The Latest U.S. Cannabis Legislation Changes and What They Mean for the Industry

The US cannabis industry is changing big time with major legislative shifts that will impact how businesses operate. From federal rescheduling to banking reforms and state-level legalization, these changes mean new opportunities and challenges. Here’s a breakdown of the biggest legislative updates and what they mean for businesses including those in the accessories market.

Federal Rescheduling of Cannabis: A Big Deal

The US Department of Health and Human Services (HHS) recommended in 2024 that cannabis be rescheduled from a Schedule I to a Schedule III substance under the Controlled Substances Act. This would recognize cannabis as having an accepted medical use and loosen federal restrictions around its sale, production and research.

What Does This Mean for the Industry? More Research: Right now, cannabis is classified with drugs like heroin and LSD, making research difficult due to strict regulations. Rescheduling would remove many of those barriers, allowing for more clinical trials and scientific studies into the plant’s medical benefits. Tax Relief: A big downside of cannabis businesses being Schedule I is they can’t claim standard business tax deductions due to IRS code 280E. Rescheduling would allow cannabis businesses to deduct expenses like marketing, rent and employee salaries – making them more profitable. Easier Medical Cannabis Access: Federal rescheduling would likely expand patient access to medical cannabis and make it easier for doctors to recommend cannabis-based treatments.

While the final decision is up to the Drug Enforcement Administration (DEA), experts expect this rescheduling to happen by 2025, one of the biggest federal policy shifts in cannabis history.

SAFE Banking Act: A Game Changer for Cannabis Businesses

For years, cannabis businesses have faced financial hurdles due to federal banking restrictions. Most banks won’t work with cannabis companies due to federal laws, forcing businesses to use cash transactions, increasing security risks and making financial management harder.

The Secure and Fair Enforcement (SAFE) Banking Act, reintroduced in Congress in 2023, would allow federally regulated banks to work with cannabis businesses without fear of legal repercussions.How Does This Affect the Industry? Banking Services: If passed, cannabis businesses will be able to use credit card processing, loans and open accounts with major banks, reducing cash-only operations. Business Stability: The ability to access traditional banking services will allow businesses to manage cash flow, payroll and investments better leading to industry growth. Less Crime: Because many dispensaries are cash-only, they are targets for robberies. Enabling secure banking would make businesses, employees and customers safer.

The SAFE Banking Act has bipartisan support and has passed the House multiple times but has yet to pass the Senate. If enacted in 2025 it will be a big deal for the cannabis industry.

State-Level Legalization Efforts: More States Moving Forward

As of 2024, 24 states and Washington D.C. have full legalization and more states are considering it. States like Indiana and Kentucky are talking about decriminalization and medical cannabis expansion in upcoming sessions.

Key Trends in State-Level Legalization Recreational Use Expanding: States like Pennsylvania, Florida and South Carolina are considering adult-use legalization which would expand the market. Medical Cannabis Programs Growing: States with medical cannabis programs only are expanding access by allowing more qualifying conditions and easier patient registration. Decriminalization: Even in states where full legalization isn’t being pursued, there are efforts to reduce penalties for possession leading to fewer arrests and lower law enforcement costs. What This Means for Businesses As more states legalize cannabis businesses that sell accessories – like pipes, vaporizers and rolling papers – will see more demand. New state markets mean new opportunities for brand expansion and partnerships. More legalization could impact federal legislation, leading to full national legalization in the coming years. 4. Challenges Facing the Cannabis Industry Despite Growth

Despite projected sales over $50 billion in 2025, cannabis businesses still face many challenges. While legislation is moving in the right direction, there are still hurdles:Complicated State Rules: Every state with legal cannabis has its own set of rules making multi-state expansion difficult for businesses. Banking Uncertainty: Even with the SAFE Banking Act, federal institutions may still be hesitant to serve the industry. Black Market Competition: In states with high cannabis taxes, the illicit market still thrives and undercut legal businesses. Federal Uncertainty: While rescheduling cannabis is a big deal, full federal legalization is uncertain leaving businesses in a grey area.

The cannabis industry is at a crossroads. With federal rescheduling, banking reform and state legalization expanding, the landscape is shifting in favor of growth and stability.

How Do Businesses Prepare? Stay Informed: Follow legislative updates to adapt quickly to new opportunities and regulations. Explore New Markets: As more states legalize cannabis, expanding product lines and distribution channels can increase revenue. Prepare for Banking Changes: Businesses should start getting financial records in order in case the SAFE Banking Act passes and they can transition to traditional banking.

For businesses in the cannabis accessory market like pipe manufacturers and retailers these legislative changes open up opportunities for more sales, innovation and brand positioning in a rapidly changing industry.

Stay informed, stay ahead and be ready for what’s next.