Federal Cannabis Legalization Push: Bills, Rescheduling, and Congress

Executive summary

Federal cannabis legalization remains stalled in Congress even as Democrats, reenergized by midterm gains, are again pressing for descheduling, banking access, and tax reform. A Fox News report published November 14, 2026 said Democrats are pushing for cannabis legalization after their midterm victories. This hub gives the structural background that explains why that push is difficult and what would have to happen for it to succeed.

The legal baseline has not changed in its fundamentals. Marijuana remains a Schedule I controlled substance under 21 U.S.C. § 812, a classification that carries no accepted medical use finding and a high abuse-potential designation. Meanwhile, a large majority of states have created medical or adult-use markets, producing a long-running conflict between federal prohibition and state regulation.

Three federal tracks matter most. The first is administrative rescheduling, run through the DEA and informed by the FDA and Department of Health and Human Services. That process moved to a proposed rule stage, a NPRM, and then into contested administrative hearings before an ALJ. The second is legislation: bills to deschedule cannabis, such as the MORE Act and the Cannabis Administration and Opportunity Act, and narrower measures such as the SAFER Banking Act. The third is tax policy, where 280E denies state-legal operators ordinary business deductions.

For operators, investors, and patients, the practical question is sequencing. Rescheduling to Schedule III would ease 280E exposure but would not legalize adult-use sales. Full descheduling would require Congress. A Democratic push after the midterms raises visibility, but the Senate's 60-vote filibuster threshold and Republican control or influence over committee agendas remain the binding constraints. This page lays out the history, players, law, state map, market effects, and decision calendar so readers can evaluate each new development against a fixed framework.

Why this matters

Federal status determines taxes, banking, interstate commerce, research, and criminal exposure for a legal industry that spans most of the country.

The stakes fall on several groups at once:

• Operators and MSOs. Multi-state operators pay effective federal tax rates inflated by 280E, which bars deductions for ordinary business expenses of businesses trafficking in Schedule I or II substances. Rescheduling to Schedule III would remove that barrier; descheduling would too.
• Lenders and capital markets. Most cannabis companies cannot list on major U.S. exchanges and depend on limited banking relationships because federal law treats proceeds as tied to an illegal drug. Federal reform changes the cost of capital.
• Patients and researchers. Schedule I status complicates clinical research, since studies require DEA-registered suppliers and extensive protocols. Patients in medical states operate under state law only; federal law offers them no protection.
• Criminal justice. Federal possession and distribution offenses remain on the books, and expungement relief depends on state action or executive clemency rather than a federal framework.
• State governments. States collect substantial excise and sales tax revenue from adult-use markets and want clarity on interstate commerce, hemp-derived THC products, and preemption.

Politically, the issue sits at an unusual intersection. Polling by Gallup and Pew Research Center has shown majority support for legalization across multiple years, yet Congress has never passed a standalone legalization law. The gap between public opinion and legislative output is the central puzzle any new push has to solve.

Background and history

Federal cannabis policy moved from taxation to prohibition in 1937 and 1970, then spent five decades eroding at the state level without a federal statutory change.

1937: The Marihuana Tax Act

Congress passed the Marihuana Tax Act of 1937, which did not ban cannabis outright but imposed registration and transfer taxes that made lawful commerce impractical. The American Medical Association opposed the bill, according to historical accounts of the hearings. The Act began the federal habit of controlling cannabis through the taxing power.

1970: The Controlled Substances Act

The Controlled Substances Act of 1970, codified beginning at 21 U.S.C. § 801, sorted drugs into five schedules. Marijuana went into Schedule I. Congress also created the Shafer Commission (the National Commission on Marihuana and Drug Abuse), which in 1972 recommended decriminalizing personal possession. President Richard Nixon did not adopt that recommendation, and Schedule I status stuck.

1969 and 1970s: Leary and the legal challenges

In Leary v. United States (1969), the Supreme Court struck down parts of the Marihuana Tax Act on Fifth Amendment grounds. Congress responded with the CSA. Early petitions to reschedule, including one filed by NORML in 1972, began a pattern of lengthy administrative proceedings that continued for decades.

