Pot luck: How Trump’s move to liberalize cannabis use could reshape America’s marijuana industry

Since then, dozens of states have legalized the drug for a variety of uses, creating an unwieldy patchwork of laws and regulations. A multibillion-dollar legal cannabis market has arisen, with specialty cafes and boutique weed shops hawking everything from candy to ointments and attracting investment from venture capitalists and celebrities. In fact, studies show more Americans now regularly use cannabis than regularly drink alcohol.

So, President Donald Trump’s decision to sign an executive order reclassifying cannabis as a ‘Schedule III’ drug (the same category as codeine-spiked Tylenol and ketamine), rather than a ‘Schedule I’ drug (the same as heroin and LSD), is not only long overdue, it’s a common-sense acknowledgment of reality.

Sure, it came at the behest of a months-long lobbying campaign by the cannabis industry, involving sizeable donations to the president’s inauguration and a flood of TV commercials aimed specifically at the White House and Mar-a-Lago.

But the executive order—which builds on work that started under the Biden administration—also happens to align with public opinion. That is a rarity for Trump these days, with his rosy assessments of an economy that most Americans say they hate and polls showing him out of sync with voters on an array of other issues. Weed is the exception: According to Pew Research, 64% of Americans think cannabis should be legal for adults to use for both recreational and medical purposes.

Reclassification moves policy closer to that, but doesn’t automatically decriminalize possessing or selling cannabis in states that still deem it illegal, as do Texas, Georgia and a handful of others.

Nor does reclassification, as an official with the National Organization for the Reform of Marijuana Laws put it, “harmonize federal marijuana policy with the cannabis laws of most states, particularly the 24 states that have legalized its use and sale to adults.”

Instead, the executive order leaves “those who produce, dispense, possess or use marijuana in compliance with state laws in jeopardy of federal prosecution.” Changing that would require cannabis to be removed from the Controlled Substances Act , which Trump hasn’t mentioned.

So, while the gripe from some is that the administration didn’t go far enough, what’s likely to happen under Trump’s executive order could still be transformative for the industry and for consumers.

First, it’s likely to boost medical research into the positive and negative effects of cannabis, including, crucially, the effects of long-term use. When classified under Schedule I, researchers who wanted to study the drug had to be vetted by the federal government. In contrast, studies on Schedule III drugs—considered to have only ‘moderate to low potential for physical and psychological dependence’—don’t have nearly as many restrictions.

This is important, given how many millions of Americans swear cannabis has health benefits, such as alleviating anxiety and pain. Many scientists say such benefits are yet to be proven and, even if they were, would need to be assessed in the context of side effects and risks.

Cannabis companies are also likely to ramp up research and development because, for the first time, they will be able to write off the costs. Under the Schedule I classification, growers and retailers have long been banned from taking common business tax deductions for expenses like rent, payroll and other overhead expenses.

Overall, the executive order is likely to supercharge the US cannabis industry, pushing it more toward big brands, deep-pocketed investors and corporatization. This has prompted some criticism, including from the president’s own party. Dozens of congressional Republicans urged Trump to rethink his executive order before he signed it. “Facilitating the growth of the marijuana industry is at odds with growing our economy and encouraging healthy lifestyles for Americans,” a group of Republican senators wrote.

Others, including me, are frustrated about what comes next for entrepreneurs of colour who, after getting arrested and jailed for cannabis during the war on drugs, have been struggling to open legal businesses through equity programmes in Democrat-run states. They’re almost sure to be lost in the shuffle of what comes next.

Nevertheless, few Americans can deny that legal cannabis is here to stay. And after 29 years, the jumble of regulations that has long defined this industry was in dire need of federal intervention. ©Bloomberg

The author is a politics and policy columnist for Bloomberg Opinion.