President Donald Trump is expected to announce a plan that could shift cannabis from Schedule I to Schedule III under federal drug law, a change that would, for the first time, formally acknowledge cannabis as having accepted medical use in the U.S.
If finalized, the move would represent one of the most consequential adjustments to federal marijuana policy in years. It could reshape how cannabis businesses are taxed, how medical marijuana is viewed within healthcare, and how federal agencies interact with a market that has long existed in legal gray areas. Still, the proposal stops well short of nationwide legalization and has sparked mixed reactions across the industry.
Under federal law, Schedule III drugs are considered to have accepted medical use and a lower likelihood of abuse than substances listed in Schedules I or II. This category includes drugs such as anabolic steroids, ketamine, and certain codeine-based pain medications.
The most immediate practical impact could come through the tax code. Businesses that deal in Schedule I or II substances are barred from deducting ordinary operating expenses under Internal Revenue Service rule 280E.
Industry executives say relief from this provision could significantly improve cash flow for licensed operators and make long-term investment more realistic. However, they caution that other obstacles, including limited access to banking services, would remain.
Supporters argue that Schedule III status would further legitimize medical marijuana and help integrate it into conventional healthcare systems. They say federal recognition could encourage research, standardization, and broader acceptance among doctors and patients.
Some industry leaders, however, are wary of unintended consequences. Some warn that shifting marijuana into a medical category could expose existing operators to new forms of federal liability. They caution that treating THC as a prescription substance could allow pharmaceutical companies to dominate the market with synthetic alternatives, while dispensaries and growers could face scrutiny under federal drug and consumer protection laws.
Advocates are divided on how the shift might affect social equity. Some believe formal recognition of medical use could draw more people into the legal market, including those from communities disproportionately harmed by past enforcement. Others worry it could widen the gap between well-funded companies and small, independent businesses.
Questions also remain about how rescheduling would align with ongoing debates over hemp-derived THC products. Joe Gerrity, chief executive of Crescent Canna, pointed to what he called a contradiction between easing marijuana rules while moving to restrict or eliminate hemp-based alternatives through future legislation. He said the change could either push lawmakers toward a clearer national policy or deepen existing confusion.
For many in the cannabis space, rescheduling would mark long-overdue acknowledgment after years of stigma. Still, there is broad agreement that the change, while historic, would not amount to full legalization. Without further action on insurance, banking, federal enforcement, and clear FDA pathways, both patients and businesses would continue to navigate a complex and uncertain system.
It remains to be seen how entities like Green Thumb Industries Inc. (CSE: GTII) (OTCQX: GTBIF) will adjust their long-term strategies and operations in light of this expected executive order rescheduling marijuana federally.
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