1996: California's Proposition 215

California voters approved Proposition 215 in 1996, making it the first state to legalize medical cannabis. The measure opened the state-federal conflict that still defines the issue. Other states followed over the next two decades.

2005: Gonzales v. Raich

In Gonzales v. Raich (2005), the Supreme Court held that Congress may regulate homegrown, non-commercial cannabis under the Commerce Clause, even where state law permits medical use. The ruling confirmed that state legalization does not displace federal authority.

2012: Colorado and Washington adopt adult-use

Colorado and Washington voters approved adult-use legalization in 2012, the first states to do so. The Department of Justice responded in 2013 with the Cole Memorandum, which set enforcement priorities and signaled that federal prosecutors would generally defer to well-regulated state markets.

2014: The Rohrabacher-Farr amendment

Congress attached a rider, known as Rohrabacher-Farr and later Rohrabacher-Blumenauer, to appropriations bills that bars the Justice Department from spending funds to interfere with state medical cannabis programs. The rider must be renewed in each spending cycle, which makes it a recurring leverage point in budget negotiations.

2018: The Farm Bill and hemp

The 2018 Farm Bill removed hemp, defined as cannabis with no more than 0.3 percent delta-9 THC by dry weight, from the CSA definition of marijuana. That opened a federally legal hemp industry and later produced disputes over hemp-derived intoxicants, including THCA flower and delta-8 products, that continue to prompt state and federal attention.

2018 onward: Cole Memo rescinded and the MORE Act

Attorney General Jeff Sessions rescinded the Cole Memorandum in January 2018, though the market largely continued. In December 2020, the House passed the MORE Act (Marijuana Opportunity Reinvestment and Expungement Act), which would have removed cannabis from the CSA schedules, the first such floor passage by a chamber of Congress. The Senate did not take it up.

2022: Clemency and the HHS review

In October 2022, President Joe Biden pardoned federal simple-possession offenses and directed HHS and the Attorney General to review how marijuana is scheduled. That directive began the process that later produced a rescheduling recommendation.

2023 to 2024: HHS recommendation and the DEA proposal

In August 2023, HHS recommended that the DEA move marijuana to Schedule III, according to reporting based on agency correspondence. In 2024, the DEA published a notice of proposed rulemaking to reschedule marijuana to Schedule III, opening a comment period that drew large numbers of public comments. A hearing process before an ALJ followed and became procedurally contested, with disputes over who could participate and how the proceeding was run.

2025 to 2026: Political transition and renewed pressure

The change in administration in 2025 reshaped the rescheduling timeline and the legislative landscape. Through 2026, bills on banking, hemp regulation, and descheduling were introduced and debated. The November 2026 midterm results, as reported by Fox News on November 14, 2026, gave Democrats a platform to renew calls for legalization. Readers should treat each new announcement as a step in a long sequence rather than a decisive break, because the pattern since 1970 has been incremental movement punctuated by stalls.

Key players

Federal outcomes depend on a short list of agencies, congressional committees, industry groups, and organized opponents.

Drug Enforcement Administration (DEA)

The DEA holds scheduling authority under the CSA, subject to HHS's binding scientific and medical findings. It ran the NPRM process and the ALJ hearing track. Its decisions on rescheduling can be challenged in federal court.

Food and Drug Administration (FDA) and HHS

The FDA conducts the eight-factor analysis under 21 U.S.C. § 811(c) on behalf of HHS. Its determination that marijuana has a currently accepted medical use, even if limited, underpins any move to Schedule III. The FDA also regulates cannabis-derived drug products such as Epidiolex (cannabidiol, CBD), which has been in a lower schedule category since its approval.

Congress

The House Judiciary, Energy and Commerce, and Ways and Means committees and the Senate Judiciary and Banking committees control most relevant bills. Key legislative vehicles include the MORE Act, the Cannabis Administration and Opportunity Act, the SAFER Banking Act, and the STATES Act, which would protect state-compliant activity from federal enforcement. Leadership agendas, not bill counts, decide what reaches the floor.

Democratic leadership and reform caucus

Senate Majority Leader-era sponsors such as Chuck Schumer, Cory Booker, and Ron Wyden have backed descheduling and social-equity provisions. In the House, the Congressional Cannabis Caucus has pressed for banking and tax fixes. A post-midterm Democratic push centers on these members.

