President Donald Trump said Monday that he is considering an executive order to reclassify marijuana as a less dangerous drug — a move that could reshape the cannabis industry, reduce criminal penalties and free up billions in research funding.
The change would represent one of the most significant federal changes to marijuana policy in decades, reducing oversight to the level of common prescription drugs and potentially opening long-closed doors to banks and investors.
“We’re looking at this very closely,” Trump told reporters in the Oval Office, responding to reports that he was considering directing federal health and law enforcement agencies to treat marijuana as a Schedule III drug.
“A lot of people want to see this — the — because it leads to a huge amount of research that can’t be done unless there’s a reclassification,” he said.
Under the American Controlled Substances Act, marijuana is classified as a Schedule I substance, like heroin, ecstasy and peyote, which implies that it has a high potential for abuse and has no currently accepted medicinal use.
Local authorities generally impose looser regulations on marijuana, allowing medicinal or recreational use.
Early reports that Trump might ease federal restrictions on the psychoactive drug sent shares of cannabis-related companies soaring. They can benefit from increased production of cannabis-based products.
This change could reshape the sector, potentially reducing taxes and making it easier to obtain financing. Schedule III drugs include Tylenol mixed with codeine, ketamine and testosterone.
Financing remains one of the biggest challenges for cannabis producers, as federal restrictions keep most banks and institutional investors out of the industry, forcing growers to turn to expensive loans or alternative financial institutions.
Shares of cannabis-related companies listed in the United States, such as Canopy Growth (CGC.O), Organigram Global (OGI.O), SNDL (SNDL.O), Aurora Cannabis (ACB.O), Trulieve Cannabis (TRUL.CD) and Tilray Brands (TLRY.O), closed down between 4% and 13%.
Still, share prices remain higher than they were after the first news of the reclassification last week.
“Should the US decide to reclassify cannabis, we see it as a significant step for the global industry, which must be accompanied by smart regulation,” an Aurora Cannabis spokesperson told Reuters.
Trulieve Cannabis declined to comment, while several other companies did not immediately respond to Reuters news agency’s request for comment.
A White House official said Friday that “no final decision has been made on the reclassification of marijuana.”
Last year, the Biden administration asked the Department of Health and Human Services to review the classification of marijuana, and the agency recommended its inclusion in Schedule III controlled substances.
The DEA (Drug Enforcement Administration) needs to analyze the recommendation and will decide on reclassification.
