Donald Trump has indicated he is considering an executive order to reclassify marijuana, a move that could significantly reshape the US cannabis industry, ease criminal penalties, and unlock substantial research funding.

The potential shift would represent one of the most significant federal changes to marijuana policy in decades, reducing oversight to the level of common prescription drugs and potentially opening doors long closed to banks and investors.

“We are looking at that very strongly,” Mr Trump told reporters in the Oval Office, responding to reports of his intention to direct federal health and law enforcement agencies to treat marijuana as a Schedule III drug.

He added: “A lot of people want to see it – the reclassification – because it leads to tremendous amounts of research that can’t be done unless you reclassify.”

Currently, under the U.S. Controlled Substances Act, marijuana is listed as a Schedule I substance, alongside drugs like heroin and ecstasy.

This classification implies a high potential for abuse and no accepted medical use, despite many local authorities permitting its medical or recreational use.

A shift to Schedule III would place it alongside common prescription drugs such as Tylenol with codeine, ketamine, and testosterone.

Such a reclassification promises to reduce federal oversight, potentially lowering taxes and making it considerably easier for cannabis producers to secure vital funding.

Federal restrictions currently deter most banks and institutional investors, forcing companies to rely on costly loans or alternative lenders.

Initial reports of Mr Trump’s potential move to loosen federal restrictions on the psychoactive drug saw cannabis-related company stocks rise.

However, US-listed cannabis-linked stocks, including Canopy Growth, Organigram Global, SNDL, Aurora Cannabis, Trulieve Cannabis, and Tilray Brands, closed down between 4% and 13% on Monday.

Despite this, their values remain higher than before the reclassification reports first emerged last week.

A spokesperson for Aurora Cannabis told Reuters: “Should the U.S. move to reclassify cannabis – we see this as a meaningful step forward for the global industry and one that must also come with smart regulation.”

Trulieve Cannabis declined to comment, while others did not immediately respond.

A White House official stated on Friday that “no final decisions have been made on the rescheduling of marijuana.”

This development follows the Biden administration’s request last year for the Department of Health and Human Services to review marijuana’s classification, which subsequently recommended a move to Schedule III.

The final decision now rests with the Drug Enforcement Administration.