Trump signs executive order to reclassify marijuana as Schedule III

President Donald J. Trump signed an executive order on Thursday to reclassify marijuana from Schedule I to Schedule III under the federal Controlled Substances Act, a shift that would place cannabis in a category with medicines that have medical uses and a lower potential for dependence. The White House said the move reflects a pivot toward treating cannabis as a regulated product rather than an illicit drug and comes as states have increasingly legalized production and use.

The Schedule III designation would allow banks to service marijuana businesses and would enable more conventional financing, potentially expanding access to capital for the roughly $60 billion industry. It would also be expected to create a more predictable regulatory framework and could open the door for Wall Street underwriting of cannabis-related companies. The change, supporters say, would align federal policy with the realities of state-level legalization and could curb illicit markets while supporting medical research.

Supporters, including industry observers and investors who have pressed for a federal policy shift, argue that regulation can keep cannabis products out of the hands of minors and reduce the profits of drug cartels while increasing tax revenue and providing medical options. Longtime hedge fund trader Marc Cohodes, an investor in cannabis companies who has been vocal in pressing the White House to move off the lumping of pot with harder drugs, told On The Money that aligning federal policy with industry realities would be beneficial and that the change could limit illegal trafficking. He has argued that making weed an accepted business in the United States is far better than the status quo, noting that marijuana can be regulated more safely and that tax revenues would flow as the industry grows.

Skeptics worry about the potency of today’s marijuana and question whether federal reclassification would do enough to prevent underage access or reduce impaired driving. Critics say a Schedule III designation may still leave gaps in enforcement and public health protections, even as regulation expands. Some policymakers also caution that shifting scheduling does not eliminate the federal conflict with state laws in places where cannabis remains illegal or restricted.

Advocates note that marijuana remains illegal at the federal level while many Americans view it as no more dangerous than alcohol, a perception that has gained ground as more states legalize. The administration’s action signals a shift in how marijuana is treated by federal agencies and the financial system, but it does not by itself legalize cannabis nationwide. The move aligns with a broader debate about federalism, public health, and regulatory modernization as state-by-state legalization continues to outpace federal policy.

Background shows that the country operates under a patchwork system: many states permit medical or recreational use, while federal law still classifies cannabis as an illegal substance. The executive action could enable banks to serve cannabis businesses more readily and could influence capital flows, tax collection, and employment across the industry. The next steps involve regulatory adjustments and agency rulemaking to implement the scheduling change and to align compliance frameworks with the new classification. industry observers will watch closely how regulators translate this move into practical rules for banking, taxation, and financial disclosures. Near-term market implications include potential shifts in stock pricing for cannabis companies and increased investor interest as the legal status evolves.

As the political calculus around cannabis remains dynamic, the White House framing of this shift emphasizes practical governance and market realities. Supporters see it as a pragmatic step that could reduce the influence of illicit markets and improve public safety through regulation, while opponents call for caution about outcomes related to youth access and driving impairment. The ongoing policy debate reflects broader tensions between state experimentation and federal law, with industry stakeholders hopeful that the scheduling change will unlock capital and broaden medical options while maintaining guardrails.

For more context on the shift and its implications for markets and state policy, observers point to the evolving legal landscape across the country and the potential for a more integrated federal approach to cannabis regulation. The administration has positioned the move as a step toward modernizing drug policy in a way that recognizes state innovation and the economic footprint of Pot Inc.