U.S. federal cannabis law has two tracks as of April 28, 2026. State licensed medical cannabis and FDA approved cannabis drug products are Schedule III controlled substances under the Controlled Substances Act, following a final order signed by Acting Attorney General Todd Blanche on April 22, 2026 and effective April 28, 2026. Adult use cannabis remains Schedule I, the same category as heroin. 24 states plus the District of Columbia have legalized adult use and 38 states plus DC have legalized medical use. The conflict between state adult use laws and federal Schedule I status remains unresolved, but the partial rescheduling eliminated the most punitive federal tax burden on state licensed medical operators.

Rescheduling is the process of moving cannabis from Schedule I of the Controlled Substances Act to a lower schedule. On December 18, 2025, President Trump issued an Executive Order directing expedited rescheduling. On April 22, 2026, the DOJ and DEA issued a final order, signed by Acting Attorney General Todd Blanche, moving state licensed medical cannabis and FDA approved cannabis drug products from Schedule I to Schedule III, effective April 28, 2026. Adult use cannabis was not rescheduled and remains Schedule I. A DEA expedited administrative hearing is scheduled for June 29, 2026 to consider whether broader rescheduling is appropriate.

The most consequential change was tax. Section 280E of the Internal Revenue Code applies only to Schedule I and Schedule II substances. Because state licensed medical cannabis is now Schedule III, operators serving the medical market are no longer barred from deducting ordinary business expenses on that revenue, eliminating an estimated $2.3 billion per year in industry tax burden. Adult use revenue remains subject to 280E because adult use cannabis is still Schedule I. Rescheduling did not federally legalize cannabis, did not open interstate commerce, and did not by itself give cannabis companies access to mainstream banking or U.S. exchange listings. Most multistate operators are restating tax disclosures to allocate revenue between medical (Schedule III, 280E exempt) and adult use (Schedule I, 280E applies).

Rescheduling moves cannabis to a lower tier within the Controlled Substances Act. It remains a controlled substance, just less restricted. Descheduling removes cannabis from the Controlled Substances Act entirely, treating it like alcohol or tobacco. Descheduling would require an act of Congress. Rescheduling can be done administratively by the DEA.

As of 2025, the 24 adult use states are Alaska, Arizona, California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nevada, New Jersey, New Mexico, New York, Ohio, Oregon, Rhode Island, Vermont, Virginia, and Washington, plus the District of Columbia. Florida, Pennsylvania, and Texas are the largest remaining medical only or restricted markets. Marijuana.news maintains a continuously updated 50 state policy tracker.

No. Interstate cannabis commerce is illegal, even between two states where cannabis is legal. Federal prohibition makes any movement of cannabis across a state border a federal crime. This is why a California cultivator cannot ship to a New York dispensary, why every state market is structurally isolated, and why operators must rebuild supply chains in each state they enter.

Section 280E of the Internal Revenue Code bars any business that traffics in Schedule I or Schedule II controlled substances from deducting ordinary business expenses. Because cannabis is Schedule I, state legal cannabis operators cannot deduct rent, payroll, marketing, or most other operating costs from federal taxable income. They can only deduct cost of goods sold. The result: effective federal tax rates that frequently exceed 70% of net income.

Before April 2026, the largest U.S. multistate operators each disclosed 280E impact in the hundreds of millions of dollars annually, and for a typical dispensary 280E could convert a profitable business into a money losing one on a GAAP basis. The April 2026 partial rescheduling eliminated 280E on state licensed medical cannabis revenue, an estimated $2.3 billion per year industry wide. Adult use revenue is still subject to 280E because adult use cannabis remains Schedule I. The single largest remaining federal policy change available is broader rescheduling or descheduling of adult use cannabis.

The Secure and Fair Enforcement Banking Act, also called SAFER Banking in its later versions, is federal legislation that would protect banks, credit unions, and payment processors from federal penalties for serving state legal cannabis businesses. It has passed the U.S. House of Representatives multiple times but has not become law. SAFE Banking would not legalize cannabis. It would only fix the financial services problem.

Federal law, including the Bank Secrecy Act and federal anti money laundering rules, treats proceeds from Schedule I drug sales as illegal. Most national banks refuse cannabis accounts to avoid federal regulatory risk. Cannabis operators rely on a small number of state chartered credit unions and specialist banks willing to take on the compliance burden. Many dispensaries still run as cash businesses, with corresponding security and tax compliance costs.

Generally no. Visa, Mastercard, and American Express prohibit cannabis transactions on their networks. Most dispensaries accept cash, debit through workaround systems like cashless ATM, or PIN debit through a small number of compliant processors. The credit card networks have stated they will reconsider only after federal legalization or SAFE Banking becomes law.

Hemp and marijuana are both Cannabis sativa L. The legal distinction in U.S. federal law is the concentration of delta 9 tetrahydrocannabinol, the primary intoxicating compound. Cannabis with 0.3% delta 9 THC or less by dry weight is hemp and federally legal under the 2018 Farm Bill. Anything above is marijuana and remains a Schedule I controlled substance.

The Agriculture Improvement Act of 2018, commonly called the 2018 Farm Bill, legalized hemp and hemp derived products at the federal level. It removed hemp from the Controlled Substances Act and created a regulated agricultural commodity. The bill is widely credited, and criticized, for accidentally creating the intoxicating hemp market by leaving delta 8 THC and other hemp derived cannabinoids in a legal gray zone.

