U.S. President Donald Trump sits in the Oval Office to sign an executive order at the White House on December 18, 2025 in Washington, DC, USA.
Evelyn HochsteinReuter
President Donald Trump signed an executive order Thursday directing federal agencies to reclassify marijuana, loosening long-standing restrictions on marijuana and marking the most significant shift in U.S. cannabis policy in more than half a century.
The order, finalized by the Drug Enforcement Administration, would move marijuana from Schedule I classification, the most restrictive category under the Controlled Substances Act along with heroin and LSD, to Schedule III classification, which includes substances with accepted medical uses and a low potential for abuse, such as Tylenol, which includes ketamine and codeine.
“This action was requested by America’s patients suffering from extreme pain, incurable illnesses, aggressive cancers, seizure disorders, and neurological problems, including many veterans with service-related injuries and older Americans living with chronic medical problems that significantly reduce their quality of life,” President Trump said Thursday in the Oval Office.
Also Thursday, White House officials said the Centers for Medicare and Medicaid Services, led by Dr. Mehmet Oz, plans to launch a pilot program in April that will allow some seniors covered by Medicare to receive doctor-recommended CBD products for free. White House officials said the products must comply with all local and state laws regarding quality and safety. Products must also come from legally compliant sources and be third-party tested for CBD levels and contaminants.
The cannabis conglomerate’s stock price fell following the announcement, likely due to concerns about new competition from international companies.
Trulieve stock ended the day down about 23%, while Green Thumb Industries fell more than 16%. tilray brand Shares were down about 4% as of Thursday’s close. of AdvisorShares Pure US Cannabis ETFThe company, which tracks U.S. carriers, fell nearly 27%.
“We have millions of registered patients across the country, many of them veterans, who rely on cannabis to alleviate chronic and debilitating conditions. We applaud the government for taking this historic step. This is just the beginning,” Green Thumb founder and CEO Ben Kobler said in a statement to CNBC.
Many analysts see this reclassification as a financial lifeline for the cannabis industry. This measure exempts businesses from IRS Code Section 280E and allows them to deduct standard expenses such as rent and payroll for the first time. It also opens the door to banking access and institutional capital that was previously blocked by compliance concerns.
Many on Wall Street also expect the changes and the Medicare pilot to draw big drug companies into the space, with a shot at federal insurance revenue.
Although CBD has rapidly grown in popularity in recent years, appearing in consumer products ranging from soda to skin care, the Food and Drug Administration has yet to fully support the compound.
Studies have found “inconsistent benefits” for target diseases, while an FDA-funded study warns that long-term use of CBD can cause liver toxicity and interfere with other life-saving medications.
Currently, the FDA has approved only one CBD-based drug, Epidiolex, for a rare form of epilepsy.
“I want to emphasize that this order does not legalize marijuana in any way, shape or form and in no way sanctions the use of marijuana as a recreational drug.”
Experts and industry officials told CNBC this week that the reclassification could pave the way for further research into the effects of CBD use.
