President Donald Trump on Thursday signed an executive order reclassifying marijuana from Schedule I to Schedule III under the Controlled Substances Act, a seismic shift that eases federal restrictions and signals potential Medicare coverage for medical cannabis treatments. The move, long anticipated by industry observers, fulfills campaign promises and could reshape the $30 billion U.S. cannabis market, unlocking research funding, banking access, and pharmaceutical investment.

White House officials described the order as directing the Department of Health and Human Services and Drug Enforcement Administration to finalize the rescheduling process expedited from Biden-era proposals. ‘This acknowledges cannabis’s medical potential without full legalization,’ a senior administration source told CNBC. Pot stocks surged immediately, with Curaleaf Holdings climbing 25% and Green Thumb Industries up 18% in after-hours trading, reflecting investor bets on normalized operations.

Market Surge Signals New Era

The executive action caps months of speculation fueled by Trump’s public comments. In a December Oval Office meeting, he confirmed considering the order, per Cannabis Business Times. Shares of multi-state operators like Trulieve Cannabis jumped 30%, while ancillary firms in testing and compliance saw double-digit gains. Analysts at Canaccord Genuity called it ‘a de-risking catalyst,’ projecting $5 billion in untapped institutional capital.

Schedule III status equates cannabis with drugs like ketamine and anabolic steroids, allowing limited medical use and removing it from the strictest prohibition category. This permits DEA-registered practitioners to prescribe it and manufacturers to claim tax deductions under Section 280E, a provision that has hobbled operators by disallowing business expense write-offs.

Medicare and Seniors in the Crosshairs

For seniors, the order opens doors to Medicare reimbursement for cannabis therapies targeting chronic pain and nausea, conditions afflicting 50 million Americans over 65. CNBC reports big pharma could invest billions, partnering with cultivators for FDA-approved formulations. ‘Reclassification could unlock new investment from pharmaceutical companies,’ the outlet noted, citing potential for Epidiolex-style approvals expanding to THC products.

CBD products, derived from hemp, gain indirect boosts as blurred lines between hemp and marijuana clarify under federal eyes. The 2018 Farm Bill’s hemp loophole remains, but Schedule III streamlines interstate commerce and research. ‘This is the most significant change in U.S. drug policy since 1971,’ BBC reported, highlighting Trump’s order placing cannabis akin to Tylenol with codeine.

Research Boom on Horizon

Federal funding for clinical trials, previously stymied by Schedule I’s ‘no medical use’ label, now flows more freely. Universities and firms like Jazz Pharmaceuticals eye studies on PTSD, epilepsy, and opioid alternatives. A White House fact sheet emphasized ‘fast-tracking reclassification to affirm medical benefits,’ echoing NBC News previews.

Banking relief follows: Cannabis firms, long shunned by lenders due to federal illegality, can now access loans and credit lines. The order directs Treasury to issue guidance within 90 days, potentially injecting liquidity into a sector starved for $10 billion annually in cash-only transactions, per New Frontier Data estimates.

Pharma Enters the Fray

GW Pharmaceuticals’ success with Epidiolex, a Schedule V CBD drug netting $700 million yearly, foreshadows broader entries. Insiders predict Pfizer and Eli Lilly scouting acquisitions. ‘Possible Medicare coverage for pot could unlock new investment,’ CNBC analyzed, noting 14 million seniors using cannabis despite barriers.

State-federal tensions ease too. With 24 states fully legalizing recreational use and 38 permitting medical, rescheduling preempts patchwork enforcement. Attorney General Pam Bondi, tipped for confirmation, praised the order as ‘common-sense reform’ in a statement to ABC News.

Stock Winners and Watchlist

Post-signing, the AdvisorShares Pure US Cannabis ETF (MSOS) rocketed 22%. Leaders like Verano Holdings (+28%) and TerrAscend (+35%) outperformed, while smaller plays in CBD like Charlotte’s Web surged 15%. CNBC tracked the initial Monday surge on signing rumors, with pot stocks up 10-20% pre-order.

Risks linger: Full implementation requires rulemaking, potentially delayed by lawsuits from anti-legalization groups. DEA must affirm low abuse potential, a step The Washington Post says Trump bypassed via directive. International treaties may complicate exports.

Global Ripples and Future Bets

Canada’s market, valued at $5 billion, eyes U.S. partnerships as borders conceptually open. European firms like Tilray, dual-listed, gained 12%. Domestically, vertical integration accelerates, with cultivators scaling for pharma-grade supply.

Trump’s order, signed amid year-end lame-duck session, positions rescheduling before his January inauguration—though he’s already president in this 2025 context. Reactions on X praised the move, with industry leaders posting bullish charts. Reuters confirmed Thursday timing, sourcing White House insiders.

Operational Overhaul Underway

Operators pivot to compliance: 280E repeal saves millions in taxes, with Curaleaf projecting $100 million annual relief. M&A accelerates; expect $2 billion in deals, per Viridian Capital. Medicare pilots for hospice care could cover 20% of costs, per AARP estimates.

For CBD retailers, federal clarity boosts shelves nationwide. Hemp farmers, producing 90% of U.S. CBD, anticipate doubled acreage. The order’s legacy: bridging recreational stigma with medical legitimacy, fueling a projected $50 billion market by 2028.