Cannabis policy has long been framed as a binary choice: reschedule or deschedule. The reality is more complicated. Cannabis is both a consumer product and a therapeutic aid, and forcing it into a single regulatory lane oversimplifies how people actually use and incorporate it into their lives.
President Donald Trump recently showcased his support for the prospect in a video posted on social media, outlining the benefits of cannabidiol for senior citizen health. The video continues to advocate for the support of pharmaceutical-grade cannabinoid products as well as a fully integrated healthcare system, which would require a reclassification at the federal level.
Under federal law, the Controlled Substances Act (CSA) is the system that determines how drugs are classified and regulated. This law places substances into “schedules,” which act as categories based on their accepted medical use and their potential for abuse. At the top, Schedule I drugs are considered to have no medical use and a high risk of abuse, while Schedule V drugs are seen as the least restrictive.
Cannabis has remained in Schedule I alongside heroin and LSD, despite its widespread medical and recreational use at the state level. To “reschedule” cannabis would mean moving it into a lower category where it is still controlled but recognized for medical use. To “deschedule” would suggest removing it from the scheduling system altogether, treating it more like alcohol or tobacco.
So what happens if the federal government adopts one model over the other?
Descheduling: Cannabis as an Open Market
Descheduling would remove cannabis from the CSA entirely, resolving federal-state conflict, and allowing states to regulate cannabis similar to alcohol or tobacco. This approach would maintain the current adult-use market’s product operating structure, minimizing disruptions and enabling the recreational market to continue using existing protocols.
For operators, descheduling would lift multiple financial setbacks that exist in today’s market. It would normalize access to banking and enable interstate commerce of cannabis products, both of which are not available to sellers of scheduled substances. It would also remove the burden of 280E taxes, which currently bars cannabis operators from deducting business expenses. However, Bob Hoban, one of the industry’s most influential legal and policy experts, warns that the IRS would likely experience significant delays in implementing this relief structure, as noted in his Forbes series on the matter.
Access to banking is one of the most immediate barriers facing cannabis operators today. Without reliable relationships with banks or other financial institutions, businesses cannot operate safely, transparently, or at scale. Broader access to credit, lending, and investment would unlock growth capital and normalize payroll and tax operations. Until then, the industry will remain financially constrained.
Interstate commerce would allow cannabis products to cross state lines with federal commerce protections if states opt for interstate product transfers. Businesses would have the ability to centralize production, lowering the per-unit cost of manufacturing goods. Multi-state operators (MSOs) could streamline logistics and their supply chains, while also achieving product consistency without state-by-state fragmentation.
While the call for descheduling has been a topic of debate for decades, there are legitimate arguments brought against it. Public health risks associated with the widespread availability of these products, such as increased youth access and the proliferation of high-potency products, would require regulatory agencies to develop strategies to mitigate these outcomes.
Regulatory capacity challenges would also be a significant factor. A national-scale consumer cannabis market would require a dedicated infrastructure, which has the potential to put pressure on existing regulatory bodies in the alcohol and tobacco sectors. Potential risks during the transition period of CSA removal may cause a gap in oversight for labelling.
If regulation, public safety, and dosage control are legitimate concerns, is rescheduling the appropriate route?
Rescheduling: Cannabis as Pharmaceutical Therapy
Recheduling under the CSA recognizes cannabis as having medical use while retaining regulatory control. Rescheduling would also give 280E tax relief if it moves out of a Schedule I or II classification. It would pave a pathway for FDA-regulated pharmaceutical cannabis products along with clinical research, which has been called for by the majority of the cannabis community. From a political standpoint, there is evidence that this approach would make cannabis more widely accepted if it were acknowledged for medical use on a federal level.
This would open the door for pharmaceutical-grade isolate products, rather than botanicals, to be manufactured and distributed on a prescription-only basis to those who require them for medical use. Currently, products of this nature are not available for sale legally; they are only attainable through quasi legal grey market operations. Recognizing the value of these products and building infrastructure to study and manufacture them on a pharmaceutical level would provide the peace of mind to this community in the form of safety and efficacy of the products.
The Commonwealth Project, which produced the previously mentioned video publicized by President Trump, states on its website, “Studying cannabis is challenging and not integrated into comprehensive medical care, depriving millions of Americans aged 65 and older of potential life-changing alternative therapies for medical ailments.”
There is high-profile advocacy against rescheduling as an effective structure. Current operators voice opposition, arguing that this model does not resolve the legality of adult use on a federal level. Rescheduling also negates the possibility of an interstate market, leaving them constrained by federal conflict.
Compliance complexity becomes an issue for operators in the form of additional DEA and FDA rules and regulations. Hoban argues that existing operators will face “compliance reality” costs, with the potential to dismantle a significant portion of the adult-use market.
Advocates against this model view it as insufficient compared to descheduling as a potential alternative. Operators claim that it fails to address systemic issues, such as access, equity, and decriminalization. While rescheduling would make cannabis products more accepted from a political aspect, there is the possibility of lobbying pressure being a factor, where larger incumbents are favored and smaller operators get left behind.
There are clear benefits to both scheduling structures, but what risks come with each?
Risks and Challenges: No Single Solution
Rescheduling would cause conflicts with federal oversight integrating with state-level regulatory programs, and the potential for new federal regulations to change the current balance. Federal change does not automatically erase existing state regulatory systems, and regulatory tension will persist.
Descheduling also poses significant challenges – a completely free and legal market would lead to confusion as a lot of states yet have recreational cannabis programs. Without rules like the alcohol industry, large corporations quickly outpace smaller operations, leading to the market losing its current identity and mirroring big tobacco in structure.
Industry Perspectives
Many operators see descheduling as the path that best expands market access and size, while others view rescheduling as the straightforward approach to legitimizing medical cannabis and expanding research.
Jeff Wu, founder of Xylem Robotics, emphasizes “It is in the interest of both state and federal government to preserve the tax revenue from the cannabis market — which is funding critical services from schools to transportation infrastructure across the country. The reality is that billions in tax revenue supports public programs and jobs that now depend on a stable cannabis market.”
Cannabis policy is not heading toward a simple resolution and the path forward will be difficult with many competing interests.
We hope you enjoyed this article, stay tuned for Part Two of this discussion coming out soon!
