• Executive Order to reschedule cannabis from Schedule I to Schedule III
• Removal of Section 280E, allowing cannabis operators to deduct ordinary business expenses
• Reduced regulatory and legal risk, potential for lower cost of capital and enhanced M&A optionality

Little Green Pharma Ltd (ASX: LGP) has announced that President Trump recently signed an Executive Order directing the US Attorney General to complete the rulemaking process to reschedule cannabis under the US Controlled Substances Act from Schedule I to Schedule III. The Executive Order represents a highly significant milestone in the evolution of US cannabis policy and is regarded as the most meaningful federal reform in more than 50 years. The Company believes the milestone is consistent with its assessment that the global cannabis sector is progressing along the slope of enlightenment in the Gartner hype cycle, characterised by improving regulatory clarity, economics and integration into mainstream healthcare systems. A key implication of down-scheduling will be the removal of the application of Internal Revenue Code Section 280E, with US cannabis operators expected to be able to deduct ordinary business expenses and materially improve after-tax cash flows. Rescheduling is also expected to reduce regulatory and legal risk costs across the sector, including the potential for lower costs of capital, improved access to non-dilutive financing, increased institutional participation, and enhanced M&A optionality over time. The Executive Order also supports expanded medical research into cannabis and further embedding cannabis within existing healthcare frameworks. LGP considers that the change significantly strengthens the long-term outlook for the global medicinal cannabis sector.

While further legislative and regulatory steps are expected to be required to fully unlock the US market, the Company believes this reform represents a very positive shift in direction.