Trump Expected to Sign Order Reclassifying Marijuana in December 2025

U.S. President Donald Trump is anticipated to issue an executive order in December 2025 directing federal agencies to reclassify marijuana from Schedule I to Schedule III under the Controlled Substances Act. This significant administrative move would formally acknowledge cannabis as a substance with accepted medical applications within the federal framework. Such a designation places it alongside certain prescription medications, including codeine-based drugs and ketamine.

This initiative is designed to finalize a review process that began under the Biden administration's Department of Justice back in 2023. However, that process stalled at the Drug Enforcement Administration (DEA) level pending expert review. President Trump’s anticipated decree is expected to bypass the administrative hearings that have been suspended since January, thereby accelerating the change.

A major ramification of this reclassification pertains to Section 280E of the Internal Revenue Code. This section currently imposes punitive tax conditions on cannabis-related businesses. Because of this rule, state-legal cannabis enterprises cannot deduct standard operating expenses. This results in extremely high effective tax rates, sometimes exceeding 70 percent. In certain instances, with gross profits reaching $1.4 million, the effective tax burden could climb as high as 98 percent. Moving cannabis to Schedule III would instantly lift this heavy burden, providing substantial fiscal relief.

The market has already reacted strongly to this prospect. Shares in cannabis companies saw a notable surge, with some climbing between 10 and 35 percent on Friday alone. This immediate investor enthusiasm underscores the financial significance of shedding the 280E restrictions.

Several key players are involved in steering this reclassification effort, including President Trump, the Department of Justice, the Department of Health and Human Services (HHS), and the DEA. Particular attention is focused on DEA Administrator Terrence Cole. Reports suggest Cole harbors skepticism regarding the reclassification and previously indicated he would give the matter a thorough examination following consultations with agency staff. Although Cole did not list reclassification among his top eight priorities upon confirmation, his appointment nonetheless rekindled hopes for advancing the process.

It is crucial to understand that this status change does not equate to full federal legalization or decriminalization of cannabis. State-level regulations will remain in effect, and barriers to banking services are likely to persist without further comprehensive federal reform. Industry leaders have voiced concerns that a shift to Schedule III might subject these businesses to new federal pharmaceutical regulations. Furthermore, there is worry that pharmaceutical giants could potentially dominate the market using synthetic THC.

Adding complexity, anti-reform advocacy groups, such as Smart Approaches to Marijuana, are reportedly prepared to challenge the reclassification legally should it proceed. Meanwhile, public sentiment in the U.S. regarding marijuana legalization remains high, albeit slightly tempered. A Gallup poll conducted in late 2025 indicated that 64 percent of American adults favor legalization, a dip from the 68 to 70 percent support seen between 2020 and 2024. Notably, Republican support dropped to 40 percent in 2025, down from 53 percent the previous year, marking the lowest level for that demographic in a decade. Amidst these regulatory maneuvers, legislative efforts like the Marijuana 1-to-3 Act (H.R. 4963) are also pushing for the Schedule III reclassification.