Overview of the President’s December 18th Executive Order and the Implications When Marijuana is Rescheduled to Schedule III under the U.S. Controlled Substances Act
TOP-LINE SUMMARY
The President signed an Executive Order on December 18, 2025, ordering his administration to move expeditiously to reschedule marijuana to Schedule III under the U.S. Controlled Substances Act. A final rule to reschedule marijuana has not yet been issued by the Department of Justice. The timeline for a final rule remains unknown, and until there is a final rule, marijuana remains Schedule I.
Rescheduling marijuana to Schedule III will:
- Remove the applicability of section 280E of the federal tax code, allowing marijuana businesses to deduct all standard business expenses in accordance with federal law, even if the Schedule III marijuana product is not a U.S. Food and Drug Administration (FDA) approved drug.
- Potentially make it easier to obtain and maintain a U.S. Drug Enforcement Administration (DEA) registration as a Schedule III research facility to research marijuana.Unless otherwise specified through new agency rules or policies, rescheduling marijuana will not:
- Change the federal status of state-regulated markets, which would remain non-compliant with U.S. federal law.
- Allow marijuana products that are not FDA-approved drugs to be prescribed by a doctor for a medical condition.
- Legalize interstate commerce. Interstate commerce of Schedule III drugs requires approval from the FDA, and necessary approvals and licenses under the Controlled Substances Act, as issued by DEA.
- Allow for the use of real-world cannabis products in human research, unless they meet FDA requirements for safety and quality through an Investigational New Drug (IND) Application.
- Change existing industry guidance from the Financial Crimes Enforcement Network (FinCEN), unless new guidance is released by the U.S. Department of Treasury.
- Change federal drug testing requirements, unless otherwise specified by appropriate federal agencies.
- Change criminal penalties for individuals found to be trafficking marijuana.
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