What Moving Marijuana to Schedule III Means for Your Workplace

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Tae Phillips: Hey, everyone. This is the Ogletree Deakins podcast series. My name is Tae Phillips, and I am a shareholder in the Birmingham office of Ogletree Deakins. I’m also the co-chair of the firm’s Drug Testing Practice Group. Our little joke is that the Drug Testing Practice Group in the last 10 or so years has really turned into the pot group, which, if you’d have told 18-year-old Tae Phillips that I would one day be talking about pot all day, every day, I would probably think that’s pretty cool, right? But we’re glad to have you here. I hope that you are enjoying whatever you’re doing as you’re listening to this podcast.

And today what we’re going to be talking about is the somewhat recent development of potentially some changes as it relates to marijuana under the Controlled Substances Act. In other words, marijuana status as an illegal drug under federal law. So, what we’re going to talk about today is President Trump’s executive order that he issued in December that directed some potential movement on the rescheduling of marijuana from Schedule I of the Controlled Substances Act to Schedule III of the Controlled Substances Act. And we’ll certainly tell you what the Controlled Substances Act is and what it means. So, we’re going to talk about that potential rescheduling of marijuana.

And then most importantly, we’re going to tell you what impact that would have, if it actually happens, what impact would that have on the current state of state-specific marijuana legalization laws, and more specifically, the impact it could have on the current state of employment-related issues that all employers have been dealing with for many years now as it relates to marijuana, positive marijuana tests, marijuana legalization laws, and the very difficult challenge of trying to manage your workplace with regards to marijuana.

And then we’re also going to talk about the DOT regulations and other federally regulated employees and what the rescheduling could do as it relates to the impact on those types of employees. So, in other words, we’re going to sort of break it down between non-DOT-regulated employees and DOT-regulated employees.

So, that’s what we’re going to talk about today and hope that you find this useful. If you have any questions, if you’re listening to this, you have any questions, you are welcome to email any of us who are on the podcast. I’m going to give a quick intro to who all is on the podcast, and then we’ll start in with the substantive materials.

So, again, I’m Tae Phillips, and on with me is Jennifer Pacicco. Jen is an associate in our Philadelphia office. We’ve got Andrew Halverson, who is in our Lafayette, Louisiana, office. And then we’ve got Dennis Gardner, who is in our Houston, Texas, office. So, that’s who we got on the line with us. Jen’s going to talk about the rescheduling. She wrote a great blog, if y’all want to check it out, on the rescheduling initiatives of President Trump.

So, I’m going to kick it to her first to talk about the rescheduling in general, the Controlled Substances Act in general. And then I’ll go back and talk a little bit more about the non-DOT aspect of the potential rescheduling. And then we’ll kick it over to Andrew to talk about the current state of the DOT regulations and how things are at the moment with respect to marijuana being on Schedule I. And then, last but not least, we will get Dennis to bring us home to talk about what would happen if marijuana moves to Schedule III as it relates to our DOT-regulated employees. So, that’s the agenda for today. So, let’s kick it off.

Jen, how about you tell everybody a little bit about the executive order in general and then the Controlled Substances Act and the rescheduling efforts from President Trump?

Jennifer Pacicco: Great. Thank you, Tae. Yes. My name is Jennifer Pacicco. I’m an associate in Ogletree’s Philadelphia office. So, just by way of background, the Controlled Substances Act governs federal drug policy in the United States. And the CSA created the drug scheduling system, which places drugs on five schedules based on a drug’s potential for abuse, accepted medical uses, and the potential for addiction.

Presently, it’s the Drug Enforcement Administration and the U.S. Food and Drug Administration that jointly classify drugs on a I through V scale, I being kind of like the highest, most dangerous level, and V being more generally accepted drugs. For example, Schedule V drug substances or chemicals are those with the lowest potential for abuse and contain limited quantities of narcotics. These drugs are typically used to treat common conditions such as coughing, as well as rarer conditions such as seizures. Schedule I drugs, on the other hand, are drugs, substances, or chemicals with no currently accepted medical use and a high potential for abuse. This includes drugs such as LSD, ecstasy, heroin, and presently marijuana. In the middle are Schedule III drugs, which the DEA recognizes of having a moderate to low potential for physical and psychological dependence. This schedule includes some pain medications with less than 90 millimeters of codeine per dose, ketamine and some anabolic steroids.

Marijuana was first classified as a Schedule I drug in the 1970s. And it remained there despite much debate about why it was there, especially given the rise of medical marijuana and states legalizing medical marijuana. In 2023, the Department of Health and Human Services recommended moving marijuana to Schedule III. U.S. Department of Justice accepted public comment on this through July 2024 and considered the move, but ultimately the rescheduling did not occur. And then on December 18th, 2025, Trump issued an executive order 14370 directing the Attorney General to expedite reclassification of marijuana. So, that’s just some background for you. I think next up, we will have the current state of the impact of rescheduling. Tae?