Delta 8 THC is an intoxicating cannabinoid that occurs naturally in cannabis in very small amounts. It is typically synthesized from CBD derived from hemp. Because delta 8 is not delta 9, and the source plant is hemp, it has been sold as federally legal under the 2018 Farm Bill, even though its effects are similar to marijuana. More than 20 states have banned or restricted delta 8. The 2024 Farm Bill, when it eventually passes, is widely expected to close this loophole.

CBD derived from hemp, with less than 0.3% delta 9 THC, is federally legal under the 2018 Farm Bill. CBD derived from marijuana is federally illegal. The Food and Drug Administration has not approved CBD as a food additive or dietary supplement, which puts most CBD edibles and beverages in regulatory limbo at the federal level. State rules vary widely.

Intoxicating hemp products are consumer goods, often gummies, vapes, or beverages, that contain hemp derived cannabinoids designed to produce a high. Common ingredients include delta 8, delta 10, HHC, THCP, and hemp derived delta 9 THC kept under the 0.3% threshold by weight in oversized servings. The category exists because of the 2018 Farm Bill loophole and is sold in gas stations and convenience stores in many states where marijuana itself is illegal.

MSO stands for multistate operator. An MSO is a cannabis company licensed to cultivate, manufacture, or sell cannabis in two or more states. Because interstate commerce is illegal, every MSO is structurally a holding company over separate state level operations, each with its own license, supply chain, retail footprint, and regulatory profile. The largest MSOs include Curaleaf, Trulieve, Green Thumb Industries, Verano, and Cresco Labs.

Vertical integration is when a single cannabis company controls cultivation, manufacturing, and retail under common ownership. Some states require vertical integration. Some states prohibit it. The economics differ sharply by state. In limited license markets, vertically integrated operators capture margin at every stage. In open markets, vertical integration can become a structural disadvantage when wholesale prices collapse.

A cannabis license is a state issued permit to perform a specific activity in the cannabis supply chain: cultivation, processing, manufacturing, distribution, testing, or retail. License types and numbers vary by state. Some states issue unlimited licenses, others cap supply at a few dozen statewide. Limited license states tend to produce higher margins for incumbents and significant license values on secondary markets.

Social equity programs are state level efforts to direct cannabis licenses, capital, or technical assistance to people and communities harmed by the war on drugs. Eligibility varies, but typical criteria include prior cannabis convictions, residence in disproportionately impacted areas, or income thresholds. Implementation has been uneven. New York, Illinois, and Massachusetts have built large programs with mixed results.

A cannabis dispensary is the retail outlet licensed to sell cannabis to consumers or medical patients. Dispensaries are subject to extensive state regulation: ID checks, purchase limits, inventory tracking through state seed to sale systems, packaging and labeling rules, and security requirements. Some states allow delivery and curbside pickup. Most prohibit on site consumption.

Major U.S. exchanges will not list companies that touch the plant, because cannabis remains federally illegal. U.S. multistate operators instead list on the Canadian Securities Exchange, which accepts plant touching companies, and trade in the U.S. on over the counter markets. Ancillary cannabis companies that do not touch the plant, such as software vendors and equipment makers, can list on U.S. exchanges.

Uplisting is the move from over the counter trading or the Canadian Securities Exchange to a senior U.S. exchange like Nasdaq or NYSE. For U.S. cannabis operators, uplisting requires either federal legalization, federal rescheduling combined with exchange policy changes, or SAFE Banking style legislation. Uplisting is widely expected to expand the institutional investor base and reduce the cost of capital for the industry.

Most cannot, in practice. Many institutional investors have charter or fund agreement restrictions against holding federally illegal businesses. Custodians often refuse to hold OTC traded cannabis securities. Tax exempt vehicles including most pension funds and endowments avoid the sector. Cannabis equity capital is dominated by family offices, dedicated cannabis funds, and Canadian institutions.

Most U.S. cannabis debt is privately placed, often as senior secured term loans from specialist lenders, real estate sale leaseback arrangements with cannabis focused REITs, or convertible notes. Interest rates run materially higher than equivalent risk debt in legal industries, reflecting the federal illegality, the limited lender pool, and the practical difficulty of foreclosing on cannabis assets.

The principal categories sold in legal markets are flower, the dried cannabis bud; pre rolls, ready to smoke joints; concentrates, including wax, shatter, rosin, and live resin; vape cartridges, distillate or live resin in a vape pen format; edibles, food and beverage products infused with cannabinoids; tinctures, liquid extracts taken sublingually; and topicals, cannabis infused creams and balms. Flower remains the largest category by revenue in most state markets.

METRC, short for Marijuana Enforcement Tracking Reporting Compliance, is the seed to sale tracking system used by most U.S. cannabis regulators. Every plant is tagged. Every transfer between licensees is logged. Every retail sale is reported. METRC data is the regulator's primary tool for catching diversion of legal product into the illicit market and tracing recalls when contamination is found.

Every batch of cannabis sold in a legal market must be tested by an accredited third party laboratory before it can move to retail. Tests typically cover potency, the percentages of THC, CBD, and other cannabinoids; pesticides; heavy metals; residual solvents in concentrates; microbials including mold and bacteria; and mycotoxins. State pass and fail thresholds differ. Lab fraud is an active enforcement issue in several markets.

Historically, sativa referred to tall, narrow leaved plants associated with energetic effects, and indica to short, broad leaved plants associated with sedating effects. Modern cannabis genetics are nearly all hybrids, and contemporary research suggests the cannabinoid and terpene profile drives the actual effect more reliably than the sativa or indica label. Most legal market product is sold by strain name and chemotype, not by the sativa or indica binary.