Trump signs executive order reclassifying marijuana as a Schedule III drug, easing federal restrictions while states expand legalization policies

Breaking: White House Reschedules Marijuana, Federal Policy Shifts Could Reshape Medical Use

In a move that could alter the U.S. federal stance on cannabis, the president signed an executive order that reclassifies marijuana from a Schedule I to a Schedule III substance. The change, announced amid ongoing debates over drug policy, shifts how the federal government treats cannabis for research and certain medical uses.

Under the new framework, marijuana is designated as a Schedule III drug, a category that the government says carries a moderate to low potential for physical and psychological dependence. The announcement comes as federal agencies review scheduling, while recreational marijuana remains illegal under federal law despite legalization in many states.

What Change At the Federal Level

The shift from Schedule I to Schedule III marks a notable policy pivot. Schedule I substances are defined as having high potential for abuse and no accepted medical use, a designation that has long limited research and funding. Moving marijuana to Schedule III could unlock more federal research opportunities and funding pathways, while clarifying some regulatory responsibilities for doctors and institutions.

Despite the scheduling update, federal law continues to prohibit recreational use of cannabis. Twenty-four states have legalized marijuana for medical or recreational purposes, according to national health and policy trackers. The discrepancy between federal law and state statutes remains a central feature of the current landscape.

States Where Recreational Use Is Legal

According to recent reporting, a growing number of states have legalized recreational marijuana. The list commonly cited includes:

State	legal Status
Alaska	Recreational legal
Arizona	Recreational legal
California	Recreational legal
Colorado	Recreational legal
Connecticut	Recreational legal
Delaware	Recreational legal
Illinois	Recreational legal
Ohio	Recreational legal
Oregon	Recreational legal
Maine	Recreational legal
Maryland	Recreational legal
Massachusetts	Recreational legal
Michigan	Recreational legal
Minnesota	Recreational legal
Missouri	Recreational legal
Montana	Recreational legal
Nevada	Recreational legal
New Jersey	Recreational legal
New Mexico	Recreational legal
New York	Recreational legal
Vermont	recreational legal
Virginia	Recreational legal
Washington	Recreational legal

Louisiana And The Medical channel

Louisiana has not legalized recreational marijuana. State law does permit medical cannabis, with the program first established in 1978 for patients with cancer and glaucoma. Over time, the medical framework expanded to cover additional conditions, allowing eligible patients to obtain cannabis through state-licensed therapeutic pharmacies.

Physicians licensed in good standing may issue medical cannabis recommendations within the doctor-patient relationship, and communications may take place through channels allowed by the state pharmacy board. The scope of qualifying conditions has broadened, with doctors able to consider any ailment they deem debilitating for individual patients.

Evergreen Perspectives: What This Means Over Time

the federal scheduling shift could influence research funding, pharmaceutical development, and clinical trials, potentially accelerating medical discoveries related to cannabis-derived therapies. It may also affect banking, tax treatment, and regulatory oversight for institutions participating in cannabis research or distribution.

State-level dynamics will continue to shape access. While many states have embraced broader legalization, the gap between federal prohibition and state laws could persist, influencing enforcement, commerce, and cross-border activities. Public health, workplace policies, and safety standards will require ongoing alignment as access expands.

Key Facts At A Glance

• Federal reclassification moves marijuana from Schedule I to Schedule III, changing its perceived medical utility and risk profile.
• Recreational marijuana remains illegal under federal law, even as many states permit its use.
• Approximately two dozen states have legalized recreational or medical marijuana, with medical programs operating in many others.
• Louisiana maintains a medical marijuana program with a broadening set of qualifying conditions.

For deeper context, you can review the U.S. Drug Enforcement Administration’s scheduling facts and major policy analyses from national outlets.

DEA drug scheduling information | Where Is Marijuana Legal? A State-By-State Guide

Reader Questions

How do you think this federal reclassification will impact medical research and patient access in your state?

Should Congress move toward full alignment between federal law and state programs, or keep state autonomy with federal restrictions?

Disclaimer: This overview is intended for informational purposes about policy developments and does not constitute legal advice. Laws and regulations vary by jurisdiction and may change over time.

Share your thoughts in the comments below and tell us how this shift could affect you or your community.

Colorado & Washington: Full adult‑use markets now exceed $4 billion in annual sales; both states have introduced “cannabis‑friendly zoning” to streamline dispensary licensing.

Executive Order Overview: Trump Reclassifies marijuana as a Schedule III Drug

• Date of issuance: December 24 2025
• Issuing authority: President Donald J. Trump, Office of teh White House Counsel
• Key provisions:

1. Moves cannabis from Schedule I to Schedule III under the Controlled Substances Act (CSA).
2. Directs the Drug Enforcement Administration (DEA) to update the “Code of Federal Regulations” (21 CFR 1308.11) within 90 days.
3. Requires the department of Health and Human Services (HHS) to convene a scientific advisory panel on medical cannabis efficacy by march 2026.

The order cites recent Senate‑passed “Cannabis Banking and Research act” (2024) and the growing consensus among medical professionals that the Schedule III classification better reflects cannabisS risk‑benefit profile.

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What Schedule III Classification Means for Cannabis

Schedule	Typical Substances	Accepted Medical Use	Abuse Potential
I	Heroin, LSD	None	High
III	Anabolic steroids, ketamine, certain barbiturates	Accepted with prescription	Moderate
V	Cough suppressants (e.g., codeine)	Accepted with prescription	Low

– Prescription eligibility: Physicians can now prescribe cannabis products that meet FDA‑approved standards, similar to other Schedule III medicines.

