Following the recent executive order directing the expedited rescheduling of cannabis from Schedule I to Schedule III, the industry has reached its largest federal policy milestone in cannabis in 50 years since prohibition. However, even with this historic momentum, it is critical for stakeholders to understand that rescheduling is an administrative process—not immediate legalization.
While the executive order directs Attorney General Pam Bondi to hasten the process of loosening federal restrictions, the change must still navigate the Controlled Substances Act’s (CSA) formal rule-making process.
For nearly a decade, Nabis has served coast-to-coast as a purpose-built cannabis wholesale platform, fulfilling approximately $1 billion in cannabis products annually, and supporting a network of ~4,000 licensed businesses across California, New York, and Nevada. Our YC-backed technology platform powers wholesale, compliant distribution, and payment processing for brands and retailers at scale. By sitting at the intersections of cultivation, manufacturing, retail, finance, and logistics, Nabis provides the stability and data-driven insights needed to manage federal changes as they ripple through real-world operations.
What Rescheduling Means for the Industry
The transition to Schedule III will introduce immediate operational benefits that strengthen the legal market:
Financial Relief
Moving off Schedule I/II would eliminate IRC §280E limits, restoring ordinary business deductions. Across our network, Nabis estimates this could result in a 12% boost to net margins for operators.In turn, this increase in liquidity can help reduce pricing in the legal market and combat illicit market sales.
Unlock Broader Medical Research
The transition to Schedule III status represents a pivotal shift for the scientific community by significantly lowering the barriers to clinical research. This move enables more rigorous studies on safety, efficacy, dosing, and indications—data points that are critical for patients, physicians, and payers alike. Ultimately, Increased medical funding opportunities and medical research at academic institutions, private health systems, will lead to more informed public health policies and regulations that serve the best interests of everyday consumers.
Widen Capital Access
Rescheduling fundamentally shifts the financial landscape by improving institutional comfort. This change draws in new lenders and investors while significantly reducing counterparty risk perceptions across the financial sector.
Reduce Stigma and Normalize the Industry
Rescheduling serves as a powerful catalyst for mainstream normalization, sparking widespread education and media coverage that reaches even those states without active legalization programs. Building on the momentum and ubiquity of the hemp beverage market, this shift brings unprecedented positive attention to the cannabis industry.
Amplify the Impact of Banking Reforms
While it does not grant full banking rights, rescheduling pairs with measures like SAFER Banking to meaningfully expand services and reduce cash risk intensity across the supply chain. This would add security to a cash-heavy industry, and reduce a variety of fees and services currently required by businesses in the space.
Improve Capital Efficiency for Operators and Infrastructure Providers
The elimination of 280E and the influx of available financing create a powerful ripple effect across the supply chain. With these federal burdens lifted, infrastructure providers like Nabis can scale networks faster, directly lowering the cost of capital for brands and modernizing the flow of credit, collections, and inventory. This shift allows for a more sophisticated, data-driven approach to scaling that was previously hindered by restrictive tax codes and limited funding.
The Road Ahead: Managing Expectations
It is important to recognize that rescheduling is not federal legalization. Cannabis will remain a controlled substance subject to federal criminal statutes and CSA rules. Key restrictions will remain in place:
No Interstate Commerce
Shipping products across state lines without specific DEA/FDA pathways remains illegal while cannabis stays on any CSA schedule.
No Traditional Pharmacies
All current state-market products—such as flower and vapes—are not FDA-approved and will not immediately appear on pharmacy shelves.There are only two approved THC pharmaceuticals, and the process to get one approved takes many years and lots of money.
Continued Compliance Burdens
Advertising restrictions, local taxes, large regulatory and licensing fees, and state-specific packaging rules will continue to govern daily operations.
The Risk of Confusion—and How to Manage It
Rescheduling will be widely (and sometimes incorrectly) reported as “legalization” or “descheduling”. This misinformation can lead to mismatched expectations among consumers, investors, local officials, and law enforcement agents. Furthermore, while rescheduling relieves specific federal burdens, it risks entrenching market fragmentation unless federal agencies coordinate updates on testing standards, product categories, and the complex cannabis-hemp boundary.
Clear guidance and sustained industry advocacy remain essential to navigate these nuances. Nabis is committed to joining other industry leaders in putting forth policy proposals that maintain a stable, well-regulated industry.
What We Expect the Administrative Process to Look Like
Following the executive order, which directed expedited completion of rescheduling, the HHS, DOJ, and DEA are directed to proceed on an accelerated timeline:
While rescheduling under the Controlled Substances Act is not instantaneous, it is important to note that the administrative process is now significantly advanced. HHS has already completed its scientific and medical evaluation recommending placement in Schedule III, and DOJ/DEA have completed substantial portions of the required rulemaking record. As a result, the remaining steps are largely procedural rather than substantive.
In this posture, the White House retains the ability to direct DOJ and DEA to conclude the process on an accelerated timeline, including resolving any remaining administrative issues and issuing a final rule at the earliest lawful date. Under the Administrative Procedure Act, agencies may also determine that further delay would be contrary to the public interest and, if appropriately justified, waive the typical post-publication delay before a final rule takes effect.This “fast-track” scenario would not bypass the law or convert rescheduling into executive fiat. Rather, it reflects the reality that much of the statutory groundwork has already been laid. If pursued, it could compress what is often a multi-month administrative tail into a matter of weeks, allowing the legal effects of Schedule III—such as relief from 280E—to take hold more quickly than many past regulatory transitions.
However, even an accelerated process must be executed carefully to ensure durability under judicial review. Stakeholders should therefore remain prepared for a short but active transition period as federal agencies finalize guidance and implementation details.
The Takeaway
While rescheduling does not equate to federal legalization or the immediate creation of a 50-state market, it marks a major milestone in shifting federal policy. By inviting broader medical research, reducing stigma, attracting new capital, and eliminating burdensome tax liabilities, this shift makes the industry significantly more financeable and efficient. These advancements empower the legal industry to mature and more effectively combat illicit operators, ensuring that safe and regulated products remain available for consumers.
