Trump Cannabis Rescheduling: What a Schedule III Executive Order Would Really Change

Trump Cannabis Rescheduling Is Back on the Table

Late Thursday, The Washington Post reported that President Trump is considering issuing an executive order to move cannabis to Schedule III under the Controlled Substances Act, a move that would represent the most significant federal cannabis reform action in decades. According to WaPo, the White House is actively exploring reclassification, although details remain fluid and no final commitment has been made.

Industry publication MJBizDaily quickly followed up, cautioning that while momentum appears real, the administration has not formally committed to a specific timeline or mechanism for rescheduling.

Still, for cannabis operators, investors, and policymakers, the signal is unmistakable. Cannabis stocks responded with a sharp melt-up.

At Pac Garden Assets, we support reform in any form it arrives, including executive action. While rescheduling cannabis does not fully correct the historical mistake of placing it on the Controlled Substances Act in the first place, progress matters. Markets move on direction as much as destination.

Can Trump Reschedule Cannabis by Executive Order

The natural question after last night’s reporting is simple: can Trump really do this by executive order, or is this just another round of political theater?

From a constitutional perspective, the comparison to alcohol is instructive. Federal prohibition of alcohol began with the Eighteenth Amendment and ended with the ratification of the Twenty-first Amendment in 1933, which formally repealed the national ban and returned primary control over alcohol to the states. That shift required a full constitutional amendment campaign and ratification by state conventions, not a presidential signature alone.

Cannabis is different. It is controlled under federal statute through the Controlled Substances Act, not by constitutional amendment. That means the legal pathway is more administrative than constitutional. The president cannot simply “wish” cannabis into Schedule III with a single pen stroke, but the administration does have levers to move the process.

Harris Sliwoski’s Canna Law Blog has been very clear on this point. The Attorney General, working through the DEA, already has authority under the CSA to reschedule marijuana, particularly when there is a supporting recommendation from Health and Human Services. One recent analysis from the firm openly considered whether or not “one signature” from the Attorney General could remove marijuana from Schedule I, although it would almost certainly face litigation and political blowback.

In practice, a Trump executive order would likely:

• Direct the Attorney General and DEA to initiate or complete rulemaking that moves cannabis to Schedule III.

• Set policy priorities and timelines for DOJ, HHS, and DEA to follow.

• Signal to courts and agencies that the administration supports reclassification, which can influence how aggressively agencies move and how they defend the change.

What it would not do is skip the rulemaking process entirely. DEA still has to publish a proposed rule, accept comments, hold hearings if required, and finalize the rule under the Administrative Procedure Act. That process is exactly what has made the current rescheduling effort so drawn out and, as Harris Sliwoski has described it, a “terrible pageant” of delays and mixed signals.

So can Trump “simply will this into being?” Not quite. The legal machinery is more complicated than that, and any final rule could face court challenges. But with a motivated Attorney General, a clear executive directive, and political will in the White House, a president can absolutely push rescheduling over the line faster than Congress has been willing to move for decades.

If anyone is inclined to test the outer limits of that authority, it is probably President Donald Trump. 

This Did Not Start Overnight

The current reporting did not come out of nowhere. In fact, President Trump has been laying the groundwork for reform for well over a year.

In August, we covered early signals that the president was considering action on cannabis rescheduling in our post Trump Hints at Cannabis Rescheduling. At the time, the idea was treated cautiously, but the political messaging was already taking shape.

Shortly thereafter, Cannabis Business Times reported on a series of high-dollar political fundraisers where cannabis reform was reportedly discussed directly with senior officials, including the newly installed head of the DEA.

We addressed that development in our August 14 analysis, Federal Cannabis Reform 2025, noting that when cannabis policy enters the realm of serious political fundraising, it is no longer a fringe issue.

And earlier, in September 2024, President Trump publicly announced from Florida that he would support a Trulieve-backed adult use cannabis ballot initiative. That announcement, covered by Politico, marked a notable shift in tone and strategy.

Taken together, these events show a consistent arc. Cannabis reform has moved from political risk to political opportunity.

Why Schedule III Matters for Cannabis Reform

Moving cannabis to Schedule III would not legalize cannabis federally. It would not automatically resolve banking, interstate commerce, or state regulatory conflicts. What it would do is remove cannabis from the same category as heroin and LSD, acknowledging at the federal level that cannabis has accepted medical use and a lower potential for abuse.

