Trump Orders HHS to Reschedule Cannabis to Schedule III, Spurring Market Optimism

President Donald Trump Plans to Push for Cannabis Rescheduling as Less Dangerous

President Donald Trump is expected to direct his administration to reclassify marijuana as a less dangerous drug, a move that could significantly shift U.S. policy on cannabis according to Bloomberg. Trump has discussed the idea with marijuana industry executives and high-ranking officials, including Health and Human Services Secretary Robert F. Kennedy Jr. and Centers for Medicare & Medicaid Services Administrator Mehmet Oz. The potential reclassification would move cannabis from Schedule I to Schedule III, placing it alongside substances like ketamine and anabolic steroids as reported.

The current classification of cannabis as a Schedule I drug places it in the same category as substances like heroin and LSD, which are considered to have no medical use and a high potential for abuse according to research. Reclassifying it to Schedule III would indicate a lower risk of dependency and open the door for more medical research and commercial opportunities. This shift could ease regulatory burdens for cannabis companies and benefit investors seeking long-term growth in the sector as data shows.

U.S. cannabis legislation remains fragmented, with over 40 states and the District of Columbia allowing medical marijuana use and about half permitting recreational use. However, federal bans continue to create challenges for banking, taxation, and interstate commerce. A rescheduling decision could alleviate these hurdles, particularly by improving access to mainstream financial services and attracting broader investment according to market analysis.

Market Implications of Reclassification

The reclassification of cannabis would have profound market implications, particularly for the cannabis industry. Companies in the sector have long lobbied for federal reform, and a change in classification could reduce tax burdens and regulatory constraints. It could also help attract more mainstream lenders and investors, increasing liquidity and growth opportunities for cannabis firms as market experts indicate. The potential for expanded medical research could also lead to new product development and innovation, further strengthening the industry's economic impact.

Cannabis companies have historically faced significant challenges due to their federal classification. Banks have been reluctant to provide services to cannabis firms, creating financial instability and limiting growth. Reclassification could make it easier for these companies to access traditional financial systems, reducing reliance on cash-based operations and improving overall business sustainability according to industry analysis. Additionally, the move could enhance public confidence in the sector, encouraging more individuals and institutions to invest in cannabis-related assets.

Legislative and Regulatory Hurdles

Despite the potential benefits, reclassification is not a straightforward process. The change would require the completion of a rulemaking process that has been delayed since January 2025. While Trump may seek to expedite the process through an executive order, the final decision would depend on regulatory agencies completing their evaluation according to regulatory sources. This delay could create uncertainty for investors and companies relying on clearer regulatory guidelines.

Legislative efforts to decriminalize cannabis at the federal level have so far yielded limited progress. Lawmakers have introduced various bills aimed at reforming cannabis laws, but political divisions have prevented significant changes from being enacted as legislative reports indicate. The rescheduling proposal could serve as a middle ground, providing a policy shift without requiring full legislative reform. However, it remains to be seen how effective this approach will be in addressing the broader issues surrounding cannabis use and regulation.

Investor Considerations

For investors, the potential reclassification of cannabis is a key event to watch. The move could signal a more favorable regulatory environment, potentially boosting the valuations of cannabis companies. However, investors should remain cautious, as the rulemaking process could take time, and the final outcome may not fully align with industry expectations as analysts note. Companies with strong financials and diverse product lines may benefit the most from a regulatory shift, while smaller firms could face challenges adapting to new requirements.

The cannabis industry is also showing signs of resilience in the face of regulatory uncertainty. For example, POSaBIT Systems, a cannabis technology firm, recently reported record adjusted EBITDA despite a decline in revenue, indicating strong operational efficiency according to earnings data. Similarly, Bullish Inc. reported a significant increase in Q3 2025 revenue, showing that the market is still generating strong returns despite ongoing challenges as reported. These developments suggest that while regulatory changes could provide a boost, the industry is already demonstrating growth in various areas.

The reclassification of cannabis under Trump's administration could mark a turning point in U.S. drug policy. If implemented, it would signal a significant shift in how the government views the drug, potentially opening the door for broader reforms in the future. For now, investors and industry stakeholders will be closely monitoring the rulemaking process and any further announcements from the administration as Bloomberg reports.