As the cannabis industry enters the second half of 2025, regulatory momentum continues to shift—sometimes rapidly, sometimes frustratingly slowly. From stalled federal reform to sweeping state-level crackdowns, the landscape is both evolving and uncertain. Here’s what cannabis businesses and investors need to know right now:
Federal Cannabis Rescheduling Hits a Wall
Hopes for federal cannabis rescheduling have dimmed—for now. The much-anticipated DEA hearing on reclassifying cannabis from Schedule I to Schedule III was indefinitely postponed in January 2025. No new date has been announced, leaving advocates and operators in a holding pattern.
Still, federal cannabis reform isn’t completely off the table. Lawmakers in both parties have introduced complementary bills aimed at easing industry restrictions—covering issues like medical research, banking access, and interstate commerce.
STATES 2.0 ACT Gains Traction in Congress
Among the most promising proposals is the STATES 2.0 Act. This legislation would amend the Controlled Substances Act to protect individuals and businesses operating in compliance with state or tribal cannabis laws from federal enforcement actions. Crucially, it would also:
Open the door to interstate cannabis commerce
Allow cannabis businesses to deduct expenses under IRS Code 280E
Lay groundwork for a national regulatory and tax framework
If passed, STATES 2.0 could reshape the industry by providing the first real pathway to federal normalization.
2018 Farm Reform Bill Could Be Industry-Defining
Although Congress extended the 2018 Farm Bill through the 2025 crop cycle, significant reforms are on the horizon. A draft released by the Senate Agriculture Committee in late 2024 proposes major changes to how hemp is defined and regulated:
Redefinition of hemp to include total THC (THC + THCA)
Restriction of “industrial hemp” to non-cannabinoid plant parts
Creation of a certified seed pilot program
These proposals could eliminate many currently legal intoxicating hemp products, potentially triggering major changes at both state and federal levels. Debate is expected to continue into late 2025 or even 2026 before any federal policy is finalized.
Florida’s Hemp Loophole Spurs Retail Innovation
In Florida, relatively loose hemp regulations have created a unique retail opportunity. With licenses costing as little as $650/year, hemp-only dispensaries are emerging as a viable alternative to Florida’s costly and limited medical cannabis market.
In April 2025, Curaleaf made headlines by converting its West Palm Beach location into The Hemp Company, the first fully licensed hemp-only dispensary in the state. Adults 21+ can now purchase THC beverages, gummies, and other Farm Bill-compliant products—no medical card required.
Other MSOs, including Trulieve, are quickly following suit, competing in a fast-growing but loosely regulated hemp-derived THC market.
Tennessee Establishes First-of-Its-Kind Hemp Regulation Law
On May 21, 2025, Tennessee enacted Public Chapter 526, marking one of the most comprehensive regulatory frameworks for hemp-derived cannabinoids in the U.S. Key provisions include:
Bans on THCA and synthetic cannabinoids if total THC exceeds 0.3%
Prohibition of online and delivery sales
Strict licensing for all market tiers (supplier, wholesaler, retailer)
New labeling, testing, and packaging standards
Tiered taxes based on weight or cannabinoid content (6% retail + wholesale tax)
Oversight will shift from the Department of Agriculture to the Alcoholic Beverage Commission starting in 2026.
California Enforces Ban on Intoxicating Hemp Products
California’s crackdown on intoxicating hemp continues to set the standard for strict enforcement. Following Governor Newsom’s 2024 emergency regulations, the Department of Alcoholic Beverage Control reports that 99.7% of licensed businesses are now in compliance.
Over 11,400 businesses were inspected, resulting in the seizure of more than 7,000 illegal products across 148 locations. The state now prohibits any detectable THC in hemp-derived consumables and bans sales to anyone under 21.
North Carolina Begins to Shape Cannabis Policy
In June 2025, North Carolina Governor Josh Stein signed an executive order establishing a 24-member Advisory Council on Cannabis. The Council will examine critical issues like public health, youth access, expungement, and tax models, with recommendations due by March 2026.
Meanwhile, state lawmakers are working to tighten control over hemp-derived products. House Bill 328 and Senate Bill 265 would prohibit sales to individuals under 21 and implement a broad framework for product testing, dosage limits, and licensing.
The Bottom Line
From Washington, D.C. to state capitals across the country, cannabis regulation is in a period of intense transformation. Whether through federal reform efforts like STATES 2.0 or state-level crackdowns on intoxicating hemp, the second half of 2025 is shaping up to be pivotal for the future of the cannabis and hemp industries.
Businesses navigating this space must stay agile, well-informed, and compliant—or risk being left behind.