President Trump is expected to sign an executive order as early as December 18, 2025, directing federal agencies to move cannabis from Schedule I to Schedule III—the most significant federal cannabis policy change in decades. While this would deliver major tax relief to the industry and acknowledge cannabis's medical value, it would not legalize recreational use, free prisoners, or automatically solve banking problems. The move follows months of stalled DEA proceedings and comes after at least $2.25 million in documented cannabis industry donations to Trump-aligned PACs and inaugural committees.
The probability of rescheduling has surged to approximately 80% following a December 9 Oval Office meeting where Trump met with cannabis executives, RFK Jr., and FDA officials. However, significant obstacles remain—including opposition from House Speaker Mike Johnson and unresolved questions about how the executive order would bypass the stalled administrative process.
Trump's December Pivot Signals Policy Breakthrough
The Trump administration's position on cannabis rescheduling crystallized dramatically in December 2025 after months of ambiguity. On December 15, Trump publicly stated he is "considering it very strongly," emphasizing that rescheduling "leads to tremendous amounts of research that can't be done unless you reclassify." [1][2]
The December 9 Oval Office meeting proved pivotal. Attendees included HHS Secretary Robert F. Kennedy Jr., CMS Administrator Dr. Mehmet Oz, FDA Commissioner Dr. Marty Makary, cannabis executives Kim Rivers (Trulieve CEO) and Jim Hagedorn (Scotts Miracle-Gro), and billionaire Trump ally Howard Kessler. House Speaker Mike Johnson, phoned into the meeting, actively opposed the plan, arguing studies don't support the move. [1][3]
The expected executive order would direct the DEA Administrator or Attorney General Pam Bondi to complete the rescheduling process and publish a final rule. It may also include directives for CMS to allow Medicare reimbursement for CBD products and urge Congress to pass the SAFER Banking Act. The order would not legalize recreational marijuana, authorize interstate commerce, or override state prohibitions. [1][6]
The DEA's formal rescheduling process—initiated under Biden—has been completely stalled since January 2025. DEA Chief Administrative Law Judge John Mulrooney II canceled planned hearings after allegations that DEA engaged in improper ex parte communications with anti-rescheduling group Smart Approaches to Marijuana. Two consecutive 90-day status updates (April and July 2025) showed identical language: "No briefing schedule has been set." [7][8][23] Trump's executive action would effectively bypass this paralyzed administrative process.
What Schedule III Actually Changes—and What It Doesn't
Moving cannabis from Schedule I to Schedule III represents a significant but limited policy shift. Understanding the precise legal implications requires distinguishing between what changes automatically and what requires additional legislative action.
The 280E Tax Revolution
The single most consequential change would be relief from IRS Section 280E. This provision prohibits businesses trafficking in Schedule I or II substances from deducting ordinary business expenses—only Cost of Goods Sold can be deducted. The result: cannabis companies face effective tax rates of 70-80%, with many reporting GAAP losses while still owing substantial federal taxes. [14][20]
Schedule III classification would immediately allow cannabis businesses to deduct payroll, rent, utilities, marketing, insurance, and professional services. Companies would also become eligible for R&D tax credits, Workers Opportunity Tax Credit, and renewable energy credits. Thirteen states have already "decoupled" from 280E, including New York, New Jersey, and Connecticut—their cannabis businesses would see compounding benefits from federal relief. [9][20]
Banking Remains Problematic
Contrary to industry hopes, rescheduling would not solve banking access problems. The Bank Secrecy Act and anti-money laundering requirements apply to all controlled substances, not just Schedule I. Banks serving cannabis businesses would still face potential federal penalties and asset forfeiture exposure. The Congressional Research Service confirms: "The law regarding financial services applies to controlled substances generally, so rescheduling would not open financial services to state-licensed businesses." [16]
Complete banking reform requires the SAFER Banking Act, which passed the Senate Banking Committee 14-9 in 2023 but has not been enacted. This legislation would create safe harbor for financial institutions and prohibit regulators from penalizing banks serving state-legal cannabis operations.
