President Donald Trump is weighing whether to reclassify cannabis as a less dangerous drug. People familiar with the matter say the idea was discussed at a recent $1 million-a-plate fundraiser at his golf club in New Jersey. Attendees included leaders from the cannabis, pharmaceutical, and cryptocurrency industries. Among them was Kim Rivers, chief executive of Trulieve Cannabis Corp (TCNNF), one of the largest U.S. cannabis companies. Rivers urged Trump to support a change that would make it easier to study and sell cannabis products. Trump told the group he was interested and flagged the topic for his staff.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
What Does it Mean for the Cannabis Industry?
The change we’re discussing would shift cannabis from its current Schedule 1(I) federal status to Schedule 3 (III). The Biden administration began pursuing this move before leaving office, but did not complete it. Schedule III drugs are still regulated but considered less risky. However, the shift would not make cannabis legal nationwide. It would ease restrictions and open the door to certain tax benefits for cannabis companies. It would also make research into medical uses more straightforward.
This change of approach was not born in a vacuum; the cannabis industry has pushed hard for this shift, contributing millions of dollars to political groups supporting Trump. These companies say reclassification would help unlock growth in a legal market projected to reach $45.3 billion in sales in 2025. They also point to broad public support for easing cannabis rules.
If cannabis moves to Schedule III, one of the biggest changes for the industry would be tax relief. Under current federal law, companies selling cannabis cannot deduct many basic business costs because it is a Schedule I drug. That restriction means higher tax bills. However, reclassifying it would allow companies to deduct expenses like payroll, rent, and marketing. For a large operator such as Trulieve, this could mean a significant jump in net income.
A Schedule III Drug Would Open the Door for New Possibilities
The shift would also expand opportunities for medical research. Companies could run clinical trials with fewer regulatory hurdles. Pharmaceutical firms, such as Pfizer (PFE), could explore cannabis-based treatments with more ease. That could lead to new products for conditions ranging from chronic pain to epilepsy.
In addition, reclassification could make it easier for cannabis companies to access banking services. Many still operate mainly in cash because banks are cautious about federal rules. A lower schedule could reduce that risk, making loans and credit lines more available.
While it would not legalize cannabis across all states, the change would signal a major federal policy shift. For investors, it could mean a more profitable, more stable cannabis sector with increased institutional money.
Using TipRanks’ Comparison Tool, we’ve compared some of the notable players in the cannabis industry. This helps investors gain a broader and more holistic view on the industry and on each of the stocks.
