January 09, 2025 - As we head into 2025, the U.S. cannabis industry stands at a crossroads. Since the beginning of the first Trump administration — which began with the appointment of cannabis opponent Jeff Session as Attorney General — the industry has come a long way. However, despite near universal acceptance of medical marijuana, and growing acceptance of adult-use cannabis at the state level, federal legalization is not here yet. As a result, it makes sense to take a closer look at what the cannabis sector can expect in the years ahead.
One of the most anticipated developments of 2025 is the potential rescheduling of cannabis from Schedule I of the Controlled Substances Act (CSA) to the less-restrictive Schedule III. In April of 2024, at the direction of President Biden, the Drug Enforcement Administration (DEA) announced its intent to initiate a formal rulemaking process to reclassify cannabis as a Schedule III controlled substance, in accordance with the Department of Health and Human Services' (HHS) earlier recommendation.
If successful, rescheduling would be a boon to the industry, easing federal restrictions and relieving state-legal cannabis businesses from Internal Revenue Code Section 280E, which prohibits businesses from deducting expenses associated with trafficking in Schedule I or Schedule II substances. As predicted, the formal rulemaking process was not completed by year's end and remains ongoing. The DEA held an initial public hearing on Dec. 2, 2024. However, the administrative law judge overseeing the possible reclassification of cannabis did not hear testimony regarding the proposed rule during the hearing, leaving testimonies for future proceedings that are scheduled to run from Jan. 21 to March 6, 2025.
While formal rulemaking can be a lengthy process (and in some instances can go on for years), given that witness testimony in the DEA's rescheduling proceedings is currently scheduled to conclude on March 6, 2025, it is possible the DEA will publish a final rule in the latter half of 2025.
While Trump has indicated support for states' rights in deciding legalization (giving hope that Trump will stay the course), his administration has not taken an official stance on the issue. Nor is cannabis reform specifically addressed in Project 2025, suggesting that it may not be a high-priority initiative.
