By Timothy S. Donahue

Top Takeaways:

• Trump ordered DOJ to fast-track rescheduling of marijuana to Schedule III.
• Rod Kight highlighted the order’s increased focus on hemp and full-spectrum CBD.
• The move signals potential regulatory shifts affecting nicotine and cannabis markets.

President Donald Trump on Dec. 18 signed an executive order directing the U.S. attorney general to expedite the rescheduling of marijuana from Schedule I to Schedule III under the Controlled Substances Act, marking a significant shift in U.S. federal drug policy while stopping short of nationwide legalization.

The order accelerates a U.S. Drug Enforcement Administration review already underway and aligns with a 2023 Department of Health and Human Services recommendation recognizing that marijuana has an accepted medical use. Marijuana is currently classified alongside heroin and LSD as a Schedule I substance, defined as having no accepted medical use and a high potential for abuse. Schedule III substances include ketamine and certain anabolic steroids.

In addition to marijuana rescheduling, the executive order places greater emphasis on cannabidiol and hemp-derived cannabinoid products, directing federal agencies and Congress to address long-standing regulatory gaps.

Not Legalization

The White House emphasized that the executive order does not legalize recreational marijuana at the federal level. Instead, it directs the Department of Justice to complete the formal rulemaking process required to reschedule marijuana.

According to the administration’s fact sheet, 40 states and the District of Columbia operate regulated medical marijuana programs, with more than six million registered patients and approximately 30,000 licensed health care practitioners authorized to recommend marijuana for at least 15 medical conditions. The FDA has identified credible scientific support for marijuana’s medical use in treating anorexia related to medical conditions, nausea and vomiting, and pain.

Rod Kight, a globally recognized cannabis attorney, said the executive order is notable both for its scope and its limits.

“As I write this, President Trump is signing an Executive Order directing the Attorney General to reschedule marijuana to Schedule III from its current (and longstanding) place on Schedule I,” Kight wrote. “Notably, in addition to rescheduling, the EO addresses hemp and full-spectrum CBD.”

Kight has consistently cautioned that rescheduling does not resolve the broader conflict between federal law and state cannabis markets, nor does it produce FDA-approved marijuana products. Schedule III status primarily removes the federal government’s formal position that marijuana has no accepted medical use, improves research access, and alters certain tax consequences, but it leaves core regulatory and commercial barriers in place.

CBD Signal

Beyond marijuana scheduling, the executive order devotes substantial attention to hemp-derived cannabinoid products, particularly CBD. The administration acknowledged that these products are widely used by consumers yet lack a clear FDA regulatory pathway, limiting consistency, oversight, and consumer protections.

The order directs senior White House officials to work with Congress to update the statutory definition of “final hemp-derived cannabinoid products” to ensure access to appropriate full-spectrum CBD products while maintaining restrictions on products that pose serious health risks. It also calls for developing a regulatory framework that could include limits on THC per serving, per-container limits, and CBD-to-THC ratio requirements.

Kight said the hemp and CBD provisions may ultimately prove as consequential as marijuana rescheduling itself, depending on how Congress and federal agencies define and implement them. He has noted that regulatory clarity around hemp-derived cannabinoids could reshape enforcement priorities and market structure well beyond the cannabis sector.

Industry operators echoed that view, warning that Schedule III reclassification changes the legal classification but not day-to-day realities. Ari Raptis, CEO of Talaria Transportation & National Secure Transport, the largest cannabis distribution and secure transportation network in the U.S., said the move improves optics but leaves core structural problems unresolved.

“Schedule III reclassification changes how cannabis is treated on paper, but it does not change how the industry operates day to day,” Raptis said. “Cannabis remains federally illegal, and this does not automatically legalize recreational use or immediately solve banking and payments issues.”

Raptis said rescheduling helps with tax treatment but leaves unresolved issues in banking, payments, interstate commerce, and federal-state conflicts.

“Those unresolved gaps keep cash in the system, inflate compliance and security costs, and limit the industry’s ability to operate like any other regulated business,” he said.

From a financing perspective, Raptis said Schedule III improves perception rather than access to financing.

“Capital follows clarity, and clarity still has not arrived,” he said, adding that while some regional banks may become more comfortable, large national banks and payment networks are likely to remain cautious without explicit federal rules.

Raptis also warned that as capital gradually re-enters the sector, increased product movement and cash volumes will strain secure transportation, regulatory oversight, and public safety infrastructure, particularly in tightly regulated markets.

“Making cannabis a truly mainstream, well-regulated industry will require Congress to deliver clear, durable legislation on banking, payments, and interstate commerce,” he said.

The executive order directs HHS, FDA, NIH, and CMS to develop research methods that use real-world evidence to inform standards of care and improve access to hemp-derived cannabinoid products in accordance with federal law. Implementation now rests with the DEA’s rulemaking process and potential congressional action regarding hemp and CBD definitions.