Tae Phillips: Yeah, thanks, Jen. So, what I want to do really quickly is talk about, if marijuana is moved from Schedule I to Schedule III, what impact will that have on non-DOT-regulated employers? And I want to make it very clear that it’s been a really difficult situation for employers in the last 10 or so years in dealing with these marijuana legalization laws and trying to navigate how you can operate your workplace within the context of these marijuana legalization laws.

And just a quick background. Currently, we’ve got about 40-ish or so, give or take, states that have medical marijuana legalization laws. We’ve got about 20-ish, give or take, states that have recreational marijuana legalization laws. And as many of you already know, employers have been struggling in trying to manage all of the various employment claim risks that come with medical and recreational marijuana.

And your risks tend to vary. So, I won’t do too deep of a dive into this, but at the moment, there are some states that have employment protections that are built into the marijuana legalization laws themselves. So, there are some medical marijuana laws that have employment protection provisions. An example of that would be Pennsylvania. I’m paraphrasing here, but those states might say something like, “You can’t fire someone for being a medical marijuana card holder.” So, that’s an example of an employment protection provision.
There’s many states that have those employment protection provisions in their medical marijuana laws. There’s about 20 states that have that type of framework. And then there’s a few states that have protections built into the recreational marijuana laws. So, those are two potential employment-related claims that you might find in state laws.

You’ve also got risks of disability discrimination claims arising under either the Americans with Disabilities Act or state disability discrimination laws. Those are potential claims that can arise with medical marijuana cardholders. And then you’ve got some states that maintain what are called lawful off-duty conduct laws. Those laws, and again, I’m paraphrasing, would say something along the lines of “You can’t fire someone for engaging in otherwise lawful off-duty activity.”

So, these are the types of state-related laws that could trigger employment claims when we’re talking about positive marijuana tests or marijuana-related issues, right? And so, these have been things that employers have been struggling with for many years. Notwithstanding the fact that marijuana has been a Schedule I controlled substance, meaning, air quotes, it’s illegal under federal law, all of these state-related laws, all of these state-specific employment protections, they still apply, right? Regardless of whether or not marijuana is illegal under federal law.

I do not want to get into a constitutional law or any sort of deep dive that would give me PTSD from my first year of law school as to why that is. But the point is, and please just take this at face value, that marijuana’s illegal status under federal law and its presence on Schedule I has always been somewhat irrelevant as it relates to compliance with all of these state-specific laws and these state-specific protections.

So, if marijuana moves from Schedule I to Schedule III, we’ve gotten dozens of questions from clients basically all asking the same thing, which is, does this mean that the state laws will no longer be applicable? Or does this mean that because marijuana is legal… I’m sorry. If marijuana moves to Schedule III, would it be, air quotes, legal? Does it mean that we no longer have to worry about all of these state marijuana legalization laws and the employment protections? And the answer, just in a word, is no.

So, to elaborate, if marijuana moves from Schedule I to Schedule III, that is not going to change whatsoever any of these risks that have been present for the past 10 or so years under these state laws. So, just to perhaps oversimplify it, if marijuana moves from Schedule I to Schedule III, it is not going to change things really whatsoever for your non-DOT employers as it relates to the various risks that exist from state to state as they exist at the moment. Right?
And so, again, I’m not trying to make this sound like it’s not important, but it’s, frankly, much ado about nothing as it relates to the existing protections under state laws.

So, to sort of bottom line this and to summarize, if marijuana does in fact move from Schedule I to Schedule III, and to be clear, we’re not sure if that will happen or not, but if it does move from Schedule I to Schedule III, the impact on your non-DOT employers as it relates to these current state marijuana legalization laws and current state protections, those will not change. All right? You will still have the risks of all of these state employment law claims, the state employment law protections. Those will continue to exist regardless of what schedule marijuana is on. All right? So, that’s going to be the impact on your non-DOT folks.

So, let’s switch over to the DOT side. And what I want to do is I want to start with Andrew to talk about the current state of DOT regulations as it relates to marijuana. In other words, what are we dealing with right now with marijuana being on Schedule I? And then we’ll kick it to Dennis to talk about what could happen from the DOT side if marijuana moves to Schedule III.
So, Andrew, let’s kick it off with you.

Andrew Halverson: Thanks, Tae. Yeah. So, let me give some high-level points about the current status of DOT law with respect to marijuana. And the Schedule I classification is just sort of king at the moment. The DOT’s authority is rooted in the Controlled Substances Act, where, as Jennifer mentioned, that marijuana is listed as a Schedule I drug for its high potential for abuse. And so, because of this, the DOT maintains an absolute prohibition on marijuana use for all safety-sensitive employees, regardless of the changing landscape, both on a societal level and the state-level legal landscapes.

Now, just a brief mention about the changes in society has been driven in part by the acceptance, the widespread acceptance of medical marijuana and then also recently the rise of CBD products. Those have DOT impacts as well.

