As Arizona nears the five-year mark since legal adult-use cannabis sales launched, Washington just handed the industry its biggest federal signal shift in decades.

On Dec. 18, President Donald Trump signed an executive order pushing the Justice Department to move forward with rescheduling marijuana from Schedule I to Schedule III. It doesn’t legalize cannabis, and it doesn’t flip a switch overnight, but it puts new pressure on federal agencies to finish a review that has lingered for years.

The fine print still matters. Any change must go through the Drug Enforcement Administration’s formal rulemaking process, and until that happens, marijuana remains federally illegal. But Schedule III would formally acknowledge medical use and lower risk, a reclassification that could quietly change everything from research access to how the industry is treated by regulators and lenders.

The real headline for operators is taxes. If cannabis lands in Schedule III, the industry could finally escape IRS Section 280E, the rule that has forced legal businesses to pay taxes like drug traffickers. That alone would reshape balance sheets across the country.

For Arizona, the timing is hard to ignore. Adult-use sales began Jan. 22, 2021, after voters passed Proposition 207, and the state has since grown into one of the nation’s most established cannabis markets. As of December, Arizona counted 170 licensed marijuana establishments, with nearly all actively operating.

So what does this federal nudge actually mean for Arizona’s cannabis insiders?

Here’s what AZ insiders in the cannabis industry are saying:
Laura Bianchi, co-founder and partner, Bianchi & Brandt: “The President’s Executive Order directs the Department of Justice to move the existing process forward to consider rescheduling marijuana from Schedule I to Schedule III, which is a meaningful development for the industry. That said, it doesn’t change the law overnight, it doesn’t reduce regulatory requirements, mandate rescheduling, or federally legalize cannabis. Any rescheduling still has to go through the DEA’s formal rulemaking process. If that process is ultimately completed, a move to Schedule III would reflect federal recognition of marijuana’s medical use and a lower abuse classification, with the most significant impact being potential relief from the 280E tax burden and, hopefully, broader shifts in how the industry is viewed.”

Justin Brandt, partner and co-founder, Bianchi & Brandt: “The Biden administration set this in motion by ordering a scientific and regulatory review of marijuana’s federal status, but that process lagged and ultimately stalled in administrative purgatory. President Trump’s executive order is a clear attempt to push it across the finish line and force action. It doesn’t change the law by itself, but it signals to the agencies that this is no longer an academic exercise. For businesses, the difference between endless review and an actual outcome is significant. This executive order doesn’t legalize cannabis, but it moves the industry out of the penalty box. Most cannabis operators aren’t looking for special treatment. They’re looking for basic fairness. Moving marijuana to Schedule III could mean relief from crushing federal tax rules and improved access to banks and investors. Schedule I treats cannabis as if it has no medical value, placing it in the same category as the most dangerous drugs. Schedule III acknowledges medical use and lower risk, which changes how regulators, lenders, and investors view the industry. For Arizona operators, that shift could unlock financing and deal activity that has been largely frozen.”

Jason Vedadi, CEO, Story Cannabis: “I want to sincerely thank President Donald J. Trump for his historic decision to reschedule cannabis from Schedule I to Schedule III. This long-overdue move finally acknowledges the overwhelming scientific evidence of cannabis’s medical value, expands critical research opportunities, and ensures our nation’s veterans can more easily access the cannabis-based treatments many of them rely on for PTSD, chronic pain, and other service-related conditions. By removing the Schedule I stigma, this action also grants dignity and legitimacy to more than 500,000 hardworking Americans employed in the legal cannabis industry, recognizing them as the normal, tax-paying citizens and job creators they have always been. This is a victory for science, compassion, and common sense. Thank you, Mr. President, for listening to the American people and taking this bold step toward a more rational drug policy.”

Sara Gullickson, CEO, The Cannabis Business Advisors: “Rescheduling cannabis from Schedule I to Schedule III is a structural shift for the industry, not full federal legalization. The most immediate impact is the effective end of 280E, which will significantly improve cash flow and financial stability for compliant operators. That said, state licensing frameworks remain fully intact, and operators should expect heightened expectations around compliance, governance, and operational discipline. This move rewards well-run businesses with strong regulatory foundations and positions cannabis closer to a normalized, highly regulated industry, while exposing those that are unprepared for increased scrutiny.”

Ann Torrez, executive director, Arizona Dispensaries Association: “The Arizona Dispensaries Association celebrates the historic announcement that marijuana will be rescheduled from Schedule I to Schedule III under the Controlled Substances Act. This action affirms what millions of Americans, and Arizona voters, have known for years. Marijuana has medicinal value and can improve health and well-being. This decision represents a profound cultural shift. For decades, marijuana has been stigmatized and now the federal government acknowledges what patients and providers have long understood. Marijuana is medicine.

Arizona operators have been at the forefront of normalizing cannabis use for more than a decade. Through the voter-approved Arizona Medical Marijuana Act and Proposition 207, Smart and Safe Arizona, Arizona built one of the most respected regulated marijuana programs in the nation. Aligning federal policy with the will of the people reinforces the strength and maturity of the industry and the benefits it provides.”

Marie Saloum, owner and CEO, GreenPharms Dispensary and Medical Marijuana Doctors: “For me, progress in marijuana has always been about making people feel comfortable, not intimidated. Whether it’s how we talk about the plant or how someone experiences a dispensary for the first time, normalization starts by removing fear and confusion. Rescheduling cannabis to Schedule III is another step in that same direction. It acknowledges what many patients and operators have known for years. Marijuana has legitimate medical value and deserves to be treated that way, including through more credible research and understanding… We’re not at the finish line yet, but moments like this help move cannabis out of the shadows and into everyday life, where education, research, and responsible access can continue to grow.”

Mitchel Chargo, partner, Hinshaw and Culbertson LLP: “For me, marijuana policy has always been about clarity and fairness, creating a regulatory framework that reflects the reality of the situation. For years, the gap between federal law and state-regulated marijuana markets has created unnecessary confusion for patients, businesses, and regulators. Rescheduling marijuana from Schedule I to Schedule III is a meaningful step in closing that gap. It acknowledges what patients, physicians, and operators have long understood. Marijuana has legitimate medical value and deserves to be treated that way. From a practical standpoint, this shift has real implications. For licensed marijuana businesses across the country, rescheduling could provide relief from the punitive effects of Section 280E, allowing operators to deduct ordinary business expenses like any other regulated industry. That change alone could improve cash flow, stabilize pricing, and strengthen long-term viability. This moment also opens the door to expanded medical research and greater access to traditional banking services, two areas long constrained under Schedule I. While rescheduling does not legalize marijuana federally, it represents a significant move toward a more rational, workable system.”

As Arizona nears its fifth anniversary of adult-use sales on Jan. 22, the industry is no longer fighting for legitimacy at the ballot box. Instead, operators, advocates, and regulators are watching Washington to see whether this federal push turns into a finalized rule, and whether that translates into real-world changes for taxes, research, and the long-standing gaps between state and federal policy.