Trump Administration Moves to Reclassify Marijuana, but Path Forward Remains Uncertain
On December 18, 2025, President Donald Trump signed an executive order directing Attorney General Pam Bondi to complete the formal process to reclassify marijuana under the Controlled Substances Act (CSA). The order initiates a transfer of cannabis from Schedule I—the most restrictive category—to Schedule III, marking a significant shift in federal drug policy while leaving many questions about implementation unanswered.
Although the move represents one of the most consequential federal actions on marijuana in decades, it does not legalize cannabis at the federal level, nor does it override existing state laws. Instead, it begins a regulatory process that could take months—or longer—to fully resolve.
What the Executive Order Does—and Does Not Do
The executive order instructs the U.S. Department of Justice and the Drug Enforcement Administration (DEA) to complete the rulemaking process necessary to reclassify marijuana to Schedule III. This follows an earlier scientific review by the U.S. Department of Health and Human Services (HHS), which concluded that cannabis has accepted medical use and a lower abuse potential than substances currently classified under Schedule I.
However, the executive order itself does not immediately change marijuana’s legal status. Until the DEA finalizes the rulemaking process, marijuana remains classified as a Schedule I substance under federal law. The timeline for that process is unclear, and legal or political challenges could further delay or alter the outcome.
President Trump emphasized that the action does not legalize marijuana or endorse recreational use, stating that it is focused on medical considerations and patient access rather than broader legalization.
Potential Impact to Research, Tax and Business Matters
If finalized, a Schedule III classification would have meaningful implications. It would ease long-standing restrictions on cannabis research, allowing scientists to study its medical applications, risks, and long-term effects with fewer regulatory barriers.
For state-licensed cannabis businesses, rescheduling could eliminate the application of IRS Section 280E, which currently prevents companies associated with Schedule I substances from taking standard business tax deductions. The inability for cannabis businesses to take standard business deductions has impacted growth and payments in the industry. While this change could provide financial relief to operators, it remains contingent on the completion of federal rulemaking and subsequent guidance from the IRS.
Importantly, rescheduling would not create a federal regulatory framework for marijuana commerce, leaving existing conflicts between state and federal law unresolved.
Hemp and CBD Provisions Add Complexity
The executive order also urges Congress to revisit federal hemp definitions, particularly to ensure continued access to full-spectrum CBD products. This comes amid industry concern over recent federal spending legislation that could significantly restrict consumable hemp products.
Administration officials also previewed a potential Centers for Medicare & Medicaid Services (CMS) pilot program that would allow certain Medicare beneficiaries to receive non-intoxicating CBD with a physician’s recommendation. Details about the scope, timing, and legal authority for such a program have not yet been released, and congressional action may be required before it can move forward.
Political Reaction and Open Questions
Reaction to the announcement has been mixed. Some lawmakers argue the move does not go far enough, while others warn that rescheduling could pose public health risks, particularly for youth and vulnerable populations. The decision has also drawn scrutiny given the administration’s recent support for restrictions on hemp-derived products, which some see as inconsistent with the CBD-related aspects of the order.
A Significant Step, but Not a Final One
The White House characterized the executive order as an effort to modernize federal cannabis policy and improve research and medical guidance. Still, rescheduling alone does not resolve broader issues such as banking access, interstate commerce, FDA regulation, or comprehensive federal legalization for recreational use.
As agencies begin the next phase of rulemaking, stakeholders across healthcare, research, and the cannabis industry will be watching closely. Whether this action leads to lasting reform—or becomes stalled in regulatory and political uncertainty—remains to be seen.
For now, the executive order represents a notable shift in federal posture on marijuana, but its real-world impact will depend on decisions yet to be made.
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