The US administration is expected to reclassify marijuana as a less dangerous drug starting Wednesday, as reported by Axios, citing an official familiar with the matter. Last December, President Donald Trump signed a decree ordering the relaxation of federal regulations on marijuana to reclassify it from Schedule I to Schedule III.
According to senior administration officials, Trump’s decree instructed his attorney general to swiftly proceed with the reclassification of marijuana, a process that could lead to the plant being listed as a less dangerous drug alongside common painkillers, ketamine, and testosterone. This reclassification, which could be the most significant policy change in marijuana regulation since 1970, would likely reshape the cannabis industry by reducing tax burdens, facilitating financing for businesses, and accelerating clinical research.
Cannabis-related companies such as Canopy Growth, Organigram Global, Sundial, Aurora Cannabis, Trulieve Cannabis, and Tilray Brands are expected to benefit from this development.
Such a measure could have significant implications for businesses.
Under the US Controlled Substances Act, marijuana is currently classified as a Schedule I drug like heroin, indicating a high potential for abuse and no recognized medical use. Last year, the Biden administration asked the Department of Health and Human Services to review the classification of marijuana and the agency recommended moving it to Schedule III, a category of substances with a low to moderate risk of physical or psychological dependence, such as steroids.
The Drug Enforcement Administration will review the recommendation and decide on the reclassification.
One of the main advantages of reclassification would be that cannabis industry companies would no longer be subject to Section 280E of the US federal tax code, which currently hinders these companies from claiming tax credits and deductions for business expenses.
A Schedule III classification could unlock access to banking for cannabis producers, attract institutional investors, reduce taxes, and stimulate mergers and acquisitions. Access to funding remains a significant challenge for cannabis producers due to federal restrictions that limit most banks and institutional investors from entering the sector, forcing producers to rely on expensive loans or alternative lenders.
The Congress has also been debating new measures for some time. The Secure and Fair Enforcement Regulation Banking Act (SAFER), introduced in 2023, would ensure that all businesses, including state-sanctioned cannabis companies, have access to deposit accounts, insurance, and other financial services.
Experts suggest that key factors such as the potential market size, the number of players, scientific validation, regulatory impact, and the sustainability of profits will determine the long-term prospects of the cannabis sector.
