Two important federal actions are changing the way the U.S. cannabis industry is seen and managed. In late 2025, former President Donald Trump signed an executive order pushing to move cannabis from a Schedule I to a Schedule III substance. Around the same time, Congress tightened the rules for hemp, setting a lower limit on THC levels and restricting some hemp-derived products.
These moves have different effects for cannabis and hemp businesses. For marijuana companies, the potential rescheduling is a positive step. Under current law, cannabis businesses can’t deduct normal expenses on their taxes because cannabis is listed as Schedule I. Moving it to Schedule III would lift that restriction, improving cash flow and making these companies stronger and more stable financially. That stability might make insurance companies more willing to offer coverage that’s easier to get and less expensive. Frank Costa, a national growth leader at World Insurance Associates, says the whole industry—from growers to retailers—could start being seen like any other business.
On the flip side, hemp producers are facing tougher times. Congress changed the legal definition of hemp to limit total THC content to 0.3% instead of just delta-9 THC. This also restricts cannabinoid products like delta-8 THC and synthetic versions. These new rules will start being enforced by late 2026. For hemp companies, this means they might have to change or stop selling some products. This can lead to legal battles with shareholders and cause headaches with product liability insurance. Insurance providers will have to rethink what they cover and what they don’t.
Testing labs will play a big role in helping hemp producers follow the new rules. They’ll need to update how products are tested, labeled, and reported to keep up with the changes.
Insurance brokers who work with cannabis and hemp clients are advised to pay close attention to product liability and recall coverage. Policies often have specific lists of what’s covered, so changes in laws can leave gaps. Costa stresses that clients should review their policies carefully to see if they still match the new federal definitions. However, coverage like workers’ compensation and commercial auto insurance likely won’t be affected.
Although the future still holds some uncertainty, insurers are preparing for a time when cannabis will be treated like a regular business risk. Costa says some carriers are already getting ready to move quickly once legalization becomes clearer. Until then, brokers need to stay informed, guide their clients on policy reviews, and work closely with underwriters.
All in all, these federal updates mark a key moment for cannabis and hemp industries, carrying both opportunities and challenges as the rules change.