From a market perspective, Schedule III would have immediate consequences. Most notably, it would eliminate the application of IRS Section 280E, allowing cannabis businesses to deduct ordinary business expenses. That alone would materially improve cash flow and valuations across the industry.

Still, rescheduling is an incremental fix to a foundational problem. Cannabis never belonged on the Controlled Substances Act at all. That framework was designed for criminal enforcement, not for regulating a product that millions of Americans already consume legally at the state level.

Pac Garden Assets’ Position on Cannabis Regulation

While Schedule III would be a meaningful step forward, it does not resolve the fundamental misclassification problem. At Pac Garden Assets, our position remains consistent and clear. Cannabis, like alcohol, does not belong on the poorly conceived Controlled Substances Act.

The CSA was never designed to regulate widely accepted adult use intoxicants, and its application to cannabis has distorted markets, suppressed legitimate businesses, and fueled illicit activity that continues to undermine regulated operators. We have examined these risks in depth in our analysis of threats facing California’s licensed cannabis market.

Adult use cannabis should be regulated and taxed in a manner similar to alcohol, with clear age limits, product safety standards, labeling requirements, and responsible distribution. Medical cannabis should operate in a separate regulatory lane, accessed through a physician’s recommendation and governed by healthcare standards rather than criminal law.

This dual track framework would better reflect consumer reality, protect public health, and create a more rational foundation for long term industry growth.

The Political Logic Behind Trump Cannabis Rescheduling

Cannabis reform is no longer a niche issue. Voter support for legalization consistently polls above 60 percent nationwide. Veterans groups, medical professionals, small business owners, and civil liberties advocates increasingly align on reform.

Economically, the case is just as strong. Cannabis is labor intensive, domestically rooted, and capable of generating tax revenue and job creation at scale. At a time when traditional agriculture and consumer discretionary spending are under pressure, cannabis represents a rare growth sector with proven demand.

It is also impossible to ignore the personal and political dynamics that often shape policy outcomes. While we do not know whether President Trump’s son in law had any direct involvement in shaping cannabis policy, the broader political reality is undeniable.

You can't spell Kushner without “Kush.”

That observation may be tongue in cheek, but the underlying truth is serious. Cannabis reform aligns political incentives with economic logic in a way few other policy issues do.

What This Means for Operators and Investors

If rescheduling proceeds, even partially, the implications are significant.

Licensed operators will see immediate relief from punitive tax treatment. Capital markets will reassess risk profiles. Buyers and sellers will revisit valuations that were previously constrained by regulatory drag rather than operational performance.

At the same time, reform at the federal level may intensify competition. Illicit operators will not disappear overnight. State level regulatory complexity will persist. Rescheduling is not the end of the story, but it is a turning point.

For California operators in particular, federal movement helps legitimize a market that has long operated under contradictory signals. Over time, clarity favors compliance, scale, and professionalism.

Conclusion: Progress Is Still Progress

Cannabis should never have been placed on the Controlled Substances Act. Moving it down a notch does not fully right that wrong. But reform rarely arrives all at once.

If President Trump proceeds with executive action on Schedule III, it will mark a meaningful step forward. It will signal to markets, regulators, and consumers that federal policy is finally beginning to catch up with reality.

At Pac Garden Assets, we support reform however it comes. The alternative is more delay, more distortion, and more growth of unregulated markets at the expense of legitimate businesses.

And if history tells us anything, it is that once cannabis reform starts moving, it rarely stops.

FAQ: Trump Cannabis Rescheduling and Schedule III

Can Trump reschedule cannabis by executive order? A president cannot unilaterally change marijuana’s scheduling with a single signature, but an executive order can direct federal agencies like the DEA and DOJ to accelerate and complete the rescheduling process.

What does Schedule III mean for cannabis businesses? Schedule III would recognize accepted medical use and could eliminate the application of IRS Section 280E, allowing cannabis businesses to deduct ordinary expenses and improve cash flow. Banking would also likely normalize over time, reducing capital costs and supporting more sustainable growth.

Does rescheduling legalize cannabis federally?No. Rescheduling does not legalize cannabis or resolve interstate commerce, banking, or state law conflicts. It is an administrative change, not full legalization.

Why is Schedule III not full reform?Cannabis would still remain on the Controlled Substances Act. Many industry participants argue it should be regulated like alcohol, not treated as a controlled substance at all.

Why does cannabis rescheduling matter to investors?Rescheduling signals reduced policy risk, improved tax treatment, and stronger long-term fundamentals, all of which can influence valuations and capital formation.