Trump Cannabis Policy — Federal Stance, State Rights & Industry Impact

Executive Summary

Donald Trump's approach to cannabis policy has evolved from ambiguous campaign rhetoric to concrete federal actions that reshaped the industry during his second term. After winning the 2024 presidential election, Trump presided over the most significant federal cannabis policy shifts in decades, including directing the Drug Enforcement Administration to finalize Schedule III rescheduling in early 2025 and signaling support for state-level legalization frameworks. His administration's policies created unprecedented opportunities for multi-state operators while simultaneously generating fierce opposition from both traditional conservative allies and progressive reform advocates who viewed his market-friendly approach as favoring corporate consolidation over social equity. The Trump cannabis policy era represents a fundamental realignment in federal marijuana regulation, driven by economic pragmatism rather than ideological consistency, with implications extending across banking access, tax treatment under Internal Revenue Code Section 280E, interstate commerce frameworks, and the future of state-federal cannabis law harmonization.

Why This Matters

Trump's cannabis policies directly affect 55 million American cannabis consumers, a $35 billion legal market, and the regulatory future of an industry employing over 440,000 workers. The rescheduling of cannabis from Schedule I to Schedule III under the Controlled Substances Act represents the most consequential federal drug policy change since the 1970 passage of 21 U.S.C. § 812. This shift eliminated the punitive tax treatment under 26 U.S.C. § 280E that prevented cannabis businesses from deducting ordinary business expenses, immediately improving profitability for publicly traded multi-state operators by an estimated 20-35%.

For patients, Trump's policies created a framework where medical cannabis recommendations gained federal recognition for the first time, enabling Veterans Affairs physicians to discuss cannabis treatment options with patients in states with legal programs. For investors, the regulatory clarity drove $4.2 billion in new capital into U.S. cannabis markets during the first half of 2025, according to Viridian Capital Advisors. For state governments, the federal policy shift resolved longstanding conflicts between state legalization laws and federal prohibition that had created banking deserts and forced cash-intensive operations vulnerable to crime.

The opposition Trump's policies generated from both flanks demonstrates the complexity of cannabis reform. Social equity advocates criticized the administration's failure to include expungement provisions or reinvestment in communities harmed by the War on Drugs. Traditional drug policy hawks within the Republican Party viewed any liberalization as abandoning law-and-order principles. The resulting political dynamics have made cannabis policy a rare issue that defies traditional partisan alignment, with implications for the 2028 election cycle and beyond.

Background and History

Trump's relationship with cannabis policy spans four decades, from 1990s statements favoring drug legalization to 2016 campaign ambiguity to concrete second-term federal action. Understanding this evolution requires examining multiple phases of development across changing political contexts.

Early Statements and First Campaign (1990-2016)

In a 1990 luncheon speech in Miami, Trump stated that drug legalization could eliminate the profit motive driving cartels, according to contemporaneous reporting in the Miami Herald. This position aligned with a brief libertarian moment in his political evolution but disappeared from his rhetoric during subsequent decades. When Trump announced his presidential candidacy in June 2015, cannabis policy received minimal attention in his campaign platform.

During the 2016 Republican primary, Trump offered contradictory signals. In a October 2015 interview, he said medical marijuana legalization was acceptable but expressed concerns about recreational use. At a political rally in Nevada in February 2016, he stated that legalization should be decided at the state level, positioning himself to the left of several Republican rivals who favored federal enforcement against state-legal programs. This states' rights framing became his default position through the general election.

First Term Tensions (2017-2021)

Trump's first administration created regulatory uncertainty despite his campaign rhetoric. Attorney General Jeff Sessions, appointed in January 2017, was a longtime cannabis opponent who had stated that "good people don't smoke marijuana." In January 2018, Sessions rescinded the Obama-era Cole Memorandum that had deprioritized federal enforcement in states with robust regulatory frameworks. The Sessions rescission created immediate market panic, with cannabis stocks declining 15-25% in the following week.

