Cannabis rescheduling by executive action: Medical research and the limits of presidential power

On Dec. 18, President Donald Trump signed an executive order entitled "Increasing Medical Marijuana and Cannabidiol Research;" the legal provisions are quoted below.

"(a) The Attorney General shall take all necessary steps to complete the rulemaking process related to rescheduling marijuana to Schedule III of the Controlled Substances Act in the most expeditious manner in accordance with Federal law, including 21 U.S.C. Section 811.

(b) The Assistant to the President and Deputy Chief of Staff for Legislative, Political, and Public Affairs shall work with the Congress to update the statutory definition of final hemp-derived cannabinoid products to allow Americans to benefit from access to appropriate full-spectrum CBD products while preserving the Congress's intent to restrict the sale of products that pose serious health risks. This will include consultation with appropriate executive departments and agencies and authorities to develop a regulatory framework for hemp-derived cannabinoid products, including development of guidance on an upper limit on milligrams of THC per serving with considerations on per container limits and CBD to THC ratio requirements. The Secretary of Health and Human Services, the Commissioner of Food and Drugs, the Administrator of the Centers for Medicare and Medicaid Services, and the Director of the National Institutes of Health shall develop research methods and models utilizing real-world evidence to improve access to hemp-derived cannabinoid products in accordance with Federal law and to inform standards of care."

The order does not legalize cannabis, does not authorize recreational use and does not dismantle existing federal or state criminal drug laws. Rather, it invokes a procedural pathway Congress established more than 50 years ago in the CSA. The executive order further directs coordinated federal engagement with Congress on the regulation of hemp-derived cannabinoid products.

This order does not release the thousands of individuals currently serving time for cannabis-related crimes. That can only be accomplished by complete descheduling -- similar to treatment of alcohol, which is not on the CSA schedule.

The directive takes cannabis out of Schedule I, which includes heroine, MDMA, DMT and LSD, and reschedules it to Schedule III which includes ketamine, Tylenol with codeine and other commonly administered prescription drugs. Surprisingly, fentanyl, which Trump just declared a "weapon of mass destruction," and is the leading cause of death among Americans age 18-44 is on Schedule II. 

Congress already delegated scheduling authority in the Controlled Substances Act

When Congress enacted the Controlled Substances Act in 1970, it expressly delegated authority to add, remove or transfer substances among schedules to the executive branch, subject to defined standards and procedural safeguards. Congress did not reserve scheduling decisions to itself, thus leaving the door open to legal revisions by executive order as we saw yesterday.

Under 21 U.S.C. Section 811(a), the attorney general may initiate proceedings to reschedule a substance after considering the statutory factors set forth in Section 811(c), including scientific evidence of pharmacological effect, current medical use, abuse potential and public health risk.

This authority is granted to the Drug Enforcement Administration (DEA), but Congress imposed a critical limitation on that delegation: the scientific and medical evaluation conducted by the Department of Health and Human Services, which is binding on the DEA. 21 U.S.C. Section 811(b). See Alliance for Cannabis Therapeutics v. DEA, 15 F.3d 1131 (D.C. Cir. 1994); Touby v. United States, 500 U.S. 160 (1991).

Rescheduling, therefore, occurs through notice and comment rulemaking under the Administrative Procedure Act, not through new legislation. Section (b) of the executive order invites congressional action to rework the implications for hemp derived cannabinoids, which is especially important due to the recent restrictions on hemp.

What the executive order does and does not do

The executive order signed yesterday operates squarely within the statutory framework created by the CSA, but it does not complete the rescheduling process. Instead, it orders the attorney general to complete Schedule III rulemaking as soon as possible and HHS to complete and formalize its scientific and medical evaluation of cannabis. It does not legalize cannabis, authorize recreational use, release incarcerated individuals or alter state criminal statutes. Rescheduling, even if completed, is not legalization; only descheduling can accomplish this crucial step forward.

Medical research, the endocannabinoid system and whole plant complexity

The emphasis on cannabis research carries particular significance given the role of the endocannabinoid system in human physiology. Cannabis interacts with this system through multiple pathways. Most doctors do not know anything about the endocannabinoid system, even though it regulates pain modulation, immune response, inflammation, appetite, mood and neurological signaling, because it is not taught in medical school.

Trump made it clear, with his team of medical professionals behind him yesterday, that this order is to enhance research and access for infirm individuals, especially the elderly and veterans. No doubt, this increased focus on medical research and overall health and wellbeing is long overdue. Although the executive order specifically references full spectrum CBD, this is a misnomer: There is no such thing. Whole plant medicine from cannabis requires the full spectrum of phytochemicals found therein, which include cannabinoids (such as THC and CBD) as well as the numerous phytochemicals such as terpenes, flavonoids and phytosterols. The executive order mentions THC to CBD ratios, indicating the true author of the executive order understood this important scientific reality.

