President Donald Trump is considering an executive order directing agencies to reclassify marijuana as a Schedule III drug, according to The Washington Post. However, a White House spokesperson told Forbes that “no final decisions have been made on the rescheduling of marijuana.”
Moving cannabis from Schedule I to Schedule III would not legalize or decriminalize it. Still, it would ease barriers to research and boost the bottom lines of legal businesses, the Post reported.
Reuters said shares of major cannabis companies surged after the Post’s story, with premarket gains of roughly 13.5% to 32.5%. Investors are betting on lower federal taxes and easier approval of cannabis-based prescription products.
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What did Trump and allies discuss?
According to the Post, Trump weighed the move during a phone call from the Oval Office with House Speaker Mike Johnson, as marijuana industry executives, Health and Human Services Secretary Robert F. Kennedy Jr. and Centers for Medicare and Medicaid Services chief Mehmet Oz listened in.
Johnson reportedly argued against the move, citing data to support his skepticism. However, those in the room with the president pushed back. Sources told the paper that Trump seemed inclined to move forward after the discussion.
What would Schedule III change?
Under Schedule III, cannabis would join a category of substances considered to have medical value and a lower risk of abuse. This classification currently includes drugs like anabolic steroids and Tylenol with codeine.
Forbes noted the move would not legalize recreational markets under federal law or resolve conflicts between state and federal laws. Schedule III status could, however, enable the industry to claim ordinary business deductions under the federal tax code. That could be “a game-changer,” a cannabis attorney told Forbes.
How would this happen legally?
Shane Pennington, a pre-rescheduling attorney, told the Post that Trump cannot unilaterally reclassify marijuana but could direct the Justice Department to waive a pending administrative court hearing and issue a final rule.
The Biden administration began a rescheduling review in 2022. Federal health officials recommended Schedule III in 2023, but the process stalled at the Drug Enforcement Administration, and a planned hearing has remained in limbo, according to the Post and Forbes.
What are the political and market signals?
Reuters reported that the investment bank TD Cowen said rescheduling “would open the door for pharmaceutical companies to seek approval for more cannabis products.” Forbes reported that advocates called the potential shift the most significant federal drug-policy change since 1970, while critics warned it would “damage” society and youth.
In August, Trump said that he was “looking at reclassification,” acknowledging mixed views and risks.
