Big Weed is pushing Trump to loosen federal regulation laws
In this DML Report…
The U.S. cannabis industry, valued at $40 to $60 billion annually, is pressing President Trump to loosen federal marijuana laws. Despite 24 states legalizing recreational use and 38 allowing medical marijuana, federal restrictions bar cannabis companies from accessing banking services, public markets, and tax deductions under Internal Revenue Code Section 280E. This forces businesses to operate on a cash basis, limiting growth and leaving them vulnerable to cartels, which control much of the black market. Industry leaders argue that federal reform could redirect billions in revenue to legitimate businesses, potentially disrupting illegal operations.
Trump has shown mixed signals on cannabis reform. During his 2024 campaign, he supported state-led legalization and rescheduling cannabis to Schedule III, a move that could ease banking restrictions and allow tax deductions, with the DEA’s final ruling expected later in 2025 after hearings concluded on March 6. However, Trump’s first term saw resistance to reform under Attorney General Jeff Sessions, and his recent nomination of Pam Bondi, a known cannabis skeptic, as Attorney General raises doubts. Despite this, Trump’s team has engaged with industry advocates, including the U.S. Cannabis Council, which hired former Trump transition official Bryan Lanza to lobby for reform.
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The industry faces additional hurdles as federal legalization could intensify competition, potentially lowering prices and squeezing smaller operators, especially in states like Minnesota. Legal challenges also persist, with a recent 1st Circuit case, Canna Provisions Inc. v. Garland, upholding federal prohibition after oral arguments in December 2024. While 70% of Americans support legalization per a 2023 Gallup poll, and bipartisan bills continue to emerge in Congress, the path to federal reform remains uncertain. The cannabis sector is banking on Trump’s populist leanings and promises of deregulation, but his administration’s priorities and appointees may ultimately dictate the pace of change.