Medical Prescriptions Face FDA Bottleneck
Rescheduling acknowledges cannabis has "accepted medical use"—a definitional shift from Schedule I's classification as having "no currently accepted medical use." However, this does not mean dispensaries can suddenly issue prescriptions. Under federal law, Schedule III substances may only be lawfully dispensed by prescription if FDA-approved. Currently, only four cannabis-related products hold FDA approval: Epidiolex (plant-derived CBD), Marinol, Syndros, and Cesamet (all synthetic THC). [10][19]
Any new FDA-approved cannabis product would require a New Drug Application, clinical trials demonstrating safety and efficacy (typically 10+ years and hundreds of millions of dollars), and DEA registration. State medical marijuana programs—operating through "recommendations" rather than prescriptions—would continue functioning under state authority, but would remain technically non-compliant with federal prescription drug frameworks. [21]
Research Barriers Partially Fall
Schedule I classification currently requires researchers to obtain site-specific DEA registration and source materials only from DEA-approved producers. Schedule III would reduce these burdens. However, the Medical Marijuana and Cannabidiol Research Expansion Act of 2022 paradoxically codified certain Schedule I-level restrictions specifically for marijuana—creating potential complications where Schedule II/III researchers might be unable to obtain cannabis from DEA-registered sources. [16]
Interstate Commerce Stays Prohibited
Interstate transport of cannabis would remain federally illegal for non-FDA-approved products. California, Oregon, and Washington have passed laws permitting interstate commerce, but these would only activate if federal law allows it—which rescheduling alone does not accomplish. [18]
Criminal Justice Impact: Progress Without Release
Perhaps the most misunderstood aspect of rescheduling concerns its criminal justice implications. Rescheduling would not automatically reduce sentences, release prisoners, or expunge records. The criminal penalties for marijuana offenses are written specifically into federal statute (21 U.S.C. § 841) and are not tied to Schedule I classification. [13][15]
Federal Prison Population Reality
As of January 2022, no offenders sentenced solely for simple possession of marijuana remained in Federal Bureau of Prisons custody. The estimated 2,700-3,000 people serving marijuana-related federal sentences are predominantly convicted of trafficking or distribution—offenses whose mandatory minimum sentences remain unchanged under Schedule III. [17][24]
Biden's 2022-2023 pardons covered simple possession under federal law and D.C. code, affecting an estimated 6,500+ people. However, these pardons: [5]
- Did not release anyone from prison (none were incarcerated solely for simple possession)
- Did not expunge records (DOJ guidance explicitly instructed prosecutors to oppose expungement motions)
- Did not cover possession with intent to distribute, cultivation, trafficking, or conspiracy charges
State Convictions Untouched
The vast majority of cannabis arrests—over 204,000 in 2024—occur at the state and local level. Federal rescheduling has no direct effect on these convictions. State governors must act independently using their pardon powers, and states retain authority to criminalize marijuana regardless of federal scheduling. [12]
What Meaningful Reform Requires
For substantive criminal justice relief, multiple pathways exist—none triggered by rescheduling alone:
- Congressional legislation such as the MORE Act (which would require federal courts to expunge prior convictions and conduct resentencing hearings)
- U.S. Sentencing Commission action making guideline amendments retroactive (as occurred with Amendment 821 in 2024)
- Presidential clemency through commutations and pardons
- State-by-state action for the majority of cannabis convictions
As the Last Prisoner Project states: "Neither rescheduling nor descheduling would have an impact on those individuals who have been previously harmed by cannabis' status as a controlled substance. We're going to need to take additional action." [15]
Following the Money: Lobbying and Political Access
The cannabis industry has invested heavily in political access during the 2024-2025 cycle, with a notable shift toward Republican recipients.
