What Happened in 2025 and What’s Next?

Introduction

When this column last examined cannabis rescheduling in late 2024, the national conversation was defined by uncertainty, speculation, and cautious optimism. Few anticipated how dramatically the regulatory landscape would evolve over the course of 2025. What followed was a turbulent but formative year: a collision of federal reforms, state-level experimentation, and market-shifting legislative proposals affecting both cannabis and hemp. The result is a regulatory environment that remains fragmented but is undeniably moving toward a new phase of national coherence.

This article reviews the major developments of 2025 impacting the legal cannabis and hemp industries, including state-specific hemp policies, the long-awaited 2024 Farm Bill, and the continuing federal process around cannabis rescheduling. It concludes with what stakeholders should expect as the stage is set for consequential policy activity in 2026.

The Uneven Evolution of Hemp Regulation in 2025

While federal cannabis policy captured headlines, the story of hemp in 2025 was defined by aggressive state-level intervention. Much of this activity was driven by concerns over intoxicating hemp derivatives (IHDs)—a rapidly expanding product category that includes delta-8 THC, delta-10 THC, THC-O acetate, THCP, and other semi-synthetic cannabinoids typically derived from CBD isolate.

States Diverge on Intoxicating Hemp Products

By mid-2025, more than a dozen states had enacted new legislation restricting, banning, or heavily regulating intoxicating hemp derivatives. While approaches varied, three themes emerged:

• Potency caps and total THC limits: States including Minnesota, Louisiana, and Virginia implemented strict milligram-per-serving caps, effectively limiting IHD products to extremely low-potency offerings. The intent was to distinguish “hemp consumables” from THC-dominant cannabis products, but enforcement and laboratory standardization remain inconsistent.
• Age restrictions and retail channel controls: Several states introduced 21+ age minimums and required that hemp intoxicants be sold only in licensed cannabis dispensaries. This approach attempted to solve the public-safety gap created by IHD products entering convenience stores, gas stations, and online markets with little oversight.
• Bans on chemical conversion: A growing number of states adopted language prohibiting cannabinoids created through isomerization or chemical modification, effectively targeting delta-8 THC. However, ambiguity persists around naturally occurring but rare cannabinoids, such as THCP, when produced at scale.

These divergent approaches created operational challenges for interstate brands, particularly in e-commerce, where inconsistent state definitions of “hemp,” “synthetic,” and “intoxicating” led to product seizures, civil penalties, and sudden loss of market access.

Litigation as a Policy Driver

The year 2025 also saw a surge in litigation, as hemp companies challenged state bans and regulators defended increasingly complex rule sets. Debates continue to be relatively inconclusive around whether the 2018 Farm Bill’s definition of hemp preempts state-level restrictions, if synthetic cannabinoids fall under the definition of “hemp derivatives” when derived from lawful CBD, and whether Congress intended hemp to be a non-intoxicating commodity or a THC-limited one.

Federal courts issued contradictory rulings, reinforcing the need for clearer federal guidance—guidance that lawmakers attempted to deliver with the next major milestone of 2025: the 2024 Farm Bill.

The 2024 Farm Bill: A Reset for Hemp Regulation

After multiple delays, Congress passed the 2024 Farm Bill in early 2025, bringing the first major overhaul of hemp policy since 2018. While the bill did not fully resolve the IHD question, it provided a more durable framework.

A New Definition of Hemp

The revised definition clarified that:

• Hemp includes cannabinoids derived from hemp so long as they are not produced using prohibited chemical processes.
• THC thresholds apply to total THC, including delta-8 and other isomers, at the point of final product sale.
• The USDA retains authority over cultivation, while FDA and state regulators govern finished consumer goods.

This move harmonized federal standards with most state programs and eliminated the loophole that had allowed high-potency delta-8 products to proliferate under the previous wording.

Implications for CBD and Minor Cannabinoids

The Farm Bill established:

• New contaminant and residual solvent testing standards.
• Manufacturing safety requirements for ingestible cannabinoid products.
• A pathway for cannabinoids like CBG, CBN, and CBC to be regulated similarly to dietary supplements, pending FDA rulemaking.

While the FDA still has work ahead, the bill created the most coherent framework the hemp market has seen since its re-legalization.

Cannabis Rescheduling: The Federal Government Moves Slowly but Significantly

The DEA’s proposal to move cannabis from Schedule I to Schedule III remained the most impactful federal action of 2025. Though not yet finalized, the administrative process advanced meaningfully.