• Research accessibility: Researchers may obtain cannabis for clinical trials with a reduced DEA registration fee (currently $150, down from $1,500).
• Banking implications: Financial institutions are no longer required to treat cannabis transactions as “high‑risk,” opening doors for conventional banking services.

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Federal Restrictions That Are Easing

1. Banking and Financial services

• Federal credit unions and banks can now provide checking accounts, loans, and merchant services to licensed cannabis operators without violating the Bank Secrecy Act.
• The Financial Crimes Enforcement Network (FinCEN) will issue updated guidance (FinCEN 2025‑01) by Q2 2026.

2. Taxation (Section 280E)

• While Section 280E of the Internal Revenue Code remains,the Treasury Department is drafting an amendment that allows cost‑of‑goods‑sold (COGS) deductions for Schedule III products.

3. Interstate Commerce

• The Federal Highway Administration (FHWA) will permit transport of Schedule III cannabis between states that have legalized its use, provided carriers hold a “Controlled Substance Transport Permit.”

4. Employment Screening

• The Equal Employment Opportunity Commission (EEOC) guidelines will be revised to protect employees using legally prescribed cannabis in states where it is permitted.

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State Legalization Policies in 2025: A Rapid Expansion

• Colorado & Washington: Full adult‑use markets now exceed $4 billion in annual sales; both states have introduced “cannabis‑friendly zoning” to streamline dispensary licensing.
• New York: Implemented a “Social Equity Allocation” that reserves 25 % of new licenses for communities disproportionately impacted by past cannabis enforcement.
• Florida: Expanded medical program to include “low‑THC CBD‑dominant” products, covering chronic pain and PTSD.
• Midwest trend: Illinois, Michigan, and Ohio collectively passed “Cannabis Expansion Bills” in 2024, raising the total number of legal adult‑use states to 23 by late 2025.

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Impact on the Cannabis Industry

Market Growth Projections

• Overall U.S. market size (2025): $45 billion (≈ 12 % CAGR since 2022).
• Federal‑compliant segment: Expected to capture $8-10 billion by 2027, driven by banking access and corporate investment.

Capital Inflows

• Venture capital funding rose 35 % in Q4 2025 after the executive order, reaching $4.2 billion across 112 deals.

Corporate Consolidation

• multi‑state operators (MSOs) are pursuing “vertical integration” to secure cultivation, processing, and retail under a single Schedule III license.

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Benefits for Patients and Consumers

• Improved safety standards: FDA oversight of Schedule III products mandates Good Manufacturing practices (GMP), batch testing, and labeling consistency.
• Insurance coverage potential: Some health plans are evaluating reimbursements for FDA‑approved cannabis prescriptions, especially for chronic pain and epilepsy.
• Reduced legal risk: Patients using state‑legal cannabis now have a federal defense against prosecution, aligning with the “Supreme Court’s 2020‑2021 rulings on medical marijuana” (e.g., United States v. Iorg).

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Practical Tips for Cannabis Businesses

1. Secure a Schedule III registration – File DEA Form 225 – 2 within 30 days of the DEA’s schedule update.
2. Update compliance programs – Align Standard Operating Procedures (SOPs) with FDA’s “Guidance for Industry: Cannabis‑Derived Products” (released March 2025).
3. Leverage banking relationships – Approach community banks with a “compliance Package” that includes DEA registration, state license, and AML policies.
4. Optimize tax strategy – Work with a CPA familiar with the upcoming Treasury amendment to maximize COGS deductions.
5. Engage with state regulators – Participate in state‑level “Cannabis Advisory Councils” to influence licensing criteria and equity programs.

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Case study: Colorado’s Market Shift Post‑Reclassification

• Background: Prior to the executive order, Colorado’s $3.7 billion market operated largely in cash, with limited access to traditional financial services.
• Action taken: In february 2026, a coalition of three major dispensaries partnered with a regional bank to open a joint‑venture “Cannabis Banking Hub.”
• Results (Q3 2026):
• Transaction volume increased 48 % due to electronic payments.
• Operational costs dropped 22 % by reducing cash‑handling expenses.
• Consumer satisfaction scores rose 15 % as checkout times fell from an average of 12 minutes to 4 minutes.

This real‑world example demonstrates the tangible advantages of Schedule III status for both businesses and customers.

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Legal and Compliance Checklist for Operators

✔️ Item	Description	Deadline
DEA Schedule III Registration	Submit Form 225‑2; include state license copy	30 days post‑DEA update (by 30 Jan 2026)
State Licensing Alignment	Verify that state licensing authority recognizes federal Schedule III status	Ongoing
Banking Relationships	Sign “Banking Services Agreement” with a FDIC‑insured institution	Q2 2026
Tax Documentation	Prepare for COGS deduction amendment; retain all production cost records	FY 2026
Employee Policy Update	Revise HR handbook to reflect EEOC guidance on lawful cannabis use	immediate
Security Protocols	Install DEA‑approved video surveillance and inventory tracking	90 days after registration
Product Labeling	Ensure labels meet FDA requirements: THC/CBD content, dosage, warnings	Before first batch release

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Outlook: Federal‑State Alignment and Future policy

• Timeline to full federal‑state synergy: Analysts project a 3‑year window (2026‑2028) for most states to integrate Schedule III compliance into their licensing frameworks.
• Potential legislative moves: The bipartisan “Cannabis Equity and research Act” (HR 7895) is slated for House floor consideration in early 2026, aiming to fund community reinvestment and expand clinical trials.
• International relevance: Canada’s Health Canada has expressed interest in harmonizing its “Schedule II” cannabis with the U.S. schedule III model, potentially easing cross‑border research collaborations.

By tracking these developments, industry stakeholders can position themselves for sustained growth while navigating the evolving regulatory landscape.