Trump's Cannabis Order Ignites Industry, Unlocks Medicare for CBD

LONG BEACH, CA – December 19, 2025 – In a move hailed as a seismic shift in U.S. drug policy, the Trump administration has taken executive action to reclassify cannabis and authorize a pilot program for Medicare reimbursement of CBD products. The executive order, signed December 18, directs the Attorney General to expedite the rescheduling of cannabis to a Schedule III substance and sets the stage for a potential $30 billion market for CBD aimed at seniors.

The news sent shockwaves through the cannabis industry, which has long operated in a legal gray area, burdened by federal prohibition. Industry leaders immediately applauded the move. Kyle Kazan, CEO of Glass House Brands, one of the largest vertically-integrated cannabis companies in the U.S., called the action “the most important drug reform of the past fifty years,” adding that it “reflects genuine common sense, acknowledging the beneficial medical and therapeutic properties of the cannabis plant.”

A Financial Revolution: The Fall of 280E

For cannabis businesses, the most immediate and transformative impact of rescheduling lies in the potential elimination of a punitive tax provision known as Section 280E. For decades, this section of the Internal Revenue Code has prohibited businesses trafficking in Schedule I or II substances from deducting standard business expenses like rent, payroll, and marketing. This has resulted in effective tax rates soaring as high as 70% or more, crippling profitability and stifling growth.

The move to Schedule III would exempt state-legal cannabis operators from 280E, fundamentally altering the financial landscape of the industry overnight. Analysts project that this change could inject an estimated $1.6 billion to $2.2 billion in annual after-tax cash flow back into the industry. This capital can be redeployed for expansion, research and development, and workforce investment, potentially fueling an unprecedented era of growth and innovation.

While the industry celebrates this financial liberation, experts caution that rescheduling is not the same as federal legalization. Cannabis will remain a controlled substance, and state-licensed dispensaries will still technically be in violation of federal law. The executive order directs Attorney General Pam Bondi to finalize the rescheduling process, but the complex interplay between state and federal regulations remains.

CBD for Seniors: A $30 Billion Bet on Wellness

The second pillar of the administration's action is the creation of a pilot program to allow Medicare to reimburse seniors for CBD products. Starting as early as April 2026, more than 60 million Medicare beneficiaries could be eligible for up to $500 per year for qualifying CBD treatments for conditions like pain, anxiety, and inflammation.

Glass House Brands, in its response, estimated this creates a “more than $30 billion market,” a figure that underscores the immense economic potential of integrating cannabis-derived medicine into the nation's largest public health system. “Given our low-cost, high-quality cannabinoid production model, Glass House can be a leading supplier to this market,” Kazan stated, highlighting the company’s focus on developing compliant CBD products.

However, a significant regulatory contradiction looms over this new opportunity. Recent federal legislation has narrowed the legal definition of hemp by restricting its total THC content, including non-psychoactive THCA. This change, set to take effect by November 2026, could render many of the full-spectrum CBD products currently on the market federally illegal. This creates a precarious situation where Medicare may begin reimbursing for products that could be outlawed shortly thereafter, a challenge the industry and regulators will have to navigate carefully.

Navigating the New Landscape: Opportunities and Hurdles

The policy shift opens numerous doors while leaving others closed. Rescheduling is expected to significantly ease the heavy regulatory burdens that have historically hampered scientific research into cannabis. With Schedule III status, scientists and pharmaceutical companies will find it easier to conduct clinical trials, potentially leading to a new wave of FDA-approved, cannabis-derived medicines.

However, this path also raises concerns among some industry veterans about a potential takeover by “Big Pharma.” Moving cannabis to Schedule III does not automatically permit interstate commerce for state-licensed brands. To be sold across state lines, a cannabis product would likely require full FDA approval, a long and costly process that favors large pharmaceutical corporations over existing state-licensed operators. Some fear this could marginalize the dispensary model that has defined the industry to date in favor of prescription-only products.

Despite these concerns, the overall sentiment is one of cautious optimism. The move is expected to lower perceived risks for financial institutions, potentially improving access to essential banking services and unlocking institutional investment that has remained on the sidelines.

Cultivating the Future: One Company's Playbook

Among the companies positioning themselves to capitalize on this new era is California-based Glass House Brands. The company has been aggressively scaling its operations, with a clear strategy to become a dominant, low-cost producer.

Glass House is already operating one of the largest cannabis cultivation footprints in the country and is on track to exceed an annual production capacity of 1 million pounds of biomass by early 2026. This focus on massive scale is paired with a strategic partnership with the University of California, Berkeley, to advance research into medicinal hemp and develop novel products targeting pain, sleep, and inflammation—ailments common among the senior population now eligible for the Medicare pilot.

“We have existing CBD/low THC strains in the California market that we believe can be comported with the new federal regulations and are actively engaged in the development of these CBD products,” Kazan affirmed in his statement. The company reports it is already fully planted in its legacy greenhouses, with its cultivation team managing the most acreage in its history. This ramp-up signals a clear intent to meet the anticipated surge in demand and solidify its position in a rapidly transforming American cannabis market.