Even so, a significant amount of uncertainty remains. State cannabis and cannabinoid laws are not uniform; and, even where cultivation and distribution are now legalized, business licensing requirements vary widely from state to state. As a result, businesses and customers alike often face significant challenges when it comes to understanding what is—and isn’t—allowed in their state. This guide serves as the starting point for understanding what you need to know about the legality of cannabis and cannabinoids in all 50 states.
- What Are Cannabinoids?
- Are Cannabinoids the Same as Marijuana?
- How Do the States Treat Cannabinoids for Legal Purposes?
- The Federal Legality of Cannabis and Cannabinoids
- The State Legality of Cannabis and Cannabinoids
- TABLE: An Overview of the Legality of Cannabis and Cannabinoids in All 50 States
- TABLE: An Overview of the Laws on Growing, Manufacturing, and Distributing Cannabis and Cannabinoids in All 50 States
- Tax Treatment of Cannabis and Cannabinoids (CBD and THC)
What Are Cannabinoids?
What are cannabinoids? Cannabinoids are the naturally-occurring chemicals found in the cannabis plant. Cannabis naturally produces more than 100 cannabinoids, all of which have different properties—and different effects. However, the two most common cannabinoids, and the two most important cannabinoids when discussing legality, are cannabidiol (CBD) and tetrahydrocannabinol (THC).
Cannabinoids can also be derived from hemp—and this is critical for the legality of CBD, as discussed below. Even though cannabis and hemp produce the same chemical compound of CBD, CBD derived from hemp contains less THC than CBD derived from cannabis. CBD and THC are treated differently for legal purposes, and this effectively means that CBD derived from cannabis and CBD derived from hemp are treated differently as well.
What is Cannabidiol (CBD)?
Cannabidiol, more commonly known as CBD, is a cannabinoid found in cannabis, and it is the primary cannabinoid found in hemp. As more states make the push to legalize cannabis and cannabinoids, medical researchers are gaining a greater understanding of CBD’s possible benefits. Today, it is found in certain medications as well as a variety of foods, oils, cosmetics, lotions, and other products.
What is Tetrahydrocannabinol (THC)?
Tetrahydrocannabinol, more commonly known as THC, also has certain recognized beneficial effects—primarily as a pain reliever. But, THC also has psychoactive properties (which are less potent with delta-8), and this is what has prevented the widespread legalization of THC that we are currently seeing with CBD, albeit gradually in some states. Like CBD, THC comes from both cannabis and hemp; and, while THC is no longer fully illegal, it is still much more tightly controlled at the state and federal levels.
Are Cannabinoids the Same as Marijuana?
When discussing the legality of cannabinoids, it is also important to clarify the distinction between cannabinoids and marijuana. Marijuana and cannabis are often used interchangeably, although strictly speaking “marijuana” refers to the parts of the cannabis plant that contain high concentrations of THC.
As a result, cannabinoids and marijuana are not the same. Cannabinoids are specific chemical compounds derived from both cannabis and hemp, while marijuana refers to specific parts of the cannabis plant. This means that the laws regarding cannabinoids and marijuana are not the same, either. When researching the legality of CBD and THC, it is necessary to focus specifically on the laws that apply to these cannabinoids. In several states, for example, marijuana remains strictly illegal while the sale of CBD is permitted subject to compliance with the states’ licensing rules and other regulatory requirements.
How Do the States Treat Cannabinoids for Legal Purposes?
While there used to be a significant amount of confusion about the relationship between marijuana and cannabinoids at the government level (and this is likely still the case in some places), it seems that state lawmakers and regulators are beginning to gain a more accurate understanding of their differences. The states are beginning to treat marijuana, CBD, and THC differently, with each state currently taking its own unique approach to:
- Legalizing or decriminalizing marijuana for medical use
- Legalizing or decriminalizing marijuana for recreational use (or “adult use”)
- Legalizing CBD derived from hemp
- Legalizing CBD derived from cannabis
- Legalizing CBD products that contain THC
Some states are treating delta-8 and delta-9 THC differently as well. Delta-8 is a less-potent form of THC that does not have the same level of psychoactive effects as delta-9. However, delta-8 only exists naturally in cannabis and hemp in small quantities; and, with the ongoing push toward legalization, the synthetic development of delta-8 is becoming more common. So, when evaluating the legality of cannabinoids at the state level, it is necessary not only to examine the differences between the laws governing marijuana, CBD, and THC, but also to examine the differences between the laws governing natural delta-8, synthetic delta-8, and delta-9 (if any).
The Federal Legality of Cannabis and Cannabinoids
Before we get too deep into our discussion of the legality of cannabinoids at the state level, we should touch briefly on the matter of federal legality. As you may know, cannabis remains a Schedule I controlled substance at the federal level. According to the U.S. Drug Enforcement Administration (DEA), this means that there is, “no currently accepted medical use and a high potential for abuse.”
