Trump Reschedules Cannabis: A New Era for U.S. Policy and Industry

A Better, More Rational Cannabis Policy Is Finally Here

This morning, the United States woke up to a major shift in federal cannabis policy. After years of stagnation, President Donald J. Trump signed an executive order directing the reclassification of cannabis from a Schedule I to a Schedule III controlled substance under the Controlled Substances Act. The move reflects growing recognition of marijuana’s legitimate medical use and promises to unlock opportunities for research, investment, and broader industry development.

"(The Executive Order) directs the Justice Department to 'take all necessary steps' to move marijuana from Schedule 1 to Schedule 3 of the Controlled Substances Act 'in the most expeditious manner in accordance with Federal law.'" MJBiz

For many observers and industry participants, this decision marks the most significant federal policy change in decades. While some critics argue it does not go far enough toward full legalization, the implications for research, business operations, and financial markets are immediate and considerable.

What Happened: The Executive Order & Trump Cannabis Rescheduling

President Trump signed the executive order on December 18, 2025, instructing federal agencies to begin the process of rescheduling marijuana from Schedule I to Schedule III under the Controlled Substances Act. This regulatory shift acknowledges that marijuana has medical value and a lower potential for abuse than previously recognized.

The White House published the text of the executive order, which highlights several goals:

• Increase federal medical marijuana and cannabidiol (CBD) research.

• Encourage regulatory frameworks to align with scientific evidence.

• Expand access to therapeutic treatments for patients.

• Create pilot programs for Medicare reimbursement for certain CBD therapies. The White House

Trump cannabis rescheduling is not equivalent to a full decriminalization or legalization of cannabis, this change does shift the federal posture toward the plant with more flexibility and scientific grounding.

Why This Matters: Practical Impacts for Markets and Patients

Rescheduling cannabis to Schedule III does not immediately legalize recreational use nationwide, nor does it erase all federal restrictions. However, several important practical effects are already rippling through the marketplace:

1. Expanded Medical Research

Marijuana’s new Schedule III status removes key research barriers. Under the previous Schedule I status, clinical research was tightly constrained by federal limitations that made it difficult for scientists to study therapeutic use and health outcomes. Now, universities, institutions, and pharmaceutical researchers can pursue deeper studies on cannabis and cannabinoids with fewer regulatory hurdles.

2. Tax Relief for Legal Operators

One of the most significant benefits for cannabis businesses is the potential elimination of the punitive IRS Section 280E tax provision. Under Schedule I, cannabis companies could not deduct ordinary business expenses. Schedule III reclassification could change that, improving cash flow and profitability for firms operating legally under state law.

3. Banking and Capital Markets

While banking reform still requires separate legislative action, the rescheduling move removes a major regulatory barrier to financial services. Banks and other financial institutions may now be more willing to offer accounts, loans, and merchant services to dispensary operators, reducing reliance on cash and improving capital access.

4. Stock Market Response

Cannabis stocks have responded with renewed vigor. Major operators and ETFs are showing strong price appreciation in the wake of the announcement, signaling investor optimism that federal policy is finally catching up with industry realities and consumer demand.

5. A Path to Global Leadership

With federal regulatory uncertainty diminished, U.S. cannabis companies are better positioned to compete internationally. Europe and other markets are increasingly receptive to regulated cannabis exports, especially for medical and therapeutic products.

Limits of the Order: What Still Has Not Changed

Despite the enthusiasm surrounding the decision, it is important to understand what the executive order did not do:

• Recreational legalization at the federal level remains off the table. Cannabis use and distribution are still technically restricted by federal law, and users could still theoretically face criminal penalties in some contexts.

• Interstate commerce for cannabis products remains complicated because transportation across state lines would still involve federal regulation.

• Banking reform and SAFE rules are not automatic outcomes of rescheduling; they still require separate legislation or regulatory action.

• FDA approval pathways for cannabis-based medicines will still require clinical trials and formal submissions. Rescheduling does not create automatic medical approvals.

In short, rescheduling is a major step, but it is not even close to the final chapter of federal cannabis reform.

Voices from the Industry and Public Sphere

The announcement drew a mix of praise and criticism from advocates, politicians, and analysts.

Proponents argue the reclassification aligns federal law with scientific consensus and the measured way states have treated cannabis medically. They note that tightening research, easing tax burdens, and potentially improving banking access and removal of 280E taxation will allow business innovation and patient care to flourish.

Critics, however, caution that this change stops short of full federal legalization and leaves key issues like criminal justice reform and equitable access unresolved. They argue that consumers and communities most harmed by past prohibition deserve more than a scheduling change. And some even fear what court challenges could arise that slow the rate of progress.

The Bigger Picture: Why This Is Historic

No matter the perspective, the rescheduling order represents the most significant federal cannabis policy shift in decades. For years, cannabis advocates have argued that its placement in Schedule I alongside substances like heroin made no sense given extensive medical use in states across the country and a robust body of evidence contradicting high abuse potential. By moving cannabis to Schedule III, the federal government effectively acknowledges:

• Legitimate medical potential.

• Mature state regulatory frameworks.

• Consumer demand and public opinion that have steadily moved in favor of reform.

This move reshapes the legal and economic landscape upon which the future of American cannabis will be built.

Conclusion: A New Chapter Begins

Today’s action is not the end of federal cannabis reform. It's an inflection point, or a meaningful shift that brings clarity to industry stakeholders, patients, researchers, entrepreneurs, and capital markets alike.

The door is open. The legal landscape is evolving. And for the first time since the Controlled Substances Act was enacted in 1971, the United States has taken a step that reflects both compassion for patients and recognition of the economic opportunity at hand.

Whether this leads to broader decriminalization, comprehensive banking reform, or eventual federal legalization remains to be seen. What is clear, however, is that these outcomes are now more plausible than at any point in modern history. The cannabis industry and federal cannabis policy have entered a new era, and we recognize the collective effort of advocates, operators, researchers, and policymakers who helped bring meaningful reform to this moment.

FAQ Section

What does Trump cannabis rescheduling to Schedule III actually change?Trump cannabis rescheduling to Schedule III would formally recognize cannabis as having accepted medical use under federal law. While it does not legalize cannabis nationwide, it could eliminate IRS Section 280E, improve research access, and materially improve cash flow for licensed cannabis businesses.

Does Trump cannabis rescheduling legalize marijuana federally?No. Trump cannabis rescheduling does not legalize marijuana at the federal level. It initiates a regulatory shift under the Controlled Substances Act, but full federal legalization would still require separate legislative or administrative action.

Will cannabis banking improve after Trump cannabis rescheduling?Trump cannabis rescheduling removes one of the largest federal risk signals facing banks. While it does not automatically pass safe banking legislation, it meaningfully increases the likelihood that financial institutions normalize relationships with cannabis operators.

Does Trump cannabis rescheduling allow interstate cannabis commerce?No. Trump cannabis rescheduling alone does not authorize interstate cannabis commerce. State regulatory systems and federal commerce laws still govern cross-border sales, which remain restricted.

How does Trump cannabis rescheduling affect medical and scientific research?By moving cannabis to Schedule III, Trump cannabis rescheduling significantly lowers barriers to research. Universities, pharmaceutical companies, and medical institutions can conduct studies with fewer approvals and less federal oversight than under Schedule I.