US Marijuana Reclassification: A Boon for Cannabis Companies
The US administration is poised to make a significant shift in marijuana regulation by reclassifying the drug from a Schedule I to a Schedule III substance, according to recent reports. This move, expected to take place as early as this week, would mark a major policy change in the cannabis industry since 1970.
President Donald Trump’s executive order in December 2025 directed the attorney general to expedite the reclassification process, which would place marijuana alongside common painkillers, ketamine, and testosterone as a less dangerous drug. This change would have far-reaching implications for the cannabis industry, including reduced tax burdens, easier access to funding, and accelerated clinical research.
Companies in the cannabis sector, such as Canopy Growth, Organigram Global, SNDL, Aurora Cannabis, Trulieve Cannabis, and Tilray Brands, are likely to benefit from this reclassification. Here’s what it could mean for them:
What does reclassification entail?
Marijuana is currently listed as a Schedule I substance under the US Controlled Substances Act, meaning it has a high potential for abuse and no accepted medical use. Last year, the Biden administration asked the Department of Health and Human Services to review marijuana’s classification, and the agency recommended moving it to Schedule III, a category for substances with a moderate to low risk of physical or psychological dependence.
The Drug Enforcement Administration must review the recommendation and decide on the reclassification.
Tax implications
One of the significant benefits of reclassification would be that cannabis firms would no longer be subject to Section 280E of the US federal tax code. This provision prevents businesses dealing in Schedule I and II controlled substances from claiming tax credits and deductions for business expenses.
Industry implications
A Class III classification could unlock banking access for pot producers, attract institutional investors, reduce taxes, and spur mergers and acquisitions. Securing funding remains a significant challenge for cannabis producers, as federal restrictions keep most banks and institutional investors out of the sector, forcing pot producers to turn to costly loans or alternative lenders.
Overall, the reclassification of marijuana could have a profound impact on the cannabis industry, providing a more favorable regulatory environment and increased opportunities for growth and investment.
