420 with CNW — Marijuana Industry Predictions for 2025

The marijuana industry experienced a sluggish pace of progress in 2024. Efforts to pass cannabis reform measures in Congress fell short, and the DEA delayed rescheduling cannabis as a recognized medicinal substance.

Moreover, voter rejection of recreational cannabis legalization initiatives, including a high-profile defeat in Florida despite almost $150 million spent by multistate operators, suggests that easy reform opportunities may have reached their peak.

However, significant changes are looming. Relief from the burdens of Section 280E taxation appears closer, and with Donald Trump assuming office, he will become the first president to have publicly supported recreational cannabis legalization.

Here are the key developments anticipated in the industry for 2025:

  1. Rescheduling marijuana to Schedule 3

The DEA is expected to finalize the process of rescheduling cannabis as a Schedule III drug this year. Following a May 2024 proposal to alter marijuana’s federal classification, an administrative law judge will issue a decision after hearing extensive arguments. Regardless of the outcome, legal challenges are likely, and the Trump-appointed DEA administrator holds the authority to override the judge’s ruling.

  1. A pro-marijuana presidency?

For the first time since 2017, Republicans will control all three branches of government as Donald Trump begins his term. Many in the cannabis industry are optimistic, citing Trump’s past endorsement of Florida’s recreational cannabis legalization measure during his campaign.

However, his cabinet choices, including Attorney General nominee Pam Bondi—who has previously linked marijuana use to fentanyl addiction—suggest marijuana reform may not be a top priority. Although Trump could push for hearings on marijuana banking reforms, other pressing issues like the border crisis and opioid epidemic may delay significant action until after the 2026 midterms.

  1. Tax battles with the IRS

In a memo last year, the IRS reiterated that marijuana businesses must comply with Section 280E, preventing them from taking typical business deductions. Nevertheless, major operators claimed these deductions, sparking a potential legal showdown that could set critical precedents for the cannabis industry.

  1. California’s tax dilemma

California marijuana businesses owe the state $1.3 billion in taxes, with the excise tax set to rise to 19% this summer unless lawmakers intervene. High tax rates have long driven customers to the illicit market, straining legal operators. As the state faces a $20 billion budget deficit starting in 2026, lawmakers will likely face tough choices.

  1. Tighter controls on hemp-derived THC

Although Congress failed to update the Farm Bill to address the hemp THC loophole, several states, including California, enacted bans on intoxicating hemp products. Many experts believe uniform regulations for THC products are inevitable, though significant federal action may go past 2025.

  1. A Supreme Court showdown

Legal challenges to federal marijuana prohibition are intensifying. Attorneys for Verano Holdings and others argue that federal cannabis laws are unconstitutional, citing a 2005 Supreme Court decision. While lower courts have rejected these arguments, the case is expected to reach the Supreme Court by 2025, potentially setting a landmark precedent.

  1. State-level reforms stagnate

States like Pennsylvania have promised votes on recreational cannabis legalization, but progress remains slow. Recent defeats in South Dakota, North Dakota, and Florida leave state legislatures as the primary avenue for reform, though efforts in states like Minnesota and Delaware are still unfolding at a measured pace.

Cannabis firms like Canopy Growth Corp. (NASDAQ: CGC) (TSX: WEED) will be watching how the U.S. marijuana industry landscape shapes up as the year progresses and the new administration reveals more concrete plans for its stance on this substance.

About CNW420

CNW420 spotlights the latest developments in the rapidly evolving cannabis industry through the release of an article each business day at 4:20 p.m. Eastern – a tribute to the time synonymous with cannabis culture. The concise, informative content serves as a gateway for investors interested in the legalized cannabis sector and provides updates on how regulatory developments may impact financial markets. If marijuana and the burgeoning industry surrounding it are on your radar, CNW420 is for you! Check back daily to stay up-to-date on the latest milestones in the fast -changing world of cannabis.

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