Meaning, research, and stocks for seniors

President Donald Trump is expected to sign an executive order this week broadly expanding access to cannabis. Industry advocates, executives and researchers who spoke to CNBC said the changes will have a major impact on both consumers and the health care industry.

President Trump said Monday that he is “strongly” considering an executive order that would reclassify marijuana as a Schedule III drug with the U.S. Drug Enforcement Administration, along with Tylenol, which contains codeine, rather than its current classification as a Schedule I drug like heroin and LSD. The order would also authorize a pilot program that would allow Medicare to cover cannabis products for seniors.

The proposal is expected to apply specifically to cannabidiol products, better known as CBD, aimed at treating chronic pain, sleep deprivation and other age-related ailments, said Sean Hauser, a partner at cannabis law firm Vicente LLP.

CBD has skyrocketed in popularity in recent years, moving into the mainstream through canned cocktails and body lotions, but it has yet to garner full support from federal drug regulators.

“We hope that the executive order will clarify what types of cannabinoids are covered and that they must be sourced under federal law,” Hauser told CNBC.

Although many in the cannabis industry view the move to Schedule III as a done deal, the addition of the controversial Medicare provision could add another wrinkle that could potentially force cannabis-derived products into the U.S. health care system despite limited clinical evidence of their effectiveness, some experts told CNBC.

Insiders like Hauser expect the final order to define legal cannabinoids, management methods and the Food and Drug Administration’s oversight framework.

“A lot of people want reclassification because it would lead to a tremendous amount of research that would not be possible without reclassification,” President Trump told reporters on Monday. “So we’re looking at that very strongly.”

Timothy Seymour, founder and chief investment officer of Seymour Asset Management and CNBC contributor, said the schedule change and Medicare coverage will likely spark new investment by institutions and investors who typically follow federal insurance coverage for big drug companies.

“The valuation of this sector will become even more valuable as institutional investors are allowed in, access and liquidity are gained and exchanges trade,” Seymour told CNBC. “This could quickly double or triple the sector.”

The move to reclassify comes after a 2024 report found that more Americans reported using marijuana every day or nearly every day than reported drinking alcohol with the same frequency. This was the first time the percentage of daily use had shifted in marijuana’s favor, based on Carnegie Mellon University’s analysis of 40 years of data.

The Medicare initiative is backed by billionaire Howard Kessler, a financier and longtime Trump ally who founded the Commonwealth Project in 2019. The group says it advocates for elderly care that includes cannabis use.

Advocates like Kessler and Hauser urged the administration to bypass typical FDA hurdles, such as years of clinical trials, and use a pilot program to collect real-world data on the safety and outcomes of cannabinoids in older adults.

Kessler did not respond to requests for comment. The White House also did not respond to a request for comment.

In September, shares of cannabis companies rose on optimism that President Trump would soon weigh in after the Commonwealth Project shared a video on Truth Social that called its CBD coverage “the most important senior health initiative of this century.”

But the Medicare proposal has also drawn scrutiny from other allies of President Trump.

The Washington Post first reported that House Speaker Mike Johnson (R-Louisiana) has raised concerns about the cost and liability of such a program, but FDA officials argue that reimbursing Americans for treatments not approved by the agency is unprecedented.

Beyond politics, the scientific case for medical cannabis remains controversial.

The FDA has so far only approved the CBD-based drug Epidiolex to treat rare forms of epilepsy. This narrow approval reflects both regulatory caution and the fact that high-quality clinical trials remain limited for most of the other conditions that cannabis promotes.

Critics warn that Medicare’s pilot program could put seniors, who often take multiple medications each day, at risk. A recent FDA-funded study suggested that long-term use of CBD can cause liver toxicity and affect other life-saving medications.

“This is not based on science at all. This is all based on money, and it’s terrible. That’s not how we make medical decisions,” said Meg Haney, director of the Columbia University Cannabis Institute. “(Kessler) is a friend of the president and can make a lot of money selling things that are unsubstantiated.”

Haney said other studies have cast doubt on the effectiveness of cannabis altogether, suggesting that it may not be effective for many of the conditions targeted in the proposed trial program.

For example, a 2023 review of 134 studies in adults over 50 found that medical marijuana was inconsistently effective in improving conditions such as terminal cancer and dementia. The study also found more frequent associations with harms such as depression, anxiety, cognitive impairment and injury.

But rescheduling cannabis would ease barriers to conducting clinical trials that experts say have historically stifled scientific research.

“Medical research has been effectively tightly controlled,” said Ryan Vandry, a professor at Johns Hopkins University who runs the Cannabis Science Institute. “Schedule I makes large-scale, placebo-controlled trials incredibly difficult. Without that data, policymakers are required to make decisions in the dark.”

The specific terms of the schedule change are important to investors.

The schedule change would improve producers’ access to banking and financial services by lifting certain IRS tax restrictions that prevent cannabis businesses from deducting standard expenses.

The economic backdrop has already changed, with the value of U.S. hemp production increasing 40% last year compared to the previous year, according to the USDA. According to Grand View Research, the global market for cannabis-derived products is projected to reach a $160 billion global market by 2032.

Rumors of schedule changes and possible pilot programs sent shares of weed producers Tilray Brands and Canopy Growth up 44% and 52%, respectively, on Friday.

As Seymour said, Medicare coverage and federal insurance involvement are the “holy grail” that can free up system capital.

Schedule III classification also helps legitimize the sector for institutional investors who have previously been hesitant to enter, paving the way for more stocks to be listed on the New York Stock Exchange or Nasdaq, and potentially shifting valuations from retail sentiment to fundamental cash flow.

“Schedule I classification has held back many institutional investors,” Seymour said. “Having to go out to your shareholders and tell them that you own a company that sells the equivalent of heroin, LSD, and cocaine is a little hard to swallow.”

If cannabis moves to a reimbursable prescription drug model or federal legalization, the category could attract interest from big pharmaceutical companies, and distribution could eventually shift from state-licensed dispensaries to national pharmacy chains such as: CVS and walgreens.

That could create difficulties for small cannabis businesses.

Big drug companies already have the deep pockets needed to fund the multi-year, double-blind clinical trials required for FDA-approved drugs, but this barrier to entry is insurmountable for most current cannabis operators.

But Seymour believes Medicare coverage is not an immediate harbinger of death, but rather a catalyst for merger and acquisition activity.

“We’re going to see more consolidation in this space,” Seymour said. “Small and medium-sized businesses that have good operations and are profitable will be targeted.”

Meanwhile, Green Thumb Industries CEO Ben Kovler predicts increased competition between pharmaceutical and cannabis companies to achieve medical advances.

“The pharmaceutical industry has historically been the main lobbyist against[cannabis]because it’s a threat,” Seymour added. “So it’s a huge opportunity for the pharmaceutical industry.”

—CNBC’s Brandon Gomez contributed to this report.