A New Era: What The Recent Executive Order Means for The U.S. Cannabis Industry

President Trump recently signed an executive order directing the Attorney General to reschedule cannabis from a Schedule I substance to a Schedule III substance “in the most expeditious manner in accordance with Federal law.”

It was the most significant federal cannabis policy change the United States has seen in decades, and this shift has felt imminent since the FDA reviewed medical cannabis in 2023 under the Biden administration. 

What does the recent executive order mean for the cannabis industry? 

This move is said to be eliminating 280E, the burdensome tax law that has plagued state-licensed cannabis businesses since California was the first state to legalize medical cannabis in 1996. 

• U.S. cannabis business operators paid $1.8 billion in additional taxes compared to non-cannabis businesses in 2022 because of 280E, according to economists. 
• State-licensed cannabis businesses are often paying tax rates of 70% or more because of cannabis’s Schedule I classification in the Controlled Substances Act (CSA).
• An estimated 27.7% of cannabis businesses were profitable in 2024, according to Whitney Economics, while 65.3% of of all small businesses in the U.S. are profitable. 

This executive order also enacts research for hemp-derived products and medical cannabis, which cannabis’s Schedule I status previously made difficult. 

• A Medicare program will be launched, enabling seniors to receive free, doctor-recommended CBD products. This would be the first time non-synthetic cannabis derivatives of any kind have been part of federally insured programs.  
• The Department of Health and Human Services (HHS) recommended to the Drug Enforcement Agency (DEA) that cannabis be reclassified from a Schedule I to a Schedule III substance in 2023 after determining more than 30,000 doctors in 43 jurisdictions are recommending medical cannabis to more than 6 million American patients. 

The industry already knows how entrenched medical cannabis is in American wellness. Still, concrete federal action of this magnitude, and all the challenges that come with that, is going to change the U.S. cannabis industry on a macro level. 

“We have people begging for me to do this, people that are in great pain for decades,” said Trump. 

“This action has been requested by American patients suffering from extreme pain, incurable diseases, aggressive cancers, seizure disorders, neurological problems, and more, including numerous veterans with service-related injuries and older Americans who live with chronic medical problems that severely degrade their quality of life.”

It’s important to note that cannabis is not legalized at the federal level because of this executive order. Still, for most cannabis businesses, this shift could mean the difference between staying in business and closing their doors. 

This also doesn’t automatically eliminate banking challenges that cannabis businesses face. SAFE Banking is still in limbo, and because cannabis is still not federally legal, this is still a hurdle.

However, it could release some of the pressure on banking institutions. Although maintaining a bank account has always been easier than working under the tight grasp of 280E, you can partner with credit unions or cannabis-specific banks. There’s no loophole to avoid 280E.

All plant-touching businesses are impacted by the implications that come from cannabis’s Schedule I status, which puts into perspective how big a deal this executive order is to our industry. 

What should cannabis business owners do to prepare for the rescheduling? 

Don’t make big decisions about your business yet. 

While it’s the most prolific step in decades for American cannabis policy, it’s still just a first step. There are still administrative steps that need to happen before this is in full effect. 

As we’ve known this day is coming, many cannabis business owners already have their financials, state-traced metrics, and growth plans in place. 

If you are a business that hasn’t done this, start organizing your backend immediately. This change is going to come alongside more federal oversight than ever before.

These are the elements of your business you need to pay immediate attention to and quickly adjust any deficiencies: 

Financial clarity across the board 

Good enough isn’t good enough anymore. You need to know detailed, accurate insights about the current financial state of your business. 

While no language has been released about increased checks and balances for state-licensed cannabis businesses, we can all safely assume they are soon to come as this process rolls out. Consider this your grace period, and we don’t know how quickly it will run out. 

There are several key areas of your business you need to be maintaining ahead of this seismic shift, including but not limited to: 

• Reliable daily and weekly reconciliation
• Clear transaction records with minimal manual adjustments
• Confidence in the reported cash position across locations
• Your past and present tax details

Reducing your operational drag from cash

You already know cash-intensive businesses carry a huge operational load. 

Transporting, counting, and reconciling can take several hours a week to manage, reducing bandwidth in other critical areas of the business. 

Cash-heavy cannabis operations also make more mistakes than those with digital payment solutions. It only takes $1 to throw off your numbers, and physical payments leave no easy trace. 

You’re also getting delayed and fragmented visibility into your cash flow, while digital solutions can give you insights in real time. 

The goal isn’t to eliminate cash. The goal is to align your plant-touching operation with non-cannabis business practices.

With more federal oversight on the way, each step you take to prove your numbers now makes it easier for you to operate later. 

Paybotic is here to help

Finding a reliable payment processing solution is one of the most challenging parts of operating a cannabis business, and the recent executive order won’t eliminate this issue.

Audit your current payment processing tool and make sure it’s ready to support you through this change. 

Paybotic is a secure, compliant, and efficient payment processing option with ACH, gift card programs, debit processing, and more for dispensaries, cannabis delivery, curbside pickup, and hemp-derived businesses. 

See why our partners trust us to guide them through the industry’s transition. 

About the Author: Kaitlin Domangue is a cannabis and media marketing leader who has worked with top industry brands and built a B2B cannabis newsletter for 20,000+ professionals. Connect with her on LinkedIn.