President Donald Trump’s administration announced April 23 that medical marijuana will be reclassified from Schedule I to Schedule III, putting it on the same level as drugs like ketamine and Tylenol with codeine.
The reclassification of medical marijuana will not affect recreational marijuana. The new class only changes rules for medical marijuana and FDA-approved products.
The Midwest will still see some changes, though. Medical marijuana businesses will find many new rules related to tax status and licensing that may open more doors for an already-rising industry.
Here’s what to know about how the reclassification of medical marijuana could affect Wisconsin and the rest of the Midwest.
No. Wisconsin has not legalized medical or recreational marijuana, and the reclassification does not change that.
Criminal penalties remain the same for possession and distribution even after reclassification. In states with legal medical marijuana, federal penalties only apply if the activity is done outside of valid medical procedures.
There is legislation in the Wisconsin Senate to legalize recreational and medical marijuana, but similar efforts in past bills and governor’s budgets have failed numerous times.
On the consumer side, the medical reclassification to Schedule III does not change much, especially because recreational marijuana is still considered Schedule I.
Medical marijuana users will still not need individual prescriptions to access products. The new order says that a state-authorized license is enough for businesses to dispense medical marijuana.
Medical marijuana was previously a Schedule I federally prohibited drug, which meant businesses could not claim tax deductions. And most financial institutions would not serve marijuana-related businesses, forcing most to operate with only cash.
That will change with the shift to Schedule III. Medical marijuana businesses can now deduct the cost of doing business and apply for federal tax credits. The federal government has also proposed reparatory tax relief for taxes already paid before the rescheduling.
The research industry has also been given a boon because they don’t have to procure Schedule I licenses anymore. Now, researchers can purchase marijuana directly from medical marijuana growers instead of relying on DEA-authorized bulk producers.
A common critique of Wisconsin’s marijuana prohibition is the tax revenue left on the table. Minnesota, Illinois and Michigan all have special sales taxes on medical and recreational marijuana sales.
In the past six months, Wisconsin’s neighbors brought in a combined $132 million in medical sales and about $2.2 billion in recreational sales, according to each state’s data.
Between medical and recreational sales, Illinois collected $742 million, Michigan collected $1.5 billion and Minnesota collected $100.4 million from September 2025 to February2026
Since January, Illinois has distributed more than $197 million to state initiatives, including R3 grants, Department of Health Services programs, record expungements, municipality budgets and more.
Throughout 2025, Michigan redistributed about $54,000 to municipalities and counties for each retail store and microbusiness license in their respective boundaries. For example, Ann Arbor had 23 different businesses in the city last year and collected $1.24 million from Michigan’s marijuana tax allocations.