As the new year gets underway, the cannabis industry is poised for significant changes in 2025, starting with expectations that marijuana will be rescheduled to a Schedule 3 controlled substance. Further legislative efforts are also expected to bar intoxicating hemp products sold by mainstream retailers that compete with licensed cannabis sellers.
The industry is still trying to predict the Trump administration’s potential stance on cannabis legalization. Here’s a look at what the industry can expect, based on reporting by MJBizDaily and presentations at MJBizCon in Las Vegas last month.
Rescheduling
MJBizDaily political reporter Chris Roberts predicted that the Drug Enforcement Agency’s proposed rule to reclassify marijuana to Schedule 3 from Schedule 1 will take effect sometime in 2025.
Rescheduling would free cannabis growers, processors, and dispensaries from the burdens of Section 280E of the Internal Revenue Code, which disallows trade or business deductions (including the cost of goods sold) for expenditures related to Schedule 1 drugs, such as cannabis. This currently results in an effective tax rate of 70% for many licensed marijuana operators compared to the standard corporate rate of 21%.
The industry remains hopeful that the Trump administration will not withdraw the rule.
A Hot State and Three Potentials
After Ohio voters approved the legalization of marijuana for adult use in 2023, retail sales out of dispensaries began in August 2024. Business journalist Marcia Pledger predicted at MJBizCon that the Ohio market will triple in size in terms of dispensaries over the next three years, growing from more than 100 today to 300. Additionally, the number of cultivators is expected to grow from the current 37 to 100 during that time.
Nebraska voters also approved a medical marijuana market on Election Day last year, but sales are not expected to start until 2026 at the earliest. On average, it takes 469 days for a state to start sales of recreational cannabis after a ballot initiative is passed.
Furthermore, two new states—Minnesota and Delaware—are expected to roll out adult-use marijuana sales in 2025.
Intoxicating Hemp Products
Expect more states to bar intoxicating hemp products, which, through a loophole in the law, are being sold outside of licensed cannabis stores. These products can be found in local gas stations, shops, and convenience stores. They are widely available through online delivery and marketed via social media platforms such as Instagram, YouTube, and TikTok.
California Governor Gavin Newsom signed a blanket ban on intoxicating hemp products for the state. Officials in Texas, Tennessee, and other states where such products have gained popularity are likely to follow suit. Beyond state actions, Congress may attempt to close the hemp loophole in a new Farm Bill, which legislators are expected to consider in the coming months.
Consumption Lounges Take Off
California’s governor also signed legislation legalizing cannabis consumption lounges. These businesses will sell marijuana products to be used on-site, providing a new avenue for cannabis-related business growth.
New Opportunities for Sales Continue to Evolv
Nevada legalized them in 2021 and they’ve sprouted up in a number of areas, particularly Las Vegas. The first lounge opened in Las Vegas in March 2024, and by the end of 2025, it’s expected that 20 more will open shop. While there is no legislation on the books in other states just yet, consumption lounges are the next logical step in recreational cannabis use, and pundits expect other states to get on the bandwagon, singling out New York in particular.
A final word: Obviously, the biggest anticipated event for 2025 is rescheduling, which would drastically change the financial picture for operators in the cannabis industry nationwide. But as the year unfolds, new initiatives to legalize recreational use in states where it’s still illegal are certain to start. The industry is still in a growth stage, and new opportunities for sales continue to evolve.