Trump contemplating potential reclassification of marijuana as less harmful substance
President Donald Trump is contemplating a significant shift in marijuana policy, with plans to reclassify the substance from a Schedule I to a Schedule III drug under the Controlled Substances Act. This decision, expected within a few weeks from mid-August 2025, marks a clear sign that cannabis rescheduling is still on the table during his administration.
The move away from Schedule I, which classifies drugs with "no currently accepted medical use and a high potential for abuse" (e.g., heroin), towards Schedule III, which includes substances with a "moderate to low potential for physical and psychological dependence" (e.g., ketamine, anabolic steroids), could have far-reaching implications for the cannabis industry.
For cannabis-related exchange-traded funds (ETFs) and companies, rescheduling could bring about several benefits. Tax benefits would be one such advantage, as rescheduling to Schedule III would allow cannabis businesses to deduct normal business expenses on their taxes, a privilege currently prohibited under Section 280E of the tax code. This change could significantly improve profitability, particularly for dispensaries operating on thin margins.
Another potential benefit is the enabling of legal interstate commerce of cannabis products, which could improve access to banking services for cannabis companies, currently faced with federal banking restrictions. Moreover, rescheduling could lift existing federal restrictions on cannabis research, potentially validating medical benefits and expanding product markets.
Politically, this move could signal a significant federal policy shift, potentially influencing the upcoming elections. Some political figures have urged Trump to act quickly for both policy and electoral reasons. Furthermore, rescheduling could align with Trump’s focus on crime reduction and enforcement priorities, as it could potentially reduce the illicit market and related organized crime by shifting demand to the regulated marketplace.
The push to reclassify marijuana was initially initiated by the administration of former U.S. President Joe Biden. Kim Rivers, the top boss of Trulieve Cannabis, recently urged Trump to pursue the goal of expanding medical marijuana research. However, a proposal to downgrade cannabis to a Schedule III drug under the Controlled Substances Act is currently stalled at the Drug Enforcement Agency.
Cannabis companies of note include Tilray Brands (NASDAQ:TLRY), Canopy Growth (NASDAQ:CGC), Aurora Cannabis (NASDAQ:ACB), Cronos (NASDAQ:CRON), Organigram (NASDAQ:OGI), Trulieve Cannabis (OTCQX:TCNNF), MariMed (OTCQX:MRMD), TerrAscend (OTCQX:TSNDF), Verano (OTCQX:VRNOF), GrowGeneration (NASDAQ:GRWG), and Curaleaf (OTCPK:CURLF).
Cronos Group announced a 21% increase in revenue, while Canopy Growth reported GAAP EPS of -C$0.22 and revenue of C$88.75M for a recent quarter. Jim Hagedorn, CEO of Scotts Miracle-Gro, stated that Trump has committed multiple times to advancing marijuana rescheduling in private conversations since his inauguration.
Cannabis-linked exchange-traded funds of interest include (NYSEARCA:MSOS), (NYSEARCA:MJ), (NYSEARCA:MJUS), (NYSEARCA:MSOX), (NYSEARCA:YOLO), (NYSEARCA:CNBS), (BATS:TOKE), and (BATS:WEED). The Wall Street Journal reported this information, citing people familiar with the matter.
Stay tuned for updates as this significant decision approaches.
- The proposed rescheduling of marijuana from a Schedule I to a Schedule III drug under the Controlled Substances Act could signify a major shift in policy-and-legislation regarding cannabis, potentially affecting the broader landscape of politics and general-news.
- The potential benefits of this rescheduling for cannabis-related companies could include tax advantages, increased profitability, improved access to banking services, and relaxation of restrictions on cannabis research, ultimately shaping the trajectory of the cannabis industry.