Republican reformers and opponents

Some Republicans back narrower measures such as banking access or states' rights frameworks, while others oppose any liberalization on public-health grounds. Organizations such as Smart Approaches to Marijuana argue that commercialization increases use and harms, and they lobby against rescheduling and legalization.

Industry groups

The National Cannabis Industry Association and the U.S. Cannabis Council represent operators and press for 280E relief, banking access, and interstate commerce. MSO executives watch rescheduling closely because of its tax effect.

Advocacy and civil liberties groups

NORML, the Drug Policy Alliance, the ACLU, and the Minority Cannabis Business Association focus on expungement, social equity, and criminal-justice provisions that they say must accompany any commercial framework.

Legal and regulatory framework

Three overlapping bodies of law control cannabis at the federal level: the Controlled Substances Act, the Internal Revenue Code, and banking and appropriations rules.

The Controlled Substances Act

Under 21 U.S.C. § 812, Schedule I requires a high potential for abuse, no currently accepted medical use in treatment in the United States, and a lack of accepted safety under medical supervision. Rescheduling to Schedule III would instead reflect moderate-to-low physical dependence potential and an accepted medical use. The Attorney General, acting through the DEA, may reschedule by rule after an HHS evaluation, following notice-and-comment procedures. Congress can also deschedule by statute, which would remove cannabis from the CSA schedules entirely and shift regulation toward an alcohol- or tobacco-style model.

Rescheduling alone leaves important gaps. Schedule III substances still require FDA approval or a DEA-registered pathway for lawful distribution, so state-licensed adult-use dispensaries would remain out of compliance with federal law even after a move to Schedule III. Only descheduling or a statutory carve-out would resolve that conflict.

Tax: Section 280E

Internal Revenue Code § 280E disallows deductions and credits for any trade or business that consists of trafficking in controlled substances listed in Schedule I or II. Cannabis companies can still subtract cost of goods sold, but not ordinary expenses such as rent, payroll for non-production staff, and marketing. Moving cannabis to Schedule III would take it outside the reach of 280E, which is why operators treat rescheduling as primarily a tax event. Companies and analysts have also discussed whether to claim refunds on past 280E payments, an issue that depends on the effective date and legal structure of any rule.

Banking and anti-money-laundering rules

Financial institutions face exposure under the Bank Secrecy Act and federal money-laundering statutes when serving cannabis businesses. FinCEN's 2014 guidance created a reporting pathway, but many banks still decline the business. The SAFER Banking Act would create a safe harbor for depository institutions, and it has passed the House multiple times without clearing the Senate.

Appropriations riders

The medical cannabis rider limits DOJ spending against state medical programs. Because it lives in annual spending bills, it is subject to expiration and renegotiation, giving appropriators a recurring role in cannabis policy.

Federalism and preemption

Under Gonzales v. Raich, federal law controls where it conflicts with state law, but the Tenth Amendment anti-commandeering doctrine limits Washington's ability to force states to enforce federal prohibition. That is why states can legalize without federal approval while operators remain technically exposed. Any federal legalization statute would need to address interstate commerce, import and export, product standards, and the treatment of existing state licenses.

Hemp and hemp-derived THC

The 2018 Farm Bill's hemp definition created a parallel federal track. Disputes over THCA flower and other hemp-derived intoxicants have led to state restrictions and proposed federal changes. A comprehensive federal cannabis bill would likely redefine the hemp-marijuana boundary, a point that matters for farmers, retailers, and state regulators alike.

State-by-state breakdown

State markets set the facts on the ground that any federal bill must absorb, and a handful of large states account for most of the revenue and political weight. The table summarizes representative states; operators should confirm current possession limits and licensing rules with state regulators because these change frequently.

