US President Donald Trump sits in the Oval Office to sign executive orders, at the White House in Washington, DC, United States, on December 18, 2025.
Evelyn Hockstein | Reuters
President Donald Trump on Thursday signed an executive order directing federal agencies to reclassify marijuana, loosening longstanding restrictions on the drug and marking the most consequential shift in U.S. cannabis policy in more than half a century.
The order, once finalized by the DEA, moves cannabis from a Schedule I classification (the most restrictive category under the Controlled Substances Act, along with heroin and LSD) to a Schedule III classification, which encompasses substances with accepted medical use and a lower potential for abuse, such as ketamine and Tylenol with codeine.
“This action has been requested by American patients suffering from extreme pain, incurable diseases, aggressive cancers, seizure disorders, neurological problems and more, including numerous veterans with service-connected injuries and older Americans living with chronic medical problems that severely degrade their quality of life,” Trump said from the Oval Office on Thursday.
Also on Thursday, the Centers for Medicare and Medicaid Services, led by Dr. Mehmet Oz, is expected to launch a pilot program in April that will allow certain seniors covered by Medicare to receive free, doctor-recommended CBD products, which must comply with all local and state laws on quality and safety, according to senior White House officials. Products must also come from a law-compliant source and undergo third-party testing for CBD levels and contaminants.
Shares of cannabis conglomerates posted mixed results following the announcement. Actions of Tilray Brands rose about 6%, while Trulieve shares sank about 15% and Green Thumb Industries fell about 5% in afternoon trading. He AdvisorShares US Pure Cannabis ETFwhich follows US traders, fell more than 10%.
Many analysts consider the reclassification a financial lifeline for the cannabis industry. The measure exempts businesses from Section 280E of the IRS Code, allowing them to deduct standard expenses such as rent and payroll for the first time. It also opens the door to banking access and institutional capital previously marginalized by compliance fears.
But many on Wall Street also hope that the changes and the Medicare pilot program will attract major pharmaceutical players to the sector to seek federally insured revenue.
While CBD has gained popularity in recent years, with consumer products ranging from carbonated beverages to skin care products, the FDA has stopped short of giving the compound its full endorsement.
Studies have found “inconsistent benefits” for specific conditions, while FDA-funded research warns that long-term use of CBD can cause liver toxicity and interfere with other life-saving medications.
Currently, the FDA has only approved one CBD-based medication, Epidiolex, for rare forms of epilepsy.
“I want to emphasize that the order … does not legalize marijuana in any way, and in no way sanctions its use as a recreational drug,” Trump said.
Experts and industry insiders told CNBC this week that a reclassification could pave the way for more research into the effects of using CBD.
