President Donald Trump has signed an executive order to reschedule cannabis from Schedule I to Schedule III under the Controlled Substances Act (CSA), recognizing its medical uses and opening further opportunities for research.

Within the order, Trump directed the Attorney General to “take all necessary steps to complete the rulemaking process related to rescheduling marijuana.” The order follows a May 2024 proposed rule from the U.S. Drug Enforcement Administration, which received 43,000 public comments and is awaiting an administrative hearing.

While the rescheduling — which will position cannabis alongside ketamine and anabolic steroids — acknowledges cannabis’ medical applications and lower potential for abuse, the manufacturing, distribution and possession of cannabis would still be subject to the CSA. Cannabis previously existed in Schedule I, alongside drugs such as heroin, LSD and ecstasy.

The U.S. Department of Health and Human Services recommended rescheduling cannabis in August 2023 after former President Joe Biden called on the agency to review its status in 2022.

The move has buoyed the industry, which has faced a substantial tax burden and limited access to financial services due to cannabis’ classification.

Cy Scott, co-founder and CEO of cannabis data firm Headset, pointed to Internal Revenue Code Section 280E, which prohibits companies from taking ordinary tax deductions if their business involves Schedule I or Schedule II substances. Scott says rescheduling would have “immediate, real-world consequences for operators, particularly at a moment when the industry is under historic financial pressure.”

“In that environment, 280E is not an abstract policy issue,” Scott says. “It directly determines whether many otherwise healthy, well-run businesses can stay open. Because the tax effectively applies to gross profit rather than true operating income, a significant share of cannabis retailers today are operating at or near breakeven after federal taxes. Removing 280E would create an instant improvement in cash flow, allowing operators to stabilize their businesses rather than simply survive quarter to quarter.”

Boris Jordan, founder, chairman and CEO of Curaleaf, applauded the move.

“This action is a landmark moment for our industry and the country,” Jordan said. “President Trump’s action is the most impactful move taken around the cannabis plant since its prohibition 55 years ago. We applaud the Trump Administration for boldly acknowledging what science, patients and the industry have known for years: Cannabis has real medical value and never belonged in Schedule I in the first place.”

Sam Brill, CEO of Ascend Wellness Holdings, echoed those sentiments.

“The move to reschedule cannabis from Schedule I to Schedule III marks a critical advancement for society, public safety and access for patients across the United States,” Brill said. “Recognizing the medicinal benefits of cannabis paves the way for expanded research, informed policymaking and more consistent access to safe, regulated products for those who need them most.”

Trump’s executive order also calls on Congress to update the statutory definition of hemp-derived cannabinoid products to support access to full-spectrum CBD products while restricting the sale of products that pose serious health risks. The direction follows a wide-reaching hemp THC ban included in government funding bill last year.

“We consider this executive order to be a direct rebuke to the hemp ban that was malignly attached to legislation that reopened government,” reads a statement from the U.S. Hemp Roundtable. “This also gives strong impetus to efforts to extend the ban’s moratorium an additional 18 months to allow proper time for Congress and the Trump Administration to develop the regulatory framework that ensures the safe provision of hemp products while cracking down on the bad actors peddling the unsafe products that the Executive Order calls out.”

The Texas Hemp Business Council also lauded the move, noting the ban — which would cap container limits of hemp THC at 0.4 mg — would effectively dismantle the $28 billion U.S. hemp industry.

“This moment highlights the growing disconnect between the American public and a Congress that continues to mishandle hemp policy,” the Texas Hemp Business Council said. “Congress must follow the president’s lead and protect full-spectrum CBD, while ensuring a science-based regulatory framework that prioritizes safety without destroying a legitimate American industry.”