Legal Memorandum on Donald J. Trump’s Rescheduling OF Marijuana By Executive Order
RE: Legal Analysis of President Donald J. Trump’s December 18, 2025 Executive Order Regarding Marijuana Rescheduling Under the Controlled Substances Act
I. Executive Summary
This memorandum provides a concise legal analysis for the public regarding President Donald J. Trump’s reported executive order dated December 18, 2025, which purports to reclassify marijuana from Schedule I to Schedule III under the Controlled Substances Act (CSA), 21 U.S.C. § 801 et seq. As of this date, the full text of the executive order has not yet appeared in official repositories such as the White House website or the Federal Register. This absence is consistent with routine publication delays following issuance. Accordingly, this analysis relies on reported details from credible sources and established federal law to assess the order’s legal validity, practical implications, and inherent limitations.
II. Legal Authority Over Drug Scheduling
Under the CSA, authority to add, remove, or transfer substances between schedules is delegated by Congress to the Attorney General, who has in turn delegated this function to the Drug Enforcement Administration (DEA). 21 U.S.C. § 811. The statute requires a formal administrative process that includes:
1. A scientific and medical evaluation by the Department of Health and Human Services (HHS);
2. Consideration of eight (8) statutory factors, including a substance’s potential for abuse, accepted medical use, and risk of dependence; and
3. Notice-and-comment rulemaking pursuant to the Administrative Procedure Act (APA), 5 U.S.C. § 553, to ensure transparency, public participation, and judicial review.
The President does not possess independent statutory authority to unilaterally reclassify a controlled substance. Any attempt to do so by executive order alone would raise serious separation-of-powers concerns under Article II of the U.S. Constitution.
III. Likely Legal Effect of the Executive Order
Properly understood, the reported executive order should not be read as directly reclassifying marijuana by presidential decree. Rather, its lawful function is likely to direct or encourage the DEA and HHS to expedite the existing administrative rescheduling process under § 811.
This interpretation aligns with prior developments. In 2023 and 2024, HHS issued formal recommendations concluding that marijuana no longer met the criteria for Schedule I placement and should be transferred to Schedule III, based on evidence of accepted medical use and a comparatively moderate risk of dependence. The CSA requires the DEA to give controlling weight to HHS’s scientific and medical findings. 21 U.S.C. § 811(b).
The order may also invoke the United States’ obligations under the 1961 Single Convention on Narcotic Drugs, which the CSA incorporates through 21 U.S.C. § 811(d), further supporting a Schedule III classification rather than total descheduling.
IV . Practical Implications of Schedule III Placement
If the rescheduling process is completed in accordance with statutory and administrative requirements, the move from Schedule I to Schedule III would have significant, though limited, effects:
1. Taxation: Cannabis businesses operating in compliance with federal law would no longer be subject to the punitive limitations of 26 U.S.C. § 280E, allowing ordinary business expense deductions.
2. Research: Medical and scientific research would face fewer regulatory barriers, facilitating clinical trials and evidence-based policymaking.
3. Pharmaceutical Development: FDA-approved cannabis-derived medications would become more feasible within established regulatory pathways. However, Schedule III status would not legalize recreational marijuana at the federal level, nor would it eliminate federal criminal exposure for noncompliant conduct. Cannabis would remain a controlled substance under federal law.
V . State-Specific Impact: Oklahoma’s Medical Cannabis Market
Oklahoma’s uniquely expansive medical marijuana program, characterized by low barriers to licensure, a record-high number of licensees, and intense price competition, stands to experience both relief and consolidation pressures from Schedule III rescheduling.
1. Tax and Cash-Flow Effects: Removal of § 280E would materially improve margins for Oklahoma operators, many of whom currently operate on thin profits due to oversupply and compressed wholesale prices. The ability to deduct ordinary business expenses may stabilize struggling businesses and reduce incentives for noncompliance.
2. Banking and Compliance: Schedule III status may modestly increase access to traditional banking services for compliant Oklahoma licensees, reducing cash-heavy operations and associated public safety risks. However, operators would still need to navigate federal registration, recordkeeping, and distribution rules applicable to Schedule III substances, increasing compliance costs for smaller businesses.
3. Market Consolidation Risks: Oklahoma’s market is particularly vulnerable to consolidation. Improved federal legitimacy may attract multi-state operators, pharmaceutical partners, or private equity capital, accelerating buyouts and exits among smaller or undercapitalized growers and dispensaries.
4. Interstate Commerce Limitations: Although Oklahoma law contemplates interstate export and import of cannabis upon federal legalization or express congressional authorization, Schedule III rescheduling alone does not satisfy that condition. Cannabis would remain a controlled substance under the CSA, and interstate commercial distribution of state-licensed marijuana would continue to be prohibited absent further federal legislative action.
