Trump Signs Executive Order to Expedite Cannabis Rescheduling to Schedule III

*WASHINGTON* – President Donald Trump on Thursday signed an executive order
directing the U.S. Attorney General to expedite the process of rescheduling
marijuana from Schedule I to Schedule III under the Controlled Substances
Act — a move the president called “common sense” that would have a
“tremendously positive impact.”
What the executive order actually does

The order seeks to finalize a 2023 recommendation by the U.S. Department of
Health and Human Services calling for cannabis to be rescheduled. However,
the executive order does not itself reschedule the plant. Under federal
administrative procedure, the Department of Justice — or its designee, the
Drug Enforcement Administration — must complete a formal rulemaking process
that includes a public comment period, any requested hearings, and
publication of a final rule in the Federal Register before rescheduling
takes effect.

According to a White House fact sheet, the order also directs HHS to
develop research methods utilizing real-world evidence to improve access to
hemp-derived cannabinoid products, and instructs White House staff to work
with Congress on legislation that would allow Americans to benefit from
full-spectrum CBD products while restricting products that pose serious
health risks.

Separately, the Centers for Medicare and Medicaid Services has proposed a
rule that would narrow the current blanket prohibition on cannabis products
under Medicare Advantage, potentially allowing coverage for hemp-derived
products that comply with both state and federal law. However, Food and
Drug Administration regulations classifying CBD as an unapproved food
additive may limit which products actually qualify for coverage.

The executive order comes after a lengthy bureaucratic process. The Biden
administration’s HHS first recommended rescheduling in 2023, finding that
marijuana has a “currently accepted medical use” — the first time a federal
health agency had reached such a conclusion. The FDA reviewed medical
marijuana research and found credible scientific support for its use in
treating anorexia related to medical conditions, nausea and vomiting, and
pain.

According to the White House fact sheet, 40 U.S. states plus the District
of Columbia now have state-sanctioned medical cannabis programs, with more
than 30,000 licensed health care practitioners authorized to recommend
medical marijuana for more than six million registered patients across at
least fifteen medical conditions.
Why 280E tax relief matters to cannabis operators

Rescheduling would not legalize marijuana federally, but it would remove
cannabis from the most restrictive category under the Controlled Substances
Act. Industry analysts say one of the most significant practical impacts
would be relief from Internal Revenue Code 280E, which prevents businesses
handling Schedule I or II substances from deducting standard operating
expenses. The restriction has resulted in some cannabis businesses facing
effective tax rates as high as 80 percent.

“280E is not an abstract policy issue,” said Cy Scott, co-founder and chief
executive officer of cannabis industry data firm Headset. “It directly
determines whether many otherwise healthy, well-run businesses can stay
open. Because the tax effectively applies to gross profit rather than true
operating income, a significant share of cannabis retailers today are
operating at or near breakeven after federal taxes. Removing 280E would
create an instant improvement in cash flow, allowing operators to stabilize
their businesses rather than simply survive quarter to quarter.”

Improved cash flow and increased stability would bring other benefits, as
well. “When free cash flow begins to resemble that of other regulated
industries, capital can be underwritten with greater confidence,” said
Darren Gleeman, managing partner at MBO Ventures. “That shift is likely to
bring private credit and deal activity back gradually — not overnight, but
meaningfully… Cleaner cash flow supports higher valuations and more
flexible transaction design.”

The rulemaking process is already well underway. The DEA published a notice
of proposed rulemaking in May 2024 and received more than 42,000 public
comments. Administrative hearings were scheduled to begin in December 2024,
but those proceedings were postponed on the eve of Trump’s inauguration —
in part because pro-rescheduling parties alleged the agency exhibited bias
toward keeping cannabis a Schedule I drug.
Why congressional Republicans are pushing back

Despite the president’s support, the executive order has drawn sharp
opposition from within his own party in both chambers of Congress.

In the Senate, nearly half the Republican Conference sent a sternly worded
letter warning the executive order poses serious health and economic
threats to the nation. The letter was spearheaded by Sen. Ted Budd (R-N.C.)
and signed by members of GOP leadership including Senate Republican Whip
John Barrasso (R-Wyo.), Senate Republican Conference Chair Tom Cotton
(R-Ark.), and Senate Republican Policy Committee Chair Shelley Moore Capito
(R-W.Va.). Former Senate Majority Leader Mitch McConnell (R-Ky.) and former
Senate GOP Whip John Cornyn (R-Texas) also signed on.

