Federal Cannabis Reform 2025: Retreat in Washington

Federal Cannabis Reform 2025: Promises vs Reality

Smoke and Mirrors in Washington

Federal cannabis reform looked promising during the Biden administration, but never manifested during Biden's term. That weak momentum now feels like smoke dissipating into the night sky. Instead of decisive action, what we are seeing from Washington is hesitation, confusion, and in some cases outright retreat. The cannabis industry, which has long been told to “wait just a little longer” for meaningful reform, now finds itself staring down a government that seems more comfortable fundraising on possible cannabis reform than actually implementing it. This failure to follow through has left businesses and advocates frustrated, questioning whether the promises of progress were ever made in good faith or simply for political optics. The recent actions by both the DEA and House Republicans suggest the latter, and the stakes for the industry have never been higher.

Red Flags from the DEA and Congress

The first signs of trouble came when Trump’s new DEA administrator released her list of priorities, conveniently omitting cannabis rescheduling from the agenda (Cannabis Business Times). This omission would have been surprising in any other context, but in the current political climate it almost feels deliberate, a signal that cannabis reform is being pushed back onto the shelf. On top of that, House Republicans have moved to restrict the Department of Justice from even using its budget to reschedule cannabis or remove it from the Controlled Substances Act (Cannabis Business Times). The inclusion of Section 607 in the federal appropriations language makes this crystal clear: “None of the funds appropriated or otherwise made available by this Act may be used to reschedule marijuana … or to remove marijuana from the schedules established under section 202 of the Controlled Substances Act” (House.gov). In practice, this means the DEA is being forced to stall while Congress erects bureaucratic roadblocks.

The Politics of Lip Service

It is hard to ignore the political theater surrounding this issue. Just weeks ago, President Donald Trump teased cannabis reform at a $1 million per plate fundraiser at his golf club in Bedminster, promising that a decision on rescheduling was coming “in the next few weeks” (Cannabis Business Times). Yet the contradiction between rhetoric and action is glaring. A White House spokesperson even admitted that while a reclassification process had been started under Biden, no final decision has been made under Trump. Abigail Jackson’s carefully worded statement—that “all policy and legal requirements and implications are being considered” and that decisions will be made in “the best interest of the American people”—reads less like a commitment to reform and more like an exercise in buying time (Daily Beast). This disconnect between promises and policies underscores the reality that federal cannabis reform is being used as a political pawn rather than treated as a matter of public health, safety, or fairness.

Eighty-Eight Years of Federal Prohibition

To put this in perspective, cannabis has been federally prohibited for 88 years. In all that time, not a single documented death has been caused directly by consuming cannabis. Compare this with alcohol and tobacco, both of which are legal and regulated despite contributing to hundreds of thousands of deaths each year. The continued placement of cannabis in Schedule I—alongside substances with no recognized medical use and high potential for abuse—defies both science and common sense. Rescheduling cannabis to Schedule III would at least acknowledge its medical benefits and allow businesses to operate under fairer tax rules. But the fact that the federal government is struggling to make even this modest change suggests that descheduling, the only truly rational path forward, remains a distant dream. For an industry that employs hundreds of thousands of people and generates billions in economic activity, that inaction borders on negligence.

The Stakes for Industry and Investors

For businesses operating in legal states, the lack of federal cannabis reform in 2025 is not just frustrating, it is financially crippling. Without rescheduling, cannabis companies remain shackled by Section 280E of the IRS code, which prevents them from deducting ordinary business expenses and often results in effective tax rates of 70 percent or higher. Investors, meanwhile, are wary of putting serious capital into an industry that continues to exist in a legal gray area. Properties like our King City processing and distribution site or Orange County cannabis retail assets represent incredible opportunities, but until federal reform provides stability, the maximum potential remains on the sidelines. The longer this uncertainty drags on, the more businesses will falter, and the more the illicit market will thrive. This is not just a cannabis issue; it is a broader question of whether the federal government can provide a coherent framework for one of the fastest-growing industries in the country.

The Bigger Picture: Political Gamesmanship

Ultimately, what we are seeing is a clash of priorities and political calculation. On one hand, the public overwhelmingly supports cannabis reform, with polls consistently showing bipartisan majorities in favor of legalization or at least rescheduling. On the other, lawmakers seem more interested in preserving talking points than in solving real problems. The insertion of Section 607 is a prime example of this dynamic—more about scoring ideological victories than serving constituents (House.gov).

"SEC. 607. None of the funds appropriated or otherwise made available by this Act may be used to reschedule marijuana (as such term is defined in section 102 of the Controlled Substances Act (21 U.S.C. 802)) or to remove marijuana from the schedules established under section 202 of the Controlled Substances Act (21 U.S.C. 812)."

Trump’s vague promises and the DEA’s convenient silence only deepen the impression that reform is being dangled as a campaign tool rather than pursued as sound policy. In the meantime, businesses and consumers are left to navigate a landscape that is at best inconsistent and at worst openly hostile. The longer Washington drags its feet, the more damage is done to both the legal industry and the credibility of federal institutions.

Industry Implications and Potential Solutions

For the cannabis sector, the implications of this federal retreat are significant. Companies must continue operating as if descheduling is not coming anytime soon, focusing instead on strengthening local partnerships, maximizing efficiency, and exploring opportunities in state-regulated markets. At Pac Garden Consulting, we believe that realism is essential and we celebrate progress when it comes, but prepare for the likelihood of continued federal stagnation. Solutions may involve leaning harder into state-level innovation, building stronger coalitions to pressure lawmakers, and ensuring that cannabis is framed not only as an economic issue but as a matter of fairness and public health. Until the federal government proves itself capable of meaningful reform, the cannabis industry will have to continue carrying itself forward, often in spite of Washington rather than with its support.

Conclusion: Reform in Retreat

Federal cannabis reform was once heralded as imminent, but today it looks more like a retreat than a revolution. If lawmakers cannot manage the relatively modest step of moving cannabis from Schedule I to Schedule III, then any hope of descheduling feels like empty rhetoric. At Pac Garden Assets, our stance remains clear: cannabis should be regulated in the same way as alcohol and tobacco, and removed from the Controlled Substances Act entirely. Until then, we will continue to advocate for reform, support businesses navigating this difficult environment, and call out political lip service for what it is. The cannabis industry deserves more than promises; it deserves action.

FAQ: Federal Cannabis Reform 2025

Q1: What is the current status of cannabis rescheduling under federal law?

The DEA in 2025 has not moved forward on Biden-era recommendations to reschedule cannabis. Congressional restrictions and shifting political priorities have stalled progress.

Q2. What does Section 607 mean for cannabis reform?

Section 607 blocks DOJ funds from being used to reschedule or deschedule cannabis, effectively freezing reform unless new legislation overturns it.

Q3. Why did the VA import cannabis from Canada?

Because the DEA blocked U.S. cultivation licenses, the VA was forced to rely on imported cannabis for research on cannabinoid efficacy for veterans.

Q4. How does this impact cannabis businesses?

Federal inaction keeps capital restricted, prevents banking reform, and sustains the illicit market — putting pressure on compliant operators and investors.

Q5. What reforms does Pac Garden advocate?

We advocate full descheduling, removing cannabis from the Controlled Substances Act entirely, so it can be regulated like alcohol and tobacco. However, we are realists, and will accept any kernel of federal reform as progress, even if it means Schedule III.