State	Status	Why it matters federally
California	Medical since 1996; adult-use since 2016	Largest legal market; heavy tax burden and enforcement against illicit sales
Colorado	Adult-use since 2012 launch	Longest-running adult-use market; model for regulation and tax data
Washington	Adult-use since 2012 launch	Early adopter with a state-controlled framework
New York	Adult-use legalized 2021	Large population; licensing rollout and social-equity design closely watched
Ohio	Adult-use approved by voters in 2023	Midwestern bellwether; legislative changes to the voter-approved law drew attention
Massachusetts	Adult-use since 2016 vote	Mature East Coast market; borders states still weighing reform
Texas	Limited medical program; no adult-use	Large state where hemp-derived THC regulation is a live fight

California

California pairs a huge legal market with persistent illicit competition and high combined taxes. Its operators are among the most exposed to 280E, so rescheduling carries large potential savings. State officials have also pressed for federal guidance on interstate commerce because California's supply exceeds its in-state demand.

Colorado

Colorado has more than a decade of data on tax revenue, youth use, and market maturation. Reformers cite it as evidence that regulated markets can function; opponents cite it in arguments about commercialization and potency.

New York

New York built a social-equity licensing priority into its 2021 law. Its slow retail rollout has become a case study in the gap between legislation and functioning markets, which informs how federal bills treat equity provisions.

Ohio

Ohio passed adult-use by ballot initiative in 2023, and subsequent legislative adjustments tested how far lawmakers may modify voter-approved cannabis laws. That tension matters nationally because it shows how state politics can diverge from polling.

Massachusetts

Massachusetts hosts a mature adult-use market with several large operators. Its regulatory history, including municipal opt-outs and host-community agreements, offers a template for how federal law might coexist with local control.

Texas

Texas has resisted adult-use legalization while allowing a restricted medical program and a large hemp-derived THC retail sector. Federal changes to the hemp definition would hit this market directly.

Market and business implications

Federal reform would reprice the sector mainly through tax relief and capital access, with the size of the effect depending on whether Congress chooses rescheduling, descheduling, or a narrower banking fix.

Rescheduling versus descheduling

This analysis uses CannIntel's own framework of three tiers of federal change, each with different business effects:

1. Tier 1: Rescheduling to Schedule III. Eliminates 280E exposure going forward and eases research barriers. Does not authorize adult-use sales, does not open interstate commerce, and leaves banking and exchange-listing questions largely unresolved.
2. Tier 2: Banking and capital reform. A safe harbor like the SAFER Banking Act would widen access to deposit accounts and credit, lowering cash-handling costs and security expenses, but would not alter tax status by itself.
3. Tier 3: Full descheduling with a regulatory framework. Would permit federal-state coordination, potentially open interstate trade, and bring cannabis under an agency such as an alcohol-and-tobacco regulator. This is the only tier that resolves the underlying legality conflict.

MSO impact

MSO balance sheets carry large tax liabilities tied to 280E, and some companies have taken uncertain-tax-position reserves. A Tier 1 change would improve free cash flow, lower effective tax rates, and potentially support refinancing of expensive debt. Analysts also point to possible uplisting to national exchanges only under Tier 2 or Tier 3 outcomes, not Tier 1.

Wholesale pricing read

Wholesale flower prices in mature markets have been under pressure from oversupply, a pattern visible in California and Oregon over several years. Federal reform that opened interstate commerce would let low-cost producers ship to higher-priced markets, compressing prices in expensive states while expanding addressable demand for efficient cultivators. Rescheduling alone would not produce that shift. Premium genetics such as Wedding Cake, OG Kush, and Northern Lights would face the same commoditization risk as other flower categories, while branded and differentiated products could hold margins better.

Capital flows and valuation

Cannabis equities and private-credit markets tend to react to headlines before law changes, then retrace when timelines slip. Investors should separate announcement effects from effective-date effects: a post-midterm Democratic push raises the probability of legislative activity but does not change legal status until a bill is enacted or a final rule takes effect.

Operator checklist

• Model 280E savings under a Schedule III scenario separately from any adult-use legality scenario.
• Stress-test balance sheets for a scenario where federal reform stalls through the next Congress.
• Track state rules on hemp-derived THC, since federal redefinition would affect competing product categories.
• Monitor appropriations bills for the medical cannabis rider each cycle.

What experts say

Analysts agree that rescheduling is easier than legalization, and they disagree mainly on whether Congress will act at all. The following positions are paraphrased from public statements and published analysis and are not direct quotes.

