification and the Road Ahead for Employers

On April 22, 2026, the U.S. Department of Justice (DOJ) issued a final order reclassifying certain marijuana-related products under the Controlled Substances Act (CSA). The order places (1) FDA-approved marijuana-derived drug products and (2) marijuana produced and dispensed pursuant to state medical marijuana licensing programs into Schedule III.

At the same time, the DOJ directed the Drug Enforcement Administration (DEA) to conduct a formal administrative hearing, beginning June 29, 2026, to consider whether marijuana more broadly should be rescheduled.

Although this development reflects a meaningful shift in federal policy, it does not legalize marijuana at the federal level. Instead, it introduces a more complex regulatory environment with important—and evolving—implications for employers.

Scope of the Rescheduling Order

The April 2026 order is limited in scope. It applies only to:

• Marijuana-based drug products approved by the Food and Drug Administration (FDA)
• Marijuana handled within state-regulated medical marijuana programs

All other marijuana—including recreational cannabis, most bulk marijuana, and products outside these regulatory channels—remains classified as a Schedule I controlled substance and therefore illegal under federal law.

This creates a dual framework under federal law, where marijuana may be treated differently depending on whether it qualifies as a regulated medical product. Employers should continue to distinguish between medical and non-medical marijuana use when addressing workplace issues.

The order also establishes a federal registration pathway for certain state-licensed medical marijuana operators, reflecting increased federal reliance on state regulatory systems.

A Shift in Federal Recognition—But Not Full Alignment

By moving qualifying marijuana products to Schedule III, the federal government has formally recognized that marijuana has accepted medical uses and a lower potential for abuse than Schedule I substances.

However, this change does not place medical marijuana on the same footing as traditional prescription medications in all respects. The CSA, the Americans with Disabilities Act, and other federal laws have not been amended, and the use of recreational marijuana remains federally prohibited. Employers should view this development as a policy shift that introduces new considerations, rather than a complete overhaul of existing legal obligations.

Key Implications for Employers

1. Increased Focus on ADA Accommodation Requests

Employers should anticipate an increase in accommodation requests tied to applicants’ and employees’ medical marijuana use.

Historically, courts rejected such claims based on the ADA’s definition of “individual with a disability,” which excludes an individual who currently engages in the illegal use of drugs, and marijuana’s status as a Schedule I controlled substance with no accepted medical use under federal law. Following rescheduling, that rationale may be subject to greater challenge—particularly where individuals are using marijuana under the supervision of a licensed health care professional and/or in compliance with state medical programs.

That said, employers are not required to automatically permit medical marijuana use. Instead, they should continue to: (1) engage in the interactive process where appropriate; (2) assess whether a requested accommodation is reasonable; and (3) evaluate whether the applicant’s or employee’s use poses a “direct threat,” particularly in safety-sensitive roles.

Employees may increasingly argue that state-authorized medical marijuana should be treated similarly to other Schedule III medications, although federal law does not yet treat these products identically. Employers should also continue to account for applicable state medical marijuana and disability discrimination laws, many of which independently provide protections for medical marijuana cardholders.

2. State “Lawful Product” Laws: Potential Reconsideration of Prior Claims

The rescheduling may also introduce new uncertainty under state “lawful product” or off-duty conduct laws.

In several jurisdictions, courts have previously rejected claims by employees or applicants who were disciplined or denied employment based on marijuana use—even where that use was permitted under state law. In those cases, courts often relied on statutory language protecting only conduct involving products that are “lawful” under federal or state law. Because marijuana was classified as a Schedule I substance, courts concluded it remained unlawful under federal law and therefore fell outside the scope of those protections.

The reclassification shift to Schedule III may prompt renewed challenges to those interpretations. Individuals may argue that marijuana—particularly when used in compliance with state medical marijuana programs—no longer categorically fails the “lawfulness” requirement that previously barred such claims. It remains unclear how courts will evaluate these arguments.

Employers operating in states with lawful product or off-duty conduct protections should monitor developments closely and consider how these laws may apply as the federal landscape continues to evolve.

3. Drug Testing and Workplace Policies Remain Permissible—But May Face Scrutiny

The DOJ’s order does not directly regulate workplace policies. Employers generally retain the ability to: (1) prohibit marijuana use, possession, and impairment during work; (2) maintain drug-free workplace policies; and (3) conduct drug testing, subject to state and local law.

At the same time, the shift in federal policy may lead to increased scrutiny of certain approaches—particularly strict zero-tolerance policies applied to off-duty medical marijuana use. Risk is most likely to arise where: (1) an employee uses medical marijuana outside of work; (2) there is no evidence of on-the-job impairment; or (3) the employer takes adverse action based primarily on a positive drug test.

Employers should ensure that policies are tied to legitimate business needs, including workplace safety, compliance obligations, and job performance.

4. Medical vs. Recreational Distinction Remains Critical

The DOJ’s order draws a clear distinction between medical and non-medical marijuana. Only products tied to FDA approval or state medical licensing qualify for Schedule III treatment. Recreational marijuana remains federally prohibited.

Although this distinction may be difficult to apply in practice, it remains important for compliance purposes.

5. Department of Transportation (DOT) Requirements Remain in Effect

For employers subject to Department of Transportation (DOT) regulations, current drug testing rules remain unchanged. The DOT has not yet issued updated guidance following the rescheduling, and prior agency statements suggest that changes will not be automatic. Employers with safety-sensitive, DOT-regulated employees should continue testing for marijuana and enforcing existing prohibitions on its use.

6. Continued Importance of State Law

The rescheduling does not override state marijuana or employment laws. Employers must continue navigating overlapping and sometimes inconsistent requirements, including medical marijuana statutes, disability discrimination laws, off-duty conduct protections, and state and local limitations on drug testing. 

Practical Steps for Employers

In light of this evolving landscape, employers should consider:

• Reviewing and updating drug and alcohol policies
• Reevaluating accommodation procedures for medical marijuana-related requests
• Training HR personnel and managers on handling marijuana-related issues
• Ensuring policies distinguish between impairment and lawful off-duty conduct
• Monitoring developments from the DEA, DOT, and courts

Looking Ahead

The DEA’s upcoming administrative hearing—and potential further rulemaking—could significantly reshape federal marijuana policy. In addition, anticipated litigation may influence how courts interpret the interaction between federal classification, state laws, and workplace obligations.

For now, the rescheduling of marijuana is another significant event in the ongoing shift in how  marijuana is treated under state and federal law, while preserving employers’ existing ability to maintain workplace safety and compliance. Employers should take a measured approach: continue applying current policies, but be prepared for evolving expectations and increased scrutiny and challenges, particularly in the accommodation and off-duty conduct context.