5. Enforcement and Diversion Risks: Given Oklahoma’s production capacity and geographic location, federal enforcement is likely to remain focused on diversion, excess cultivation, and cross-border transport. Oklahoma’s pre-positioning for future interstate commerce may heighten federal scrutiny during the rescheduling transition period.
6. Public Health and Regulatory Response: Expanded research opportunities could integrate Oklahoma more closely into federally recognized medical pathways, but state regulators may respond to rescheduling by tightening oversight, testing standards, and physician recommendation practices to align with evolving federal expectations.
VI. Limitations and Potential Legal Challenges
Rescheduling falls well short of descheduling. The CSA does not permit removal of marijuana from federal control through executive action alone. Full descheduling would require congressional amendment to the statute, as contemplated in legislative proposals such as the Marijuana Opportunity Reinvestment and Expungement (MORE) Act.
VII. Potential obstacles to implementation include:
1. Litigation alleging procedural defects, arbitrary or capricious agency action, or failure to comply with the APA;
2. Congressional efforts to block or reverse the rescheduling through legislation or appropriations restrictions; and
3. Continued conflict between federal law and state regimes permitting recreational use.
VIII. Additional Considerations and Public Misconceptions
A. International Treaty Obligations
The United States remains bound by the 1961 Single Convention on Narcotic Drugs, as amended, which is incorporated into domestic law through 21 U.S.C. § 811(d). Rescheduling marijuana to Schedule III appears calculated to remain within the treaty framework, which permits controlled medical and scientific use but not unrestricted commercialization. While this approach reduces treaty friction, it may still complicate international trade, exports of cannabis-derived pharmaceuticals, and global perceptions of U.S. cannabis policy, particularly if domestic markets continue to expand beyond narrowly medical channels.
B. Market Volatility and Investor Risk
Historically, federal cannabis reform signals have triggered short-term volatility in publicly traded cannabis companies. Schedule III rescheduling may prompt stock price increases driven by anticipated tax relief under 26 U.S.C. § 280E and improved access to capital. However, these gains remain vulnerable to reversal if implementation is delayed by litigation, adverse rulemaking outcomes, or congressional intervention. Investors should recognize that rescheduling is a process, not an event, and that legal uncertainty persists throughout the administrative timeline.
C. Federal Enforcement Priorities
Rescheduling does not mandate changes in federal enforcement policy. Prosecutorial discretion remains with the Department of Justice, and while low-level possession enforcement in state-legal markets may continue to be deprioritized in practice, interstate transport, unlicensed cultivation, and violations implicating organized activity or diversion remain federal concerns. Schedule III status may sharpen federal scrutiny over compliance with registration, manufacturing, and distribution requirements.
D. Pharmaceutical Industry Implications
Schedule III classification significantly lowers barriers for pharmaceutical development. Large pharmaceutical companies are well-positioned to pursue FDA-approved cannabis-derived or cannabinoid-based products, potentially through patented formulations. This development may marginalize smaller operators and legacy cultivators who lack access to capital or regulatory infrastructure, raising concerns about market consolidation and the displacement of traditional cannabis businesses.
E. Social Equity and Criminal Justice Limitations
Rescheduling does not address expungement, resentencing, or the collateralconsequences of prior cannabis convictions. Nor does it directly remedy racial andsocioeconomic disparities in cannabis enforcement. Those outcomes remain squarel within the domain of congressional action or state-level reform. As such, reschedulingalone should not be mistaken for comprehensive cannabis justice reform.
F. Public Perception and Media Framing
Public perception frequently overstates presidential authority due to media framing thatconflates executive direction with completed rulemaking. Headlines frequentlycharacterize the executive order as an accomplished reclassification, obscuring the realitythat the CSA requires DEA rulemaking, HHS scientific concurrence, public commentand judicial defensibility. While President Trump’s executive order accelerates anadministrative process initiated under prior administrations, it does not complete it. Congress retains ultimate authority over descheduling and broader reform.
IX. Conclusion and Public Guidance
The reported executive order represents a potentially meaningful but legally constrained steptoward reforming federal cannabis policy. Its ultimate effect depends on faithful adherence to the CSA’s administrative process and successful navigation of judicial, political, and international challenges.
Members of the public, industry participants, and other stakeholders should closely monitor the Federal Register for publication of the DEA’s proposed rule and consider submitting public comments during the notice-and-comment period. While rescheduling may promote industry growth, research advancement, and partial normalization of state markets, it also underscores the continuing need for comprehensive legislative reform to resolve enduring federal/state conflicts and equity gaps in cannabis law.
Rachel O. Klubeck, Esq.
Partner | Gies Law Firm PLLC
