Rescheduling, Safe Banking & State Battles:
The Policy Landscape in 2026

Trump's Cannabis Executive Order: What It Means

In a surprise move, President Trump signed an executive order on December 18, 2025, directing the DEA to reclassify cannabis from Schedule I to Schedule III under the Controlled Substances Act. The order has set the industry ablaze with cautious optimism — but significant uncertainty remains.

• Safe Banking guidance — The executive order directs Treasury to clarify the banking landscape; without congressional Safe Banking Act passage, banks remain reluctant to serve cannabis clients.
• 280E clarification — Business leaders widely cited safe banking and 280E guidance as the two reforms that "will fundamentally change the industry for the better."
• Capital access — Access to reasonable-rate bank loans would "greatly stimulate growth" and dramatically accelerate M&A activity, according to multiple MSO executives.
• DEA process — Rescheduling still requires a full DEA administrative rulemaking process, which could take 12–18 months even with executive pressure.

The 280E Burden: By the Numbers

Major marijuana multi-state operators collectively owe more than $1.6 billion in back taxes to the IRS, according to recent public filings. This is the result of a bold but risky strategy — withholding 280E payments to preserve cash while challenging the rule's applicability in court.

State-Level Legislative Battles

Even as federal policy slowly evolves, states continue to drive the pace of legal cannabis expansion — and contraction.

• Wisconsin — 47 Democratic lawmakers introduced a sweeping bill to legalize adult-use and medical cannabis while simultaneously regulating intoxicating hemp, all in one legislative package.
• Texas — Enforcing a ban on smokable hemp flower starting March 31, 2026, with new regulations for the state's estimated $5.5 billion hemp market, including stricter THC measurement standards.
• Oklahoma — Medical marijuana operators are escalating a legal fight for survival, with more than 30 businesses now suing Gov. Kevin Stitt over hostile regulatory actions.
• Colorado — Lawmakers weighing another excise tax increase despite already sluggish legal cannabis sales in the nation's oldest legal market.
• Idaho — A medical cannabis legalization initiative campaign claims it has surpassed the statewide signature threshold for ballot qualification.
• Indiana — The Republican governor signaled openness to legalization, citing four neighboring states that have already moved forward.

Intoxicating Hemp: A $30B Policy Earthquake

The federal ban on intoxicating hemp-derived THC products, passed at the end of 2025, doesn't take effect until late 2026. The transition period creates significant uncertainty for everyone in the value chain.

• A major alcohol industry trade association has launched a campaign urging Congress to reconsider the scheduled hemp ban, reflecting crossover concerns from adjacent industries.
• The semi-synthetic nature of many hemp-derived cannabinoids (Delta-8, Delta-10, HHC, etc.) complicates enforcement — new analogues can be created faster than regulations can be written.
• Wisconsin's Governor Evers asked Congressional delegates to "prevent the negative impacts" of the forthcoming hemp ban on his state's producers.

Product Liability: Courts Apply Traditional Standards

A developing area of cannabis law: courts are not creating cannabis-specific product liability rules. Instead, traditional product liability doctrines — strict liability, negligence, failure to warn — are being applied directly to cannabis products, creating new compliance imperatives for manufacturers and retailers alike.