President Donald Trump is moving toward a major overhaul of federal weed policy and this could deliver a reform outcome that advocacy groups and lawmakers across party lines have pushed for over many years.
According to reports the president plans to reclassify weed from its current Schedule I status to Schedule III under federal law. Such a move would mark one of the most significant shifts in national regulation in decades and would fundamentally change how the federal government treats weed-related activity.
At present weed is grouped in the same legal category as heroin under the Controlled Substances Act. Schedule I classification signals high potential for misuse and no accepted medical use. Reclassification would move weed into a category that includes substances such as ketamine anabolic ster*ids and testosterone. Washington post was the first to report.
News of the potential change immediately sent weed-related stocks higher as investors anticipated regulatory relief and improved operating conditions across the sector.
Reclassification would remove several barriers that have constrained the industry for years. One of the most impactful changes would be tax related. Under current law weed businesses are subject to Internal Revenue Code Section 280E which prevents them from deducting standard business expenses even though they still pay federal income taxes. This restriction exists solely because of Schedule I status and has pushed many companies to the edge financially.
The change would also expand opportunities for medical research which has long been limited by existing federal rules. Researchers have repeatedly argued that Schedule I classification makes legitimate study of potential therapeutic applications nearly impossible. Under Schedule III weed would be permitted for medical use according to guidance from the National Institutes of Health though it would not create nationwide legalization or allow pharmacies to distribute products.
The broader legal landscape remains fragmented. While federal law continues to prohibit weed entirely two dozen states three U.S. territories and the District of Columbia have legalized or decriminalized it in various forms. Federal enforcement still carries serious consequences including loss of eligibility for firearm purchases certain housing assistance visas federal employment and military service roles.
Colorado and Washington were the first states to approve adult recreational use in 2012 and Alaska Oregon and the District of Columbia followed soon after. Several additional states permit medical use while maintaining other restrictions and others allow possession with civil penalties rather than criminal charges. Some states permit medical use only with all other uses remaining prohibited.
Despite this patchwork federal law technically supersedes state regulations although most federal agencies defer to state frameworks when addressing weed-related matters.
The financial strain created by federal policy has been evident across the industry. MedMen one of the sector’s most recognizable brands sought bankruptcy protection in 2024 which highlighted the pressures companies face under Schedule I constraints. Banking access remains another challenge as many financial institutions avoid weed businesses due to federal restrictions which forces some operators to rely heavily on cash transactions.
States that have legalized weed have generated substantial tax revenue from regulated sales and many allocate those funds to public health programs local budgets and treatment services according to industry analysts.
The current move follows a recommendation issued during the Joe Biden administration when the Department of Health and Human Services advised the DEA to reclassify weed to Schedule III. That recommendation was not acted upon at the time.
International health bodies have also influenced the discussion. The World Health Organization recently formalized recognition of a serious weed-related medical condition which has since been adopted by the Centers for Disease Control and Prevention and added another layer to debates around health effects and regulation.
Looking ahead reclassification could eventually allow interstate commerce and remove long-standing research barriers although the DEA retains authority over implementation details. Congress also continues to shape policy through legislation as seen in recent spending bills that restricted certain hemp-derived products despite earlier allowances under the 2018 Farm Bill.
The potential shift stands out as a rare point of alignment between business interests public health advocates and criminal justice reformers who argue that current federal restrictions create more harm than benefit.