A landmark federal policy shift is on the horizon, and the ripple effects on markets, science, and the drug war could be seismic.
The federal government is poised to take what could be its most consequential step on marijuana policy in a generation. The Trump administration is expected to move as early as Wednesday to formally reclassify marijuana under federal law, a decision that would rewrite decades of drug enforcement orthodoxy and send shockwaves through the booming cannabis industry.
News of the anticipated move, first reported by Axios and attributed to an official with knowledge of the matter, immediately rattled financial markets — in the best way possible for cannabis investors. Shares of Canopy Growth surged 23 percent, while Tilray Brands climbed 15 percent in U.S.-listed trading.
Marijuana and the Schedule Question
Currently classified as a Schedule I controlled substance — a category reserved for drugs deemed to have no accepted medical use and a high potential for abuse — marijuana has long been lumped alongside heroin and LSD under federal law. Reclassifying the drug to Schedule III would move it into a very different neighborhood, placing it alongside ketamine, testosterone, and certain prescription painkillers. That shift alone would represent a tacit federal acknowledgment that marijuana has legitimate medical applications and carries a comparatively lower risk profile.
The authority to make that call rests with the Drug Enforcement Administration, which had not responded to requests for comment as of publication time. Neither had the Justice Department.
Trump’s Executive Order Sets the Stage
The groundwork for Wednesday’s expected announcement was laid in December, when President Donald Trump signed an executive order directing federal agencies to ease regulatory restrictions on marijuana. While the order stopped short of reclassifying the substance outright, it signaled a clear shift in the administration’s posture — and set in motion the bureaucratic machinery needed to make rescheduling a reality.
For advocates who have spent years pushing for federal reform, the moment carries a weight that goes beyond politics. Rescheduling marijuana would remove longstanding barriers to scientific research, allowing universities and pharmaceutical companies to study the plant’s therapeutic properties with far fewer regulatory hurdles than currently exist.
What Reclassification Means for the Marijuana Industry
The financial stakes are enormous. Under current federal law, cannabis companies are prohibited from deducting standard business expenses on their federal tax returns — an obscure but punishing provision known as 280E — because they traffic in a Schedule I substance. Reclassification to Schedule III would effectively eliminate that burden, dramatically improving the bottom line for cannabis operators overnight.
Access to capital could also improve. Banks and institutional investors have largely avoided the cannabis sector because of its murky federal status. A change in scheduling would not legalize marijuana nationally, but it would signal that the federal government views the industry in a fundamentally different light — potentially unlocking financing channels that have long been closed off.
Companies like Canopy Growth, Tilray Brands, and Trulieve Cannabis — all publicly traded and heavily exposed to the U.S. market — stand to benefit most directly from the policy change. The investor reaction on Tuesday reflects not just optimism, but years of pent-up anticipation.
A Policy Shift Decades in the Making
Marijuana has been a Schedule I substance since the Controlled Substances Act was enacted in 1970 — a classification that critics have long argued is scientifically and morally indefensible given the drug’s widespread medical use across dozens of states. More than 40 states have now legalized marijuana in some form, creating a patchwork of state-legal markets operating in open conflict with federal prohibition.
Rescheduling would not resolve that conflict entirely — marijuana would still be a controlled substance under federal law — but it would narrow the gap significantly. And for millions of Americans who use cannabis medically or recreationally in states where it is legal, it would represent a long-overdue acknowledgment that the federal government’s posture on the drug has been out of step with both science and public opinion for far too long.
What Comes Next
The formal rulemaking process for rescheduling is likely to involve a public comment period and additional regulatory steps before any change takes effect. But the political signal sent by Wednesday’s expected announcement could itself shift the landscape — for investors, for researchers, and for the millions of Americans living in states where marijuana is already legal but federal law still says otherwise.
For an industry that has spent years navigating the contradiction between state and federal law, the promise of reclassification is not just a policy footnote. It is, potentially, the beginning of a new era.
Source: Reuters