On December 18, 2025, President Donald J. Trump signed an executive order titled Increasing Medical Marijuana and Cannabidiol Research (the EO), directing federal agencies to accelerate efforts to reclassify cannabis under the Controlled Substances Act (CSA) and to expand federal research into medical marijuana and cannabidiol (CBD).
The EO represents a significant statement of executive-branch policy regarding cannabis and builds on the current administrative review process underway (and currently stalled) at the Drug Enforcement Administration (DEA). Although the EO signals strong support for reform, it does not itself reclassify cannabis or alter federal criminal statutes. Rather, its practical impact will depend on subsequent agency action and completion of the formal rulemaking procedures required under the CSA. This alert summarizes the EO’s principal provisions and outlines key considerations for stakeholders in the cannabis, healthcare, research, and hemp industries.
Direction to Expedite Cannabis Rescheduling
The EO directs the US Attorney General to take all necessary steps to complete the rulemaking process to move marijuana from Schedule I to Schedule III under the CSA in the most expeditious manner consistent with federal law, including the procedures set forth in 21 U.S.C. § 811.
Schedule I substances are defined as having no currently accepted medical use and a high potential for abuse, while Schedule III substances are recognized as having accepted medical uses and a lower potential for abuse and dependence. The EO expressly relies on findings from the Department of Health and Human Services , the Food and Drug Administration (FDA), and the National Institute on Drug Abuse (NIDA) to support the conclusion that marijuana has accepted medical uses and meets the criteria for Schedule III placement.
Importantly, the directive does not itself reclassify cannabis, nor does it bypass the statutory rulemaking process required under the CSA. Any change in scheduling must still proceed through DEA’s formal administrative process, including publication of a final rule in the Federal Register.
Expansion of Medical Marijuana and Cannabidiol Research
The EO instructs HHS, in coordination with FDA, the National Institutes of Health, the Centers for Medicare & Medicaid Services (CMS), and other federal health agencies, to expand research into medical marijuana and hemp-derived cannabinoid products. The EO places particular emphasis on the development and use of real-world evidence to improve understanding of therapeutic uses, safety, and clinical outcomes.
By expressly recognizing marijuana’s medical applications and directing coordinated federal research efforts, the EO seeks to address longstanding barriers to cannabis research associated with Schedule I status and fragmented federal oversight.
Focus on CBD and Hemp-Derived Products
The EO goes beyond prior federal guidance by directly addressing the regulatory treatment of hemp-derived cannabinoids, including full-spectrum CBD products. It directs the White House Deputy Chief of Staff for Legislative, Political, and Public Affairs to work with Congress to update statutory definitions applicable to final hemp-derived cannabinoid products.
The EO further calls for interagency consultation to develop a regulatory framework that promotes safe access while addressing public health concerns. This includes consideration of guardrails such as THC content per serving and container, CBD-to-THC ratios, and consumer safety standards. Although CBD is not a controlled substance under federal law, the EO acknowledges persistent regulatory uncertainty, particularly with respect to consumer products and FDA oversight.
Interplay with Ongoing DEA Proceedings
The EO acknowledges the ongoing DEA administrative proceedings related to cannabis rescheduling, including hearings and the review of extensive public comments submitted earlier this year. The EO does not displace those proceedings but appears intended to accelerate agency review and align executive-branch priorities with scientific findings supporting rescheduling.
At this stage, no definitive timeline has been announced for completion of the rescheduling process. Any final rule would be subject to publication in the Federal Register and potential legal challenge.
Practical Impact for Licensed Cannabis Operators
The rescheduling of marijuana to Schedule III would mark a significant shift in the federal treatment of cannabis. While the EO relies significantly on medical use, there are several key takeaways relevant to both medical and adult-use cannabis operators.
First, rescheduling would facilitate greater access to marijuana for clinical trials and medical research. Cannabis businesses involved in research and development could expect fewer regulatory hurdles, allowing for more comprehensive studies on safety, efficacy, and therapeutic applications. This could ultimately lead to FDA-approved products, opening new avenues for legal market expansion.
Second, under Schedule III, cannabis businesses would likely benefit from more favorable tax treatment. Currently, marijuana remains classified as a Schedule I substance, subjecting businesses to IRC § 280E, which disallows most deductions for operating expenses. Rescheduling would likely enable cannabis businesses to deduct ordinary business expenses, such as rent, wages, and utilities, resulting in significant tax relief and more equitable financial treatment compared to other industries.
These changes would offer cannabis operators new opportunities for growth, research collaboration, and improved financial stability, marking a clear step toward normalization of the cannabis industry under federal law.
Conclusion and Key Takeaways
The EO marks a notable development in federal cannabis policy, particularly for healthcare, research, and regulated cannabis markets. At the same time, its real-world impact will depend on how federal agencies implement its directives and how quickly the DEA completes the required rulemaking process.
- Signals strong executive-branch support for moving cannabis to Schedule III
- Directs the Attorney General to complete formal CSA rulemaking expeditiously
- Anchors rescheduling in HHS, FDA, and NIDA scientific findings
- Expands and coordinates federal medical and scientific research efforts
- Initiates a legislative and regulatory framework for hemp-derived cannabinoid products
- Does not itself legalize cannabis or immediately change criminal, tax, or banking laws
- Creates opportunity for improved tax treatment of cannabis operators
McCarter & English’s Cannabis and Government Affairs practices are well positioned to advise clients through this evolving regulatory landscape, drawing on deep experience in cannabis regulation, federal policymaking, and agency engagement. Please contact the authors of this alert or any member of McCarter’s Cannabis or Government Affairs teams with questions or to discuss the potential implications of this executive order.
*Alexandria Santiago, a summer associate at McCarter not yet admitted to the bar, contributed to this alert.