Donald J. Trump’s victory in November’s Presidential election coincides with a pivotal moment for the U.S. cannabis reform, as efforts to reschedule the substance could significantly reshape the future of the industry, with him potentially having a say.
During his campaign, Trump expressed support for rescheduling cannabis from Schedule I to Schedule III of the Controlled Substances Act, which would acknowledge its medical value and ease the business tax burden. He also supported providing banking access to the cannabis industry and backed a Florida ballot measure to legalize recreational use, though it ultimately failed.
But given Trump’s controversial cannabis policy records during his first term, it is difficult to predict whether he will continue to support these initiatives. Therefore, understanding how Trump might influence cannabis reform in his second term is crucial for anticipating the future of the industry in the United States.
The Evolution Of Trump’s Stance On Cannabis
Since 2012, when Washington and Colorado first legalized recreational cannabis, over 24 states have followed suit, and 38 have legalized medical cannabis.
However, in November’s election, only Nebraska succeeded in passing a measure to legalize medical cannabis and establish a cannabis commission. Ballots to legalize recreational cannabis in North and South Dakota, as well as one in Florida, failed. Similarly, in Massachusetts, where recreational cannabis is already legal, voters rejected a measure to legalize psychedelic substances.
Nevertheless, the years-long changing landscape and the growth of medical cannabis programs have shaped Trump’s evolving stance on cannabis, leading to a more open approach, according to Kim Rivers, CEO of Trulieve, one of the largest cannabis companies in the country.
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“I think President Trump recognizes the shifting perspectives and the fact that data and science have advanced across the U.S.,” she said.
However, Trump’s records on cannabis policy during his first term tell a different story.
While he signed the 2018 Farm Bill legalizing hemp production, his administration rescinded the 2013 Cole Memorandum, which directed federal prosecutors not to pursue cannabis cases in states where it was legal. Additionally, in his 2021 budget, Trump proposed ending federal protections for state medical cannabis programs.
The discrepancy between Trump’s stance on cannabis today and his approach during his first term makes him unpredictable, raising concerns about the future of the cannabis industry while also offering hope that he may adopt policies aligned with the industry’s needs.
“Trump’s support for cannabis reform may continue, although records of his first term create uncertainty. It will also depend on his cabinet and public opinion,” Cat Packer, director of drug markets and legal regulation at the Drug Policy Alliance, explained. “However, reforms like the SAFE Banking Act and cannabis rescheduling don’t address the issues and challenges that everyday Americans are experiencing because of cannabis criminalization.”
Matt Gaetz’s Potential Role In Cannabis Reform
In this context, Trump’s recent pick of Congressman Matt Gaetz as U.S. attorney general may align with the industry’s interests, as Gaetz is a vocal supporter of cannabis legalization. However, he is facing scrutiny amid an ongoing investigation into allegations of a 2017 sexual relationship with a minor, sparking bipartisan calls for transparency.
“While Gaetz, as Attorney General, wouldn’t have unilateral authority to legalize or reschedule marijuana, he could heavily influence enforcement,” Jonathan Robbins, chair of cannabis practice at law firm Akerman, explained. “Based on his history, it is unlikely the Department of Justice would target state-legal cannabis companies.”
Republican Opposition To Cannabis Reform
Although the Attorney General’s stance carries weight, cannabis legislative reform ultimately rests with Congress.
Opposition within the Republican Party could arise, as many view cannabis reform as aligning with broader drug control issues.
For example, Trump’s pick of John Thune as Senate Majority Leader, who is a long-time opponent of cannabis policy reforms, could create tensions between the DOJ and Senate over cannabis’s future. However, recent bipartisan initiatives to regulate and legalize cannabis at the federal level show that conservatives are not entirely opposed.
Packer explained that Trump’s cannabis agenda will depend on his advisors, but to change cannabis law, he will need Congress. Even with Republicans controlling both the House and Senate, many don’t fully support reforms, and the ones they have backed don’t address key issues. As a result, reforms may focus on business interests, like the SAFE Banking Act, rather than comprehensive legalization.
