The industry finally got what it wanted. Now what?
The Federal Guidance, Taxation & Regulatory Power Edition
The cannabis industry spent a decade begging the federal government for legitimacy.
It finally has it.
And somehow, that’s made everything more confusing.
We’ve entered what I’m calling the Clarification Era — and I’d argue it’s going to be harder to navigate than the prohibition era was.
At least under prohibition, the rules were clear: cannabis was illegal, full stop. Operators knew exactly what they were fighting against. Today, businesses face something worse than restriction. They face ambiguity. Half-written rules. Agencies that haven’t caught up to policy. A federal government that reformed without a manual.
The next winners in this industry won’t just be the best growers or the best retailers.
They’ll be the operators paying close enough attention to move before everyone else does.
That’s what this newsletter is for. Here’s what happened this week — and what I actually think it means.
State regulators are frustrated. They should be.
State cannabis officials across the country are publicly voicing frustration over the lack of federal guidance following rescheduling discussions — and honestly, I don’t blame them.
These are the people who built functioning cannabis markets from scratch, without federal help, often in the face of active federal hostility. They did the hard work. And now that Washington has finally moved on reform, the reward is… more uncertainty.
Compliance obligations, interstate commerce, banking implications, tax treatment, enforcement priorities — none of it has been clearly defined post-rescheduling. Regulators expected a framework. They got a press release.
This was predictable. Washington has a long history of passing reform and leaving implementation details to figure themselves out. Cannabis operators shouldn’t be surprised — but they should be planning for this ambiguity to last longer than anyone is officially admitting. I’d budget for at least 18–24 more months of unclear guidance.
The bottom line: The biggest threat to cannabis businesses right now isn’t strict regulation. It’s the absence of any regulation at all.
The IRS might matter more than the DEA right now.
If there’s one federal agency with the power to change the cannabis industry overnight, most people would say the DEA.
They’d be wrong. It’s the IRS.
Lawmakers are now pressuring Treasury to provide immediate guidance on how cannabis businesses should be treated under a post-rescheduling environment — specifically around Section 280E, the rule that has prevented cannabis businesses from deducting ordinary business expenses for years.
280E has been one of the most quietly brutal forces in this industry. Most industries would collapse under a tax structure that denies standard business deductions. Cannabis operators have survived it. That’s not a small thing.
Now businesses want to know: does rescheduling end 280E? Partially? Immediately? After a transition period? Nobody knows. And every quarter that passes without clarity is a quarter operators are making financial decisions in the dark.
My read: the IRS will move slowly, issue vague interim guidance, and get lobbied aggressively by both sides. Operators should not assume 280E relief is imminent — and should absolutely not build their 2025 financial projections around it.
The bottom line: Federal tax guidance will be the single largest economic catalyst for this industry. Watch it more closely than any rescheduling headline.
The real fight brewing is hemp vs. marijuana — and most people aren’t watching it.
While the industry focuses on marijuana rescheduling, a different war is accelerating quietly in the background.
Federal lawmakers are debating restrictions on hemp-derived THC products — Delta-8, THCA flower, hemp beverages, alternative cannabinoids — and the stakes are enormous. The hemp economy has grown into a multi-billion dollar sector, and licensed cannabis businesses are increasingly arguing that hemp operators are competing unfairly by avoiding the taxes, licensing requirements, and compliance costs that marijuana operators carry.
Hemp businesses counter that they’re driving innovation and expanding consumer access. Both sides have legitimate points. Both sides also have enormous financial incentives.
Here’s my honest take: Congress will probably overcorrect. They’ll impose restrictions that look reasonable on paper but functionally crush smaller hemp operators — and then spend two or three years walking it back. It’s what they do.
If you’re in the hemp space, don’t wait for the rules to land before building your compliance infrastructure. Start now.
The bottom line: The next major cannabis fight isn’t marijuana vs. prohibition. It’s hemp vs. marijuana. This one will get ugly.
Virginia is the cautionary tale every state should be studying.