Documented Contributions to Trump
| Donor | Amount | Vehicle |
|---|---|---|
| Trulieve | $750,000 | Trump inaugural committee |
| Trulieve | $250,000 | MAGA Inc. PAC |
| U.S. Cannabis Council/Curaleaf | $250,000 | Trump inaugural committee |
| American Rights and Reform PAC | $1,000,000 | Trump-aligned PAC |
Total documented: At least $2.25 million [1][23]
Kim Rivers, Trulieve's CEO, attended a $1 million-a-plate Trump fundraiser in August 2024, a pre-inauguration candlelight dinner, and the December 9 Oval Office rescheduling meeting. Howard Kessler, a Palm Beach billionaire who attended Trump's wedding to Melania, has emerged as a key cannabis advocate in Trump's orbit. [1]
Industry Lobbying Expenditures
Total marijuana industry lobbying reached $4.57 million in 2024 with 88 registered lobbyists. The National Cannabis Roundtable led at $642,000, followed by the National Cannabis Industry Association. Smart Approaches to Marijuana, the leading opposition group, spent $140,000 lobbying against rescheduling. [23]
Of candidate and party contributions, 64% went to Republicans in the 2024 cycle—a significant shift from 2016 when only 42% favored Republicans.
Pharmaceutical Positioning
Jazz Pharmaceuticals—which acquired GW Pharmaceuticals for $7.2 billion in 2021—holds particular interest in rescheduling outcomes. GW developed Epidiolex, the first FDA-approved cannabis-derived drug, which generated $697 million in the first nine months of 2024. Jazz holds 150+ patents on the cannabis plant and has pursued aggressive patent litigation against generic manufacturers. [3]
While rescheduling would not give pharmaceutical companies control over existing state cannabis markets (FDA approval remains a separate process), it could facilitate pharmaceutical entry into cannabis drug development by removing Schedule I barriers. Industry advocates warn this could create competitive pressure against dispensary models.
Alcohol and Tobacco Investments
Constellation Brands invested $4 billion in Canopy Growth in 2018 but has since distanced itself following massive write-downs. Altria (Marlboro's parent) maintains a $1.8 billion, 45% stake in Cronos Group. Neither alcohol nor tobacco industries have documented lobbying positions specifically against rescheduling—suggesting they're positioned to participate rather than oppose cannabis normalization.
The State Landscape: 24 Legal, 4 Holdouts
American cannabis policy now resembles a patchwork quilt, with 80% of states permitting some form of legal cannabis access.
Full Recreational Legalization (24 states + DC)
The recreational map now spans from early adopters Colorado and Washington (2012) through Ohio's August 2024 retail launch. Notable recent developments include Virginia's blocked retail sales (possession legal since 2021, but sales vetoed by Governor Youngkin until new Governor Spanberger takes office, targeting November 2026) and Minnesota's 2023 legislative legalization.
Medical-Only States (14 states)
Florida represents the most significant medical-only market after Amendment 3 failed in November 2024 with 56% approval—short of the required 60% supermajority. A new petition targets 2026. Pennsylvania, New Hampshire, and Hawaii show the strongest momentum toward recreational conversion.
Limited and Prohibition States
Ten states maintain CBD-only or low-THC programs, including Texas (recently expanded to 1% THC) and Georgia (5% THC cap). Four states—Idaho, Kansas, South Carolina, and Wyoming—maintain full prohibition, though Idaho voters may face a 2026 ballot measure designed to block citizen initiatives on marijuana.
Border State Dynamics
Indiana presents a particularly stark example: surrounded by recreational states Michigan, Illinois, and Ohio, plus medical-state Kentucky, yet maintaining prohibition. Dispensaries in border towns—Niles, Michigan (8 miles from Indiana), South Beloit, Illinois—report heavy Indiana customer traffic. Despite majority polling support, Indiana lawmakers rejected 2025 legalization bills, including one proposed to address a $2 billion budget shortfall.
Tribal Cannabis Expansion
Tribal operations represent a growing factor: 77 tribally owned cannabis retail outlets operated by 59 tribes across 9 states as of April 2025—a 24% increase since May 2024. The Eastern Band of Cherokee Indians operates the only legal cannabis in North Carolina, while Minnesota's White Earth Nation secured the first tribal-state compact allowing off-reservation dispensaries.
Federal Rescheduling Impact by Category
For recreational states, the primary benefit would be 280E tax relief—potentially dropping effective rates from 70-80% to approximately 21%. Legal status of recreational use remains unchanged (still federally prohibited).
