Today, December 18, 2025, President Trump signed an Executive Order directing the Attorney General to expedite rescheduling marijuana to Schedule III under the Controlled Substances Act. This marks a historic shift in federal policy and sets the stage for significant changes in research, compliance and taxation.
Key points from the Executive Order
- Rescheduling to Schedule III will recognize marijuana’s accepted medical use and remove major barriers to research. This is expected to rollout in the first half of 2026, barring possible delays by any legal challenges.
- Expanded research initiatives will leverage real-world evidence to inform standards of care for medical marijuana and CBD products.
- Improved access to hemp-derived cannabinoid products is a priority, with legislative and regulatory pathways under development.
What This Means for Your Business
- Section 280E remains in effect for now.Until the DEA completes the rescheduling process and publishes a final rule, cannabis businesses cannot deduct ordinary business expenses on federal returns.
- Retroactive amendments are not currently permitted.The Executive Order does not authorize retroactive application of Schedule III status or tax relief. Any changes will apply prospectively once the rule is finalized.
- Compliance and planning:Begin preparing for a transition to Schedule III standards, including documentation of expenses and readiness for DEA/FDA oversight.
Recommendations
- Continuing current tax planning under existing 280E restrictions.
- Monitoring developments closely – DEA rulemaking and IRS guidance will determine timing and scope of tax changes.
- Schedule a strategy session to review potential impacts on your financial and compliance roadmap. We have a vision for actions that cannabis operators should address post-rescheduling to minimize taxation.
We will keep you informed as soon as formal guidance is issued. This move aims to be a positive step forward for the cannabis industry.
