Update Applicable to:	Effective Date
All Employers with Drug‑Testing Programs (including DOT); Cannabis Operators and Hemp Product Makers	December 18, 2025

What happened?

On December 18, 2025, the President signed an Executive Order (EO) directing the Department of Justice (DOJ) to expedite the completion of the rulemaking process to reschedule marijuana from Schedule I to Schedule III under the Controlled Substance Act (CSA). The EO also directs expanded federal research and development of a regulatory framework for hemp‑derived cannabinoidCBD products.

The EO does not legalize marijuana. Any changes will occur only after the Drug Enforcement Administration (DEA) completes rulemaking and after the Department of Health and Human Services (HHS), the Food and Drug Administration (FDA), the Centers for Medicare & Medicaid Services (CMS), and the National Institutes of Health (NIH) issue related guidance through applicable federal process.

Note: Schedule III controlled substances are defined as having moderate potential for abuse (less than Schedules I or II), with abuse leading to moderate physical dependence, and have a currently accepted medical use in the United States. Schedule III substances may be filled with a written, electronic, or oral prescription.Schedule III examples includeKetamine, Tylenol with codeine, Buprenorphine, and Anabolic Steroids.

Overview

The Executive Order directs agencies to move forward with rescheduling marijuana to Schedule III under the Controlled Substances Act (CSA) and to expand medical marijuana and hemp-derived cannabinoid research infrastructure.

• Hemp-derived product guidance: Agencies are directed to develop a regulatory framework, including potential guidance on tetrahydrocannabinol (THC) limits (per serving and per container) and CBD:THC ratio considerations for hemp-derived products.

• Centers for Medicare & Medicaid Services (CMS) initiatives: CMS is directed to develop research models, including potential pilot initiatives, to evaluate certain CBD treatments.

• Process signals: The Attorney General is instructed to complete the rescheduling rulemaking “in the most expeditious manner.” A fast‑tracked final rule could arrive in 2026; though traditional rulemaking timelines may still apply.

• Employer status quo: Until rescheduling is finalized and effective, drug testing and accommodation policies remain unchanged, including the Department of Transportation (DOT) rules for safety‑sensitive positions.

• Industry impact: Schedule III status would likely end Internal Revenue Code (IRC) § 280E expense disallowance on a prospective basis, improving federal tax treatment for state‑licensed cannabis operators. Interstate commerce and banking access would still require congressional action.

Best Practices:

• HR and compliance teams must maintain current policies while preparing for possible shifts in ADA (American with Disabilities Act) accommodation analyses if federal scheduling ultimately changes.

• DOT regulated employers- should monitor development and plan for potential future testing framework updates, recognizing that separate DOT rulemaking would be required.

• Cannabis operators should model post‑§ 280E tax scenarios while avoiding operational or tax changes before a final rule takes effect. Note: If cannabis is formally moved to Schedule III, § 280E would no longer apply, as it only applies to Schedule I or II substances.

Action Steps for Compliance

• Reaffirm current policies: Communicate internally that marijuana remains prohibited under existing federal and DOT rules until a final rescheduling rule is effective.

• Map safety‑sensitive roles: Confirm which positions are subject to 49 CFR Part 40 and keep testing protocols unchanged.

• Prepare an ADA playbook: Draft decision trees for accommodation requests if Schedule III status is finalized; incorporate state law considerations.

• Monitor rulemaking: Track DOJ/DEA docket and forthcoming HHS, FDA, CMS, and NIH guidance related to THC limits and CBD:THC ratios.

• For operators: Maintain § 280E compliance; model cash‑flow and tax impacts post‑§ 280E;

engage in protective planning (no retroactivity assumed).

Additional Information

• DEA posture: 2024 hearings were postponed; leadership skepticism means timelines remain uncertain – we will continue to monitor events and outcomes.

What to Avoid

• Do not interpret the EO as legalization or change testing panels or policies prematurely.
• Do not grant ADA accommodations for marijuana based solely on the EO; wait for final federal action and updated guidance.
• Do not market, subsidize, or reimburse CBD products without verifying THC thresholds and applicable federal requirements.
• Do not assume § 280E relief is retroactive or effective before the final rule takes effect.

Source References

• White House EO – INCREASING MEDICAL MARIJUANA AND CANNABIDIOL RESEARCH (December 18, 2025)
• Federal Register – EO 2025-23846 (90 FR 60541) – Increasing Medical Marijuana and Cannabidiol Research

Resources

• Fact Sheet: President Donald J. Trump is Increasing Medical Marijuana and Cannabidiol Research

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