Cannabis Industry Alert: Executive Order Directs Completion of Marijuana Rescheduling Rulemaking

On Thursday, December 18, 2025, President Trump signed an executive order directing the Attorney General to complete the ongoing administrative rulemaking process related to the potential rescheduling of marijuana from Schedule I to Schedule III under the Controlled Substances Act. The order does not itself reschedule marijuana. Any change in scheduling must occur through completion of the administrative process under the Controlled Substances Act, including final action by the Drug Enforcement Administration and publication of a Final Rule in the Federal Register with an effective date.

The text of the executive order confirms that marijuana remains classified as a Schedule I substance and focuses on accelerating the completion of an existing rulemaking process related to medical marijuana research and oversight, as well as directing additional research and regulatory coordination related to hemp derived cannabinoid products. The order directs the attorney general to complete the rulemaking process that began a few years ago related to rescheduling marijuana to Schedule III of the Controlled Substances Act in the most expeditious manner in accordance with federal law.

The purpose of the order is to address barriers to medical research and regulatory oversight related to the use of marijuana for medical purposes which has been impacted by its status as a Schedule I drug. It should be noted that the order does not address adult-use or recreational marijuana in any way and does not itself alter marijuana’s legal status under the Controlled Substances Act or its federal income tax status under Internal Revenue Code Section 280E.

Until such rule is finalized, marijuana continues to be classified as a Schedule I substance, and marijuana-related businesses remain subject to Internal Revenue Code Section 280E, which disallows business deductions and credits for businesses considered to be trafficking in controlled substances under Schedule I or II of the Controlled Substances Act. Any change to the application of Section 280E would occur, if at all, only on a prospective basis following the effective date of a final rescheduling rule.

Our Cannabis Advisory Services team will continue to monitor developments in the administrative rulemaking process and will assess the potential implications for cannabis operators as additional authoritative guidance becomes available.