U.S. President Donald Trump sits in the Oval Office to sign executive orders, at the White House in Washington, DC, United States, December 18, 2025.
Evelyn Hockstein | Reuters
President Donald Trump signed an executive order Thursday directing federal agencies to reclassify marijuana, easing longstanding restrictions on the drug and marking the most consequential change in U.S. cannabis policy in more than half a century.
The order, once finalized by the Drug Enforcement Administration, moves cannabis from a Schedule I classification – the most restrictive category under the Controlled Substances Act, alongside heroin and LSD – to a Schedule III classification, which encompasses substances with accepted medical use and low potential for abuse, such as ketamine and Tylenol with codeine.
“This action was requested by American patients suffering from extreme pain, incurable illnesses, aggressive cancers, seizure disorders, neurological problems and more, including many veterans suffering from service-related injuries, and older Americans who live with chronic medical problems that seriously degrade their quality of life,” Trump said from the Oval Office on Thursday.
Also Thursday, the Centers for Medicare and Medicaid Services, led by Dr. Mehmet Oz, is expected to launch a pilot program in April allowing certain seniors covered by Medicare to receive free doctor-recommended CBD products, who must comply with all local and state quality and safety laws, according to senior White House officials. Products must also come from a legally compliant source and undergo third-party testing for CBD levels and contaminants.
Shares of cannabis conglomerates were mixed following the announcement. Actions of Tilray Brands rose about 6%, while shares of Trulieve fell about 15% and Green Thumb Industries fell about 5% in afternoon trading. THE AdvisorShares Pure American Cannabis ETFwhich follows American operators, fell by more than 10%.
“Millions of registered patients across the United States, many of them veterans, rely on cannabis to relieve their chronic and debilitating symptoms. We applaud the administration for taking this historic step. This is just the beginning,” Ben Kovler, CEO and founder of Green Thumb, said in a statement to CNBC.
The reclassification is seen by many analysts as a financial lifeline for the cannabis industry. The move exempts businesses from Section 280E of the IRS code, allowing them for the first time to deduct standard expenses such as rent and payroll. It also opens the door to access to the banking sector and institutional capital, previously marginalized by compliance fears.
Many on Wall Street also expect the Medicare changes and pilot to attract major pharmaceutical players into the sector to chase federally insured revenue.
While CBD has grown in popularity in recent years, with infused consumer products ranging from seltzers to skincare, the FDA has yet to give its full support to the compound.
Studies have found “inconsistent benefits” for targeted conditions, while FDA-funded research warns that prolonged use of CBD can cause liver toxicity and interfere with other life-saving medications.
Currently, the FDA has only approved one CBD product, Epidiolex, for rare forms of epilepsy.
“I want to emphasize that the order … does not legalize marijuana in any form and in no way penalizes its use as a recreational drug,” Trump said.
Experts and industry insiders told CNBC this week that a reclassification could pave the way for more research into the effects of CBD use.