Trump's executive order lowers the regulatory classification of marijuana, investors "sell the facts," and marijuana stocks fall broadly

On Thursday, President Trump downgraded marijuana from the most strictly regulated category of drugs, easing restrictions but not fully legalizing it. According to the executive order, marijuana will be downgraded from a Schedule I controlled substance to a Schedule III, on par with ketamine. However, senior U.S. government officials stated that this move will not change how law enforcement handles marijuana-related arrests. Trump stated: The marijuana order is not law, and this order will not legalize marijuana in any form. At the same time, the order also authorizes the initiation of a pilot program allowing U.S. federal health insurance to reimburse CBD (cannabidiol, a non-psychoactive cannabis compound) products for patients with conditions such as cancer. This health insurance program is expected to launch next year. Trump's decision has sparked divisions within the Republican Party. Recently, 18 Republican senators and 26 Republican House members sent a letter to the president opposing the reclassification, and the conservative nonprofit organization CatholicVote also expressed opposition. Marijuana stocks generally fell, with the ETF CNBS down nearly 16%, MSOS down 15.77%, MJ down over 10%, and VFF's gains narrowing to 3.71%. Despite the sell-off, related stocks recorded significant gains before the executive order was signed, with analysts suggesting that this may be due to investors "buying the expectation, selling the fact," cashing out profits. (Marijuana stocks generally fell on Thursday) Policy Adjustment Acknowledges Medical Value of Marijuana This executive order downgrading marijuana from a Schedule I controlled substance to a Schedule III means that the U.S. federal government officially recognizes that marijuana has certain medical value and a lower potential for abuse. Trump stated on Monday that this move will promote marijuana research. Trump said: Many people want to see marijuana's regulatory classification changed because it will bring a lot of research opportunities that cannot be pursued without reclassification. Dr. Kevin Hill, a psychiatry professor at Harvard Medical School, stated: Reclassifying marijuana will eliminate some key barriers, making marijuana research easier. However, he pointed out that the main barrier to research is not its Schedule I status, but the lack of available research funding. Dr. Hill said: Reclassification should drive larger-scale research, but the key is that stakeholders, such as state governments and businesses currently profiting from marijuana sales, must be more proactive in funding research than in the past. Another important aspect of the executive order is the authorization for the Centers for Medicare & Medicaid Services to launch a pilot project next year, to reimburse CBD treatment costs for Medicare beneficiaries, including cancer patients. The push for this health insurance proposal comes from billionaire financier and long-time Trump ally Howard Kessler. This leukemia survivor and founder of The Commonwealth Project stated in a statement: President Trump's executive order has sparked seismic changes in the healthcare sector—one of the boldest breakthroughs in generations. While the reclassification of cannabis will make headlines, his revolutionary healthcare pilot program will provide immediate, life-changing relief and access to cannabinoid therapies for millions of seniors suffering from chronic pain and debilitating diseases. Opposition Within the Party Trump's decision has sparked controversy within the Republican Party. Eighteen Republican senators wrote in a letter to the president: Given the documented dangers of cannabis, promoting the growth of the cannabis industry is contrary to developing the economy and encouraging healthy lifestyles for Americans. We urge you to continue your strong leadership for the nation and the economy and abandon the reclassification of cannabis. Despite facing resistance within the party, the Trump administration has continued to push this policy change, which also extends the efforts of the Biden administration. In October 2022, then-President Biden requested the U.S. Department of Health and Human Services and the Drug Enforcement Administration to review the regulatory classification of cannabis. Nearly a year later, the Department of Health and Human Services recommended reclassifying cannabis as a Schedule III controlled substance based on scientific assessments, considering that cannabis has potential medical benefits and can be grouped with substances like testosterone and ketamine. Since then, the formal process for changing the classification has been advancing through the rule-making process of the Drug Enforcement Administration in the United States