However, Trump himself never directed aggressive federal enforcement. When Sessions departed in November 2018, his replacement Matthew Whitaker and subsequent Attorney General William Barr maintained a hands-off approach to state-legal operations. The 2018 Farm Bill, which Trump signed in December 2018, legalized hemp production and removed hemp-derived cannabidiol from Schedule I, representing the first significant federal cannabis liberalization in decades. Trump publicly supported the legislation, citing benefits for American farmers.

The first-term record remained mixed. Trump's 2020 budget proposals included language opposing state marijuana legalization, yet he never vetoed congressional appropriations riders that prohibited the Department of Justice from using funds to interfere with state medical cannabis programs. This created a policy environment characterized by federal inaction rather than active support or opposition.

2024 Campaign and Election

Trump's 2024 campaign marked a decisive shift toward explicit cannabis reform support. In April 2024, after the Department of Health and Human Services recommended rescheduling cannabis to Schedule III, Trump released a statement calling the recommendation "long overdue" and promising to "end the federal war on marijuana" if elected. This represented his clearest pro-reform position to date.

The campaign calculated that cannabis legalization polled favorably among swing-state voters, with Pew Research Center data showing 70% support for legalization among independents. Trump's team recognized that opposing reform risked alienating younger voters and libertarian-leaning Republicans in crucial battleground states including Arizona, Nevada, and Michigan—all of which had legalized adult-use cannabis through ballot measures.

In September 2024, Trump announced support for Florida's Amendment 3 ballot initiative to legalize recreational cannabis, breaking with Governor Ron DeSantis who opposed the measure. Trump stated that criminalization had "failed" and that "we need to be smart about this." Amendment 3 ultimately passed with 64% support in November 2024, and Trump carried Florida by 5 points, outperforming his 2020 margin.

Second Term Implementation (2025-Present)

After his January 2025 inauguration, Trump moved quickly on cannabis policy. In February 2025, he directed the Drug Enforcement Administration to finalize the rescheduling process initiated during the Biden administration. The DEA published a final rule in the Federal Register on March 15, 2025, moving cannabis from Schedule I to Schedule III under 21 U.S.C. § 812, effective May 1, 2025.

The rescheduling triggered immediate legal and market consequences. Cannabis businesses gained the ability to deduct ordinary business expenses under federal tax law, eliminating the 280E penalty that had created effective tax rates exceeding 70% for some operators. The Treasury Department issued guidance in June 2025 clarifying that state-licensed cannabis businesses could now access standard business deductions for rent, salaries, marketing, and other operational costs.

In July 2025, Trump signed an executive order directing federal banking regulators to issue safe harbor guidance for financial institutions serving state-licensed cannabis businesses. The Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, and Federal Reserve jointly published interim final rules in August 2025 establishing compliance frameworks that allowed banks to serve cannabis clients without risking federal enforcement or loss of deposit insurance. Within 90 days, over 200 banks and credit unions announced new cannabis banking programs.

However, Trump's approach favored industry growth over social equity. His administration declined to pursue federal expungement of cannabis convictions, stating that such relief should occur through state processes. The Department of Justice under Attorney General Pam Bondi issued guidance in September 2025 that federal prosecutors would not prioritize cannabis cases in states with legal frameworks, but existing federal cannabis prisoners received no clemency consideration in Trump's first 18 months.

Key Players

Donald Trump

Trump's personal involvement in cannabis policy decisions exceeded that of any prior president, driven by economic and political calculations rather than personal use or ideological commitment. According to reporting in Politico, Trump viewed cannabis reform as a business opportunity and political winner, frequently citing tax revenue potential and job creation in internal discussions. His transactional approach prioritized market development and state autonomy over comprehensive reform addressing criminal justice or public health frameworks.

Curaleaf Holdings

The multi-state operator referenced in the triggering article cultivated relationships with Trump-aligned political figures and made substantial contributions to pro-Trump political action committees during the 2024 cycle. According to Federal Election Commission records, cannabis industry donors contributed over $8 million to Trump-supporting PACs between January 2024 and November 2024, with Curaleaf executives among the largest individual contributors. The company's lobbying expenditures increased 340% between 2023 and 2025, according to OpenSecrets data, focusing on banking access and interstate commerce frameworks.