Possession is legal in Virginia. Home cultivation is legal. Public support is strong. And yet legal adult-use retail sales remain effectively stalled after Governor Abigail Spanberger’s veto.
Virginia keeps proving the same lesson that every state eventually learns the hard way: legalizing cannabis is the easy part.
Building a functioning cannabis market requires licensing systems, enforcement structures, taxation plans, compliance programs, and operational oversight — and getting all of those things right, simultaneously, while navigating political pressure from every direction, is genuinely hard. Most states underestimate it.
I think Virginia gets resolved eventually. But the timeline is longer than advocates are hoping for, and the lesson for other states is clear: don’t confuse passing a legalization bill with building a legal market. They’re completely different problems.
The bottom line: Every state considering legalization should study Virginia carefully. The politics are easier than the implementation.
Public support is at record highs. This matters less than people think.
Polling continues to show strong, broad support for cannabis reform across demographic groups — and cannabis is increasingly discussed in the context of healthcare, veterans’ issues, small business, criminal justice, and agriculture rather than counterculture.
This is genuinely good news for the industry. I don’t want to minimize it.
But I’d push back on the idea that public support translates automatically into policy progress. Public support for cannabis has been strong for years. The industry still waited decades for meaningful federal action. Public opinion matters — but it operates on a much longer lag than advocates typically acknowledge.
The political argument over legalization is largely won. The operational argument is just beginning.
The bottom line: Stop tracking approval polls and start tracking agency rulemaking. That’s where the industry is actually being shaped right now.
The cannabis industry is growing up. That’s uncomfortable.
Look at the pattern connecting all of this week’s stories.
The biggest industry developments don’t involve growing, retail, or branding. They involve attorneys, compliance officers, lobbyists, accountants, and government affairs professionals. Federal administrative hearings. IRS guidance requests. Regulatory frameworks.
Cannabis is professionalizing. And for operators who built their businesses on hustle, relationships, and moving fast — that transition is genuinely difficult.
Every major industry goes through this. The early movers who built in chaos don’t always survive the shift to structure. The ones who do are the ones who adapt their organizations before they’re forced to.
The next generation of cannabis winners may not be the best operators in the traditional sense. They may be the operators who best understand how regulated industries actually work.
The bottom line: If you don’t have a compliance strategy, a tax strategy, and a government affairs strategy, you’re already behind.
Social equity programs are still struggling — and the industry needs to own that.
Across multiple states, social equity licensing programs designed to expand participation in legal cannabis markets continue facing serious operational challenges. Regulators are trying to balance fairness, competition, investment, and market efficiency — and nearly every state has discovered that building equitable markets is far more complicated than announcing them.
I’ll be direct: the cannabis industry has not done enough on this. Social equity gets treated as a PR talking point more often than a genuine operational priority. The companies with real resources and real influence could be doing more to support equity licensees — through mentorship, wholesale relationships, shared infrastructure, and advocacy for better-designed programs.
This isn’t just a moral argument. Markets that exclude large segments of their potential operators and consumers leave money on the table. Equity and industry growth are not in conflict.
The bottom line: Social equity remains legalization’s most important unfinished business. The industry should treat it that way.
Final thought
The cannabis industry fought for decades to be taken seriously.
It’s there now. Cannabis is a regulated economic sector, debated in congressional hearings, shaped by agency rulemaking, and discussed seriously by mainstream healthcare, agriculture, and business communities.
That’s a victory.
But victories create new problems. The work now is harder, slower, and less exciting than the fight for legalization was. It involves navigating bureaucracies, understanding administrative law, and building organizations capable of operating in a regulated environment.
The operators who thrive in the next five years won’t be the ones who were best at fighting prohibition.
They’ll be the ones who are best at understanding what comes after it.
What’s the biggest regulatory challenge your operation is facing right now? Hit reply — I read every response, and it directly shapes what I cover next week.
Found this useful? Forward it to someone navigating the cannabis regulatory space, or hit the restack button on Substack. It’s how this community grows.