Trump Lights Up the Cannabis Market With Plans for Reclassification

"The U.S. marijuana industry has stagnated for year, languishing under federal inaction on reclassification or decriminalization. Classified as a Schedule I drug under the Controlled Substances Act - alongside hard drugs like heroin and LSD - cannabis is deemed to have no accepted medical use and high abuse potential. This status blocks research, interstate commerce, and access to basic banking services for operators. Meanwhile, 38 states have legalized medical marijuana, and 24 allow recreational use, creating a patchwork of regulations that limits scalability."

"Cannabis companies also struggle with Section 280E tax rules, which deny standard business deductions, eroding profits. Investors have shied away from pot stocks, keeping valuations depressed despite booming state-level sales exceeding $30 billion annually. Now, however, President Trump has ignited fresh momentum. Reports indicate he plans to sign an executive order directing federal agencies to reclassify marijuana as a Schedule III substance."

"Trump is reportedly set to issue an executive order instructing the Justice Department and Health and Human Services to bypass ongoing administrative hearings and finalize marijuana's shift from Schedule I to Schedule III. This classification recognizes moderate abuse potential but accepted medical value, akin to ketamine or codeine. Trump discussed the plan in a Dec. 10 Oval Office call with House Speaker Mike Johnson, joined by industry executives, HHS Secretary Robert F. Kennedy Jr., and CMS head Mehmet Oz."

Marijuana remains a Schedule I substance under the Controlled Substances Act, classified alongside heroin and LSD and deemed to have no accepted medical use and high abuse potential. That federal status blocks research, interstate commerce, and basic banking services for operators while a state-level patchwork—38 states with medical programs and 24 with recreational laws—limits scalability. Section 280E tax rules deny standard business deductions, eroding profits and keeping investor interest and valuations low despite more than $30 billion in annual state sales. Reports indicate a planned executive order to reclassify marijuana as Schedule III and instruct agencies to bypass administrative hearings, a move that has already driven sharp stock gains.

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