Schedule III is Here: What Trump’s Executive Order Means for NC CBD Shops

The federal rules around cannabis and CBD are starting to change, and those changes could affect businesses across the country, including in North Carolina. On December 18, 2025, President Donald Trump signed an executive order that directed cannabis to be moved from Schedule I to Schedule III under the Controlled Substances Act.

This is one of the most significant federal cannabis policy moves in decades. It could impact how cannabis is researched, how businesses operate, and how clearly the law treats cannabis-related products.

In this article, we break down what Schedule III actually means, how this executive order could affect CBD shops, especially in North Carolina, and what may come next for the industry.

What Is the Schedule III Reclassification?

Before diving into the details of Schedule III and CBD shops in North Carolina, let’s look at what the executive order actually does.

From Schedule I to Schedule III

Under the Controlled Substances Act, drugs are placed into different schedules. These schedules are based on medical use, risk of abuse, and safety. 

The Status of Schedule I Substances

Schedule I substances are considered the most restricted. They have no accepted medical use and a high risk of abuse. Some of the examples are heroin, LSD, and, until now, marijuana.

The Shift to Schedule III

Schedule III substances are treated very differently. They are recognized as having accepted medical uses and a lower risk of dependence. Common Schedule III drugs include ketamine, anabolic steroids, and prescription pain medications like Tylenol with codeine.

The Role of the Executive Order

President Trump’s executive order directs the attorney general and the Department of Justice to speed up the formal process of moving marijuana into Schedule III. However, the order does not instantly change federal law. The Drug Enforcement Administration must still complete the required rulemaking process before the reclassification becomes official.

This effort builds on earlier scientific reviews and agency recommendations. It points toward a broader shift in how the federal government views the medical value of cannabis.

What the Reclassification Does and Doesn’t Change

It is important to note that moving cannabis to Schedule III does not make it federally legal. Cannabis would still be classified as a controlled substance. Under federal law, it would remain illegal unless it is approved by the FDA as a prescription medicine.

This means recreational cannabis would still be illegal at the federal level. Many traditional CBD products would also continue to be regulated by states or the DEA. In practice, most rules around CBD and cannabis sales would still depend on state law rather than federal approval.

Here’s what Schedule III status might change:

• Medical legitimacy: Official federal recognition that marijuana has accepted medical use.

• Research access: Reduced barriers for medical and clinical research into cannabis and cannabinoids.

• Tax relief: Federal tax code changes (specifically the removal of IRC Section 280E) would allow cannabis operators to deduct standard business expenses, improving profitability.

But it doesn’t:

• Legalize recreational cannabis at the federal level.

• Automatically change state laws.

• Guarantee that federal agencies will immediately allow widespread CBD treatment coverage or open banking.

Why This Matters to CBD Shops in North Carolina?

Even though the executive order tells federal agencies to move faster, cannabis is still classified as a Schedule I drug until the DEA finishes its formal rulemaking process. That process includes:

• Publishing a proposed rule

• Allowing time for public comments

• Releasing a final rule

Only after all of these steps are completed would cannabis officially move to Schedule III. Most experts believe this could happen in mid- to late 2026, as long as there are no lawsuits or major delays.

For CBD businesses, understanding this timeline is important. It affects future compliance decisions, tax planning, and how quickly companies can adapt to possible regulatory changes.

CBD Shop Opportunities and Risks in the Schedule III Era

Here are some of the main ways CBD shops could benefit:

1.   Recognition of Medical Value

Placing cannabis under Schedule III tells us that it has accepted medical use. This change could:

• Encourage more clinical research into CBD and other cannabinoids.

• Increase trust among doctors, regulators, and consumers when it comes to cannabis-based treatments.

2.   Tax and Banking Relief

One major headache for cannabis and CBD operators has been IRS Section 280E, which prevents standard business deductions for controlled substances. Schedule III status could lift these restrictions. This will enable CBD businesses to:

• Deduct expenses like rent, payroll, and utilities.

• Improve profitability and potentially reinvest in growth.

Access to banking services may also improve as federal agencies adjust their guidance.

However, meaningful banking reform will still depend on actions from regulators or

Congress.

3.   Research Expansion and Product Innovation

Lower regulatory barriers could make universities and medical institutions more willing to study CBD products. Stronger research can lead to:

• Better and safer product formulations.

• Health claims backed by real scientific evidence.

• Higher confidence among consumers when making purchasing decisions.

Regulatory Challenges in the Future

Despite the positives, there are also some serious regulatory challenges in the future.

1.   Federal Hemp Policy Conflicts

Separately from cannabis rescheduling, Congress has included language in a federal spending bill that would tighten THC limits for hemp-derived products. This could effectively ban full-spectrum CBD products, even those that contain only trace amounts of THC.

This provision could seriously disrupt the legal hemp CBD market. Although the President is asking for a review of CBD laws, actual changes will likely need a new law from Congress, not just an executive order.

2.   Ongoing Legal Gray Areas

Rescheduling cannabis does not solve many existing legal uncertainties around CBD. 

Currently:

• CBD foods and supplements that are not approved by the FDA remain in a legal gray area.

• CBD products are not automatically recognized as lawful dietary supplements under federal law.

This lack of clarity continues to create compliance challenges for retailers, brands, and manufacturers.

3.   State-Level Rules Still Apply

North Carolina doesn't have a legal market for recreational marijuana. Because of this, state-specific hemp and CBD laws will continue to dictate how local shops operate. This means that even with changes at the federal level, business owners must still follow North Carolina's strict rules on testing, labeling, and product safety.

What NC CBD Shops Should Do Now

Here are some practical tips for CBD businesses:

• Keep track of DEA rulemaking and take advantage of public comment periods.

• Join industry groups to advocate for practical hemp definitions and CBD protections.

• Consult tax professionals to understand how any Section 280E changes might affect your business.

• Watch for updates to state regulations to stay fully compliant.

Conclusion

President Trump’s 2025 executive order marks a historic change, recognizing the medical value of cannabis and potentially easing tax and research restrictions. However, North Carolina CBD shops will not see immediate effects. The real impact depends on the DEA completing its rulemaking and Congress clarifying hemp regulations, making 2026 a pivotal year for businesses to adapt.