President Donald Trump on Thursday signed an executive order directing the federal government to move marijuana from Schedule I to Schedule III, potentially easing regulatory and financial constraints for cannabis companies while keeping recreational use illegal under federal law.
The order instructs the attorney general to expedite the ongoing process of rescheduling marijuana, which is currently classified alongside heroin and LSD as a Schedule I drug — considered to have a high potential for abuse and no accepted medical use. Schedule III drugs, by contrast, include ketamine, Tylenol with codeine, and anabolic steroids, generally seen as less risky.
The order also directs the White House to work with Congress to improve access to hemp-derived cannabidiol (CBD) products, while leaving criminal penalties and recreational use unchanged.
Trump’s order cites growing evidence of medical marijuana’s benefits in treating pain, nausea, and anorexia, and notes that more than six million patients are currently registered under state-sanctioned programs. The Department of Health and Human Services (HHS) and the Food and Drug Administration (FDA) have recommended rescheduling, and the Department of Justice issued a proposed rule in May 2024, which received nearly 43,000 public comments.
Industry experts said rescheduling could have major economic implications. Brian Vicente, founding partner of Vicente LLP, said it could relieve cannabis businesses of crippling tax burdens and open new avenues for research.
“Rescheduling releases cannabis businesses from the crippling tax burden they have been shackled with and allows these businesses to grow and prosper,” Vicente said.
Shawn Hauser, a partner at Vicente LLP, called it “the beginning of a new era of public health policy.”
Despite the executive order, pot stocks fell sharply on Thursday, with US multi-state operators such as Curaleaf Holdings, Ascend Wellness, Cresco Labs, Trulieve Cannabis, Green Thumb Industries, Jushi Holdings, and Verano Holdings posting double-digit percentage declines. Cannabis-focused ETFs, including AdvisorShares Pure US Cannabis ETF and Amplify Seymour Cannabis ETF, also fell about 12%.
Canadian licensed producers, including Canopy Growth, Tilray, Cronos, Aurora Cannabis, SNDL Inc., and OrganiGram Holdings, outperformed US peers following the announcement.
The signing took place at the Oval Office with HHS Secretary Robert F Kennedy Jr., Mehmet Oz, administrator of the Centers for Medicare & Medicaid Services, and other officials in attendance.