Trump’s Executive Order Moves Cannabis to Schedule III: What It Means for Patients, Industry, and Policy
On December 18, President Donald Trump signed an executive order directing U.S. Attorney General Pamela Bondi to reschedule cannabis from Schedule I to Schedule III under the Controlled Substances Act. The shift acknowledges the plant’s accepted medical use and lower abuse potential, ending a classification that has persisted for more than five decades.
During the signing ceremony Trump emphasized the breadth of public support for the change, stating:
“We have people begging for me to do this,” Trump said, mentioning veterans with service‑related injuries and older Americans coping with chronic conditions that “severely degrade their quality of life.”
He added that 82 % of Americans support rescheduling and that he had received more phone calls on this issue than on any other.
While the order does not legalize recreational use, Trump clarified that the move is grounded in “common sense” and aims to provide safer alternatives to addictive opioid painkillers.
Key Provisions of the Executive Order
- Rescheduling cannabis from Schedule I to Schedule III, recognizing its medical value and reduced potential for abuse.
- Directing the White House to work with Congress to update the statutory definition of final hemp‑derived cannabinoid products, enabling broader access to full‑spectrum, non‑intoxicating CBD.
- Instructing the Centers for Medicare & Medicaid Services (CMS) to allow doctors to recommend CBD products to older Americans, with Medicare covering up to $500 annually for qualifying individuals starting April 2026.
Industry Leaders Respond
The announcement elicited a wide range of reactions from cannabis‑industry executives, advocates, and policymakers. Below are selected comments that illustrate the optimism, cautions, and calls for further reform.
Optimism About Medical Access and Tax Fairness
Michael Bronstein, President of the American Trade Association for Cannabis and Hemp (ATACH), called the move “the most significant federal shift in cannabis policy in over 50 years” and noted that it “opens doors to expanded medical research and helps reduce the stigma.”
Kim Rivers, CEO of Trulieve, described the order as “a bold and historic direction” that acknowledges medical benefits and supports licensed operators.
Howard Kessler, Founder of The Commonwealth Project, highlighted the accompanying Medicare pilot program as a “life‑altering relief” for seniors with chronic pain.
Jon Levine, CEO of MariMed, pointed out that ending the IRS Section 280E tax penalty will allow state‑legal businesses to be taxed like other consumer‑goods sectors, materially improving profitability.
Calls for Further Reform
Adam J. Smith, Executive Director of the Marijuana Policy Project, welcomed the step but argued that “it is only a step” and urged full descheduling to end possession arrests and reconcile federal law with state markets.
Senator Jeff Merkley (D‑OR) agreed that rescheduling helps with taxation and research but warned that federal prohibition still blocks legal businesses from accessing banking, urging passage of the SAFER Banking Act.
Paul Armentano, Deputy Director of NORML, noted that while the order validates medical utility, it does not resolve the conflict between federal prohibition and state‑legal adult‑use markets, emphasizing that cannabis must be removed from the Controlled Substances Act entirely to achieve true federalism.
Industry‑Specific Impacts
Cy Scott, Co‑Founder and CEO of Headset, explained that eliminating Section 280E would instantly improve cash flow for retailers operating at or near breakeven, reducing store closures and enabling more consistent staffing.
Brian Vicente, Founding Partner of Vicente LLP, called the change a “game‑changer” for state‑legal businesses, allowing them to deduct ordinary operating costs for the first time.
Zachary Kobrin, Partner at Saul Ewing, cautioned that while rescheduling removes major tax barriers, questions remain about FDA‑approved cannabis products, DEA enforcement evolution, and how state adult‑use markets will fit within a federally controlled framework.
What Schedule III Means in Practice
Moving a substance to Schedule III signals that the federal government accepts its medical use and acknowledges a moderate to low potential for dependence. Practically, the change:
- Removes the federal ban on standard business deductions under IRS Code 280E, allowing cannabis operators to deduct rent, payroll, and other expenses.
- Facilitates clinical research by reducing the regulatory hurdles associated with Schedule I substances.
- Does not automatically grant legal status for recreational use; possession, distribution, and manufacture outside state‑legal frameworks remain federal offenses.
- Leaves banking access uncertain, as many financial institutions remain wary of servicing businesses that still touch a federally controlled substance.
Looking Ahead
Stakeholders agree that the executive order marks a pivotal moment, but many stress that it is only the beginning of a broader reform agenda. Key next steps frequently mentioned include:
- Passing the SAFER Banking Act to provide safe harbor for financial institutions working with cannabis businesses.
- Developing clear federal guidance on hemp‑derived cannabinoids and CBD products to complement the rescheduling.
- Encouraging Congress to consider further descheduling or federal legalization to align policy with the majority of state laws and public opinion.
- Continuing to support equity initiatives that ensure communities disproportionately impacted by the war on drugs benefit from the emerging legal market.
As the administration moves to implement the order through rulemaking, the cannabis industry, medical community, and lawmakers will monitor how quickly the promised tax relief, research opportunities, and patient access translate into tangible outcomes on the ground.
For the full roundup of industry reactions, see the original coverage Here.
