US President Donald Trump is reportedly weighing a major shift in federal drug policy that would relax decades-old restrictions on cannabis, potentially injecting new life into the industry.

Six people familiar with the discussions told the Washington Post that Trump is preparing an executive order directing federal agencies to pursue the reclassification of cannabis from a Schedule I substance to Schedule III.

The effort, still under internal review, was the focus of a December 10 phone call between Trump and House Speaker Mike Johnson, several of the sources said. Joining the call were cannabis industry executives, Secretary of Health Robert F. Kennedy Jr. and Mehmet Oz, administrator for the Centers for Medicare & Medicaid Services.

The people spoke on the condition of anonymity because they were not authorized to discuss the meeting publicly.

Johnson reportedly expressed skepticism and laid out several studies and data points opposing rescheduling, but by the end of the call, Trump appeared inclined to proceed. However, the sources emphasized that no final decision has been made and that he could still change course; this was later confirmed by another White House official.

Reclassification would shift cannabis from Schedule I status — reserved for substances deemed to have high potential for abuse and no accepted medical use — to Schedule III, which includes Tylenol with codeine and certain steroids.

The shift would not legalize recreational use under federal law, but would remove some of the most onerous constraints faced by medical researchers and by companies operating legally in dozens of states.

“This would be the biggest reform in federal cannabis policy since marijuana was made a Schedule I drug in the 1970s,” said Shane Pennington, a DC attorney who represents companies involved in rescheduling litigation.

He noted that while Trump cannot unilaterally change the drug schedule, he can instruct the Department of Justice to bypass a pending administrative hearing and finalize the rule.

The political backdrop has shifted sharply in recent years. Cannabis is legal for medical use in most states and for recreational use in 24, and has become a multibillion-dollar industry. Both Democrats and Republicans have expressed interest in rescheduling even as broader legalization remains deeply contested at the federal level.

For cannabis businesses, reclassification would be economically transformative.

Current tax rules prohibit companies that sell Schedule I substances from deducting ordinary business expenses, a barrier that industry representatives have long described as crushing.

“This monumental change will have a massive, positive effect on thousands of state-legal cannabis businesses around the country,” said Brian Vicente, founding partner at Vicente. “Rescheduling releases cannabis businesses from the crippling tax burden they have been shackled with and allows these businesses to grow and prosper.”

Policy advocates say the move would eliminate a central pillar of the federal government’s 50 year prohibition regime, while also highlighting how much work remains.

“This is the beginning of a new era of public health policy,” said Shawn Hauser, also a partner at Vicente.

She called the directive “a long-overdue acknowledgment of marijuana’s medical value and safety,” while warning that rescheduling alone will not resolve broader regulatory inconsistencies or criminal justice disparities.

Trump, who said in August that he was “looking at reclassification,” inherited a stalled proposal originally launched by then-President Joe Biden that recommended moving cannabis to Schedule III.

Rescheduling’s origins trace back to October 2022, when Biden instructed the Department of Health and the Drug Enforcement Administration (DEA) to review whether the current classification for cannabis is scientifically justified.

Health officials concluded in 2023 that it is not, prompting the DEA to propose shifting cannabis to Schedule III in early 2024. The proposed rule has been frozen since March 2025.

Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.

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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.