- - Trump's 'common sense' overhaul of marijuana rules could boost budding industry. But investors should be on high alert

Libby MacDonaldDecember 18, 2025 at 3:00 PM

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President Donald Trump speaks before signing a series of executive orders in the Oval Office of the White House in Washington, D.C., Dec. 18, 2025.

With the stroke of his pen on Thursday afternoon, President Donald Trump directed federal officials to reclassify marijuana, loosening restrictions on the drug by signing an executive order in the name of driving medical research.

“This reclassification order will make it far easier to conduct marijuana-related medical research, allowing us to study benefits, potential dangers and future treatments,” Trump told reporters in the Oval Office. (1) “It’s going to have a tremendously positive impact.”

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Trump ordered that marijuana, currently classified as a Schedule I drug — the same classification as heroin and MDMA — be reclassified as a Schedule III drug. Such drugs are considered to have “a moderate to low potential for physical and psychological dependence,” unlike Schedule I drugs, which have “no currently accepted medical use and a high potential for abuse,” the Drug Enforcement Administration explains.

“The facts compel the federal government to recognize that marijuana can be legitimate in terms of medical applications when carefully administered,” Trump continued to reporters. “In some cases, this may include the use as a substitute for addictive and potentially lethal opioid painkillers.”

The president called it a “common sense” move.

The order makes no criminal justice changes. States in which the drug is legal will remain unchanged and the order doesn’t legalize marijuana federally.

Tax savings, research opportunities, investor options

The effects of this reclassification could ripple through the economy almost immediately. For businesses, it could unlock major tax savings and research opportunities. For investors, it could create new opportunities — but also plenty of risk.

For one, cannabis businesses would gain access to major tax breaks, according to PBS News. (2) Businesses licensed to sell marijuana in states where it’s legal may soon be privy to federal tax deductions.

Central to the reclassification, as emphasized by Trump, is the fact that a lower designation would allow scientists to conduct federally approved research on marijuana more easily than they have been able to previously, given the difficulty involved in researching Schedule I drugs. That research could uncover new use cases and open up new markets.

The reclassification could also help normalize the industry in the eyes of mainstream investors.

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Intrigued investors should approach with caution

Support for cannabis legalization has grown in recent years. According to polling from Gallup, support for legalization rose from 36% in 2005 to 70% in 2023. (3)

This changing sentiment and the legalization of recreational and medical use in dozens of states shows that the tide appears to be turning on marijuana use in America. Reclassification also presents a major investment opportunity. If you're considering investing in cannabis, here are a few things to know.

Expect volatility to be the norm

Cannabis stocks have a history of wild swings. Promising policy news can lead to short-term rallies followed by steep corrections, and legal changes that stick can cause steep drops or increases.

Federal vs. state laws still differ

Even if reclassified, marijuana will still be federally illegal for recreational use. That means banking restrictions and legal uncertainty will continue to weigh on the industry. While this may change over time, don't expect the reclassification to change everything overnight.

Pick your exposure level carefully

Investors can buy shares of cannabis growers and dispensaries, exchange-traded funds that track the sector or pharmaceutical companies researching cannabis-based drugs. Each type of cannabis stock comes with a different level of risk and growth potential, so make sure you understand your risk level.

Cannabis remains an emerging industry

While no investment is without risks, cannabis is inherently risky because it's not a mature industry. Reclassification could unlock major funding, but the timeline for federal legalization or banking reform is unknown. Investors should be prepared for long stretches of uncertainty.

With files from Danielle Antosz.

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Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

NBC News (1); PBS News (2); Gallup (3)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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