Trump signs EO easing federal marijuana restrictions
President Donald Trump signed an executive order easing federal marijuana restrictions.
- President Donald Trump signed an executive order on Dec. 18 to federally classify marijuana as a less dangerous substance.
- The order doesn’t legalize marijuana and also doesn’t immediately reschedule marijuana.
- Michigan’s cannabis industry celebrated the move and said marijuana companies could benefit from tax deductions and exemptions if it’s rescheduled.
President Donald Trump signed an executive order on Dec. 18 to federally classify marijuana as a less dangerous substance, a move applauded by Michigan’s marijuana industry.
The order doesn’t legalize marijuana and also doesn’t immediately reschedule marijuana.
What the executive order does is it directs the Attorney General to “take all necessary steps to complete the rulemaking process related to rescheduling marijuana to Schedule III of the Controlled Substances Act in the most expeditious manner in accordance with federal law.”
It will take time — perhaps months — for that change to go through the regulatory process.
But if marijuana is rescheduled, it would change from a Schedule I drug — considered highly dangerous, addictive and without medical use — to a Schedule III drug — like Tylenol with codeine and ketamine — which would mean it can be lawfully prescribed as medication.
Trump’s signing of the order builds on work started by then-President Joe Biden in 2022, when he asked the departments of Justice, and Health and Human Services to review how marijuana should be scheduled under federal law.
In 2023, the Department of Health and Human Services recommended it be rescheduled to Schedule III. The Justice Department then did its own analysis and reached the same conclusion. But then the process stalled.
Now, with Trump’s executive order, rescheduling cannabis is a possibility once again.
The executive order comes at a time when Michigan’s cannabis industry is already going through a lot of change. A new 24% tax on the wholesale price of marijuana is set to go into effect on Jan. 1, which will likely lead to higher prices for consumers and could impact sales, leading to business closures.
Those in Michigan’s cannabis industry generally celebrated the executive order, and said that, at a high level, it gives the industry more credibility. Rescheduling cannabis will also likely allow marijuana companies to benefit from tax deductions and exemptions available to businesses in other industries.
The executive director of Michigan’s Cannabis Regulatory Agency said in an emailed statement that while he’s still assessing the details of the order, “this development has the potential to move the federal marijuana policy debate forward after years of advocacy by patients, businesses and states across the country.”
“Rescheduling marijuana carries important implications — but also clear limitations — for state-regulated markets,” Brian Hanna, executive director of Michigan’s CRA, said in the statement.
Hanna pointed to comments the agency submitted to the U.S. Drug Enforcement Administration during the rescheduling rulemaking process last year, which he said emphasized the need for federal policy to reflect the realities of state-regulated markets like Michigan’s.
Robin Schneider, executive director of the Michigan Cannabis Industry Association, in an emailed statement called the order “a significant win for our industry.” She said the move eliminates 280E tax implications and “opens the door to critical reforms, including expanded access to banking and financial services.”
Section 280E — the Internal Revenue Code that prohibits taxpayers who are engaged in the business of trafficking certain controlled substances from deducting typical business expenses associated with those activities — would likely not apply to these companies.
Ross Sloan, a senior vice president and cannabis banking officer at Michigan-based Dart Bank, described rescheduling marijuana to Schedule III as a “meaningful but limited step.”
Sloan said in emailed comments that the relief from 280E “should free up capital for reinvestment, improve cash flow and strengthen operators’ ability to service debt over time.”
However, he noted that rescheduling marijuana doesn’t change restrictions on interstate commerce and also introduces new considerations, such as the potential for increased regulatory oversight through the FDA and possibly greater competition from larger pharmaceutical or institutional players.
“Those pressures come at a time when many cannabis businesses are already facing tight margins and pricing challenges,” Sloan said.
Detroit Free Press staff writer Todd Spangler contributed to this report.
Contact Adrienne Roberts: amroberts@freepress.com
