Client Alert: The Recent Executive Order on Marijuana Rescheduling and Its Impact on Employers
CLIENT ALERT
Federal Cannabis Laws Going Up in Smoke?
Still Some Smoldering Issues Under State and Federal Law
The Recent Executive Order on Marijuana Rescheduling and Its Impact on Employers
By Attorneys Jane Pyatt and James Reidy
On December 18, 2025, the White House published Executive Order 14370, titled “Increasing Medical Marijuana and Cannabidiol Research.” Heralded as an important victory for the supporters of marijuana (“cannabis”) legalization, Executive Order 14370 does not legalize cannabis under federal law. Instead, it provides instructions to the Executive Branch of the federal government to resume and finalize the rulemaking process required to reschedule cannabis from a Schedule I controlled substance to a Schedule III controlled substance.
Rescheduling Cannabis
Under the federal Controlled Substances Act, cannabis is currently classified as a Schedule I controlled substance. This class of substances are defined as having “no currently accepted medical use and a high potential for abuse,” and substances in this class face the most heightened restrictions under federal law. Other Schedule I substances include heroin, methylenedioxymethamphetamine (ecstasy), lysergic acid diethylamide (LSD), mescaline (peyote), and methaqualone (quaaludes). In comparison, the Controlled Substances Act defines Schedule III substances as substances with a “moderate to low potential for physical and psychological dependence” and an accepted medical use.
Citing the potential medicinal value of cannabis to treat conditions including chronic pain, nausea, and certain forms of anorexia, Executive Order 14370 instructs the U.S. Attorney General to complete the rulemaking process required to reschedule cannabis.
However, this process is not automatic. In fact, the Department of Health and Human Services issued a recommendation in 2023 that cannabis be rescheduled from a Schedule I controlled substance to a Schedule III controlled substance, and the Department of Justice began the rulemaking process for rescheduling in early 2024. The Department of Justice will need to complete the formal rulemaking process before rescheduling can go into effect. However, while the timeline for rescheduling is uncertain, Executive Order 14370 suggests that change may be coming soon.
Updating Guidelines for Hemp-Derived Products
In addition to instructing the U.S. Attorney General to reschedule cannabis, Executive Order 14370 instructs members of the Executive Branch of the federal government to 1) “update the statutory definition of final hemp-derived cannabinoid products,” 2) develop guidance regarding the amount of tetrahydrocannabinol (“THC”) (the intoxicant in cannabis) that can be included in CBD products, and 3) “develop research methods and models utilizing real-world evidence to improve access to hemp-derived cannabinoid products.” The stated goal of these directives is to increase Americans’ access to safe hemp-derived products.
Executive Order 14370’s Impact on Employers
While cannabis remains a Schedule I controlled substance under federal law, many states have enacted laws authorizing the use of cannabis for recreational and/or medicinal purposes. As of January 2026, cannabis is legal, in one form or another, in 47 states, and within that number, 24 states plus the District of Columbia have legalized the non-medical use of cannabis by adults. Five out of the six New England states have legalized both recreational and medicinal cannabis use. To date, New Hampshire is the only New England state that has not yet legalized recreational marijuana, allowing only for the therapeutic use of cannabis.
The dichotomy between federal and state marijuana laws has created a complicated legal landscape for employers to navigate since Colorado and California began the trend towards the legalization of recreational marijuana in 2012. Employers have grappled with this uncertainty while developing their policies on drug possession, use and testing as well as the consequences for policy violations. While Executive Order 14370 does not legalize recreational cannabis under federal law, it may be a preliminary step towards legalizing the use of cannabis for medical purposes under federal law. This may clarify employers’ obligations surrounding cannabis.
For example, some employers, such as federal contractors and employers in the transportation industry, are required to implement policies to ensure a drug-free workplace under federal law despite the fact that marijuana has been legalized in their state. This has led to confusion for some employees. If the rescheduling of cannabis occurs, the federal government is expected to further clarify how the drug-related obligations of federal contractors and employers in the transportation industry may change.
A significant shift for employers may occur within the realm of reasonable accommodations. Since states began legalizing medical marijuana, questions have arisen regarding how employers must accommodate off-duty medical marijuana use under the federal Americans with Disabilities Act, as amended, and similar state laws. Some states, including New Hampshire, Massachusetts, and Connecticut, have recognized that employers may have an obligation to reasonably accommodate certain employees’ off-duty medicinal use of cannabis despite the fact that cannabis remains illegal under federal law. The rescheduling of cannabis on the federal level may resolve ambiguity regarding employers’ obligations relating to reasonable accommodations.
Best Practices for Employers
While employers may not feel an immediate impact from Executive Order 14370, the eventual rescheduling of cannabis may resolve some uncertainty regarding the intersection between federal and state cannabis laws.
For now, employers should ensure they are familiar with the relevant state and federal laws pertaining to cannabis. As more updates from the federal government are expected to come soon, employers should stay up to date regarding the rescheduling of cannabis. Employers should also review their policies on drug possession and use and as well as pre-employment and other drug testing to be sure they comply with applicable laws.
Attorneys in our Labor & Employment group are available to help employers update their policies and understand their legal obligations in the wake of Executive Order 14370 and other changes to applicable state laws.
This article is intended to serve as a summary of the issues outlined herein. While it may include some general guidance, it is not intended as, nor is it a substitute for, legal advice.