United States President Donald Trump’s administration is reportedly set to reclassify marijuana to lower restrictions on the industry, with cannabis-related stocks soaring.
Trump could issue an executive order directing federal agencies to reclassify marijuana as a Schedule III substance as soon as Monday, the Washington Post and CNBC reported. The White House has said that no final decisions have been made.
Trump previously said in August that the administration was considering reclassifying marijuana. “We're looking at reclassification and we'll make a determination over the next few weeks,” he said.
He spoke to Republican House Speaker Mike Johnson last week about the executive order, along with cannabis industry executives, Health and Human Services Secretary Robert F. Kennedy Jr, and Centers for Medicare and Medicaid Services head Mehmet Oz. Johnson has opposed reclassifying marijuana.
Reclassifying marijuana would allow producer companies similar tax deductions to other businesses, avoiding the high tax rate the industry is subject to while it remains a Schedule I substance.
As a Schedule I drug, marijuana is in the same category as heroin and LSD. The U.S. Drug Enforcement Administration (DEA) considers Schedule I drugs to have “no currently accepted medical use and a high potential for abuse”, though marijuana is legal for medicinal use in 40 states and for recreational use in 24 states.
The Schedule III category includes anabolic steroids and Tylenol products with codeine, drugs with a “moderate to low potential for physical and psychological dependence”, per the DEA. Rescheduling marijuana would not federally decriminalise its sale or use, and Schedule III drugs are not legally available without prescriptions.
The Department of Health and Human Services and Justice Department recommended in 2023 that the DEA reclassify marijuana as a Schedule III drug, although the DEA has not done so. Almost all hemp products will also soon be banned under a provision in November’s government spending bill.
Shares in cannabis producer Canopy Growth Corp (NASDAQ: CGC) surged 54% after reports of a potential reclassification, reaching their highest point since August.
Tilray Brands (NASDAQ: TLRY), another cannabis company, also saw shares rise by 44.1% before climbing a further 11.4% in after-hours trading.
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