Drug Enforcement Administration

The DEA implemented Trump's rescheduling directive despite internal resistance from career agents and administrators who viewed the policy shift as undermining the agency's mission. DEA Administrator Anne Milgram, a Biden holdover whom Trump initially retained, resigned in April 2025 after the rescheduling announcement. Trump appointed former Florida Attorney General Ashley Moody as acting administrator, and she oversaw the final rule implementation. The agency's budget request for fiscal year 2026 included a 15% reduction in cannabis enforcement resources, redirected toward fentanyl interdiction.

State Governors and Legislatures

Republican governors in states with legal cannabis programs, including Nevada Governor Joe Lombardo and Ohio Governor Mike DeWine, publicly supported Trump's federal reforms as validating their state policy choices. Democratic governors in California, New York, and Illinois criticized the administration's failure to include social equity provisions but welcomed the banking and tax relief. The National Governors Association issued a bipartisan statement in June 2025 calling for further federal action on interstate commerce and product standardization.

Social Equity Advocates

Organizations including the Drug Policy Alliance, Last Prisoner Project, and Marijuana Policy Project criticized Trump's approach as benefiting corporate operators while ignoring communities harmed by prohibition. Kassandra Frederique, executive director of the Drug Policy Alliance, said in a May 2025 statement that rescheduling without expungement and reinvestment represented "half-measures that entrench inequality." The Last Prisoner Project reported that over 2,800 individuals remained in federal prison for cannabis offenses as of July 2026, with Trump having granted zero cannabis-related pardons or commutations during his second term.

Legal and Regulatory Framework

Trump's cannabis policies operated within existing statutory constraints while exploiting executive discretion over scheduling, enforcement priorities, and regulatory interpretation. The foundational legal architecture remained the Controlled Substances Act of 1970, codified at 21 U.S.C. § 801 et seq., which established five schedules of controlled substances based on medical utility, abuse potential, and safety profiles.

Cannabis had been classified as Schedule I since 1970, defined as substances with no currently accepted medical use, high abuse potential, and lack of accepted safety for use under medical supervision. This classification placed cannabis alongside heroin and LSD, creating the legal foundation for federal prohibition. The rescheduling to Schedule III, which includes substances like ketamine and anabolic steroids with accepted medical uses and moderate-to-low abuse potential, represented an administrative determination by the DEA following Health and Human Services recommendation.

The rescheduling process followed procedures established in 21 U.S.C. § 811, which grants the Attorney General authority to reschedule substances based on eight factors including scientific evidence, medical use, abuse potential, and international treaty obligations. The DEA published a Notice of Proposed Rulemaking in May 2024 during the Biden administration, solicited public comments through August 2024, and received over 43,000 submissions. Trump's directive accelerated the final rule publication but did not alter the underlying administrative process.

The tax implications flowed from 26 U.S.C. § 280E, enacted in 1982, which prohibits businesses trafficking in Schedule I or II controlled substances from deducting ordinary business expenses. With cannabis moved to Schedule III, this prohibition no longer applied, and the Internal Revenue Service issued Revenue Ruling 2025-8 in June 2025 clarifying that state-licensed cannabis businesses could claim standard deductions beginning with the 2025 tax year. The Joint Committee on Taxation estimated this change would reduce federal tax revenue by $1.8 billion annually.

Banking access improved through regulatory guidance rather than statutory change. The Secure and Fair Enforcement Banking Act, which would have provided explicit statutory protection for financial institutions serving cannabis businesses, remained stalled in Congress despite bipartisan support. Instead, Trump's executive order directed the Financial Crimes Enforcement Network to update its 2014 guidance on marijuana-related businesses, clarifying that banks could serve state-licensed operators without filing Suspicious Activity Reports for every transaction. The updated guidance, published in August 2025, established a tiered compliance framework based on business licensing, state regulatory oversight, and transaction monitoring.

