When President Donald Trump signed an executive order Thursday to reclassify marijuana as a less dangerous drug, it sent a ripple through the national cannabis landscape. In Nevada, where cannabis has long operated as a regulated and expanding industry, the move was met with a combination of relief, optimism, and understandable curiosity.

For decades, marijuana has been listed as a Schedule I drug under federal law, grouped with substances such as heroin and LSD. The administration now plans to shift it to Schedule III, a category that includes ketamine and certain steroids. This is not federal legalization and it will not suddenly make recreational cannabis permissible across the country. However, the change carries meaningful implications for Nevada’s cannabis economy.

Nevada Cannabis Association executive director Layke Martin said the most immediate impact is financial. She explained that cannabis companies have long been restricted by IRS Code 280E. This rule bars any business associated with a Schedule I drug from deducting standard business expenses such as rent, employee salaries, insurance, marketing, and utilities. “By moving from Schedule I to Schedule III, that goes away,” Martin said. “It frees up capital. Businesses can reinvest in their employees and their operations. It is huge.” For many companies that already operate on thin margins despite strong consumer demand, the removal of 280E could be a turning point.

James Humm, executive director of the Nevada Cannabis Compliance Board, said the effects do not stop at taxes. He noted that the change could improve access to traditional banking services and expand opportunities for scientific research. “The president emphasized research today and access to traditional banking could follow,” Humm said. Many cannabis businesses still operate largely in cash because major banks and credit card companies fear conflicts with federal law. Universities have also faced barriers when attempting to study cannabis. A shift to Schedule III may ease both challenges.

Nevada has also been preparing for a moment like this. In 2023, state lawmakers ordered a full report on the potential impacts of federal rescheduling. The Cannabis Compliance Board released that study in March 2024. “We have been looking at this issue for several years,” Humm said. “There is still ambiguity in how federal changes will affect states, but we will be ready.” He added that Nevada’s seed to sale tracking system, which monitors every cannabis product from its earliest stage of growth to its final point of sale, will remain in place throughout the transition. “Status quo,” he said. “We will continue monitoring every product from seed to sale.”

Operational changes for licensees remain uncertain. Martin said much depends on how federal agencies implement the rescheduling. Even with the shift to Schedule III, interstate cannabis commerce will continue to be prohibited. Every cannabis product sold in Nevada must still be grown and produced within the state. This rule limits the potential for expansion and prevents the formation of a national marketplace, something industry leaders hope will be revisited in the future.

For consumers, nothing changes in the immediate term. Humm emphasized that customers will continue buying cannabis in the same way they always have, from licensed and tested dispensaries. He noted that visitors and residents will not notice any difference at the retail level.

Martin described the rescheduling as an important step forward. She hopes additional reforms will follow, including improvements in banking access, updates to hemp regulations, and possibly full descheduling. “It has been misclassified this entire time,” she said. “We are very happy with the changes made today. It is a step in the right direction.”

Humm agreed, adding that Nevada will continue to analyze the evolving federal landscape. “As more federal dominoes fall, we will be ready.”