The Cannabis Rescheduling Executive Order Is A PR Win, Not A Policy Win

/ Cannabis News

Cannabis stocks bumped 8% in a single afternoon. Industry Twitter lit up with victory laps. Trade press published a wave of “historic moment” headlines. A few small hemp businesses in the extended Divine Tribe network started texting to ask if this meant the November hemp ban was canceled. It does not. The rescheduling executive order is a PR win, not a policy win, and confusing the two is how small operators get blindsided in seven months.

What The Executive Order Actually Did

On December 18, 2025, President Trump signed an executive order directing Attorney General Pam Bondi to “expedite the rescheduling of marijuana” from Schedule I to Schedule III under the Controlled Substances Act. That’s the same schedule as Tylenol with codeine, ketamine, and anabolic steroids.

Presidents can’t just wave a pen and change drug schedules — that is not how it works. The executive order directs the AG to speed up a process that was already in motion. The DEA had been dragging its feet on a rulemaking proposal from May 2024 to reschedule cannabis, and this order basically told them to get moving. An executive order isn’t a law. It is closer to a strongly-worded memo.

Even if rescheduling happens tomorrow, here is what changes and what does not. What changes: licensed cannabis operators in state-legal markets get tax relief. They can deduct normal business expenses on federal returns because 280E no longer applies. Medical cannabis research gets easier because Schedule III is less restrictive for academic work. What does not change: recreational cannabis is still federally illegal. Interstate commerce is still banned. The November hemp ban still kicks in on schedule. Home growing is still illegal in prohibition states.

“Rescheduling to Schedule III is good news for publicly-traded MSOs who are going to book hundreds of millions in tax savings. It is not good news for the small hemp farmer who loses his market in November, or for the adult in a prohibition state who has no legal cannabis access. Two different tracks.” — Matt, Divine Tribe

The Full Timeline: How We Got Here

Worth zooming out for context.

August 30, 2023: The Department of Health and Human Services officially recommended that the DEA reschedule marijuana from Schedule I to Schedule III. This was the first time a federal health agency formally acknowledged that marijuana does not belong in the same category as heroin and LSD. The recommendation came after an FDA scientific review HHS Secretary Xavier Becerra had requested in October 2022.

May 21, 2024: The DEA published a proposed rule in the Federal Register to reschedule marijuana to Schedule III. This opened a 60-day public comment period that drew over 43,000 comments — an overwhelming majority in favor of rescheduling or going further.

July 2025: The DEA’s Chief Administrative Law Judge retired. That’s the position that would actually preside over the rescheduling hearing.

January 13, 2025: DEA Administrative Law Judge John J. Mulrooney II canceled the evidentiary hearing on the proposed rule, citing the incoming administration and the need to allow new leadership to assess.

December 18, 2025: Trump signs the executive order.

January 6, 2026: The DEA reminds everyone that formal rulemaking still has to happen — notice and comment, administrative hearings, the works.

February 2026: The rescheduling process appears stalled. Not officially dead, but not actively progressing either.

Where It’s Stuck — The ALJ Position Is Vacant

Here’s the bureaucratic mechanic that almost nobody is reporting. The rescheduling process requires a formal rulemaking procedure overseen by a DEA Administrative Law Judge. The DEA doesn’t currently have one. The position is vacant, and there has been no public indication of when it will be filled.

Without an ALJ, the rulemaking process can’t begin. Without rulemaking, there’s no hearing. Without a hearing, there’s no schedule change. The executive order sits in bureaucratic limbo — technically active, practically frozen.

Roger Stone has publicly asked the obvious question: “Who is holding up the President’s order?” Stone has been around Washington long enough to know when something is being slow-walked. Whether you like him or not, the question is fair. When a sitting president issues a directive and the machinery of government simply doesn’t move, someone is making that choice.

The $18.5 Billion Answer

You don’t have to guess at motive. The money trail is public record.

The U.S. legal cannabis market hit an estimated $30.5 billion in 2026. Research published in PLOS ONE found that full cannabis legalization would reduce pharmaceutical sales by approximately 11%. Applied to the relevant U.S. prescription drug market, that’s an $18.5 billion annual hit to Big Pharma’s bottom line.

Pharmaceutical companies have spent over $6.1 billion on federal lobbying since 1999, according to OpenSecrets. They are the single largest lobbying force in Washington, outspending even the defense industry. Every dollar of that spending protects a regulatory framework that treats cannabis — a plant that has never caused a fatal overdose — as equivalent to heroin.

Private prison corporations spend nearly $970,000 per year lobbying against cannabis reform, per OpenSecrets data. Drug offenses fill their beds. CoreCivic and GEO Group have both been documented lobbying against legalization efforts at the state and federal level.

Alcohol distributors have poured millions into opposing cannabis ballot measures. The Wine & Spirits Wholesalers of America and individual beer distributors have funded anti-legalization campaigns in multiple states. They know the data: in states with legal cannabis, alcohol sales decline.

These aren’t conspiracy theories. They are SEC filings, FEC records, and lobbying disclosures.

Who Actually Benefits From Schedule III

Not you. Unless you are the CFO of a publicly-traded multi-state operator, Schedule III does not put money in your pocket.

Big cannabis operators have been pushing for rescheduling for years because IRS Section 280E disallows normal business deductions for companies selling Schedule I or II substances. Some cannabis businesses pay effective tax rates of 50–70%. Industry-wide, the 280E burden has been estimated at $1.6 to $2.2 billion per year in lost deductions. That single tax change is worth hundreds of millions a year to the top ten cannabis corporations.

For small dispensaries, the savings are real but smaller. For hemp businesses, home growers, and consumers — the savings are zero.

