On April 22, 2026, as the Trump administration is expected to sign an executive order to reclassify marijuana from a federal Schedule I controlled substance to Schedule III, market observers widely anticipate that this move will significantly improve the operating environment for cannabis businesses and bring substantial benefits to the industry.
Under the Controlled Substances Act, Schedule I substances, such as heroin, are considered to have no accepted medical use and a high potential for abuse, while Schedule III substances, like ketamine, are recognized as having medical value and a lower risk of abuse. The core impact of this reclassification lies in breaking through two major bottlenecks: taxation and financing.
Currently, cannabis companies are restricted by Section 280E of the U.S. federal tax code, which prevents them from deducting ordinary business expenses such as wages and rent, similar to other businesses. This results in an effective tax rate as high as 60% to 80%. If marijuana is downgraded to Schedule III, this provision would no longer apply, fundamentally improving corporate profitability.
Furthermore, reclassification is expected to open the door to mainstream banking services and institutional investment for cannabis companies. Long-standing federal prohibitions have prevented most banks and institutional investors from serving the industry, forcing businesses to rely on high-cost alternative financing channels. Following the policy relaxation, corporate financing costs are expected to decrease, and merger and acquisition activities may also accelerate.
Stimulated by this news, shares of cannabis-related companies such as Canopy Growth, Tilray Brands, and Aurora Cannabis surged collectively on the day, reflecting heightened market sentiment. Analysts believe this marks the most significant shift in U.S. marijuana policy in decades and will reshape the economic foundation of the entire industry.
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