Just when it was looking like another stagnant year for cannabis legal reform, 2025 closed with big news: a new definition of legal hemp that bans practically all THC, and President Donald Trump’s commitment to moving marijuana to Schedule III.
Momentous federal action
In May 2024, Attorney General Merrick Garland submitted a proposed rule to reclassify marijuana to a Schedule III controlled substance. But with a resistant DEA, the process has languished since January 2025.
Despite President Trump lambasting nearly everything the prior administration did, he ordered his attorney general, Pam Bondi, to get the rescheduling ball moving again on Dec. 15.
While rescheduling would not legalize marijuana the way it is legalized in 42 states and would not apply to recreational use, it will alleviate federal tax burdens on businesses struggling to survive and may make federal research easier.
In December, the Congressional Research Service released a couple of reports on the legal implications of rescheduling. They said not all federal criminal penalties will change as many laws specify “marijuana” rather than Schedule III drugs.
And although Trump’s order is named, “Increasing Medical Marijuana and Cannabidiol Research, the Medical Marijuana and Cannabidiol Research Expansion Act of 2022 created specialized procedures for the DEA to approve manufacturing for research purposes.
“Substance-specific registration requirements would continue to apply if marijuana were rescheduled, which might limit the impact of rescheduling on marijuana research,” the other report said.
As of Jan. 30, the DEA hasn’t posted a new rule. And on Jan. 5, the DEA and cannabis-related companies that are appealing the original DEA hearing process reported the matter remains pending.
Meanwhile, bills to ease banking cannabis, another crucial need of the industry, went nowhere.
Legal hemp redefined to ban intoxicating products
As 1.4 million federal workers were on furlough or working without pay during the government shutdown last year, lawmakers snuck in language into a short-term funding bill, signed by Trump on Nov. 12, that could kill the hemp-derived cannabinoids (HDC) product market.
Under the new law, the total amount of all forms of THC or THCA is limited to 0.4 milligrams, regardless of the total weight of the product. This new standard essentially makes most HDC products, including non-intoxicating CBD, federally illegal. The FDA was also required to publish a list of naturally occurring cannabinoids and THC compounds within 90 days.
The THC limit doesn’t go into effect until this November, leaving time for Congress and hemp-industry supporters to change it. Already, lawmakers have filed bills to delay the ban another two years or repeal it altogether.
Meanwhile, hemp-related businesses face a year of uncertainty.
“With the 2026 planting season approaching, farmers have only 3-5 weeks to decide whether to plant,” said a Jan. 21 email to U.S. Hemp Roundtable supporters. “Without congressional action, many will be forced to make irreversible decisions that could devastate farms, jobs and local economies.”
States favor HDC reforms over bans
Despite several bills that sought to ban HDCs in 2025, notably in Texas, the only ban that became law was in Montana, where SB 375 prohibited the sale of consumable hemp products containing delta-9 THC.
Most of the hemp-related bills that became law placed restrictions on the market, including setting minimum age limits to 21, requiring permits or registrations, limiting THC amounts, and assigning regulatory authority.
In all, new HDC laws were enacted in Alabama, Arkansas, California, Connecticut, Hawaii, Kentucky, Maine, Minnesota, Montana and Tennessee.
In California, state legislators cracked the door open for HDCs with AB 8. The state had long banned licensed marijuana businesses from working with HDC products. Then in 2024, Gov. Gavin Newsom issued an executive order that banned all HDC products that contained any amount of THC, effectively killing the market.
Signed by Newsom on Oct. 2, 2025, AB 8 allows licensed businesses to now manufacture, produce and sell HDCs, except hemp flower. Additionally, SB 378, signed Oct. 6, holds online hemp and marijuana marketplaces liable for damages.
As the THC beverage market has grown, Alabama and Kentucky set THC limits of 5 mg per serving. Hawaii now requires state regulators to maintain a registry of HDC product distributors and retailers, with exceptions. Similarly, in Arkansas, HDC retailers will need to hold permits.
Another major development in hemp bans occurred in June when the 8th Circuit Court of Appeals resurrected a two-year-old ban on products containing delta-8, delta-9 and delta-10 THC in Arkansas. It was the second circuit court to do so as the First Circuit upheld Virginia’s hemp-THC ban in January.
New state laws refine marijuana regulations
None of the remaining eight cannabis-illegal states — Idaho, Wyoming, Kansas, Wisconsin, Indiana, Tennessee, North Carolina and South Carolina — passed legislation last year to authorize a regulated market, let alone possession.
And the New Hampshire Senate, once again, failed to pass bills for adult-use possession and sales.
Instead, state legislatures focused on refining their cannabis regulations. Among the new laws:
- Colorado HB 25-1209: Increased the amount of cannabis to be sold from 1 ounce to 2 ounces, and other regulatory changes.
- Maryland, SB 215/HB 132: Allows social equity consumption lounges and cannabis events. Owners can also sell their businesses to employees.
- Michigan, HB 4951: Raised the wholesale excise tax to 24% to fund road construction.
- Montana, SB 27: Requires new licenses to be related to an existing licensed premises and prohibits new location licenses until 2027. SB 74: Revises the definitions of “controlling beneficial owner, “employee,” and “financial interest.”
- New Jersey, A 4937: A medical cannabis permit holder may concurrently hold a cultivator, manufacturer and dispensary permit. It also, limits active cultivator permits to 28. Medical cannabis dispensaries can have up to two satellite locations.
- New Mexico, HB 10: Enacting a new section of the Cannabis Regulation Act to allow for enforcement; establishes the enforcement bureau within the Regulation and Licensing Department.
- New York, S818/A 418: Allows adult-use cannabis products to be sold at “pop-up” showcase events with permits.
- Ohio, SB 56: Combines medical and adult-use licenses; caps dispensaries at 350; reduces home grow from 12 to six plants; and other changes.
- Washington, SB 1141: Allows cultivation workers to unionize. SB 5403: Limits financial interest agreements for retailers to five licenses.
Finally, Delaware, which legalized adult-use in April 2023, was finally able to launch its adult-use market with the passage of HB 110 two years later. Licensing was delayed because the FBI said the state couldn’t proceed with background check fingerprinting. This bill clarified specific categories of people required to obtain fingerprints to satisfy the FBI’s requirements. The state has 35 active licenses and another 123 approved or pending, as of Jan. 9, 2026, according to the CRB Monitor licensing database.
