The day has finally arrived. United States President Donald Trump has signed an executive order to expedite the process of making cannabis a Schedule III controlled substance. In doing so, the federal government has officially recognized the medical value that marijuana can have.
Applause broke out in the White House on Thursday as the American leader stroked the paper with his pen.
“For decades this action has been requested by American patients suffering from extreme pain, incurable diseases, aggressive cancers, seizures, disorders, neurological problems and more,” the president said at his desk, “including numerous veterans with service related injuries and older Americans who live with chronic medical problems that severely degrade their quality of life.”
The shift from Schedule I to Schedule III will mark a major change in the way that the drug is recognized in the U.S. It will not legalize cannabis, but will put it out of the same category as cocaine or heroin and into one that includes Tylenol with codeine, ketamine and certain prescription medications. Recreational usage will remain illegal at the federal level for the time being.
This executive order will also facilitate a pilot program that enables Medicare patients to receive reimbursement for products containing cannabidiol (CBD). It will enable seniors to access cannabis-derived therapies through federally insured healthcare. Currently, the FDA has only approved one CBD-derived drug for epilepsy: Epidiolex from Jazz Pharmaceuticals PLC (NASDAQ: JAZZ) (FRA: J7Z).
“President Trump’s Executive Order marks one of the most meaningful federal developments the industry has seen in decades, and the signal around potential Medicare reimbursement for CBD products is particularly significant,” High Tide Inc. (CVE: HITI) (NASDAQ: HITI) (FRA: 2LYA) CEO Raj Grover commented.
Research barriers to be removed
Finalization of the order will cut red tape and remove restrictions that hinder medical cannabis research.
Schedule I drugs are classified as having no accepted medical use and high abuse potential, requiring researchers to navigate stringent DEA approvals, limited supply sources and heightened security/storage protocols that have historically limited studies.
Schedule III substances, such as ketamine and anabolic steroids, carry moderate to low dependence risk and possess accepted medical uses. This subjects research on Schedule III drugs to far less burdensome DEA oversight.
The Drug Enforcement Administration now needs to finalize the president’s executive order to recognize cannabis as a less dangerous drug. The DEA could potentially wrap up this process by the end of 2026.
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Stocks dropped as investors felt underwhelmed
Despite the cannabis stock rally fuelled by investor speculation that led up to the move earlier this week, major operators watched their shares decline Thursday due to the executive order not meeting expectations. Notably, the AdvisorShares Pure US Cannabis ETF (NYSEARCA: MSOS), a key benchmark for American weed stocks, fell by over 27 per cent.
Additionally, Trulieve Cannabis Corp (CNSX: TRUL) (OTCMKTS: TCNNF) (FRA: T0A) observed a 23 per cent decline, Green Thumb Industries Inc (CNSX: GTII) (OTCMKTS: GTBIF) slid by more than 16 per cent and Canopy Growth Corp (TSE: WEED) (NASDAQ: CGC) (FRA: 11L) declined by approximately 12.5 per cent.
Trump’s new order disappointed investors with regard to banking reform in particular because it included no provisions addressing the proposed SAFE/SAFER Banking Act or mandating broader financial access for cannabis businesses — issues that require congressional action and remain unresolved.
However, the rescheduling will directly eliminate Section 280E of the IRS code, which currently bars operators from deducting ordinary business expenses like rent and payroll, leading to effective tax rates often over 70 per cent. Once finalized, this exemption will significantly boost cash flow, profitability, and reinvestment potential for state-licensed cannabis companies, providing a major long-term financial lifeline despite the absence of immediate banking relief.
Fears of increasing competition from international companies likely also contributed to the slide.
JUST NOW: President Trump signs an Executive Order to reschedule marijuana from Schedule I to Schedule III alongside doctors, cancer patients, veterans, and law enforcement pic.twitter.com/4BBaVMlosm
— Karoline Leavitt (@PressSec) December 18, 2025
Read more: Stressed out rats choose to inhale cannabis more than relaxed rodents, study finds
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