Public Comment, Scientific Review, and the Politics
of Reform

Throughout 2025, federal agencies received record levels of public comment, with input from researchers, states with legal markets, pharmaceutical interests, medical associations, and industry groups. Generally, the public comments demonstrated that cannabis should not be Schedule I as it does have medical use. There is abuse potential for cannabis use, however it is comparable to other Schedule III substances. Ultimately, rescheduling will substantially improve research access and reduce barriers to clinical trials. Rescheduling has received opposition primarily from law-enforcement organizations and a few prohibition-leaning political groups who are focused on concerns about increased use, commercialization, and state-federal conflict.

What Schedule III Would Change

Although Schedule III would not legalize interstate commerce or adult-use cannabis federally, it would have significant effects:

• Tax Reform: Section 280E would no longer apply, reducing effective tax rates for state-legal operators by 60–80%.
• Research Expansion: Universities could study cannabis without the burdensome Schedule I registration process.
• Pharmaceutical Pathways: FDA-approved cannabis-based medications would become more feasible.
• Banking and Insurance: Financial institutions would face fewer penalties for serving cannabis businesses.

The DEA is expected to release the final rule in early-mid 2026, barring political disruption.

Market Impacts: 2025 as a Transition Year

Regulatory shifts triggered meaningful market behavior in both hemp and cannabis.

Hemp Market Contraction and Re-Stabilization

The IHD crackdown reduced the total addressable market for delta-8 and similar products in several states. However, the Farm Bill’s clearer framework allowed traditional hemp categories—CBD wellness products, fiber, grain, and non-intoxicating cannabinoids—to begin rebuilding consumer trust.

Cannabis Market Resilience Despite Fragmentation

State-legal cannabis markets experienced mixed results:

• Mature markets like Colorado and Oregon saw stabilization after years of price compression.
• New markets such as Ohio, Maryland, and Delaware posted strong early sales.
• Anticipation of 280E relief spurred M&A conversations, capital raises, and infrastructure investments, particularly in cultivation and manufacturing.

Across the board, 2025 was a year of cautious expansion driven by expected regulatory tailwinds.

What’s Next in 2026?

Finalization of Cannabis Rescheduling

This one is bound to be controversial, but most experts expect the DEA to finalize Schedule III by mid-2026. Litigation is likely but will not halt implementation. Congress may attempt to codify or modify aspects of the rescheduling decision, particularly around taxation and medical research.

Continued State-Level Hemp Enforcement

State regulators will refine their definitions of intoxicating hemp, likely converging on:

• Universal age restrictions
• Total THC limits
• Prohibition of chemically modified cannabinoids
• Stricter testing and packaging rules

Interstate compliance will remain a central challenge for hemp brands.

Potential Federal Legislation Beyond Rescheduling

Several proposals introduced in 2025 could advance, including:

• A bipartisan cannabis banking bill tailored to harmonize with Schedule III.
• A federal product-safety framework for cannabis edibles and vapes.
• Pilot programs allowing limited interstate commerce among legal states.

While none are guaranteed to pass, the political climate is more favorable to incremental reform than at any previous time.

Conclusion

The cannabis and hemp industries entered 2025 expecting regulatory movement, but few expected the volume and velocity of change that ultimately occurred. State hemp actions, the 2024 Farm Bill, and the federal rescheduling process collectively pushed the sector toward clearer standards, improved safety,and a more scientifically grounded policy environment.

As 2026 approaches, the uncertainty of the past decade is slowly giving way to a new era characterized by structured regulation, improved research access, and a more stable commercial landscape. However, the transition remains incomplete, and stakeholders must remain agile as federal and state policies continue to evolve.

About the Columnist

Lo Friesen is the founder, CEO, and Chief Extractor of Heylo. With a background in chemistry and clinical research, Lo was inspired to explore cannabis as a medicine and to enter the emerging industry. She joined Eden Labs, a leading CO₂ extraction equipment manufacturer to support and expand a Research and Development department. There she managed the development of their latest and greatest CO₂ extraction system. In 2017, after working with Eden Labs and another cannabis processor, Lo launched Heylo with a mission to help people get more out of life with cannabis.

How to Cite this Article

Friesen, L., What Happened in 2025 and What’s Next?, Cannabis Science and Technology, 2025, 8(6), 10-12.