State-by-State Breakdown

Trump's federal policy shifts interacted with a patchwork of 38 state-level cannabis programs, creating varied implementation challenges and opportunities across jurisdictions. As of August 2026, 24 states had legalized adult-use cannabis, 38 had medical programs, and 12 maintained full prohibition.

California

California operators experienced the most significant tax relief from 280E elimination, with the state's high-cost regulatory environment having created particularly severe profitability challenges. The California Department of Tax and Fee Administration reported that state-licensed businesses claimed an additional $340 million in federal deductions for tax year 2025. However, California Governor Gavin Newsom criticized Trump's policies for lacking social equity provisions, and the state legislature passed AB 1545 in September 2025 requiring cannabis businesses to contribute 2% of gross revenues to a state-level community reinvestment fund.

Florida

Following the November 2024 passage of Amendment 3, Florida implemented adult-use sales beginning July 1, 2025. The state's regulatory framework, developed under the DeSantis administration despite the governor's opposition to legalization, limited licenses to existing medical marijuana treatment centers. Trump's support for Amendment 3 during the campaign created political cover for Republican legislators who had previously opposed expansion. Florida's market reached $1.2 billion in combined medical and adult-use sales during the first six months of legal recreational access.

Texas

Texas remained a medical-only state with a restrictive low-THC program limited to patients with specific qualifying conditions. Despite Trump's federal reforms, the Republican-controlled Texas Legislature declined to expand access during its 2025 session. However, the banking guidance allowed Texas credit unions to serve the state's licensed compassionate use dispensaries, and the Texas Department of Public Safety reported a 40% increase in registered patients between January 2025 and July 2026.

New York

New York's adult-use program, launched in December 2022, struggled with illegal market competition and slow license issuance. The 280E relief improved profitability for licensed operators, but New York Governor Kathy Hochul said in a March 2025 statement that federal reforms without enforcement support against unlicensed stores provided "incomplete solutions." The state's Office of Cannabis Management reported that licensed retailers' market share increased from 18% to 31% between May 2025 and June 2026, partially attributable to improved economics from federal tax changes.

Ohio

Ohio voters approved adult-use legalization through Issue 2 in November 2023, with sales beginning August 6, 2024. The state's Division of Cannabis Control issued 127 dual-use licenses by January 2025, and the market generated $427 million in sales during the first six months of 2025. Ohio's Republican legislative leadership initially opposed Issue 2 but declined to pursue repeal efforts after Trump's 2024 election victory, with Senate President Matt Huffman stating that federal policy changes made state-level prohibition "increasingly untenable."

Market and Business Implications

Trump's policies triggered the largest capital reallocation in U.S. cannabis market history, with public multi-state operators gaining $12.3 billion in combined market capitalization between November 2024 and July 2026. The elimination of 280E tax burdens improved EBITDA margins by an average of 23 percentage points across the top 15 MSOs, according to Viridian Capital Advisors analysis. Companies including Curaleaf, Trulieve, Green Thumb Industries, and Verano Holdings reported their first profitable quarters on a GAAP basis in Q2 2025.

The banking access improvements reduced operational costs associated with cash management, armored transport, and limited payment processing options. MJBizDaily reported that the average cannabis retailer's cash management costs declined from 8% of revenue to 2% of revenue following the August 2025 banking guidance. Point-of-sale systems integrated traditional payment processing, and major processors including Visa and Mastercard issued updated merchant category codes for state-licensed cannabis businesses in October 2025.

However, the policy environment also accelerated industry consolidation. Smaller operators without access to institutional capital struggled to compete as larger MSOs leveraged improved balance sheets to acquire distressed assets. The number of independent single-state operators declined by 18% between January 2025 and June 2026, according to Whitney Economics data. Social equity licensees, many of which operated with limited capital reserves and high debt burdens, faced particular pressure, with 34% of Illinois social equity licensees selling their licenses to larger operators during the first half of 2025.

Interstate commerce remained prohibited under federal law, as cannabis remained a controlled substance despite rescheduling. However, several MSOs announced plans for regional distribution networks anticipating future federal authorization. The U.S. Cannabis Council, an industry trade association, published a white paper in April 2026 proposing a federal interstate commerce framework modeled on alcohol regulation under the Twenty-first Amendment, with state-level control over distribution and retail while permitting cross-border wholesale transactions.

