President Donald Trump is set to sign the cannabis reclassification order today, a move that could reshape the federal legal landscape for medical and recreational marijuana use across the United States. The executive order, which reclassifies cannabis from a Schedule I controlled substance to a Schedule III drug under the Controlled Substances Act, is expected to eliminate many of the federal penalties that have plagued the industry for decades.
Background/Context
The cannabis reclassification order arrives after a decade of state-level legalization that has created a patchwork of regulations, tax structures, and enforcement practices. As of December 2025, 37 states and the District of Columbia have legalized recreational cannabis, while 44 states allow medical use. Despite this expansive state approval, cannabis remains federally illegal, complicating banking, taxation, and interstate commerce. The federal prohibition has meant that companies operate in a shadow economy, often relying on cash transactions, limited access to federal loans, and the constant risk of DEA raids.
President Trump’s decision follows a growing bipartisan consensus that cannabis reclassification will streamline regulation, boost economic growth, and reduce unnecessary criminal prosecutions. The administration’s intent is to create a single federal framework that harmonizes with state laws, allowing for a regulated, taxable market that can compete with other legal consumer goods.
Key Developments
The new order, issued on Monday at 10:15 a.m. Eastern Time, stipulates that cannabis and its derivatives be moved to Schedule III—placing them in the same category as methadone and oxycodone. Key provisions include:
- Licensing Simplification: States will be authorized to issue federal licenses for cultivation, processing, and distribution, subject to basic quality and safety standards.
- Banking Access: Financial institutions can now process cannabis-related transactions without fear of federal penalties, opening the door for credit lines and investment capital.
- Taxation Framework: The order recommends a 15% excise tax on retail sales, a significant reduction from the 28% imposed by the Excise Tax Act of 2022, aligning federal rates with many state tax rates.
- Research & Development: Funding for medicinal research is expanded, including grants for federally funded clinical trials examining cannabis for chronic pain, epilepsy, and PTSD.
- Interstate Commerce: The order permits interstate shipping of cannabis products under a new federal licensing system, thereby mitigating current barriers to cross-state trade.
“Today’s sign‑off is a watershed moment for a trillion‑dollar industry poised to contribute significantly to the nation’s GDP,” said Rep. Alexandria Ocasio-Cortez (D‑NY) during a televised briefing. “The reclassification order will align our federal stance with the reality on the ground, fostering innovation and ensuring consumers’ safety.”
Sources close to the Senate committee confirm that the order had already received a 60‑to‑25 vote earlier this week, with the bipartisan majority reflecting a shift from the previous administration’s stricter stance on drug enforcement.
Impact Analysis
For businesses, the reclassification order removes a huge regulatory burden. Prior to the order, cannabis growers depended on a complex array of state permits and were barred from accessing traditional banking services, forcing many to operate on cash. The new federal framework will allow companies to open bank accounts, access lines of credit, and pursue mergers and acquisitions in a regulated environment. Industry analysts predict a 30‑percent rise in capital investment over the next five years as venture funding flows more freely.
Tax revenue projections are equally profound. The Treasury Department estimates that if the reclassification order takes effect statewide, federal cannabis tax revenue could rise to $5.2 billion annually—up from the current $750 million collected under the excise tax system. This influx would support public health programs, educational initiatives, and infrastructure spending.
Criminal justice reform is another immediate consequence. By shifting cannabis into Schedule III, the Department of Justice will no longer prosecute individuals for possession and sale within legalized states, potentially halving the number of cannabis‑related arrests nationwide. Advocates argue that this will free up law‑enforcement resources for more serious offenses and reduce the disproportionate impact on minority communities.
International students and scholars who study in the U.S. must note the implications for their visas. The policy shift allows for greater transparency in visa applications involving cannabis research. Students engaged in medical or botanical studies can now secure research visas without the fear of federal criminal charges for cannabis possession, fostering greater academic collaboration worldwide.
Expert Insights/Tips
Legal counsel from Ginsberg & Partners recommends that cannabis businesses promptly apply for federal licenses under the new framework. “The application process will be less bureaucratic and more predictable,” says lead attorney Maya Ginsberg. “However, compliance with federal quality controls, reporting, and tax filing remains essential.”
Financial advisors advise companies to transition sooner rather than later. Jones Wealth Management notes that banks have begun opening accounts for cannabis enterprises in the pilot states of Colorado and California. “If you wait until the final implementation dates,” says portfolio manager Daniel Kim, “you risk missing out on early access to interest‑bearing accounts and better borrowing terms.”
For growers, the order brings new agronomic regulations. The Department of Agriculture will set nationwide standards for pesticide use, soil safety, and product labeling. “Standards will require precise data collection,” explains agronomist Dr. Erin McCall. “Investing in compliance software now will pay dividends when the industry matures.”
Academic scholars should anticipate a surge in federally funded studies. The National Institutes of Health has announced a $200 million initiative to evaluate cannabis as a treatment for neurological disorders. “This is a unique opportunity for students and researchers worldwide,” says Dr. Raj Patel, director of Neurology at Harvard. “Secure a research sponsorship and align your proposal with federal guidelines.”
Looking Ahead
As the cannabis reclassification order moves from proposal to enforcement, the first wave of regulatory implementation will focus on establishing licensing authorities and standardizing interstate shipping protocols. Industry stakeholders are preparing to lobby for state-level adjustments to align with federal timelines, ensuring a smooth transition for consumers and operators alike.
Meanwhile, policy analysts predict that the reclassification will spur federal investment in cannabis‑related public health programs, such as education campaigns on safe usage and research into potential long‑term health effects. Governor Mark C. Johnson of Colorado, a pioneer state, has announced plans to allocate $3 million of state funds to expand treatment facilities for opioid addiction, modeling a collaborative approach between federal and state agencies.
International investors are also watching closely. The alignment of federal laws eliminates the legal ambiguity that previously deterred venture capital from entering the U.S. cannabis market. According to Bloomberg Intelligence, foreign equity inflows could rise by 45 percent over the next decade, positioning the United States as a global leader in regulated cannabis commerce.
In the months ahead, stakeholders—from growers to educators—will need to adapt to the new regulatory environment. The cannabis reclassification order lays the groundwork for a unified framework that balances economic opportunity, consumer safety, and public health. As the administration begins the licensing roll‑out, the industry’s future looks clearer, more compliant, and more profitable.
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