Trump Signs Order to Loosen Restrictions on Marijuana: What to Know

President Donald Trump on Thursday signed an executive order that directs Attorney General Pam Bondi to accelerate the reclassification of marijuana from Schedule I to Schedule III. The move would not legalize marijuana at the federal level, and the drug would remain illegal under federal law for purposes beyond the reclassification intended to facilitate research and certain regulatory actions.

The order would reclassify marijuana from Schedule I — a category used for drugs the DEA defines as having no currently accepted medical use and a high potential for abuse — to Schedule III, which the DEA describes as having a moderate to low potential for physical and psychological dependence. Tylenol with codeine and several other prescription medicines already sit in Schedule III. The directive would not, on its face, authorize federal legalization or decriminalization; states that have legalized medical or recreational use would continue to regulate those activities under state law, and manufacturers would still need FDA authorization to produce cannabis products for sale.

Beyond the classification change, the order would lower regulatory hurdles for marijuana research and development. Proponents say it could expand clinical studies and facilitate the creation of medical marijuana products, while also potentially easing some burdens on research institutions and universities studying cannabis’s therapeutic properties. It would not, however, resolve federal tax or banking challenges on its own. The federal tax code’s Section 280E continues to restrict what cannabis businesses can deduct, and even with reclassification, many banks have remained wary of serving cannabis firms due to ongoing federal restrictions.

Analysts have signaled that the shift could yield meaningful financial relief for industry players. Viridian Capital Advisors estimated that reclassification could save roughly $800 million a year in tax-deductible expenses for the top 12 U.S. cannabis companies, a figure that underscores how much of the industry’s financial framework hinges on federal treatment. While the change would not immediately unlock full access to banking services, it could build momentum toward broader reforms and greater legitimacy for the industry in the eyes of lenders and investors.

Still, the administration stressed that the move is only a stepping stone. Rescheduling alone would not settle banking problems or fully unlock federal legitimacy for marijuana businesses. Supporters point to additional legislative avenues, such as the SAFER Banking Act, which would provide a safe harbor for financial institutions that serve cannabis businesses legal under state law, as a next step for lawmakers in Congress. Some analysts warned that even with reclassification, banks would still face regulatory and reputational risks that would keep many institutions cautious.

The timing of the action reflects political calculations as well as policy aims. Trump, who has signaled support for easing restrictions on marijuana in prior public remarks, has sought to cast the move as balancing medical research with prudent regulation. In 2024, he indicated he would back research into the medical uses of cannabis and supported allowing state-legal firms access to banking and other services. His comments came amid broader polling on cannabis and political concerns involving younger voters. A Harvard Institute of Politics survey released earlier this month placed Trump’s support among 18- to 29-year-olds at about 29%, down slightly from a prior survey, underscoring the political incentives advisers say accompany any shift on the issue.

History offers context. In October 2022, President Joe Biden directed the Department of Health and Human Services and the DEA to review marijuana’s classification. In 2023, HHS recommended reclassifying marijuana to Schedule III, and the DEA began an administrative review, including a hearing, before the transition to the current administration disrupted the process. Some Republican lawmakers have criticized rescheduling, arguing it could enable unlawful activity or harm public health.

Industry and policy observers note that the path to broader reform remains uphill, even with a scheduling shift. The reclassification could reduce some barriers to medical research and improve the financial calculus for legitimate research programs and state-legal cannabis businesses, but it does not equate to federal legalization. The administration has framed the action as a pragmatic move to support science and patient access while preserving federal restrictions on recreational use and interstate commerce. As lawmakers weigh broader reform, stakeholders will watch closely how this move interacts with banking and tax policy, state-level regulatory regimes, and ongoing litigation and enforcement dynamics surrounding cannabis.