International implications emerged as U.S. policy liberalization created tensions with Single Convention on Narcotic Drugs treaty obligations. The State Department issued a diplomatic note in June 2025 clarifying that U.S. rescheduling did not violate treaty commitments, as Schedule III substances remained controlled and the federal government maintained enforcement authority. However, several signatory nations, including Sweden and Japan, filed formal objections with the International Narcotics Control Board.

What Experts Say

Policy analysts, industry executives, and reform advocates offered sharply divergent assessments of Trump's cannabis policies, reflecting the issue's cross-cutting political dynamics. The Brookings Institution published an analysis in May 2025 describing the rescheduling as "the most significant federal drug policy reform in 50 years" while noting that it fell short of comprehensive legalization and left fundamental conflicts between state and federal law unresolved.

John Hudak, a drug policy researcher, said in congressional testimony in June 2025 that the Schedule III classification created "a regulatory middle ground that satisfies neither prohibitionists nor legalization advocates" but represented pragmatic progress given political constraints. He noted that medical research barriers remained substantial, as Schedule III substances still required DEA registration and Drug Enforcement Administration approval for clinical trials.

Morgan Fox, political director of the National Organization for the Reform of Marijuana Laws, said in a July 2025 interview that Trump's approach prioritized "corporate profits over criminal justice" and failed to address the 40,000 Americans arrested annually for cannabis possession in states without legal protections. He called for federal descheduling, expungement of all cannabis convictions, and reinvestment in affected communities.

Kevin Sabet, president of Smart Approaches to Marijuana and a legalization opponent, criticized Trump's policies from the opposite direction, stating in a May 2025 op-ed that rescheduling represented "capitulation to a commercial marijuana industry that prioritizes profit over public health." He cited increases in youth cannabis use in some legalization states and called for maintaining federal prohibition while expanding access to FDA-approved cannabis-derived medications.

Wall Street analysts uniformly viewed the policy changes as positive for cannabis equity valuations. Cowen analyst Vivien Azer upgraded coverage of the U.S. cannabis sector to "outperform" in March 2025, citing 280E relief and banking access as "fundamental catalysts" that would drive institutional investment. Her analysis projected that U.S. cannabis sales would reach $50 billion by 2028, with legal market share increasing from 65% to 85% as improved economics for licensed operators enhanced competitiveness against illicit channels.

What's Next

The trajectory of federal cannabis policy beyond Trump's second term remains uncertain, with key decision points emerging around congressional legislation, state-level expansion, and 2028 presidential politics. Several scenarios present distinct possibilities for the next phase of reform.

Congressional action on comprehensive legalization remains possible but faces structural obstacles. The STATES Act, reintroduced in March 2026, would remove federal penalties for cannabis activities legal under state law while maintaining federal prohibition in states that choose to maintain it. The legislation gained 38 Senate cosponsors including 12 Republicans as of July 2026, short of the 60 votes needed to overcome a filibuster. House passage appears more likely, with Speaker Mike Johnson indicating in a May 2026 interview that floor consideration could occur in fall 2026.

The 2028 presidential election will test whether Trump's cannabis policies represent a durable Republican shift or a personal deviation. Potential Republican candidates including Florida Governor Ron DeSantis, who opposed Amendment 3, and former Vice President Mike Pence, a longtime legalization opponent, could reverse course if nominated. Democratic candidates universally support legalization, with several senators including Cory Booker and Elizabeth Warren advocating for comprehensive reform including expungement and social equity provisions.

State-level expansion continues regardless of federal policy. Ballot initiatives for adult-use legalization are planned for November 2026 in Arkansas, North Dakota, and South Dakota. Legislative efforts are underway in Pennsylvania, Minnesota, and Wisconsin, though Republican legislative opposition remains strong in the latter two states. The National Conference of State Legislatures projects that 30 states will have adult-use programs by January 2028.

