Trump marijuana rescheduling could cut taxes for California cannabis – The Desert Sun
President Donald Trump has signed an executive order to expedite a historic change in how the federal government views marijuana, but what does the order mean for Californians?
Trump ordered the U.S. Justice Department to hasten a recategorization of marijuana from a Schedule I drug under the 1971 Controlled Substances Act to Schedule III. No longer would marijuana sit with heroin and LSD as a drug with a high potential for abuse and no official medical use, instead moving into the ranks of drugs like Tylenol with codeine and other widely prescribed drugs.
Here’s what to know about the executive order.
The rescheduling won’t make marijuana legal nationwide, nor will it mean companies can ship marijuana across state lines or immediately access normal banking services like other businesses. One potential benefit for consumers is the use of debit and credit cards for marijuana purchases, though many dispensaries already take debit cards.
The order noted that “decades of Federal drug control policy have neglected marijuana’s medical uses,” which has limited research, and that the U.S. Food and Drug Administration and National Institute on Drug Abuse have recommended the change.
“The Federal Government’s long delay in recognizing the medical use of marijuana does not serve the Americans who report health benefits from the medical use of marijuana to ease chronic pain and other various medically recognized ailments,” the order stated.
The order also brings a softening on a new law affecting cannabidiol, commonly known as CBD, including allowing reimbursement for purchases of CBD products for Medicare beneficiaries. This would allow the Americans “to benefit from access to appropriate full-spectrum CBD products,” the order stated.
Full-spectrum CBD products don’t include hemp products with levels of THC that would get consumers of them high. Trump and Congress closed a loophole last month that legalized the high-THC products nationally, though it won’t take effect for a year.
Dr. Mehmet Oz, Trump’s administrator for the Centers for Medicare & Medicaid Services, said at the rescheduling-order signing that CBD reimbursement would take place beginning in April.
California’s history with cannabis legalization started in 1996 when it became the first state to legalize medicinal use of the drug, according to Third Way. The state would legalize recreational use for adults over 21 years old, 20 years later, with the passing of Proposition 64.
As of Dec. 1, 2025, 24 states and Washington, D.C., had fully legalized the recreational use of marijuana, according to DISA.com.
The rescheduling from I to III would likely not affect most Californians, but it could impact the cannabis industry in the state because of an IRS tax law, known as 280e after the section of federal code.
The tax law applies only to Schedule I drugs, massively reducing the tax burden for marijuana companies. The 280e law disallows companies from deducting normal business expenses, such as employee payroll and capital expenses, from their tax obligations.
Because of it, some pay effective tax rates of 50% to 70%, according to cannabis attorney Jason Adelstone, who has written articles on the subject.
The removal of 280e is essentially “the only benefit that state legal operators will see” from rescheduling, said Adelstone.
The change would result in a “massive benefit” for many dispensary companies, saving them millions of dollars in tax payments, he said.
Reach the reporter at rstern@arizonarepublic.com or 480-276-3237. Follow him on X @raystern.
Ernesto Centeno Araujo covers breaking news for the Ventura County Star. He can be reached at ecentenoaraujo@vcstar.com, 805-437-0224 or@ecentenoaraujo on Instagram and X.