A New Push for Federal Cannabis Legalization: What the STATES Act Means for America

In a historic move, bipartisan lawmakers have reintroduced the STATES Act in 2025, signaling a renewed effort to end nearly a century of federal cannabis prohibition. This legislation could reshape the future of cannabis in the United States—offering long-awaited relief to businesses and states operating in legal markets.

What is the STATES Act?

The Strengthening the Tenth Amendment Through Entrusting States (STATES) Act is designed to amend the Controlled Substances Act, effectively removing federal penalties for individuals and businesses complying with state cannabis laws. While it doesn't legalize cannabis nationwide, it respects each state's decision to regulate cannabis without federal interference.

This means states that choose to legalize cannabis—whether for medical or adult-use—would no longer fear federal prosecution, and cannabis businesses could finally operate with more stability.

“This is about honoring states’ rights while bringing clarity and security to an industry that’s been living in legal limbo for too long,” said one of the bill’s sponsors.

You can access the proposed bill here: https://www.congress.gov/bill/116th-congress/house-bill/2093

280E Tax Relief: A Game Changer for Cannabis Businesses

One of the most significant impacts of the STATES Act is its potential to eliminate the burdensome IRS Tax Code 280E for compliant businesses. Under current law, cannabis companies cannot deduct standard business expenses because cannabis remains federally illegal. This has led to inflated tax bills and financial strain across the industry.

By removing cannabis from federal prohibition in legalized states, the STATES Act would grant these businesses fair tax treatment, unlocking growth and profitability in a sector projected to reach $40 billion by 2026.

Interstate Commerce on the Horizon

Another groundbreaking provision is the potential allowance for interstate commerce between legal states. This could revolutionize the cannabis supply chain—allowing products to move across state lines, reducing costs, and encouraging specialization in cultivation and production.

States with mature markets like California, Oregon, and Colorado could export surplus cannabis to states with high demand but limited supply, fostering a more efficient national cannabis economy.

Why Now? The Political and Economic Climate

Public support for cannabis legalization is at an all-time high, with over 70% of Americans favoring legalization in some form. Additionally, 38 states have already legalized cannabis for medical or adult use.

The reintroduction of the STATES Act reflects both political momentum and economic necessity, as states seek new revenue streams and job creation opportunities in a post-pandemic economy.

However, challenges remain. While bipartisan, the bill faces hurdles in a divided Congress, where federal legalization efforts have stalled in the past despite widespread public approval.

What’s Next?

If passed, the STATES Act could usher in a new era of cannabis regulation—one where businesses operate without fear, consumers access safe products, and states benefit from economic growth.

For now, advocates, entrepreneurs, and policymakers alike are watching closely as this legislation advances, hopeful that 2025 could be the year federal cannabis reform finally becomes reality.

References:

1. Cannabis Business Times — US House Reps File Bill to Legalize Cannabis, Deliver 280E Relief, Permit Interstate Commerce
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2. Marijuana Moment — Coverage on Federal Cannabis Legislation Updates.
   marijuanamoment.net
3. Pew Research Center — Public Opinion on Marijuana Legalization
   pewresearch.org