With respect to medical marijuana, there’s still a complete rejection of medical marijuana on the federal level. That’s because the federal regulations supersede state-level medical recommendations. And so, in light of that, for quite a number of years, the DOT has been issuing formal medical marijuana notices stating to medical review officers that they are forbidden from verifying a drug test as a negative based upon state-issued medical marijuana cards. So, even if it’s permissible under state law, still not permissible under DOT regulations. So it would result in a failed drug test.

For CBD products, the interesting wrinkle here is that CBD is quite popular, but the DOT has warned that it has yet to certify the purity of any CBD-related products, oils or supplements. And so, the risk here is that if a CBD product has a trace amount of THC, even if it’s labeled THC-free, a subsequent positive test would still be considered a failed drug test under DOT law. And that’s largely driven by the cumulative nature of the THC buildup in a person’s system. So, that’s the sort of the CBD risk there.

Couple of other points about current DOT law. One is, what about off-duty use? There’s no specific per se ban of marijuana use in an employee’s off time, but really, it’s more of an effect of the way the testing is done. DOT testing has historically been…has relied upon urine samples to detect non-psychoactive metabolites. And it’s the metabolites that are the issue because they hang around in the system, in a person’s system, for weeks after use. And so, if the test comes back positive for marijuana, the test can’t distinguish between someone who is actively under the influence and high versus someone who had utilized or used marijuana in their off time in the days or weeks preceding the test. So, particularly for safety-sensitive positions, the effect of it is that employees in those safety-sensitive positions cannot use marijuana so as to avoid a positive test later on.

And then finally, what if there is a positive test for marijuana? Safety-sensitive employees are immediately removed from their role. And to return, they are required to complete a rigorous evaluation with a substance abuse professional and undergo a series of return-to-duty tests, which involves automatic retesting, or I’m sorry, not automatic, but unannounced retesting. And that unannounced retesting can last for years after that failed drug test.

So, those are the high points that I have. I’m going to turn it over to Dennis to talk about the move of marijuana to Schedule III and as it relates to DOT.

Dennis Gardner: Thank you, Andrew. The first point I want to make is that there is right now no change in the DOT position on marijuana. It’s still a Schedule I drug, and all safety-sensitive employees are still prohibited from using it. It may change. It could is a good description, because nobody really knows. I’ve surveyed the literature that’s come out lately and tried to do a synopsis here of what the various coulds are.

And first of all, since the DOT’s mandate is safety and not just legal compliance, if it’s legalized or rescheduled, the DOT can still determine that the use of a substance is incompatible with performing safety-sensitive functions under their regulatory authority. So, point one would be they don’t have to change.

The next thing would be that testing remains mandatory now, and it could remain mandatory in the future. It’s likely that the DOT will initiate formal rulemaking when and if the marijuana is rescheduled. Right now, the rules appear in 49 Code of Federal Regulations Part 40, and if it’s moved from Schedule I to Schedule III, that’s going to require the readjustment of the regulations. So there’s a period of time, really an indefinite period of time, if they decide to adapt to Schedule I to Schedule III change.

There’s some speculation in the industry that they might go to an impairment-based test as opposed to right now it’s an absolute prohibition. If they go to impairment, that would treat it more typically on the same way that Schedule III drugs are treated. In other words, a medical professional could determine that use of the marijuana in the employment context would not impair the employee’s ability to safely perform their functions.

There is some concern that change from Schedule I to Schedule III undermines the ability of the DOT to even do testing. There’s a discussion whether a carve-out would be necessary, because Health and Human Services-certified laboratories technically only have the authority to test for Schedule I and Schedule III substances. So the DOT might need to create a specific regulatory carve-out that authorizes continued marijuana testing for transportation workers.

As I mentioned, it could be a focus on impairment. The problem with that is, there’s really no set level of impairment with marijuana. Unlike alcohol, where there’s an alcohol content that’s pretty well determined that you’re impaired, that isn’t true for marijuana. One of the things that may come from the rescheduling is more research on actual impairment.

If marijuana is treated like other Schedule III drugs, the DOT might create a process where the medical review officer could evaluate if a safety-sensitive employee’s use of medical marijuana impairs their ability to safely perform their job.

In short, we really don’t know where this is going to wind up. So, it’s basically, once the rescheduling is done and depending on what comes from that, then the DOT in particular will need to examine whether they want to change their regulations, and if so, how. But at this point, employers should just continue to do their programs under the existing regulations.
Tae, back to you.

Tae Phillips: Thanks, Dennis. And for everyone that’s listening, just to wrap up, we want to make it very clear that things do not necessarily move at lightning speed in Washington, D.C. Right?
And so, certainly this is something to monitor. Certainly, it grabbed a lot of attention when President Trump signed the executive order last December. As Jen already told you, essentially the exact same thing happened under the back end of the President Biden administration. So, it’s kind of like a pendulum when it comes to things in Washington.

And so, certainly something to monitor, certainly something that could happen. But for now, I think, to Dennis’s point, business as usual and stay tuned. We will certainly keep you abreast of any sort of looming changes. And if this does become a reality, we’ll certainly make sure that we’re keeping you informed.

Thank you for listening. Really appreciate it. Hope you all have a good rest of your day. Thanks.

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