The Federal Shakeup: Marijuana Rescheduling Executive Order Changes the Game

The Federal Shakeup: Marijuana Rescheduling Executive Order Changes the Game

In a monumental shift for federal drug policy, President Trump signed an Executive Order on December 18, 2025, directing the Attorney General and the DEA to expedite the reclassification of marijuana from Schedule I to Schedule III.

While the administrative process has been in motion since 2022, this “holiday surprise” order effectively forces the hand of the DEA to finalize a rule that has been stalled by hearings and appeals for much of 2025. This move marks the most significant change to the Controlled Substances Act (CSA) since its inception in the 1970s.

1. What the Executive Order Does (and Doesn’t) Do

The primary objective of the order is to move marijuana into the same category as ketamine and anabolic steroids, acknowledging for the first time at a federal level that the plant has an “accepted medical use.”

• Expedited Rulemaking: It directs the Attorney General to complete the ongoing rulemaking process “in the most expeditious manner,” aiming to bypass further procedural delays.

• Medical Focus: The order emphasizes Medical Marijuana and CBD research. It does not legalize recreational use federally, nor does it override state-level bans.

• Research Expansion: Researchers will no longer face the exhaustive “Schedule I” registration hurdles that have historically stifled cannabis studies in the U.S.

2. The Financial Game-Changer: Section 280E

For the cannabis industry, the most critical “game-changer” isn’t social—it’s financial. The move to Schedule III effectively kills IRS Code Section 280E.

Analyst Note: This shift is expected to save the U.S. cannabis industry billions of dollars annually, providing a massive lifeline to struggling operators who currently pay effective tax rates of 70% or higher.

3. The “Hemp Lifeline” and CBD Pilot Program

The Executive Order also addresses a growing crisis in the hemp industry following the November 2025 spending bill, which threatened to ban many non-intoxicating CBD products.

• Redefining Hemp: The order urges Congress to revisit the “Total THC” definition to protect non-intoxicating CBD while remaining strict on synthetic, intoxicating products like Delta-8.

• Serving Size Guidance: It directs the FDA and USDA to develop clear “serving size” regulations to create a standardized national market for hemp-derived cannabinoids.

4. Timeline: When Will It Be Official?

While the President has ordered an “expeditious” conclusion, the DEA must still follow the Administrative Procedure Act.

• December 2025: Executive Order issued.

• January 2026: Final hearings and record reviews expected to conclude.

• Q2 2026: Earliest projected date for the Final Rule to be published in the Federal Register.

• Implementation: Usually, there is a 30-to-90-day window after publication before the change becomes legally effective.

Conclusion: A Tectonic Shift in Federal Policy

By explicitly establishing a federal policy to expand medical research and fix the tax “death trap” for cannabis businesses, the 2025 Schedule 1 update represents a point of no return. While it stops short of full decriminalization, it brings the federal government closer to the reality of the 38 states that have already legalized medical use.