Cannabis Rescheduled: Trump's Order Ignites Industry Transformation

CHICAGO, IL – December 18, 2025 – In a move heralded as a historic turning point for one of America’s fastest-growing sectors, President Donald Trump today issued an Executive Order directing the Department of Justice to reschedule cannabis from Schedule I to Schedule III of the Controlled Substances Act (CSA). The decision, which accelerates a process initiated under the previous administration, has sent waves of optimism through the cannabis industry, with leaders celebrating the potential for sweeping reforms in taxation, banking, and medical research.

Verano Holdings Corp., a leading multi-state cannabis operator, was among the first to applaud the announcement. The company, which runs 158 dispensaries and over 1.1 million square feet of cultivation capacity across 13 states, framed the policy shift as a long-overdue validation of the industry's economic and social contributions.

“Today's historic cannabis rescheduling announcement marks a significant milestone and transformative policy shift that paves the way for America’s next great homegrown industry to finally reach its full potential,” said George Archos, Verano Founder and Chief Executive Officer, in a statement. “We’re grateful to President Trump for recognizing the overwhelming majority of Americans who support cannabis rescheduling, opening the door to federal reform, medical research, and normalization for an industry that employs hundreds of thousands of professionals and contributes billions of dollars in taxes and economic activity every year.”

A Monumental Shift in Federal Policy

For over 50 years, cannabis has been classified as a Schedule I substance, a category reserved for drugs with a high potential for abuse and no accepted medical use, placing it alongside heroin and LSD. The move to Schedule III fundamentally alters this definition at the federal level, officially recognizing that cannabis has accepted medical applications and a lower potential for abuse than substances in Schedules I and II. Other Schedule III drugs include ketamine and Tylenol with codeine.

This reclassification, however, is not federal legalization. Recreational cannabis will remain illegal under federal law, and the complex patchwork of state-level regulations will persist. But the symbolic and practical implications are profound. The order directs the Attorney General to expedite the formal rulemaking process, which includes a public comment period. This action follows an August 2023 recommendation from the Department of Health and Human Services (HHS) to the Drug Enforcement Administration (DEA) to make the same change, a process that had stalled before today’s executive intervention.

The decision effectively aligns federal policy more closely with the 40 states that have already legalized medical cannabis and the 24 that permit adult recreational use, acknowledging a reality that has long been at odds with federal statute.

The Billion-Dollar Tax Windfall

The most immediate and tangible benefit for cannabis companies like Verano is the anticipated relief from the punitive IRS tax code Section 280E. This provision has long forbidden businesses “trafficking” in Schedule I or II substances from deducting standard business expenses—such as payroll, rent, and marketing—from their federal tax filings. This has resulted in cannabis companies paying effective tax rates of 70% or higher, severely restricting cash flow and hindering growth.

With cannabis moved to Schedule III, Section 280E will no longer apply. For Verano, the financial impact is staggering. The company previously disclosed that the removal of this tax burden would have saved it over $80 million in cash flow in fiscal year 2023 alone. This newfound capital can be redeployed to lower prices for consumers, increase employee wages, expand operations, and drive innovation.

Across the industry, the effect will be transformative, unlocking billions of dollars in capital that can fuel a new wave of investment and job creation. It allows state-legal cannabis businesses to operate on a more level playing field with other mainstream industries, a change that executives have sought for over a decade.

Unlocking Banking and Investment Avenues

Beyond the tax relief, rescheduling is expected to thaw the industry's frozen relationship with the financial sector. Major banks have largely refused to service cannabis companies due to the federal illegality and risks associated with handling funds from a Schedule I enterprise. Rescheduling to Schedule III significantly lowers this perceived risk, potentially opening the door for businesses to access traditional banking services like loans, lines of credit, and simple checking accounts.

While some experts caution that comprehensive banking reform, such as the long-stalled SAFER Banking Act, may still be necessary to provide full legal safe harbor for financial institutions, the move is a crucial step toward normalization. It is also expected to attract a new class of institutional investors who were previously deterred by the Schedule I classification.

For companies like Verano, which currently trade on the OTCQX market and the Canadian Securities Exchange, the move also fuels ambitions for a U.S. stock exchange listing. While rescheduling does not automatically grant access to major exchanges like the NYSE or Nasdaq—as cannabis remains a federally controlled substance—it removes a significant barrier and signals a clear path toward that goal. Normalizing the industry's financial footing is a critical prerequisite for its acceptance on Wall Street.

A New Dawn for Medical Cannabis Research

The reclassification also promises to dismantle decades-old barriers that have stifled scientific and medical research into cannabis in the United States. As a Schedule I substance, studying cannabis required navigating a gauntlet of burdensome regulations and a limited supply of government-approved product. The move to Schedule III will dramatically ease these restrictions, allowing scientists and medical institutions to conduct more robust clinical trials.

This change represents a formal acknowledgment by the federal government of cannabis's therapeutic potential, which the FDA has noted for treating conditions like pain, anorexia, and chemotherapy-induced nausea. The Executive Order specifically directs HHS to develop new research models to better understand the long-term health effects of medical cannabis. This could usher in an era of evidence-based, cannabis-derived medicines and provide clearer guidance for patients and physicians.

The shift will also bring cannabis more directly under the regulatory oversight of the Food and Drug Administration (FDA), which could push the industry toward more rigorous, pharmaceutical-grade standards for product quality, testing, and labeling, ultimately benefiting consumer safety. As the federal government finally begins to align its policies with scientific evidence and overwhelming public opinion, the American cannabis industry stands at the precipice of a new, more integrated, and potentially far more profitable era.