Sep 3, 2025
President Trump recently confirmed that his administration is considering reclassifying marijuana as a less dangerous drug, and that shift could have a massive impact on the U.S. economy.
Currently, marijuana is classified as a Schedule I drug — alongside heroin, LSD and MDMA. These drugs are considered more dangerous and are defined as having no acceptable medical use.
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Trump is considering reclassifying marijuana as a Schedule III drug, alongside some types of testosterone, estrogen and caffeine. Drugs in this classification have a lower risk of abuse and accepted medical uses.
"We're looking at reclassification and we'll make a determination over the next — I would say over the next few weeks, and that determination hopefully will be the right one,” Trump said in a recent news conference. “It's [a] very complicated subject.”
While this shift will not federally legalize marijuana, the "billions in untapped potential" could have a major impact on the U.S. economy and the stock market.
'Some people like it, some people hate it'
If Trump reclassifies marijuana from Schedule I to Schedule III, the effects could ripple through the economy almost immediately.
For one, cannabis businesses would gain access to major tax breaks. Right now, companies that sell marijuana in states where it’s legal can’t deduct normal business expenses — such as payroll, marketing and rent — because these companies are “trafficking” a Schedule I drug. Reclassification would open the door to those deductions, which could lead to significant tax savings for said companies.
The change would also make it easier for scientists to conduct federally approved research on marijuana, as it's very difficult for companies to research Schedule I drugs. That research could uncover new use cases and open up new markets. This reclassification could also help normalize the industry in the eyes of mainstream investors.
But reclassifying marijuana is not without its critics. The National Sheriffs’ Association submitted a written opposition stating that marijuana has a “high abuse potential” and has resulted in fatal vehicle crashes.
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The administration says it is early in the decision process, but plans to decide in the coming weeks.
"I've heard great things having to do with medical, and I've [heard] bad things having to do with just about everything else,” said Trump, according to ABC News. “Some people like it, some people hate it."
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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 68% in 2024.
The changing sentiment and the legalization of recreational and medical use in dozens of states show that the tide appears to be turning on marijuana use in America. But the potential reclassification of marijuana 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. Even promising policy news often leads 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 (ETFs) 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 billions, but the timeline for federal legalization or banking reform is unknown. Investors should be prepared for long stretches of uncertainty.
Reclassification of marijuana would represent one of the most significant federal shifts in cannabis policy. For businesses, it could unlock billions in tax savings and research opportunities. For investors, it could create new opportunities — but also plenty of risk.
As the Trump administration weighs its decision, the cannabis industry and Wall Street alike are bracing for what could be a historic move.
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Danielle is a personal finance writer based in Ohio. Her work has appeared in numerous publications including Motley Fool and Business Insider. She believes financial literacy key to helping people build a life they love.
