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President Donald Trump signed an executive order on Thursday relaxing cannabis’ classification in a change that is expected to catalyze investment and spark new innovation in an industry that’s waited decades for the very decision.
Trump’s executive order reschedules cannabis from Schedule I—a status it’s held for decades alongside heroin and LSD—to Schedule III, or substances like ketamine and certain steroids that are recognized for having medical benefits alongside a potential for abuse..
To be clear, the executive order does not legalize cannabis, which remains illegal at the federal level. “I want to emphasize that the order I am about to sign doesn’t legalize marijuana in any way, shape, or form,” Trump said on Thursday. “In no way it sanctions its use as a recreational drug – it has nothing to do with it – just as prescription painkillers may have legitimate uses, but can also do irreversible damage.”
The president also greenlit a program that will reimburse Medicare patients who use products containing CBD, a compound derived from cannabis plants without the psychoactive component responsible for intoxication.
The move also opens up new opportunities in medical research since it’s far easier to conduct clinical trials on Schedule III substances compared to Schedule I drugs. The decision is also expected to expand cannabis businesses’ access to banking services in states where the substance is legal.
“We’re grateful to President Trump for recognizing the overwhelming majority of Americans who support cannabis rescheduling, opening the door to federal reform, medical research, and normalization for an industry that employs hundreds of thousands of professionals and contributes billions of dollars in taxes and economic activity every year,” says George Archos, the founder and CEO of Verano, a cannabis company.
Cannabis companies will also no longer face a part of the tax code known as Section 280E, which bars companies working with controlled substances from receiving tax credits or deductions. Section 280E specifically applies to Schedule I and Schedule II substances, so cannabis companies could save up to millions in taxes, according to past estimates from Vicente LLP, a law firm.
The Biden administration floated the decision to reclassify cannabis last year, but those efforts ultimately stagnated. And it’s a decision that doesn’t have support among all Republican lawmakers. Still, reclassification is a decision that has grown in popularity amongst Americans, particularly younger ones. A Pew Research study demonstrates that a majority of consumers under 30 back legalizing cannabis for medical and recreational use.
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Melissa Angell
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