Yet, the National Institutes of Health (NIH) recognize that cannabinoids have a variety of potential health benefits. According to the NIH:
“Drugs containing cannabinoids may be helpful in treating certain rare forms of epilepsy, nausea and vomiting associated with cancer chemotherapy, and loss of appetite and weight loss associated with HIV/AIDS. In addition, some evidence suggests modest benefits of cannabis or cannabinoids for chronic pain and multiple sclerosis symptoms. Cannabis isn’t helpful for glaucoma. Research on cannabis or cannabinoids for other conditions is in its early stages.”
Additionally, the U.S. Food and Drug Administration (FDA) has approved three medications either derived from cannabis or that contain synthetic cannabinoids. Notably, however, the FDA also clarifies that it “has not approved a marketing application for cannabis for the treatment of any disease or conditions,” and that its approval of these drugs simply means that, “[the] FDA has concluded that [these drugs are] safe and effective for [their] intended use.”
This is among the reasons why many states have legalized the use of cannabis and cannabinoids for medical purposes. It is also why, in 2018, Congress enacted the Agriculture Improvement Act (also commonly known as the “Farm Bill”). The Farm Bill legalized CBD derived from hemp as long as it contains no more than 0.3 percent delta-9 THC. Otherwise, however, THC remains federally illegal, and the states have taken an inconsistent approach to legalizing THC—as discussed in detail below.
The federal government has drawn another important distinction as well. Under federal law, cannabinoids, including CBD derived from hemp, cannot be sold as dietary supplements. The FDA writes that, “THC and CBD products are excluded from the dietary supplement definition under [federal law].” At present, this is due in large part to a lack of scientific evidence of the dietary benefits of cannabinoids and CBD-based products. As researchers continue to study the dietary benefits of cannabinoids, it is possible that the FDA’s stance on marketing CBD-based products as dietary supplements will change as well.
The State Legality of Cannabis and Cannabinoids
Understanding the legality of cannabinoids at the state level is complicated. While the laws governing the legality of CBD and THC are still continuing to develop, this is only part of the challenge. Determining the legality of cannabinoids at the state level also gets confusing because:
- While cannabis remains a Schedule 1 controlled substance under federal law, some states have fully legalized cannabis—and, by extension, cannabinoids.
- While CBD is now legal under the federal Farm Bill (subject to certain limitations), some states still have laws that either restrict or prohibit the sale of CBD.
- When it comes to the legalization of CBD and THC, the states have taken very different approaches. While some of these differences are regional or political, there currently does not seem to be much rhyme or reason behind the states’ incongruent attempts to address the legality of cannabinoids.
As the U.S. Centers for Disease Control and Prevention (CDC) explains, while the Farm Bill legalized CBD derived from hemp by removing hemp from the federal Controlled Substances Act, “a few states have not removed hemp from their state’s controlled substances acts, so legality of CBD products differs across states.” Additionally, as noted above, not only do states treat CBD and THC differently in many cases, but there are potential concerns regarding the differing legality of delta-8 and delta-9 THC at the state level as well. With this in mind, while the following information can be used as a starting point, anyone who has questions or concerns about the legality of cannabinoids in their state should consult with a local lawyer who has experience in this evolving area of the law.
TABLE: An Overview of the Legality of Cannabis and Cannabinoids in All 50 States
The following table provides an overview of the legality of cannabis and cannabinoids in all 50 states. Keep in mind that these are the laws regarding possession and use only. Each state also has the authority to establish its own laws and regulations regarding the sale of cannabis and cannabinoids, and many states have developed (or are in the process of developing) systems for the licensing and regulation of growing, manufacturing, wholesale, and retail cannabis and CBD-based businesses.
