Why marijuana rescheduling is a real shift, but not the final victory

Norman Yousif/Courtesy photo

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President Donald Trump’s historic executive order Thursday expediting the reclassification of cannabis from Schedule 1 to Schedule 3 is the most meaningful federal cannabis policy win – ever. It’s an acknowledgment many in this industry have long awaited: cannabis has accepted medical use and does not belong in the same category as the most dangerous narcotics.

All that said, it’s important to separate substance from symbolism. Marijuana rescheduling creates real opportunity, but it also comes with limits, responsibilities for legal operators and a reminder that there’s a longer road ahead.

What marijuana rescheduling actually changed

Once rescheduling is finalized, federal law will no longer classify cannabis as a Schedule I substance, a category for drugs with no medical value and a high potential for abuse. In Schedule 3, cannabis will be alongside drugs like Tylenol with codeine, anabolic steroids, and the synthetic THC treatment dronabinol. These are medically recognized but still tightly regulated.

The shift will be completed via formal federal rulemaking via the Justice Department, which includes the U.S. Drug Enforcement Administration. But until that process is completed, existing federal controls remain in place. In other words, this is a phased transition, not an overnight transformation.

Most importantly: cannabis is still not federally legal. And as Trump said on Thursday, it won’t be anytime soon.

Why cannabis rescheduling matters for cannabis businesses

Federal taxation finally begins to normalize

Once Schedule 3 is fully implemented, cannabis businesses will no longer be subject to Internal Revenue Code Section 280E. That provision has prevented operators from deducting ordinary business expenses like payroll, rent, marketing and technology on their federal tax returns.

The removal of 280E is not a small accounting detail. It fundamentally changes the financial reality of operating a compliant cannabis business. For many operators, it will significantly reduce effective tax rates and improve cash flow, allowing reinvestment into staff, infrastructure and compliance.

Medical research barriers come down

Schedule 3 status lowers federal hurdles for clinical and scientific research. Universities, hospitals, and research institutions will have an easier path to studying cannabis, its risks and its therapeutic potential.

This strengthens the medical legitimacy of cannabis and shifts the conversation toward data, outcomes, and standards, where it belongs. FDA oversight still applies for any product seeking prescription or interstate pathways, but the door to credible research is now far more open.

Banking may improve, but slowly

Schedule 1 status is one of the biggest red flags for financial institutions considering offering services to cannabis operators. Rescheduling alone could encourage some banks and lenders to re-evaluate their stance on cannabis.

However, this does not automatically solve cannabis banking. Full normalization still requires additional regulatory clarity or Congressional legislation. Operators should expect gradual progress, not instant access.

Compliance expectations will increase, not decrease
Schedule 3 does not mean lighter regulation. In many ways, it signals the opposite.

As cannabis moves closer to traditional regulated industries, expectations around audit readiness, reporting accuracy and operational transparency are likely to rise. State regulations remain unchanged, and federal scrutiny will continue to evolve.

What marijuana rescheduling does not do

It’s just as important to be clear about what this moment does not accomplish.

• It does not legalize cannabis federally.
• It does not allow interstate commerce.
  It does not eliminate federal enforcement authority – or state regulation.
  It does not bypass US Food and Drug Administration standards for medical or pharmaceutical use.

This is progress. But it is not legalization. And it is not deregulation.

Where cannabis operators should focus now

Rescheduling raises the bar for the entire industry. Cannabis businesses treating this win as a victory lap are missing the point.

Operators should be preparing for:

• More traditional accounting and financial scrutiny.
• Higher expectations for clean, defensible data.
• Stronger reporting across sales, marketing, and promotions.
• Long-term alignment with evolving federal and state oversight.

This moment rewards disciplined operators – those who already run transparent, compliant and data-driven businesses. It also exposes the risks of fragmented systems and shortcuts that may not hold up under increased scrutiny.

A Step Forward – With Eyes Open

The reclassification of marijuana to Schedule 3 is a long-overdue acknowledgment of reality. It validates years of patient experience, medical advocacy and responsible state regulation.

But progress in cannabis has always been incremental. This move opens doors around taxation, research, and legitimacy, but it also signals that the industry is being taken more seriously – and will be held to higher standards because of it.

That’s not a bad thing. It’s a sign that cannabis is continuing its shift from the margins toward a regulated, accountable, and sustainable future.

Norman Yousif is the CEO and founder of Off The Charts (OTC), a leading cannabis dispensary chain operating in multiple states.