US Executive Order Sparks Major Shift in Global Medicinal Cannabis Market

A Historic Regulatory Shift in US Cannabis Policy

In a move that marks the most significant federal reform in over half a century, President Trump has signed an Executive Order directing the US Attorney General to reschedule cannabis from Schedule I to Schedule III under the Controlled Substances Act. This directive initiates a formal rulemaking process that could fundamentally alter the regulatory landscape for cannabis in the United States.

For Little Green Pharma Ltd (ASX – LGP), a leading global medicinal cannabis company, this development signals a pivotal moment. The company views the rescheduling as a validation of the sector’s gradual maturation, aligning with its perspective that the global cannabis industry is advancing through a phase of regulatory clarity and mainstream healthcare integration.

Economic and Legal Implications for the US Cannabis Sector

One of the most immediate and impactful consequences of down-scheduling cannabis to Schedule III is the anticipated removal of Internal Revenue Code Section 280E restrictions. Currently, Section 280E prevents cannabis businesses from deducting ordinary business expenses, severely limiting profitability. Rescheduling would allow US cannabis operators to deduct these expenses, materially improving after-tax cash flows and financial health.

Beyond tax relief, the reform is expected to reduce regulatory and legal risks that have long burdened the sector. This could translate into lower costs of capital, improved access to non-dilutive financing options, and increased participation from institutional investors. Additionally, the change may unlock greater merger and acquisition activity, providing companies like Little Green Pharma with expanded strategic opportunities.

Broader Impact on Medical Research and Healthcare Integration

The Executive Order also paves the way for expanded medical research into cannabis, a critical step toward embedding cannabis-based therapies within established healthcare frameworks. This could accelerate the development of new medicinal products and enhance patient access, reinforcing the sector’s legitimacy and growth potential.

Little Green Pharma’s Strategic Positioning Amid Global Growth

With vertically integrated operations spanning Australia and Europe, including the largest production facility in Europe, Little Green Pharma is well-positioned to capitalize on this regulatory momentum. The company’s diversified portfolio and presence in over a dozen export markets provide a robust platform to leverage increasing global demand for medicinal cannabis.

While the Executive Order represents a significant positive shift, the company acknowledges that further legislative and regulatory steps will be necessary to fully unlock the US market’s potential. Nonetheless, this development strengthens the long-term outlook for the global medicinal cannabis sector and underscores Little Green Pharma’s strategic growth trajectory.