(Jewish Voice News) President Donald Trump is signaling a potential loosening of federal restrictions on marijuana, a move that advocates and many Democrats have sought for years and one that could dramatically reshape the legal and financial landscape of the cannabis industry, as Axios reported.

Under a plan first reported by the Washington Post and expanded on by CNBC, Trump is considering reclassifying marijuana under federal law, a change that would mark one of the most consequential drug-policy shifts in decades. Marijuana is currently classified as a Schedule I substance under the federal Controlled Substances Act — the same category as heroin, LSD, ecstasy, and peyote — a designation that deems it highly addictive with no accepted medical use.

Trump’s proposal would move marijuana to Schedule III, placing it alongside drugs such as anabolic steroids, ketamine, and testosterone. As CNBC reported, the change would acknowledge medical uses for cannabis and sharply reduce federal restrictions without fully legalizing the drug nationwide.

The political and economic stakes are significant. Reclassification would likely be one of Trump’s most popular policy decisions to date, while also removing the legal gray zone that has long plagued cannabis businesses and the banks that serve them, according to Axios. Cannabis stocks surged after reports of Trump’s possible shift became public.

Under current federal law, marijuana remains illegal even as states move ahead with legalization. While most federal agencies defer to state laws in practice, Schedule I status still carries serious consequences. Individuals charged under federal marijuana laws can face penalties affecting firearm ownership, federal housing eligibility, visas, military service, and government employment, CNBC reported.

The push to reclassify marijuana gained momentum during the Biden administration, when the Department of Health and Human Services formally recommended that the Drug Enforcement Administration move cannabis to Schedule III. Trump is now reportedly weighing that recommendation, according to Axios.

Such a reclassification would ease regulations on medical research, allowing scientists greater access to cannabis for clinical studies. It could also unlock tax relief for cannabis companies, which are currently burdened by Internal Revenue Code Section 280E. As CNBC reported, that provision prevents businesses dealing in Schedule I substances from deducting normal operating expenses, even though they must still pay federal income taxes.

Those restrictions have kneecapped the legal cannabis industry for years. Despite booming consumer demand in legal states, companies have struggled to turn profits. MedMen, one of the industry’s most recognizable brands, filed for bankruptcy protection in 2024, a casualty of the federal-state mismatch and harsh tax rules, according to Axios.

At the state level, marijuana policy has moved rapidly. Colorado and Washington became the first states to legalize recreational marijuana in 2012, followed by Alaska, Oregon, and Washington, D.C. Today, two dozen states, three U.S. territories, and the District of Columbia have legalized or decriminalized marijuana in some form, CNBC reported.

Medical marijuana is legal in additional states, though with varying restrictions. Some states decriminalize recreational use without legalizing it outright, while others allow cannabis only for approved medical purposes, leaving non-medical users subject to criminal penalties.

Despite these state-level changes, federal law still supersedes state statutes. That disconnect has complicated enforcement, banking access, and interstate commerce, creating what Axios has described as an “uphill battle” for the industry.

Reclassification would not amount to national legalization, nor would it allow marijuana sales through pharmacies. However, experts say it could eventually pave the way for interstate cannabis trade and eliminate longstanding barriers to research and investment, CNBC reported.

Congress also continues to play a role. The spending bill that ended the government shutdown in November included a last-minute provision criminalizing several hemp-derived products that had been legalized under the 2018 Farm Bill. Many states rely on hemp-related tax revenue to fund addiction services, county budgets, and public health programs, experts told CNBC.

For now, Trump has not formally announced a final decision. But as Axios reported, the president’s openness to reclassification marks a notable shift — one that could realign federal drug policy with the reality already unfolding across much of the country.