Federal marijuana rescheduling would signal major policy shift, but uncertainty remains
President Donald Trump is signaling a potential shift in federal marijuana policy as his administration considers directing federal agencies to reclassify cannabis under the Controlled Substances Act, according to multiple national reports published this week.
Reporting from multiple media outlets indicates the president is weighing an executive order that would instruct federal agencies to move marijuana from Schedule I to Schedule III.
The White House has stated that no final decisions have been made.
Marijuana is currently classified as a Schedule I substance, a category reserved for drugs considered to have a high potential for abuse and no accepted medical use. Substances in this category include heroin and LSD. Schedule III drugs are recognized as having medical value but still carry risks of physical or psychological dependence.
National reporting indicates Trump discussed the issue privately with House Speaker Mike Johnson, who has expressed opposition to rescheduling. Individuals familiar with the call said it included cannabis industry executives and senior health officials. The White House later confirmed only that discussions had occurred and emphasized that no final action has been taken.
If implemented, rescheduling would not legalize marijuana or decriminalize it at the federal level. Cannabis would remain federally prohibited, and state-regulated medical and adult-use markets would continue to operate in conflict with federal law.
Rescheduling would, however, ease restrictions on scientific research and significantly change how cannabis businesses are treated under federal tax law.
State-licensed marijuana operators are currently subject to Section 280E of the Internal Revenue Code, which limits their ability to deduct ordinary business expenses because marijuana is classified as a Schedule I substance.
Moving marijuana to Schedule III would remove those tax restrictions, allowing cannabis businesses to take standard deductions available to other industries. Industry advocates say the change would free up significant capital for reinvestment, hiring, and operational stability.
The current rescheduling effort began under the Biden administration. In 2022, President Joe Biden directed the Department of Health and Human Services to review marijuana’s classification. By 2023, federal health officials recommended moving cannabis to Schedule III and forwarded that recommendation to the Drug Enforcement Administration.
The process has since stalled amid administrative review requirements and legal challenges.
Reports suggest the Trump administration could attempt to advance the process by directing the Justice Department and DEA to finalize the proposed rule. Legal experts note that while the president cannot unilaterally change marijuana’s scheduling, the administration can influence whether the rulemaking process is completed.
Financial markets reacted sharply to reports of possible rescheduling. CNBC reported that publicly traded cannabis companies and related investment funds posted significant gains following news that an executive order could be imminent, reflecting investor expectations of improved banking access and reduced tax burdens.
Industry advocates have characterized rescheduling as a meaningful but limited reform. While it would reduce financial pressure on state-legal cannabis businesses, it would not resolve the broader conflict between federal law and state systems that regulate marijuana outside the pharmaceutical framework.
Additionally, rescheduling could pose new difficulties for operators.
Because Schedule III substances are regulated within the federal pharmaceutical framework, questions remain about how agencies such as the FDA and DEA would approach oversight if marijuana is reclassified.
Cannabis is currently produced, distributed, and sold through state-regulated systems that do not resemble prescription drug models, and rescheduling would not automatically reconcile those differences.
Operators, regulators, and policymakers have raised concerns about potential compliance uncertainty, overlapping federal and state authority, and whether future guidance could introduce new reporting, manufacturing, or distribution expectations that state-licensed businesses are not structured to meet. Until federal agencies clarify how Schedule III cannabis would be treated in practice, rescheduling could create new regulatory questions as it seeks to resolve others.
Brandon Dunn contributed to this story.
