President Donald Trump signed an executive order Dec. 18 directing federal agencies to expedite a reclassification of cannabis from a Schedule I to a Schedule III drug under the Controlled Substances Act.

The move represents a significant change in federal policy. A Schedule III designation for cannabis means it is seen as having accepted medical uses and a lower potential for abuse than Schedule I substances.

Other Schedule III drugs include anabolic steroids, ketamine and moderate-dose opioid combinations like Tylenol with codeine. Schedule I drugs are represented as having no accepted medical uses and a high level of potential abuse. These substances include heroin, ecstasy and LSD.

The federal action will not legalize or decriminalize cannabis use under federal law. Recreational use of cannabis and federal penalties for crimes related to its use are not affected by the order.

Twenty-four states, including New Jersey, and the District of Columbia have legalized cannabis for adult recreational use. Forty states have legalized medical marijuana use.

Potentially the biggest result of the shift in classification may be that companies legally dealing in cannabis and cannabis products may no longer be subject to an IRS ban on their ability to deduct business expenses from taxes, a move that would ease the profit margins.

It is also possible that banks and other financial institutions that had resisted providing full banking services to the industry when cannabis was a Schedule I drug may ease that position.

The move may also ease restrictions that have hampered cannabis research.

Trump wrote: “I believe it is time to end needless arrests and incarcerations of adults for small amounts of marijuana for personal use. We must also implement smart regulations, while providing access for adults to safe, tested product.”

Not everyone was happy with the move to reclassify cannabis. Leading Democrats in Congress, including Senate Minority Leader Chuck Schumer, praised the action, but members of Trump’s own party blasted the decision.

Almost half of the Senate Republican Conference sent a letter to Trump warning that his executive order poses serious health, economic and safety issues for the nation.

In New Jersey as of May there were 240 registered cannabis dispensaries that generated a billion dollars in revenue in 2024 and more than $64 million in state taxes.

Contact the reporter, Vince Conti, at vconti@cmcherald.com.