On Thursday, Donald Trump signed an executive order directing U.S. Attorney General Pam Bondi to begin the process of moving cannabis from Schedule I to Schedule III under federal law.

Schedule I is reserved for substances deemed to have no accepted medical use and a high potential for abuse, a category that has historically included drugs like heroin and LSD. Schedule III, by contrast, is used for substances that have recognized medical applications but still carry some risk of dependency, such as ketamine, anabolic steroids, and medications containing codeine.

If finalized, this would represent the most substantial shift in federal drug policy since the Controlled Substances Act was enacted in 1970. The move could have sweeping implications for the state regulated cannabis industry, which currently generates an estimated $32 billion annually and operates in some form across roughly 40 states.

In announcing the order, President Trump framed the decision as a practical response to long standing medical concerns.

“People have been asking for this for years, especially those dealing with chronic pain,” Trump said. “This is about common sense and acknowledging legitimate medical use.”

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What Rescheduling Does and Does Not Do

While the announcement is being celebrated across much of the cannabis industry, rescheduling does not equal federal legalization. Cannabis would remain a controlled substance, meaning federal oversight and restrictions on production, distribution, and possession would still apply.

The existing conflict between state and federal law would also remain intact. Medical cannabis is currently legal in a majority of states, and adult use sales are permitted in roughly half the country, yet those markets still technically operate in violation of federal law.

Additionally, rescheduling alone does not open the door for U.S. cannabis companies to list on major exchanges like the New York Stock Exchange or NASDAQ. Those barriers are tied to broader federal legality, not scheduling alone.

That said, the announcement delivered an immediate psychological and financial boost to the sector. Cannabis related stocks saw notable gains following the news, reflecting renewed optimism after years of regulatory stagnation.

What Happens Next

The executive order does not instantly change cannabis’ classification. Federal agencies must first open a 30 day public comment period, during which feedback will be collected from medical professionals, industry stakeholders, and the general public. Legal challenges from opponents of reform are also expected.

The order also outlines a proposed pilot program that would allow Medicare recipients to seek reimbursement for certain CBD and medical cannabis products, a move that could significantly expand access for seniors and patients on fixed incomes.

One major unanswered question is how rescheduling might impact the intoxicating hemp market, which is currently under scrutiny and facing potential federal restrictions set to take effect next year.

A Shift, Not the Finish Line

Rescheduling cannabis to Schedule III would mark a historic shift in how the federal government views the plant, especially in terms of medical legitimacy. However, it is only one step in a much longer process toward comprehensive reform.

For now, the cannabis industry finds itself in a familiar position; cautiously optimistic, encouraged by progress, but still navigating uncertainty in a system that has yet to fully catch up with public opinion and state level policy.