US President Donald Trump signed an executive order on Thursday to speed up the reclassification of marijuana from Schedule I to the less serious Schedule III, saying the move is to boost research.
While the previous administration of Joe Biden began the reclassification process, it stalled due to administrative delays and legal hurdles. Months after taking office for a second term, Trump agreed to finish the job.
What does an executive order do?
Trump’s latest executive order essentially directs US Attorney General Pam Bondi to speed up the reclassification process.
“The federal government’s long delay in recognizing the medical use of marijuana does not serve Americans who report health benefits from the medical use of marijuana to relieve chronic pain and other various medically recognized ailments…,” Trump’s order said.
“My administration’s policy is to increase research on medical marijuana and CBD to better inform patients and doctors,” he added.
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Currently, marijuana is classified along with heroin and LSD as Schedule I drugs, which are defined by the Drug Enforcement Administration (DEA) as having “no currently recognized medical use and a high potential for abuse.”
In comparison, Schedule III drugs such as Tylenol with codeine, ketamine, etc. are described by the DEA as having “moderate to low potential for physical and psychological dependence.”
Does Executive Order Legalize Marijuana?
No, Trump’s executive order does not legalize marijuana under federal law, a fact the president has emphasized.
“I want to emphasize that the order that I am about to sign is not legalization or legalization of marijuana in any way, shape or form and does not in any way condone its use as a recreational drug,” Trump said at a press briefing from the Oval Office.
Forty US states, including the capital Washington, DC, have legalized the use of medical marijuana, while more than half of them – 24 – have also legalized recreational use.
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Currently, medical and recreational marijuana is still considered illegal under the Controlled Substances Act, and companies seeking to legally manufacture and distribute marijuana and related products need approval from the US Food and Drug Administration (FDA).
The ordinance won’t change that, TIME reported, adding that penalties for crimes related to recreational marijuana use won’t be affected either.
Does the executive order affect the industry?
While the executive order does not yet directly affect businesses, the reclassification of marijuana once completed will.
Currently, cannabis businesses are subject to IRS Code 280E, which prevents them from deducting standard business expenses (rent, wages, marketing) because they are “dealing in a Schedule I substance.”
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The reclassification would effectively treat them as normal corporations for tax purposes, likely helping the industry save billions in exorbitant taxes — an estimate by Viridian Capital Advisors suggests the top 12 cannabis companies alone would save $800 million a year in taxes.
Since companies would no longer have to pay high taxes, prices for consumers could also drop at the counter if businesses passed on the benefits.
In addition, it would make it much easier for scientists to study cannabis. This could lead to better, FDA-approved cannabis-derived drugs and potentially insurance coverage for medical marijuana prescriptions in the future.