The senators argued that marijuana should remain classified as a Schedule I
drug because of “its high potential for abuse and its lack of an
FDA-approved use.” They also made an economic argument, contending that
rescheduling would undermine Trump’s manufacturing agenda. “We cannot
reindustrialize America if we encourage marijuana use,” they wrote.
“America’s workplace and America’s roads are endangered by marijuana use.”

The senators estimated 280E relief would save cannabis businesses
approximately $2.3 billion annually — funds they warned would be used to
increase marketing and expand operations into more states.

In the House, a group of 26 Republicans led by Rep. Pete Sessions (R-Texas)
and House Freedom Caucus Chairman Andy Harris (R-Md.) sent a similar letter
urging Trump to abandon the effort.

“We write to urge you to oppose rescheduling marijuana, a harmful drug that
is worsening our nation’s addiction crisis,” the House lawmakers wrote.
“Reclassifying marijuana as a Schedule III drug will send the wrong message
to America’s children, enable drug cartels, and make our roads more
dangerous.”

A White House official responded to the Republican opposition by
emphasizing the order’s limited scope. “The President is committed to
expanding medical research into promising treatments for American
patients,” the unnamed official told Fox News. “Today’s EO does not
legalize recreational marijuana use, nor does it pave the way to
recreational marijuana use.”

The road to final rescheduling remains uncertain. While the executive order
directs the Attorney General to “expedite” the process, the postponed
hearings still must be resolved and a final rule issued. Some observers
estimate the process could take 60 to 90 days under favorable conditions,
though legal challenges from either cannabis reform opponents or industry
stakeholders concerned about regulatory implications could extend the
timeline.

Congressional action also remains a possibility. Republicans opposed to
rescheduling could attempt to pass legislation blocking the regulatory
process under the Congressional Review Act, though such a measure would
face uncertain prospects given the president’s support for the policy.
What this means for hemp, CBD, and medical research

The executive order also addressed the recent federal budget legislation
that redefined hemp in ways that will broadly ban consumable hemp products
containing THC or other intoxicating cannabinoids, set to take effect in
November 2026. The order urges Congress to examine updating the definition
of hemp to ensure that full-spectrum CBD remains accessible to patients —
but accomplishing that goal would require Congress to revisit the
legislation it passed just last month.

“Any cannabis reform benefits the entire plant,” said attorney Jonathan
Miller, who represents the U.S. Hemp Roundtable. “We consider this
executive order to be a direct rebuke to the hemp ban that was malignly
attached to legislation that reopened the government [in November]. This
also gives strong impetus to efforts to extend the ban’s moratorium an
additional eighteen months to allow proper time for Congress and the Trump
administration to develop the regulatory framework that ensures the safe
provision of hemp products while cracking down on the bad actors peddling
the unsafe products that the executive order calls out.”
What happens next — and how long it could take

The executive order sets a clear direction, but significant questions
remain — including whether the administration will restart the postponed
DEA hearings or seek an alternative path to finalize rescheduling. With
nearly half of Senate Republicans on record opposing the move, the industry
may be waiting months to learn whether this policy shift survives the road
ahead.
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What Trump’s cannabis rescheduling order means — and what it doesn’t

1. Does Trump’s executive order legalize marijuana?

No. The order does not legalize marijuana or immediately reschedule it.
It directs the Attorney General to expedite the existing administrative
process required to move cannabis from Schedule I to Schedule III.
2. What would cannabis rescheduling to Schedule III do?

Rescheduling would move marijuana out of the most restrictive category
under the Controlled Substances Act, recognizing accepted medical use while
maintaining federal controls.
3. When could cannabis be officially rescheduled?

If hearings resume and no major legal challenges intervene, some experts
estimate 60 to 90 days, but delays are possible.
4. Will rescheduling eliminate 280E tax restrictions?

Yes. Cannabis businesses would no longer be subject to IRS Code 280E,
allowing standard business deductions and significantly improving cash flow.
5. Why are some Republicans opposing rescheduling?

Opponents argue marijuana has high abuse potential, lacks FDA-approved
uses, and could harm workforce productivity and public safety.
6. Does this affect hemp and CBD products?

Indirectly. The order urges Congress to preserve access to full-spectrum
CBD, though FDA rules and recent hemp legislation complicate implementation.