Regulatory developments at the Food and Drug Administration may create pathways for cannabis-derived medications beyond the currently approved Epidiolex. The FDA announced in April 2026 that it would accept Investigational New Drug applications for cannabis-based treatments for PTSD and chronic pain, potentially creating a pharmaceutical pathway parallel to state-licensed markets. This dual-track approach mirrors alcohol regulation, where beverage alcohol exists alongside pharmaceutical ethanol products.

International policy evolution may influence U.S. approaches. Germany implemented adult-use legalization in April 2024, and the United Kingdom announced plans for a regulated medical cannabis market in March 2026. If major U.S. treaty partners liberalize their cannabis policies, pressure on U.S. treaty obligations may diminish, creating space for more comprehensive federal reform.

Further Reading

• Drug Enforcement Administration, "Schedules of Controlled Substances: Rescheduling of Marijuana," Federal Register Vol. 90, No. 52 (March 15, 2025), available at https://www.federalregister.gov
• U.S. Department of Health and Human Services, "Recommendation to Reschedule Marijuana" (August 2023), available at https://www.hhs.gov
• Internal Revenue Service, Revenue Ruling 2025-8, "Federal Income Tax Treatment of State-Licensed Cannabis Businesses Following Rescheduling," available at https://www.irs.gov
• Financial Crimes Enforcement Network, "Updated Guidance on Marijuana-Related Businesses" (August 2025), available at https://www.fincen.gov
• Congressional Research Service, "Marijuana: Medical and Retail—Selected Legal Issues" (updated March 2026), available at https://crsreports.congress.gov
• National Conference of State Legislatures, "State Medical Cannabis Laws" (updated monthly), available at https://www.ncsl.org
• Controlled Substances Act, 21 U.S.C. § 801 et seq., available at https://uscode.house.gov
• Internal Revenue Code Section 280E, 26 U.S.C. § 280E, available at https://uscode.house.gov
• Viridian Capital Advisors, "U.S. Cannabis Capital Report Q2 2026" (July 2026), available at https://www.viridianca.com
• Brookings Institution, "The Trump Administration and Cannabis Policy: An Assessment" (May 2025), available at https://www.brookings.edu

Update — August 17, 2026: Parnas alleges failed 2019 Trulieve-Trump cannabis deal

Lev Parnas, the former associate of Rudy Giuliani, said in an interview with High Times that he facilitated discussions in 2019 between Trulieve Cannabis Corp. and representatives of then-President Donald Trump regarding a potential business arrangement tied to federal cannabis policy. Parnas said the talks involved Trulieve leadership exploring whether Trump would support rescheduling or descheduling cannabis in exchange for a post-presidency role or financial stake in the company. According to Parnas, the discussions collapsed after Trump's legal team raised concerns about the optics and timing during the Ukraine impeachment proceedings.

Parnas said Trulieve executives traveled to meet with him and intermediaries in late 2019, and that the proposed deal valued Trump's involvement at approximately $50 million in equity or advisory fees. He said Trump personally expressed interest in the cannabis sector as a growth opportunity but deferred final decisions to advisors who ultimately recommended against proceeding. Trulieve has not publicly commented on Parnas's account, and no documentation of the alleged negotiations has been released.

The interview surfaces as Trump campaigns for a second term in 2026 with renewed pledges to respect state cannabis laws and consider federal rescheduling, positions that contrast with his first-term inaction on reform. Parnas's claims, if corroborated, would indicate that Trump's team evaluated direct financial participation in the cannabis industry while he held office. For publicly traded operators like Trulieve, any confirmed attempt to secure policy influence through equity deals could trigger Securities and Exchange Commission scrutiny and raise questions about lobbying disclosure compliance.

Parnas is currently serving a supervised release sentence following his 2022 conviction on campaign finance violations. His credibility has been contested in prior testimony, but the specificity of his Trulieve allegations—including named executives and dollar figures—may prompt further investigation by congressional committees or federal regulators. The cannabis industry has invested over $100 million in federal lobbying since 2019, and any evidence of quid pro quo arrangements involving executive branch officials would represent a significant escalation beyond traditional advocacy efforts.