Trump Prepares to Reschedule Cannabis to Schedule III
After weighing the “good” and the “bad,” President Donald Trump finally appears ready to direct his administration to follow through on a campaign promise to “unlock the medical uses of cannabis” as a Schedule III drug.
After holding a meeting that included cannabis industry executives on Dec. 10 in the Oval Office, Trump “is expected” to issue an executive order directing top officials in his cabinet to reclassify the plant to a less restrictive status under the Controlled Substances Act (CSA), The Washington Post reported on Thursday.
Health Secretary Robert F. Kennedy Jr. and Centers for Medicare and Medicaid Services chief Mehmet Oz also attended the meeting, while the president phoned in U.S. House Speaker Mike Johnson, R-La., who opposed the plan, arguing that several studies and data don’t support the move, the media outlet reported.
Under its current Schedule I listing alongside heroin, LSD and ecstasy as drugs with the highest potential for abuse, the federal government does not recognize cannabis as having a currently accepted medical use in the U.S. This would change under the White House’s expected plan to reschedule the plant; however, the president cannot unilaterally reschedule cannabis, and he hasn’t finalized his decision.
Within the executive branch, the CSA “vests” the attorney general with the authority to “schedule, reschedule or decontrol drugs” (21 U.S.C. 811(a)), meaning U.S. Attorney General Pamela Bondi holds the keys. While the attorney general has traditionally delegated this authority to the Drug Enforcement Administration (DEA) since the agency’s establishment in 1973, some cannabis legal experts arguedthat former Attorney General Merrick Garland “undelegated” this authority for a Schedule III proposal under President Joe Biden.
The report that Trump plans to direct his cabinet to ease restrictions on cannabis comes four months after the president told reporters during a press conference on Aug. 11 that his decision would come “over the next few weeks.”
“It’s a very complicated subject—the subject of marijuana,” he said in August. “I’ve heard great things having to do with medical, and I’ve [heard] bad things having to do with just about everything else. But [for] medical and for pain and various things, I’ve heard some pretty good things. But for other things, I’ve heard some pretty bad things.”
This pending decision could mean that the proposed rule that Garland signed in May 2024 to relist cannabis as a Schedule III substance would be back in play after being sidelined by the administrative process since early January.
While relisting cannabis as a Schedule III substance wouldn’t legalize or decriminalize the plant or solve industry banking problems, it could open the door for Food and Drug Administration (FDA) approval of more cannabinoid-based medicines and further sway public opinion and state reform efforts.
Perhaps most notably related to the longevity and legitimacy of the licensed industry, a Schedule III listing would allow state-sanctioned cannabis businesses to deduct ordinary business expenses – such as payroll, rent and utilities – from their federal taxes under Section 280E of the Internal Revenue Code.
“This monumental change will have a massive, positive effect on thousands of state-legal cannabis businesses around the country,” Brian Vicente, founding partner at Vicente LLP, said in a statement provided to Cannabis Business Times. “One dominating inequity cannabis businesses face is the inability to deduct regular business expenses, since they sell a Schedule I substance. Rescheduling releases cannabis businesses from the crippling tax burden they have been shackled with and allows these businesses to grow and prosper. We work with hundreds of licensed cannabis businesses, and the ability to deduct ordinary operating costs under the Schedule III proposal is a game-changer for them.”
Leading up to this point, Trump has had several options for his administration, including:
Picking up the rescheduling process where the Biden administration left off with an administrative law judge hearing;
Skipping straight to publishing a final rule to reschedule;
Starting the process from square one with a new scientific and medical evaluation under the U.S. Department of Health and Human Services (HHS); or
Killing the proposed rescheduling rule and keeping cannabis listed in Schedule I.
Should Trump pull the rescheduling trigger, it would continue a years-long executive process that Biden initiated in October 2022, when he directed his cabinet to review how cannabis is classified. Under Biden, the HHS recommended to former DEA Administrator Anne Milgram in August 2023 that cannabis be moved to Schedule III after conducting a scientific and medical evaluation.