Unfortunately, both Trump and Dr. Oz indicated during their live statements that yesterday's action relates only to "CBDs," which signals a fundamental misunderstanding of the plant and its components. Hopefully, the research called for yesterday will deliver greater education and understanding to lawmakers.

Assistance for some patients in need

The implications of expanded cannabis and cannabidiol research are particularly important for veterans and those on federal health programs, including Medicare and Medicaid--populations that disproportionately experience chronic pain, post-traumatic stress disorder and complex comorbidities. Federal law has long constrained the ability of clinicians within the Veterans Health Administration to rely on cannabinoid-based, notwithstanding widespread state-level medical use.

Similarly, coverage and reimbursement decisions under Medicare and Medicaid depend on clinical evidence, standards of care and real-world data developed through lawful research pathways. Subsection (b) of the executive order expressly acknowledges this reality by directing coordination among HHS, FDA, CMS and NIH to develop research methods and models that can inform standards of care and access determinations within federally administered healthcare programs. By strengthening the scientific foundation rather than expanding access by fiat, the order positions cannabinoid research to inform evidence-based treatment protocols and coverage policies for veterans and vulnerable populations, while remaining tethered to existing statutory limits and congressional oversight.

According to Trump's live announcement yesterday, the order does not legalize cannabis and does not authorize recreational use. Rescheduling is not the same as descheduling, as cannabis industry advocates have pointed out. There are still thousands of individuals behind bars. This executive order does not release those people and does not affect state law justice impacted individuals.

DEA registration after rescheduling

Schedule III now subjects cannabis operators to the DEA's registration framework because businesses who manufacture, distribute, dispense or research Schedule III substances, which now includes cannabis, must obtain DEA registration. See 21 U.S.C. Sections 822-823; 21 C.F.R. Part 1301 and DEA Forms 224 and 225. DEA Registration does not confer federal approval of products or authorize interstate commerce.

Practitioners, medical programs and state continuity

The CSA permits Schedule III substances to be dispensed by practitioners authorized under state law. 21 U.S.C. Sections 802(21), 829. This framework provides a statutory basis for the continued operation under state medical cannabis programs.

FDA, HHS and cannabinoid regulation

Rescheduling also intersects with the Food and Drug Administration (FDA) to the extent products fall within the Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. Section 301 et seq. It is important to note that even FDA facility registration does not constitute FDA approval of any cannabis (or hemp) products.

Notably, the administration's public emphasis on cannabidiol (CBD) intersects with a long-standing FDA regulatory position that substantially constrains widespread CBD use. CBD is the active ingredient in Epidiolex, the only botanically derived cannabinoid drug approved by the Food and Drug Administration. The FDA has also determined that substantial clinical investigations of both THC and CBD were authorized and publicly disclosed, including through GW Pharmaceuticals' clinical trials involving Sativex, notwithstanding that Sativex was never approved in the United States. The FDA relies on those determinations to conclude that cannabinoids such as CBD entered the drug development pipeline under investigational new drug authorizations, thereby triggering the statutory "drug exclusion" provisions of the Food, Drug, and Cosmetic Act. See 21 U.S.C. Sections 321(ff)(3)(B), 331(ll). As a result, the FDA has treated cannabidiol not as a lawful dietary ingredient, but as a drug subject to premarket approval requirements, independent of dose, formulation or derivation from hemp.

Congress separately defined "hemp" and hemp-derived cannabinoids in the Agriculture Improvement Act of 2018, codified at 7 U.S.C. Section 1639o, while expressly preserving the FDA's authority under the Food, Drug, and Cosmetic Act. 7 U.S.C. Section 1639r. That statutory structure explains why subsection (b) of the executive order contemplates congressional action rather than unilateral agency resolution to address access to full-spectrum hemp-derived cannabinoid products.

Recent federal enforcement activity addressing additives and intoxicating cannabinoids has therefore proceeded primarily through the FDA, with policy oversight from the Department of Health and Human Services. Those actions reflect concern over synthesized or highly concentrated cannabinoids marketed outside approved pharmaceutical pathways and underscore the limits of existing statutory tools in regulating a rapidly evolving cannabinoid marketplace.

280E liability may be reduced

Many have said that the effect of rescheduling will be financial because IRS Code 280E applies only to Schedule I and Schedule II narcotic activities. Earlier this year, the "No Deductions for Marijuana Businesses Act" was introduced as Senate Bill 471 and House of Representatives Bill 1447, which would continue the prohibition on regular business expenses imposed by 280E on legal cannabis companies, even after rescheduling.

Hemp and cannabis must be addressed together

Yesterday's action signals the inevitable: unified treatment of cannabis and hemp laws and regulations. To quote Gavin Newsom: as goes California, so too goes the nation. The recent passage of Assembly Bill 8 in California delivers parity in how cannabis and hemp operators are treated under the law-- and confirms exactly that. By this time next year, we will be living in a far different regulatory world for both cannabis and hemp.