Medical Cannabis and Psychedelics Reforms Reshaping Mental Health Markets

A new era for cannabis?

The federal move toward cannabis rescheduling began in May 2024.

However, a postponed interlocutory appeal over a year ago left the process in limbo until acting Attorney General Todd Blanche signed the final order placing state-licensed medical cannabis into Schedule III on April 23.

Soon after, the Drug Enforcement Administration (DEA) announced it would begin accepting applications for federal protection from medical cannabis businesses. The Department of Justice also said that a new administrative hearing will begin on June 29 to address the broader rescheduling of “all cannabis.”

For major cannabis operators like Curaleaf Holdings (CSE:CURA,OTCQX:CURLF), Green Thumb Industries (CSE:GTII,OTCQX:GTBIF), Cresco Labs (CSE:CL,OTCQX:CRLBF) and Trulieve Cannabis (CSE:TRUL,OTCQX:TCNNF), the primary catalyst is the removal of the Section 280E tax burden.

The treasury department and Internal Revenue Service expect rescheduling “to have significant positive tax consequences" for medical cannabis businesses, and will soon issue guidance on how 280E relief applies.

“Historically, this provision has driven effective federal tax rates as high as 70 percent or more, materially constraining cash flow and distorting financial performance,” said Terry Mendez, CEO of Safe Harbor Financial, in an emailed statement. “Relief from 280E should improve operator liquidity, financial transparency, and credit quality, all of which are foundational to sustainable banking relationships.”

While this step de-risks the medical cannabis landscape, it leaves intact the core regulatory and compliance constraints: no federal legalization and no tax relief for adult‑use providers.

“It does not replace the need for comprehensive federal reform,” said Mendez. “A durable solution will require congressional action, including passage of the SAFER Banking Act, along with clear and consistent federal guidance that aligns financial services policy with the scale and legitimacy of today’s state-legal cannabis industry.

Adam Stettner, CEO of FundCanna, noted the structural implications:

“The order begins to formalize a federal pathway for medical cannabis within an established regulatory framework, including DEA registration, reporting, and compliance requirements aligned with Schedule III substances.

“This introduces a higher bar for operational discipline while signaling to institutional capital that parts of the cannabis market are becoming more standardized and financeable."

Gennaro Luce, founder and CEO of EM2P2 and CannaLnx, said the emerging structure creates an opening for platforms like CannaLnx, a HIPAA‑compliant, insurer‑integrated rail that connects patients, providers, dispensaries and insurers, enabling medical cannabis to become a reimbursable medical benefit.

“Rescheduling may reduce friction. It may encourage research and improve physician comfort over time. But it does not, on its own, build the infrastructure required for a stable, healthcare-integrated market,” he said.

“If policymakers intend for cannabis to evolve into a legitimate therapeutic category, the next phase of reform must focus on reimbursement pathways, claims infrastructure, and benefit integration.”

However, Ryan Hunter of Spherex pointed out that the move creates a contradiction within federal policy — in his view, it is logically incoherent to advance medical cannabis under Schedule III while a federal ban on intoxicating hemp-derived products is slated to take effect this November.

While US President Donald Trump has urged Congress to amend the upcoming hemp‑THC restrictions to protect non‑intoxicating, full‑spectrum CBD products while still curbing intoxicating hemp‑derived products, he faces resistance from a coalition of prohibitionist-minded lawmakers and traditional cannabis incumbents.

These market players view any carve out as a failure to fully close the 2018 Farm Bill loophole, which defines hemp as any cannabis plant containing less than 0.3 percent Delta-9 THC. Because other cannabinoids were not included in this bill, companies found they could chemically convert legal CBD into intoxicating THC products.

“It is hard to understand how the government will manage and regulate a third classification of cannabis related products, but it seems like state-legal marijuana for adult use is getting edged out of this important opportunity after spending years to establish clean and safe products, while intoxicating hemp providers have been responsible for the proliferation of untested and unsafe gas station products,” explained Hunter.

Meanwhile, Josh Kesselman, publisher of High Times, has warned that a misstep in Washington could favor a handful of companies best positioned to navigate new, rigorous requirements for compliance and capital access, while marginalizing independent operators and small farmers.

Executive order accelerates psychedelic breakthroughs

Parallel to cannabis reform, Trump signed the Accelerating Medical Treatments for Serious Mental Illness executive order on April 18, mandating that the Food and Drug Administration (FDA) prioritize psychedelic drug applications.

The order also allocates US$50 million in Department of Health and Human Services funding for research.

The FDA then announced a series of new steps for accelerating access to psychedelics for people with mental health conditions, including prioritizing so-called breakthrough therapy drugs for national priority voucher programs, establishing a “right to try” pathway for eligible patients to access experimental therapies and partnering with the Department of Veterans Affairs and state governments to expand clinical trial participation and research funding.

Shea Wihlborg, an analyst at ARK Invest, called the order a “clear signal” that federal agencies are aligned and a catalyst for companies in this space nearing the commercialization phase.

FDA Commissioner Marty Makary has also suggested that the first approval could come as early as this summer.

In Wihlborg’s view, the successful market adoption of Spravato, which has already scaled to a nearly US$2 billion run rate, provides the essential commercial template for a highly profitable model.

In a recent newsletter, Wihlborg highlights COMPASS Pathways (NASDAQ:CMPS), which received an FDA rolling review and a national priority voucher for its psilocybin treatment, COMP360, following the executive order. According to Wihlborg, COMP360 is “leading the psychedelic pack,” and could be the first classical psychedelic to get approval.

As part of the directive, Makary announced that three commissioner’s national priority vouchers will be issued for psychedelic compounds. While the administration has not officially confirmed the full list of recipients, Transcend Therapeutics has publicly stated it was granted priority review. The Usona Institute, a non-profit medical research organization, also received a voucher that ensures a high level of federal priority upon the completion of its uAspire Phase 3 trial, which evaluates psilocybin as a treatment for major depressive disorder.

Wihlborg also noted that ATAI Life Sciences (NASDAQ:ATAI), which is advancing its 5-MeO-DMT formulation, BPL-003, would stand to benefit significantly from the newly accelerated regulatory environment.

Investor takeaway

Both cannabis rescheduling efforts and the psychedelics executive order create a federal frame for mental health treatment in the US, where Schedule III cannabis and impending psychedelic approvals are treated more like prescription‑level therapeutics than recreational drugs.

Ultimately, these developments signal a transition for these therapies from experimental research into a new, institutionalized phase of the mental health market.