Executive Order Summary
“Increasing Medical Marijuana and Cannabidiol Research”
Signed by President Donald J. Trump — December 18, 2025
Overview
President Trump issued an executive order directing federal agencies to expand and improve research on medical marijuana and cannabidiol (CBD), recognizing growing evidence of therapeutic benefits and widespread public and clinical use. The order focuses on federal rescheduling efforts and modernizing research infrastructure to close knowledge gaps on safety and efficacy.
Key Policy Directives
-
Rescheduling Marijuana: Marijuana is to be rescheduled from Schedule I to Schedule III of the Controlled Substances Act, acknowledging its medical use and lower potential for abuse than previously classified.
-
Federal Legal Status: The order instructs the Attorney General to complete rulemaking to enact this rescheduling.
-
Improved Research: Health and Human Services (HHS), FDA, and NIH will develop research models that include real-world evidence to inform clinical practice.
-
CBD Regulation: Federal agencies are tasked with developing guidance and statutory definitions that ensure access to safe hemp-derived CBD products.
Why This Matters to the Cannabis Retail Industry
This executive order represents a major shift in federal policy that directly or indirectly affects cannabis retail operators, especially in administrative, financial, and HR systems.
Tax and Accounting Software Implications
-
Section 280E Relief: Rescheduling to Schedule III potentially eliminates the IRS application of Section 280E, which currently blocks cannabis businesses from deducting ordinary operating expenses (e.g., payroll, rent, utilities). This could materially lower effective tax rates and improve profitability.
-
Accounting Software Changes: Retailers will need to update accounting and payroll systems to reflect new federal classifications, updating tax codes, expense deduction logic, cost categorizations, and financial reporting modules once IRS guidance is finalized.
-
Federal Reporting Compliance: ERP and accounting platforms should prepare for changes in federal reporting, including Schedule III cost tracking, federal payroll tax computations, and changes to deductibility status on tax returns.
Payroll & HR Management
-
Payroll Tax Treatment: With rescheduling, payroll costs become federally deductible, reducing net taxable income and impacting payroll tax planning. Updated payroll software must accommodate revised tax treatments and deduction categories.
-
Regulated Employee Benefits: As cannabis operators become more aligned with mainstream businesses, payroll and HR systems will need to handle broader benefit offerings consistently and compliantly.
Retirement Benefits (401(k), IRA Plans)
While the executive order itself does not directly mandate retirement benefits, the federal policy shift creates an environment where cannabis retailers can:
-
Offer Standard Retirement Plans: Federal rescheduling reduces legal ambiguity, encouraging banks and plan administrators to support cannabis businesses in offering 401(k) and IRA plans. Previously, some financial providers declined service due to Schedule I status risks.
-
Integrate Benefits into Payroll Software: Cannabis retail payroll systems must be prepared to handle benefit deductions and employer matching provisions for 401(k) and contributions to IRAs, using updated IRS and Department of Labor compliance rules.
-
Improve Workforce Competitiveness: Standard retirement benefits enhance hiring and retention in a competitive labor market, especially for skilled roles in regulated retail operations.