President Donald Trump’s December 18th executive order directing the Department of Justice to legally classify marijuana as a drug with less dangerous and therapeutic value under federal law is historic and game-changing.
But marijuana reform is creating confusion, misinformation and outright misinformation in the $32 billion regulated marijuana industry.
On top of the practical questions, such as what exactly this does and if it happens, some wild theories and wild guesses abound, including allegations that this is all a coming Big Pharma takeover (not anytime soon) and that this means that cannabis companies can seek federal tax relief years later (don’t push your luck).
MJBizDaily participated in a website with Denver law firm Vicente LLP on Dec. 22 addressing these and several other pressing issues. Some points of law will be argued (and re-argued) in court. Some question marks depend on the future action. But there are well-known ones.
Here are some of the industry’s most pressing and frequently asked questions about marijuana reform.
When is marijuana legally Schedule 3?
It is not clear, but soon, or soonish – maybe. Unless someone screwed something up, and it could be years.
On December 18, Trump ordered Attorney General Pam Bondi to “take all necessary steps to complete the rulemaking process related to rescheduling Schedule III marijuana,” and to do so “in the most expeditious manner consistent with Federal law.” How fast is the “fastest way”? No one knows – maybe not even the White House. “There’s no deadline,” said Shane Pennington, a partner at the national law firm Blank Rome. MJBizDaily.
In theory, the Justice Department could move quickly, announce a freeze on the process currently left to the Biden administration and publish the final rule in the Federal Register, the official record of what the federal government does — after which the final rules generally valid for 30 days.
But there are problems. Critics have dragged out the Biden administration’s reorganization process for taking too long, in part because the DOJ has stuck to this process: taking public input, responding to some of them, scheduling a hearing before an administrative law judge — that is, creating a record if the question comes up in court about whether federal law was followed.
Opponents of legalization have vowed to sue to stop redistricting no matter what. If corners are cut and cannabis opponents can convince a federal judge that the process was unfair, redistricting could end up stuck in the courts. And the court in the United States is rarely a fast process.
Will rescheduling marijuana mean the 280E is obsolete by 2025? Does 280E relief work?
For many users, the top question is related to the tax exemption, how much and when. “Everybody’s happy not to have to deal with 280E,” said Rachel Gillette, a Denver-based partner at Holland & Hart, less than a year old.
But some operators seem ready to file their 2025 returns for free from 280E or go ahead and file amended returns retroactively. Of course they’re free to do so, but that seems to warrant a fight with the Internal Revenue Service in tax court — which is probably where the case was destined, anyway.
Remember that cannabis remains Schedule 1 until the above process plays out – that is, until sometime in 2026 at the earliest. That means marijuana was Schedule 1 for all of 2025 – meaning 280E applies.
As some tax experts recently noted in Bloomberg Law, the Internal Revenue Service has generally not allowed retroactive amendments to prior year returns based on changes in the law. (Think of it this way: the legalization of marijuana has allowed some past convictions to be expunged but for changes to the statute allowing for expungement; Congress could theoretically allow past 280E convictions to be expunged, but it seems unlikely to do so.)
“That is the official position of the IRS,” Gillette noted.
However, that doesn’t mean some emerging marijuana operators won’t take up the issue anyway and file amended returns for previous years and/or 2025 returns that say they’re immune. But that means spoiling the fight.
“Everything can go against a lawyer,” Gillette noted.
What does this mean for hemp’s THC ban?
Very little, at least directly.
Thanks to a spending bill that Trump signed into law last month to end the record-long government shutdown, the federal definition of hemp will change in November 2026. If it does, nearly all of the products that sustain the $28.3 billion US hemp industry will be illegal — at least under federal law. Many states still have hemp laws that remain unchanged regardless of what the feds do — and exactly what they might do, if they do anything at all, is far from clear.
(If that sounds familiar, it should: That’s the case with state-regulated cannabis.)
Nothing in Trump’s plan changes this, either at the federal or state level. However, the order directs senior White House officials to “work with Congress to develop a legal definition of hemp-derived cannabinoid end products to allow Americans to benefit from access to full CBD products while maintaining Congress’ intent to limit the sale of products that pose significant health risks.”
Remember that Mehmet Oz, director of the Centers for Medicaid Services, promised that adults in the US could see up to $500 in annual reimbursements for CBD products in April. It will be difficult for them to have any products to return if they can’t find anything – and the hemp industry has said that the limit, which will go into effect next year, of no more than 0.4 milligrams of THC per container of the finished product cannot be enforced.
Trump’s EO puts the executive and legislative branches on notice to revisit the hemp question. Presidential encouragement may encourage action, but it does not guarantee it.
In order for hemp-derived THC beverages to enjoy federal protection or for full CBD products to remain on the market, Congress must act.
What else does this mean for existing cannabis businesses?
For now, that’s pretty good.
It is true that some Schedule 3 drugs, such as Tylenol with codeine and anabolic steroids, are legally available only with a prescription and only at pharmacies approved by the US Food and Drug Administration. It is also true that botanical products, such as the cannabis flower, are usually not sold in pharmacies with a prescription.
Few serious cannabis industry observers will tell you that the current state-controlled dispensary/retail model will suddenly end or that cannabis somehow becomes more legal when restrictions are loosened. (That’s the whole point of relaxing restrictions – and cannabis was already Schedule 1, the strictest control available, and the feds didn’t ban it all.)
More changes to federal law are likely to come. Others may come as soon as 2026. But restructuring is not intended interfere existing industry, and in itself should not.
Chris Roberts can be reached at chris.roberts@mjbizdaily.com.