For medical-only states, rescheduling provides federal acknowledgment of medical value, potentially opening insurance coverage discussions and significantly easing clinical trial barriers.
For prohibition states, rescheduling creates no legal compulsion to change—states retain full authority to maintain prohibition. However, political and economic pressure would likely intensify.
Probability Assessment: High Likelihood, Uncertain Timeline
Based on current reporting, the probability of cannabis rescheduling occurring stands at approximately 80%, with timing dependent on the form Trump's executive action takes.
Optimistic Scenario (6-9 months)
- Executive order signed: December 18-20, 2025
- DEA directed to publish final rule: Q1 2026
- Effective date: Summer 2026
Standard Scenario (12-18 months)
- If hearings must resume: Q2 2026
- ALJ report: Q3 2026
- Final rule: Late 2026 - Early 2027
Pessimistic Scenario (18-36 months)
- Executive order challenged in court
- Full administrative process required
- Extended litigation
Remaining Obstacles
Political opposition persists: House Speaker Mike Johnson actively opposed rescheduling at the December 9 meeting. Senators Pete Ricketts (R-NE) and James Lankford (R-OK) filed the "No Deductions for Marijuana Business Act" to preserve 280E restrictions regardless of scheduling. [1][11]
Legal uncertainties include how an executive order would interact with the stalled DEA hearing process, potential court challenges, and the unresolved ex parte communications controversy. [8]
Administrative capacity questions arise from DEA leadership instability—the agency has cycled through two acting administrators since Trump took office, and Senate has not confirmed nominee Terrance Cole, reportedly a "marijuana skeptic."
The Supreme Court's December 15, 2025 decision to decline Canna Provisions v. Bondi—rejecting a constitutional challenge to federal prohibition—leaves administrative rescheduling as the only viable near-term path to federal reform. Full legalization would require Congressional descheduling, which faces no realistic pathway in the current political environment. [22]
Conclusion
Cannabis rescheduling under Trump represents "progress but not justice"—a phrase the Last Prisoner Project uses to capture its limited scope. The expected executive action would deliver substantial financial relief to cannabis businesses through 280E elimination while acknowledging the plant's medical utility. [15]
However, critical limitations demand recognition: recreational use remains federally prohibited; banking problems persist without SAFER Banking Act passage; state dispensaries don't become legal federal operations; and not a single prisoner walks free from rescheduling alone.
The December 2025 developments reveal cannabis policy shaped by competing forces—industry lobbying access, conservative political opposition, pharmaceutical positioning, and the practical reality that 80% of Americans already live in states with some form of legal cannabis access. Whatever form Trump's action ultimately takes, it will mark the end of cannabis's half-century classification alongside heroin—while falling far short of the comprehensive reform many advocates seek.
Sources & References
Major News Outlets
[1] NBC News - "Trump expected to sign an order moving to reclassify cannabis and open up medical potential" (December 2025) https://www.nbcnews.com/politics/donald-trump/trump-expected-order-reclassify-cannabis-open-medical-pot-rcna249550
[2] CNN - "White House is considering reclassifying marijuana to ease restrictions on the drug" (December 15, 2025) https://www.cnn.com/2025/12/15/politics/marijuana-white-house-reschedule
[3] CNBC - "What Trump's reclassification of pot and CBD could mean for seniors, research and stocks" (December 16, 2025) https://www.cnbc.com/2025/12/16/trump-medicare-pot-seniors-marijuana-reclassification.html
[4] CBS News - "Trump could reschedule marijuana to Schedule III, promising tax relief but raising new legal and industry concerns" https://www.cbsnews.com/atlanta/news/trump-reschedules-marijuana-to-schedule-iii-promising-tax-relief-but-raising-new-legal-and-industry-concerns/
