Trump Recognises Medical Marijuana for 6 Million Americans — GOP Cries 'Cartel Threat'

Donald Trump issued an executive order on Thursday instructing federal agencies to move marijuana from its most restrictive classification. The move has sparked fierce opposition from many in Congress, particularly among Republicans.

Hours before the signing, 48 Republican lawmakers sent opposition letters. House Republicans warned that the policy would 'enable drug cartels', according to MarketWatch. Trump, however, emphasised that the order is aimed at addressing the needs of patients 'suffering from extreme pain, aggressive cancers... including numerous veterans.'

The executive order reclassifies marijuana from Schedule I — a category that includes heroin and LSD — to Schedule III, where drugs like codeine and ketamine are classified. Trump stressed that this does not legalise recreational cannabis.

The immediate market reaction was dramatic: cannabis stocks plummeted, with the sector's main ETF dropping 27%, as reported by CNBC. The sell-off reflects concerns that major pharmaceutical firms will soon step into the market, especially with a new Medicare pilot programme launching in April.

GOP Lawmakers Warn of 'Cartel Threat'

A day prior to the signing, a letter from 22 Republican senators opposed the reclassification, according to MarketWatch. On the day of the announcement, 26 House Republicans followed suit. Their concerns centred on the potential for increased drug trafficking and societal harm, with one letter warning that reclassification would 'send the wrong message to America's children, enable drug cartels, and make our roads more dangerous.'

Similarly, Senate Republicans argued that 'facilitating the growth of the marijuana industry is at odds with growing our economy and encouraging healthy lifestyles.' Despite the opposition, Trump pointed to recent polling data showing strong public support for the move. A November Gallup poll indicated that 64% of Americans support legalising marijuana use. Trump stated that many people 'going through this horrible ordeal of cancer or other things' have found that marijuana 'is something that makes them feel better.'

Market Response: Despite Tax Relief, Panic Ensues

Despite the President's claims that the move benefits patients, investor sentiment turned sour. The AdvisorShares Pure US Cannabis ETF closed Thursday down by 27%, with notable drops for companies like Trulieve (down 23%) and Curaleaf (down 33%), according to CNBC. The sharp decline occurred despite the fact that the reclassification brings significant tax relief.

Under Schedule III, cannabis firms are exempt from IRS Code Section 280E, which imposes effective tax rates of 70% to 90% on operators. This change is expected to reduce their tax burden to approximately 20%, according to Charles Alovisetti of Vicente law firm. Additionally, the Trump administration announced a Medicare pilot set to launch in April, offering free CBD products to seniors.

Wall Street analysts expect major pharmaceutical companies to enter the market, seeking to capitalise on the federally recognised medical use of cannabis. Kim Rivers, CEO of Trulieve, told MarketWatch that the reclassification will 'enable scientists to further explore therapeutic potential.' However, the industry is already experiencing its narrowest profit margins since 2021, according to industry tracker Headset.

What Does Rescheduling Actually Change?

Currently, marijuana is a Schedule I substance, defined by the Drug Enforcement Administration (DEA) as having 'no accepted medical use' and a high potential for abuse — on par with heroin and LSD. Moving to Schedule III recognises marijuana's accepted medical applications and moderate to low dependence risk.

Drugs like codeine, ketamine, and testosterone are Schedule III. Trump clarified that reclassification 'does not legalise marijuana in any way' and stressed that it's 'never safe' to use controlled substances recreationally.

The key impact is regulatory: it removes barriers to FDA research, enables banking access previously blocked by federal law, and allows firms to deduct business expenses.

This change aligns with a 2023 HHS recommendation acknowledging marijuana's medical potential. Currently, 40 states plus Washington DC operate medical marijuana programmes under state law.

Uncertain Timeline for DEA Action and Medicare Pilot

While the order instructs Attorney General Pam Bondi to speed up rescheduling, no specific timeline has been set. The DEA must formalise the rule, and observers are unsure how quickly this will happen.

Meanwhile, the Centres for Medicare and Medicaid Services (CMS), led by Dr Mehmet Oz, will launch a pilot in April offering free, doctor-recommended CBD products to certain Medicare beneficiaries, subject to state laws and third-party testing.

This will recognise 6 million registered patients — 60% of whom use cannabis for pain — under the new classification. Chronic pain affects one in four US adults and one in three seniors, according to the Department of Health and Human Services.

However, Republican opposition suggests potential pushback in Congress. Industry insiders remain cautious about how swiftly the DEA will act and whether Big Pharma will capitalise on this shift.