Supporters of reform, including sponsors of the MORE Act and advocacy groups such as NORML and the Drug Policy Alliance, argue that federal prohibition drives unequal enforcement and that descheduling plus expungement is the only coherent fix. The Drug Policy Alliance has said that rescheduling alone would leave existing criminal penalties largely intact.

Industry groups, including the National Cannabis Industry Association, have said that tax relief under a Schedule III move would be a major step for small and mid-sized operators, though they continue to press for full legalization and banking access.

Opponents, including Smart Approaches to Marijuana, have said that commercial legalization increases use and public-health costs and that rescheduling could give the industry legitimacy without safeguards. Some health researchers have raised concerns about higher-potency products and cannabis use disorder, and call for stronger product standards before further liberalization.

Budget analysts and tax professionals have noted that the fiscal effects cut in two directions: federal revenue from cannabis taxpayers would fall if 280E stopped applying, while new federal excise taxes, as contemplated in some bills, could add revenue. Congressional scorekeeping on these proposals determines how they fare in budget negotiations.

The consistent theme across camps is that a single headline victory for Democrats does not change federal law; only enacted legislation or a final, court-surviving rule does.

What's next

The near-term calendar turns on the new Congress's organization, the status of the DEA rescheduling process, and the next appropriations cycle.

Decision points to watch

• Congressional organization. Committee chairmanships and leadership agendas in the next Congress determine whether the MORE Act, the Cannabis Administration and Opportunity Act, or the SAFER Banking Act receive hearings or votes.
• The rescheduling proceeding. Watch for ALJ scheduling orders, any final rule, and litigation in federal court challenging the outcome. A final rule would face legal challenges regardless of direction.
• Appropriations. The medical cannabis rider and any hemp-related provisions travel with spending bills, so continuing-resolution fights can carry cannabis language.
• Hemp definitions. Federal and state action on hemp-derived THC could alter the competitive map before any marijuana legalization law.
• State ballot measures and legislation. New state markets add pressure and data points that Congress may cite.

Scenarios

1. Stall (most consistent with history). Democratic messaging increases but filibuster math and competing priorities keep bills from passing. Rescheduling proceeds slowly or stays tied up in process.
2. Narrow win. Congress passes a limited measure, most plausibly banking access or hemp regulation, attached to larger legislation. Operators gain capital access without a change in legal status.
3. Administrative Schedule III. A final DEA rule takes effect, delivering 280E relief, with litigation and implementation questions following.
4. Comprehensive descheduling. The least likely in the near term, requiring a bipartisan Senate coalition capable of reaching 60 votes or a change in Senate rules.

Readers should expect dated updates to this hub as the next Congress organizes and as the rescheduling record develops.

Further reading

Primary sources provide the authoritative text behind every claim on this page.

• Controlled Substances Act, 21 U.S.C. § 801 et seq.: https://www.law.cornell.edu/uscode/text/21/chapter-13/subchapter-I
• 21 U.S.C. § 812 (schedules of controlled substances): https://www.law.cornell.edu/uscode/text/21/812
• Internal Revenue Code § 280E: https://www.law.cornell.edu/uscode/text/26/280E
• DEA Diversion Control Division, scheduling information: https://www.deadiversion.usdoj.gov/schedules/
• Federal Register (search for DEA marijuana rescheduling notices): https://www.federalregister.gov/
• FDA, cannabis and cannabis-derived products: https://www.fda.gov/news-events/public-health-focus/fda-and-cannabis-research-and-drug-approval-process
• Congress.gov (search MORE Act, SAFER Banking Act, Cannabis Administration and Opportunity Act): https://www.congress.gov/
• FinCEN guidance on marijuana-related businesses: https://www.fincen.gov/
• Gonzales v. Raich, 545 U.S. 1 (2005): https://supreme.justia.com/cases/federal/us/545/1/
• Fox News coverage of the Democratic legalization push, November 14, 2026: https://news.google.com/rss/articles/CBMiVkFVX3lxTE5lSE9FdkVkR0RnZE52TktmOEE4c1JJemFFa3ZkWWhjLTBmdGRab2Q1ZGNhZnpJbFhLRHBwMXpseVlZM1V4dTJ4WHFNTG9OZUx4WF9VcGFR?oc=5