Trump reclassifies cannabis to Schedule III, easing weed restrictions
US President Donald Trump sits to sign executive orders in the Oval Office at the White House in Washington, DC, USA, on December 18, 2025.
Evelyn Hockstein | Reuters
President Donald Trump signed an executive order Thursday directing federal agencies to reclassify marijuana. This loosened longstanding restrictions on the drug and marked the most momentous shift in U.S. cannabis policy in more than half a century.
The order, adopted by the Drug Enforcement Administration, moves cannabis from the Schedule I classification – the most restrictive category under the Controlled Substances Act alongside heroin and LSD – to a Schedule III classification, which includes substances with accepted medical use and a lower potential for abuse, such as ketamine and Tylenol with codeine.
“This action has been demanded by American patients suffering from extreme pain, terminal illnesses, aggressive cancers, seizure disorders, neurological problems and more, including many veterans with service-connected injuries and older Americans living with chronic medical problems that significantly impact their quality of life,” Trump said Thursday in the Oval Office.
Also on Thursday, the Centers for Medicare and Medicaid Services, led by Dr. Mehmet Oz is expected to launch a pilot program in April that will allow certain Medicare-covered seniors to receive free, doctor-recommended CBD products that must comply with all local and state quality and safety laws, according to senior White House officials. The products must also come from a legally compliant source and be tested by third parties for CBD content and harmful substances.
Shares of cannabis companies fell after the announcement, likely due to concerns about new competition from international companies.
Trulieve stock ended the day down about 23%, Green Thumb Industries stock fell more than 16%, and Tilray brands fell about 4% as of Thursday’s close. The AdvisorShares Pure US Cannabis ETFwhich covers American operators, fell by almost 27%.
“Millions of registered patients in the United States, including many veterans, rely on cannabis to relieve chronic and debilitating symptoms. We commend the government for this historic step. This is just the beginning,” Ben Kovler, founder and CEO of Green Thumb, said in a statement to CNBC.
The reclassification is seen by many analysts as a financial lifeline for the cannabis industry. The move exempts businesses from Section 280E of the IRS code and allows them for the first time to deduct standard expenses like rent and payroll. It also opens the door to banking access and institutional capital previously sidelined due to compliance fears.
Many on Wall Street also expect the changes and the Medicare pilot to lure big pharmaceutical companies into the sector to generate government-insured revenue.
While CBD has become increasingly popular in recent years, used in consumer products from seltzer to skin care products, the Food and Drug Administration has not yet given the active ingredient full support.
Studies have found “inconsistent benefits” for targeted conditions, while FDA-funded research warns that prolonged CBD use can lead to liver toxicity and interfere with other life-saving medications.
Currently, the FDA has only approved one CBD-based drug, Epidiolex, for rare forms of epilepsy.
“I want to emphasize that the order … does not legalize marijuana in any way, shape or form and in no way sanctions its use as a recreational drug,” Trump said.
Experts and industry insiders told CNBC this week that a reclassification could pave the way for further research into the effects of CBD consumption.
