Marijuana is big business and continues to grow. What was once viewed as a fringe or experimental sector has evolved into a sophisticated, highly regulated industry that continues to generate significant demand for legal services. The legal cannabis industry in the U.S. topped $30 billion in annual sales in 2025 and is projected to expand as more states legalize and federal policy evolves. Adult-use recreational programs now operate in roughly two dozen states, while medical cannabis programs exist in nearly every state and multiple U.S. territories.
This rapid growth continues to provide robust work for lawyers across practice areas, especially as regulatory frameworks, both state and federal, are in significant flux.
Shifting legal landscape: federal developments
The most consequential cannabis policy development in decades came in December 2025, when President Donald Trump signed an executive order directing federal agencies to move marijuana out of Schedule I of the Controlled Substances Act and toward Schedule III status. This executive action formally acknowledges cannabis’s accepted medical use at the federal level and signals a major federal policy shift.
Key implications of the rescheduling process include:
- Cannabis would be treated like other drugs with accepted medical use and a lower abuse profile.
- Recreational use remains illegal under federal law until or unless Congress acts.
- Rescheduling could open the door to normal IRS tax treatment (ending the burdensome tax code restriction), expanding clinical research opportunities and improving banking access.
- Federal agencies (DEA, DOJ, and HHS) must complete formal rulemaking before rescheduling becomes effective.
While this is a historic shift, the rescheduling process does not automatically override state law or instantly legalize cannabis at the federal level. It will, however, create enormous legal work and complexity as lawyers interpret how new federal classification may affect taxation, interstate commerce, licensing, and enforcement.
Federal hemp regulation also is evolving. Congress included a nationwide ban on intoxicating hemp-derived THC products in recent legislation. But implementation of that ban is delayed until late 2026, creating an interim gray area that states are beginning to address on their own. Lawmakers in the House have continued to push for comprehensive federal legalization bills though broader legalization remains politically divided.
State regulation and legalization trends
At the state level, cannabis law continues its steady march toward broader legalization and reform:
- Approximately 24 U.S. states, 3 territories, and D.C. now permit adult recreational use, while medical use is legal in around 40 states and territories.
- States like California have enacted new regulatory reforms aimed at stabilizing and growing their markets.
- Expungement and criminal record reform continues in multiple states, with laws that automatically seal or clear many past cannabis convictions, significantly impacting employment and civil rights for affected individuals.
Despite broad legalization trends, individual states still differ markedly in how they regulate product safety, licensing, equity programs, and local opt-outs. Thus the legal landscape remains complex and ripe for litigation and counsel.
Core legal challenges
Cannabis law remains one of the most dynamic practice areas due to several core legal challenges:
- Conflicting Federal and State Rules
Even with rescheduling efforts underway, cannabis continues to be illegal under the federal Controlled Substances Act. Lawyers must navigate conflicting authorities, especially regarding enforcement policy, banking rules, taxation, research, and interstate commerce.
- Banking and Finance
Rescheduling could significantly improve access to banking and credit services. Until those administrative changes take effect and institutions update their risk policies, however, many cannabis businesses still operate largely in cash, which is a continuing compliance and risk management issue.
- Employment Law
Employers in states with legal cannabis must revisit workplace drug policies, including how workplace impairment is assessed and how medicinal use intersects with disability and anti-discrimination law.
- Intellectual Property
Even as federal policy shifts, trademark and patent protections remain complicated because federal law historically has prohibited trademarks for “illegal activities,” though rescheduling will alter the context for many filings.
- Privacy & Data Issues
Cannabis businesses must navigate HIPAA, state privacy statutes, and complex cross-jurisdictional issues when handling patient data or responding to breaches that involve individuals in states with differing legal statuses.
Who’s practicing cannabis law today?
Cannabis law no longer is a speculative bet. It’s a durable, evolving practice area that intersects with some of the most in-demand legal skills in the market. State bar associations, likewise, are updating ethics guidance permitting lawyers to advise cannabis clients within state law while appropriately disclosing federal risks.
In the early years of legalization, cannabis law was dominated by solo practitioners and small firms willing to tolerate legal ambiguity and reputational risk. Today, more than a dozen Am Law 200 firms have meaningful cannabis or cannabis-adjacent practices, often housed within regulated industries, healthcare, corporate, or tax groups. As federal policy shifts, there should be even broader law firm participation. For law firms, the question is not whether to engage, but how to strategically hire and position talent as federal and state frameworks continue to change.
Lawyers serving the industry are routinely involved in:
- Corporate formation, governance, and M&A, including multi-state expansion and consolidation.
- Tax planning, particularly in anticipation of potential relief from Section 280E.
- Regulatory and administrative law, including agency interactions and compliance audits.
- Real estate, land use, and zoning.
- Employment and labor law, especially around drug testing, impairment standards, and accommodation of medical use.
- Intellectual property, including branding strategies and trademark challenges.
- Privacy, data protection, and cybersecurity, particularly for medical cannabis operations.
This breadth explains why cannabis law is increasingly embedded within full-service firms rather than boutique practices.
Cannabis companies themselves are professionalizing. Many now employ general counsel, compliance officers, and sophisticated legal teams, often hiring lawyers from healthcare, pharma, or consumer products backgrounds. These in-house roles can create reverse pipelines back into law firms when attorneys later return to private practice with valuable operational insight.
Staying current in a fast-moving field
The tension between state permission versus federal prohibition has long been the defining feature of cannabis law and the reason why it generates such consistent legal work. With laws and regulations in flux, cannabis lawyers must:
- Monitor federal administrative actions related to rescheduling and hemp policy.
- Track state legislative and regulatory developments (licensing, expungement, taxation).
- Build referral networks across jurisdictions to support multi-state operations.
- Engage with industry groups and bar associations focused on cannabis law such as the International Cannabis Bar Association (formerly National Cannabis Bar Association) which provides education and networking for cannabis practitioners. (https://incba.org/)
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