[5] NPR - "Biden expands pardons for marijuana possession and grants clemency to 11" (December 2023) https://www.npr.org/2023/12/22/1221230390/biden-pardons-clemency-marijuana-drug-offenses
Cannabis Industry Publications
[6] Cannabis Business Times - "Trump Prepares to Reschedule Cannabis to Schedule III" https://www.cannabisbusinesstimes.com/cannabis-rescheduling/news/15774030/trump-prepares-to-reschedule-cannabis-to-schedule-iii
[7] Cannabis Business Times - "DEA Provides No Cannabis Rescheduling Update After 180 Days" https://www.cannabisbusinesstimes.com/cannabis-rescheduling/news/15750186/dea-provides-no-cannabis-rescheduling-update-after-180-days
[8] Cannabis Science and Technology - "Cannabis Rescheduling Delayed: DEA Judge Puts a Pin in Cannabis Reform" https://www.cannabissciencetech.com/view/cannabis-rescheduling-delayed-dea-judge-puts-a-pin-in-cannabis-reform
[9] Cannabis Science and Technology - "The Impact of Rescheduling Cannabis—Things to Prepare for Now" https://www.cannabissciencetech.com/view/the-impact-of-rescheduling-cannabis-things-to-prepare-for-now
[10] High Times - "Cannabis Rescheduling May Sound Like a Win. Here's Why It's Complicated" https://hightimes.com/guides/cannabis-rescheduling-questions-answered/
Advocacy Organizations
[11] NORML - "Cannabis Rescheduling: Separating Fact from Fiction" (December 16, 2025) https://norml.org/blog/2025/12/16/cannabis-rescheduling-separating-fact-from-fiction/
[12] NORML - "Marijuana Arrests Comprised Nearly Half of All Drug-Related Arrests in Over a Dozen States in 2024" (November 2025) https://norml.org/blog/2025/11/05/marijuana-arrests-comprised-nearly-half-of-all-drug-related-arrests-in-over-a-dozen-states-in-2024
[13] Marijuana Policy Project (MPP) - "DEA Moves to Reschedule Marijuana to Schedule III: Questions and Answers" https://www.mpp.org/policy/federal/dea-moves-to-reschedule-marijuana-to-schedule-iii-questions-and-answers/
[14] Marijuana Policy Project (MPP) - "What is 280E?" https://www.mpp.org/policy/federal/what-is-280e/
[15] Last Prisoner Project - "DEA Moves to Officially Reschedule Cannabis" https://www.lastprisonerproject.org/dea-moves-to-officially-reschedule-cannabis
Government & Legal Sources
[16] Congress.gov / Congressional Research Service - "Legal Consequences of Rescheduling Marijuana" https://www.congress.gov/crs-product/LSB11105
[17] United States Sentencing Commission - "Weighing the Impact of Simple Possession of Marijuana" https://www.ussc.gov/research/research-reports/weighing-impact-simple-possession-marijuana
Legal Analysis & Law Firms
[18] Harris Sliwoski (Canna Law Blog) - "Is Marijuana Rescheduling Finally Happening? What to Know, Now." https://harris-sliwoski.com/cannalawblog/is-marijuana-rescheduling-finally-happening-what-to-know-now/
[19] Jackson Lewis - "Navigating Cannabis Rescheduling: Key Insights for Healthcare" https://www.jacksonlewis.com/insights/navigating-cannabis-rescheduling-key-insights-healthcare
[20] Duane Morris LLP - "Tax Implications of Rescheduling Cannabis as a Schedule III Controlled Substance" https://www.duanemorris.com/alerts/tax_implications_reclassifying_cannabis_schedule3_controlled_substance_0923.html
[21] FDA Law Blog - "Cannabis Redux: Marijuana Rescheduling Act Reintroduced in the U.S. House" (September 2025) https://www.thefdalawblog.com/2025/09/cannabis-redux-marijuana-rescheduling-act-reintroduced-in-the-u-s-house/
Policy Analysis
[22] Cato Institute - "Schedule III Cannabis: Rearranging Prohibition" https://www.cato.org/blog/schedule-iii-cannabis-rearranging-prohibition
[23] Independent Voter News - "Cannabis Rescheduling Remains Paused Despite Trump Support" (April 2025) https://ivn.us/posts/cannabis-rescheduling-remains-paused-despite-trump-support-2025-04-01
Additional Sources
[24] Crime in America - "How Many People Are In Prison For Marijuana Possession?" https://www.crimeinamerica.net/how-many-people-are-in-prison-for-marijuana-possession/