Research institutions and pharma benefit too. Schedule III opens up FDA-pathway cannabinoid drug development and makes clinical trials much easier to run. That’s not a bad outcome, but it’s not the cannabis liberation the headlines suggested.

“If you own Curaleaf stock, congratulations. If you are a hemp farmer in Kentucky or a smoke shop owner in Texas, this EO does not fix your problem. Know the difference.” — Matt, Divine Tribe

What Schedule III Still Does Not Fix

Even if rescheduling lands tomorrow, the major fights aren’t over:

  • Banking access. Most banks still won’t serve cannabis businesses due to federal risk. The SAFE Banking Act, which would protect banks that serve cannabis companies, has passed the House seven times but stalled in the Senate every time. Schedule III makes it marginally easier but does not fix the underlying federal exposure for banks.
  • Criminal records. Rescheduling does not automatically expunge or reduce sentences for people convicted of marijuana offenses under the old classification. Thousands remain incarcerated for marijuana offenses that are now legal in their states.
  • Interstate commerce. A legal producer in Oregon still cannot ship to a legal retailer in New Jersey. Both products are state-compliant. Both would be Schedule III after rescheduling. Neither changes in law affects this constraint — interstate commerce requires separate congressional action that is nowhere on the agenda.
  • The hemp loophole. The legal distinction between hemp and marijuana — based on the 0.3% THC threshold from the 2018 Farm Bill — remains a mess. Rescheduling marijuana does not address the booming market of hemp-derived THC products that the November federal ban is about to wipe out.
  • Veterans and federal employees. Even at Schedule III, marijuana use may still be grounds for employment termination or loss of security clearances for federal workers and military personnel.
  • Recreational legalization. Schedule III substances are still controlled. You’d still need a state-legal framework to be compliant. There is no federal regulatory framework for adult-use sales.

The Gun Rights Angle Nobody Is Talking About

This one’s flying under the radar but it’s significant. Both the NRA and NORML — two organizations that don’t agree on much — have filed briefs to the Supreme Court arguing that cannabis consumers shouldn’t lose their Second Amendment rights. Under current federal law, if you use cannabis (even legally under state law), you’re a “prohibited person” who cannot buy or possess firearms.

In rural states where people grow their own and also own firearms for property and game, this has been a real tension point. If rescheduling helps resolve the 2A status of cannabis users, that’s a win nobody expected from this particular administration.

The Opposition Is Already Mobilizing

Don’t think this is going to be smooth sailing. Prohibitionist groups are gearing up for legal challenges. Anti-cannabis organizations have retained former Attorney General Bill Barr — yes, Trump’s own former AG — as legal counsel to fight rescheduling in court.

The pharmaceutical industry also isn’t thrilled about easier access to a plant that competes with their painkillers, sleep aids, and anti-anxiety meds. Expect lawsuits, lobbying, and every delay tactic in the book. Industry analysts now expect the process could extend well into 2027.

Why The PR Win Is A Distraction

The industry is getting a feel-good headline while two very real policy fires keep burning. The federal hemp ban takes effect November 12, 2026, and eliminates the entire hemp-derived cannabinoid market. States including Texas, Ohio, Pennsylvania, and Florida are passing their own prohibitionist measures. None of that is affected by the rescheduling EO.

This pattern is decades old for anyone paying attention. The industry gets a big announcement about something abstract — rescheduling, descheduling, banking reform, SAFER Act — and the media narrative shifts to celebration. Meanwhile the actual laws that damage everyday consumers and small operators keep advancing with no coverage. It is how you keep a community demobilized while policy moves against them.

What Could Actually Help

A few things would actually move the needle:

A standalone bill that delays the November hemp ban by one year and directs USDA to propose a rational THC-per-container limit. No such bill has been introduced in either chamber.

Congressional action on interstate cannabis commerce. Right now a legal producer in Oregon cannot ship to a legal retailer in New Jersey. Both products are state-compliant. Interstate commerce requires congressional action that is nowhere on the agenda.

Adult-use federal legalization. Nobody in Washington is proposing this seriously.

Expungement bundled with rescheduling. Rescheduling without expungement just helps the publicly-traded companies, not the people whose lives prohibition destroyed.

What To Do With This Information

Don’t celebrate rescheduling as a turning point. Celebrate it as modest tax reform for big operators and a research boost for pharma. Good things. Not your things unless you work in those sectors.

Keep pressure on Congress about the November hemp ban. That bill has not passed the full House yet. Floor amendments are still possible. Representatives pay attention to constituent calls when the volume gets high.

Stock up on hemp products you use if you live in a state without legal adult-use cannabis. November 12 is not far away.

Support state-level adult-use campaigns in your state. Federal reform is slow and uncertain. State legalization actually gives you access — 24 states plus Washington D.C. have legalized recreational marijuana, and 38 states have medical marijuana programs. The federal government is increasingly out of step with where the states and the public already are. Over 70% of Americans support legalization, according to Gallup.

“I have been hearing ‘it is coming’ for years now. From Obama, from Trump’s first term, from Biden. At some point you stop believing the hype and start watching what people actually do.” — Matt, Divine Tribe

The Bottom Line

Rescheduling is a step forward, not a finish line. The 280E relief alone could save small cannabis businesses tens or hundreds of thousands of dollars a year. That matters. But we can’t lose sight of the bigger picture: federal legalization, expungement, interstate commerce, the hemp industry’s survival, and the people who built this culture benefiting from its legalization — not just the corporations with lobbyists.

The $18.5 billion question isn’t whether cannabis should be rescheduled. It’s how long the industries profiting from prohibition can keep stalling the inevitable.

References