Economic Impact of Cannabis Reform On Businesses
Trump’s economic plans may not directly target the cannabis industry, though it remains unclear how proposed higher tariffs and lower taxes will affect businesses. However, measures like cannabis rescheduling could indirectly reduce the tax burden on companies.
Specifically, rescheduling cannabis from Schedule I to Schedule III would benefit licensed businesses by eliminating the 280E tax burden, allowing them to deduct ordinary business expenses like other industries, promoting growth.
Robbins from Akerman explained that cannabis advocates and multi-state operators are focusing on litigating the constitutionality of Internal Revenue Service (IRS) Code Section 280E. If successful, this would represent significant progress for the business.
“IRS Code provision 280E is an albatross around the neck. This is the main reason why companies want to see cannabis rescheduled, because it would save tens of millions of dollars a year in taxes that they have to pay right now. So, that will fuel either litigation or lobbying efforts on the part of this industry,” he said.
For example, Trulieve recently announced it received $113 million in tax refunds while challenging its obligations under IRS Section 280E. The Florida-based company also plans to seek $143 million in federal tax refunds and $31 million in state refunds, but it declined to disclose the specific basis for the tax refunds, citing competitive, trade-secret, and pending litigation reasons.
Rivers from Trulieve said that cannabis rescheduling “has everything to do with the fact that it is improperly classified today,” and that is evidenced by the report that was released from the Department of Health and Human Services as part of the rescheduling process where “cannabis was found to be significantly less harmful than any of those substances in a host of categories.”
In addition to the economic impact of cannabis rescheduling, the passage of the SAFE Banking Act, while not directly targeting the cannabis industry, would offer protections for financial institutions working with cannabis businesses, thereby easing their access to banking services.
Trump’s Potential Militarized Drug Policy
However, what concerns Jeffrey Miron, senior lecturer at Harvard and director of economic studies at the Cato Institute, is not so much the economic impact of Trump’s administration on the cannabis industry but the conservatives’ proposals to potentially use the military for border enforcement and against Mexican cartels, marking a significant escalation in drug and immigration policy.
“The administration’s idea of choosing the military to fight the drug cartels is just totally insane. The only way to stop the violence and take power away from the cartels is to legalize all those drugs so that the cartel doesn’t have any particular profit or have any power,” he said.
While the military focus on cartels wouldn’t primarily affect cannabis, as cartels have mostly shifted away from its production due to state legalizations, Miron argues it reflects an attitude toward drug policy that opposes legalization. He argues that conservatives, generally focused on drug control, may not support significant change and could treat cannabis the same as other drugs, advocating for its continued prohibition.
On the broader drug policy, Packer says it may be a more militarized drug war, especially targeting fentanyl and linking it to immigration, which could disproportionately impact immigrant, black, and brown communities. Furthermore, the focus on supply-side reduction without addressing demand-side efforts like harm reduction, education, and access to tools such as naloxone could cause more harm, not less, as resources are diverted from life-saving services to criminalization.
“If we increase the militarization and criminalization while simultaneously taking resources away from harm reduction services and redirecting them towards criminalization, we won’t be saving lives; we’ll be pushing people further into unhealthy and dangerous situations in today’s drug market,” she said.
Cannabis Rescheduling As The Base For Future Reforms
Therefore, while comprehensive drug policy under Trump may lean towards a strong prohibition stance, cannabis may be an exception, as it has already made significant progress in the U.S., with key players in his administration potentially advancing it further.
Trump is not expected to bring radical change in cannabis policy, as little was seen during Joe Biden’s presidency, which, however, initiated the cannabis rescheduling process. While proper legalization addressing civil rights and directly impacting cannabis consumers, such as federal legalization, is unlikely, the approach of Trump’s administration on cannabis may focus more on the business side.
Rivers believes cannabis reform will be incremental, with years of effort and compromise being crucial to eventual success.
“Marijuana rescheduling from Schedule I to Schedule III needs to be completed, as it would set off a host of opportunities for future policies. I think that’s a very achievable win and something that should be completed as soon as possible,” she said.
H/T: www.forbes.com
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