Rumors began to swirl after President Donald Trump met with cannabis industry executives at the White House on December 10, 2025. The Oval Office meeting, which included the U.S. Department of Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. and Centers for Medicare and Medicaid Services chief Mehmet Oz, was an indication that the federal government was considering rescheduling marijuana from a Schedule I substance to Schedule III under the Controlled Substances Act (CSA).
Now, it looks like that speculation was justified, with President Trump signing an executive order on Thursday, December 18, that directs federal agencies to reclassify the popular recreational and medical drug. However, those hoping for reclassification to be handled quickly should be aware that an executive order lacks the legal authority to make the change on its own. While the EO is an attempt to expedite the process, there is currently no deadline for reclassification.
Cannabis businesses and those seeking access to recreational and medical marijuana have long sought the drug's reclassification, but it isn’t suddenly legal at the federal level. For now, it remains a Schedule I drug that carries the same penalties as heroin, ecstasy, and LSD. While that is likely to soon change, businesses will still have to wait a bit for developments, and the EO or any subsequent federal reclassification won’t change state laws that criminalize the recreational or medical use of cannabis.
Dispensing With Schedule I
The battle over the potential rescheduling of cannabis has raged for decades. It remains illegal at the federal level, carrying the most severe classification as a Schedule I drug under the CSA. However, most U.S. states allow the purchase and use of doctor-prescribed medical marijuana, with almost half also permitting recreational use as well. Others allow products with low amounts of THC/CBD for certain medical uses.
Under former President Joe Biden, then-Attorney General Merrick Garland signed a proposed rule through the Drug Enforcement Administration (DEA) in 2024 to reschedule cannabis as a Schedule III drug. The HHS evaluation determined that marijuana has legitimate medical value and thus should not be a Schedule I drug. The 60-day public comment period ended with almost 70% of respondents calling for cannabis descheduling, decriminalization, or legalization at the federal level. However, Biden failed to secure a final decision before losing the 2024 election.
What Does Cannabis Becoming a Schedule III Drug Mean?
The reclassifying of marijuana from Schedule I to Schedule III will likely mean much more to cannabis companies than to individual users. It would likely still be subject to strict regulation and require a prescription for legal use at the federal level. However, removing it from the strictest rating under the CSA would mean businesses in the marijuana industry would have their federal tax burden lessened and would also be able to access deductions for expenses that were previously unavailable. Reclassification could also permit working with banks and other financial institutions, which have shown extreme reluctance to be involved with the cannabis industry due to its federal classification.
In addition to the EO, the Centers for Medicare and Medicaid Services announced that it will launch a pilot program to provide certain covered seniors with free CDB treatment. CBD is derived from hemp, but does not contain THC, the psychoactive compound in cannabis.
Related Resources
- Setting Up a Legal Marijuana Business: State Laws To Know (FindLaw’s Starting a Cannabis Business)
- State Marijuana Laws (FindLaw’s State Laws)
- Tax Issues Related to Marijuana Businesses (FindLaw’s Learn About the Law)
