🌿 Court allows rescheduling process to proceed, senators reintroduce SAFE Banking Act, and states collect $3.55 billion cannabis taxes

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Block out. A federal appeals court has declined to temporarily block the Trump administration’s effort to reschedule cannabis under federal law, allowing the process to proceed while broader litigation challenging the reform continues. The U.S. Court of Appeals for the D.C. Circuit rejected a stay request from the National Drug and Alcohol Screening Association (NDASA) and pharmaceutical company MMJ International Holdings, concluding that the challengers had not met the stringent legal standard required to halt the policy while the case is being reviewed.

The challengers argued that rescheduling could increase cannabis consumption and cited potential public health consequences, particularly for adolescents and pregnant women. They also contended that moving cannabis to a less restrictive federal schedule could stimulate the legal cannabis industry by changing its federal tax treatment. The Justice Department opposed the request, arguing in part that the challengers have financial interests that are served by keeping cannabis in Schedule I and questioning whether they are appropriate parties to challenge the federal government's rescheduling decision.

The ruling does not resolve the underlying legal challenges to rescheduling. Multiple lawsuits have been consolidated before the D.C. Circuit, meaning the court will still consider the broader arguments over whether the administration can move cannabis to a different schedule under the Controlled Substances Act. The current litigation therefore remains an important source of uncertainty for the federal cannabis policy landscape.

The court also rejected a separate request by two medical cannabis companies seeking to intervene on the government's side of the litigation. Judges concluded that the companies had not demonstrated that their interests were inadequately represented by the existing parties, although they will be permitted to participate by filing amicus briefs.

SAFE harbor. A bipartisan group of U.S. senators has reintroduced the Secure and Fair Enforcement (SAFE) Banking Act of 2026, legislation aimed at giving state-legal cannabis businesses access to traditional banking and financial services. Led by Jeff Merkley (D-OR), it comes as the federal government has recently reclassified cannabis from Schedule I to Schedule III. According to Merkley’s office, the legislation is intended to provide financial institutions with greater legal clarity when serving state-regulated medical and adult-use cannabis businesses.

The bill would establish protections for banks and other financial institutions that choose to work with legitimate cannabis businesses operating under state law. Specifically, it would restrict federal banking regulators from penalizing or discouraging financial institutions from providing services to state-sanctioned cannabis companies and related businesses, including landlords, lawyers, and other service providers. The legislation would also protect banks from losing federal deposit insurance solely because they serve state-legal cannabis businesses.

The proposed legislation includes a federal safe harbor from criminal prosecution, liability and asset forfeiture for banks, officers, and employees providing financial services to qualifying cannabis businesses. It would also require banks to continue complying with current Financial Crimes Enforcement Network (FinCEN) guidance, while allowing that guidance to be streamlined as federal and state cannabis policies evolve.

The measure has support from both parties, with Senators Lisa Murkowski (R-AK), Steve Daines (R-MT) and Elizabeth Warren (D-MA) listed as cosponsors. In the House, Representative David Joyce (R-OH) is leading the legislation. Earlier versions of the SAFE Banking Act passed the House seven times with bipartisan support, although previous efforts never become law.

Sin tax. Cannabis is becoming an increasingly meaningful line item on state balance sheets. According to new data from the U.S. Census Bureau, 30 states and Washington, D.C., collected an estimated $3.55 billion in cannabis excise taxes between July 2025 and June 2026. This is up 15.7% from $3.06 billion when the bureau began tracking the data in fiscal year 2022.

The growth story comes with an important asterisk: tax policy matters. States are trying to strike a tricky balance between generating revenue and keeping legal cannabis competitive with the illicit market. California offers the clearest case study. After eliminating its cultivation tax in 2022 in an effort to lower prices and squeeze the black market, the state’s cannabis tax revenue fell from $878.6 million in fiscal year 2022 to $528.2 million the following year. National collections subsequently rebounded as more states launched taxed cannabis markets.

There’s no single tax model winning, either. States tax cannabis at different points in the supply chain including cultivation, wholesale and retail, and some vary rates based on product type, weight, or THC content. Washington and Montana currently lead on a per capita basis, collecting more than $50 per resident annually in cannabis excise taxes. Washington’s retail excise tax is 37%, while Montana’s is 20%. Alaska takes a different route entirely, relying on a $50 per ounce cultivation tax rather than a retail excise tax.

Meanwhile, newer markets are starting to show what the next wave of cannabis tax revenue could look like. Minnesota, which raised its cannabis excise tax from 10% to 15%, collected $34.4 million in fiscal year 2026, which was more than double its $16.6 million haul the previous year. Delaware, which began collecting a 15% cannabis excise tax in August 2025, is also seeing revenue build as more licensed businesses enter the market.

The takeaway: cannabis may still be federally illegal, but at the state level, it’s increasingly behaving like a bona fide tax-generating industry. And as more markets mature, policymakers face the same million dollar question: how much tax is enough to fill state coffers without pushing consumers back toward the unlicensed market?

Illinois: Medical cannabis access is expanding by allowing adult use dispensaries to obtain medical licenses, with 37 already approved to serve registered patients.

Massachusetts: The adult use cannabis industry has surpassed $10 billion in sales and generated $2 billion in taxes, but faces market oversaturation and a November 2026 ballot question that could repeal recreational cannabis legalization.

Minnesota: The Office of Cannabis Management announced more than $250 million in combined adult-use and medical cannabis sales since the statewide adult-use market launched one year ago, including approximately $150 million in adult-use and $100 million in medical cannabis sales.

Pennsylvania: The Auditor General found that the medical cannabis program needs stronger internal controls, standardized inspection procedures, and better approval and documentation processes to ensure consistent oversight and patient safety.

Vermont: Lieutenant Governor John Rodgers agreed to pay a $2,500 fine to settle a Cannabis Control Board violation after his business temporarily grew about 100 cannabis seedlings at an unauthorized greenhouse location.

Virginia: The Cannabis Control Authority has released draft regulations for the state’s adult-use cannabis market, including proposed licensing fees, eligibility rules, and business limits, ahead of final regulations expected in December with retail sales beginning July 1, 2027.

Cresco plucks PharmaCann in Pennsylvania

The mega multi-state operator acquired nine Pennsylvania medical cannabis dispensaries for $50 million, expanding its retail footprint and making it the state’s largest medical cannabis retailer.

Red White & Bloom expands into Europe

The cannabis business closed a strategic transaction giving it a controlling interest in a newly formed European medical cannabis platform with operations and investments across Germany, the U.K., and other European markets.

TerrAscend acquires Aunt Mary’s

The Canada-based North American cannabis company has finalized its Aunt Mary’s acquisition in New Jersey, adding a fifth dispensary that generates over $10 million in annualized revenue and is expected to immediately boost EBITDA and free cash flow.

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The Pre Roll Team

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