| State | Legality of Cannabis (Possession Only) | Legality of Cannabinoids | Specific Restrictions and Limitations on Cannabinoids |
| Alabama | Medical cannabis only; adult use not decriminalized | Restricted | CBD oil with THC concentration in excess of 0.3 percent is legal with a medical cannabis license for specified conditions. |
| Alaska | Legal | Legal (subject to Farm Bill) | |
| Arizona | Legal | Legal (subject to Farm Bill) | |
| Arkansas | Medical cannabis only; adult use not decriminalized | Restricted | Cannabis-derived CBD oil with THC concentration in excess of 0.3 percent is legal only with a medical license for specified conditions. |
| California | Legal | Restricted | Hemp-derived CBD edibles are not currently legal in California, though cannabis-derived CBD edibles are. |
| Colorado | Legal | Legal (subject to Farm Bill) | |
| Connecticut | Legal | Legal (subject to Farm Bill) | |
| Delaware | Medical cannabis only; adult use decriminalized | Restricted | Cannabis-derived CBD oil with THC concentration in excess of 0.3 percent is legal only with a medical license for specified conditions. |
| District of Columbia | Legal | Legal (subject to Farm Bill) | |
| Florida | Medical cannabis only; adult use not decriminalized | Restricted | Only hemp-derived CBD oils are currently legalized in Florida. |
| Georgia | Medical CBD oil only; adult use not decriminalized | Restricted | Cannabis-derived CBD oil is legal only with a medical license for specified conditions; oil must contain equal amounts of CBD and THC, and THC content cannot exceed 5.0 percent |
| Hawaii | Legal | Restricted | Only hemp-derived CBD oils are currently legalized in Hawaii. |
| Idaho | Illegal | Restricted | CBD is legal in Idaho as long as it does not have any traceable amount of THC. |
| Illinois | Legal | Legal (subject to Farm Bill) | |
| Indiana | Medical CBD oil only; adult use not decriminalized | Restricted | CBD is legal in Indiana as long as it does not have more than 0.3 percent THC. |
| Iowa | Medical CBD oil only; adult use not decriminalized | Restricted | Cannabis-derived CBD oil with THC concentration in excess of 0.3 percent is legal only with a medical license for specified conditions. |
| Kansas | Illegal | Restricted | CBD is legal in Kansas as long as it does not have any traceable amount of THC. Up to 5.0 percent THC content is permitted with a medical license for specified conditions. |
| Kentucky | Medical CBD oil only; adult use not decriminalized | Restricted | Only hemp-derived CBD oils are currently legalized in Kentucky. |
| Louisiana | Medical cannabis only; adult use decriminalized | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions. |
| Maine | Legal | Legal (subject to Farm Bill) | |
| Maryland | Medical cannabis only; adult use decriminalized | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions. Maryland has passed a law that will legalize the sale of adult use cannabis beginning July 1, 2023. |
| Massachusetts | Legal | Legal (subject to Farm Bill) | |
| Michigan | Legal | Legal (subject to Farm Bill) | |
| Minnesota | Medical cannabis only; adult use decriminalized | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions. |
| Mississippi | Medical cannabis only; adult use decriminalized | Restricted | Cannabis-derived CBD oil with THC concentration of up to 0.5 percent is legal with a medical license for specified conditions; must be obtained from the University of Mississippi. |
| Missouri | Legal | Restricted | Cannabis-derived CBD oil with THC concentration exceeding 0.3 percent is only legal with a medical license (no specified conditions). |
| Montana | Legal | Legal (subject to Farm Bill) | |
| Nebraska | Legal | Restricted | Only hemp-derived CBD is legal in Nebraska. |
| Nevada | Legal | Legal (subject to Farm Bill) | |
| New Hampshire | Medical cannabis only; adult use decriminalized | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions. |
| New Jersey | Legal | Legal (subject to Farm Bill) | |
| New Mexico | Legal | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions. |
| New York | Legal | Legal (subject to Farm Bill) | |
| North Carolina | Illegal | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions; qualifying patients and study subjects only. |
| North Dakota | Medical cannabis only; adult use decriminalized | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions. |
| Ohio | Medical cannabis only; adult use decriminalized | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions. |
| Oklahoma | Medical cannabis only; adult use not decriminalized | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions. |
| Oregon | Legal | Legal (subject to Farm Bill) | |
| Pennsylvania | Medical cannabis only; adult use not decriminalized | Restricted | CBD oil with THC concentration in excess of 0.3 percent is legal only with a medical license for specified conditions. |
| Rhode Island | Legal | Restricted | CBD oil with THC concentration in excess of 0.3 percent is legal only with a medical license for specified conditions. |
| South Carolina | Illegal | Restricted | CBD oil with THC concentration in excess of 0.9 percent is legal only with a medical license for specified conditions. |
| South Dakota | Medical cannabis only; adult use not decriminalized | Restricted | Only hemp-derived CBD oils containing less than 0.3 percent THC are currently legalized in South Dakota. |
| Tennessee | Medical CBD oil only; adult use not decriminalized | Restricted | CBD oil with THC concentration in excess of 0.9 percent is legal only with a medical license for specified conditions. |
| Texas | Medical CBD oil only; adult use not decriminalized | Restricted | CBD oils containing less than 1.0 percent THC are available to patients with qualifying conditions. |
| Utah | Medical cannabis only; adult use not decriminalized | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions. |
| Vermont | Legal | Legal (subject to Farm Bill) | |
| Virginia | Legal | Legal (subject to Farm Bill) | |
| Washington | Legal | Legal (subject to Farm Bill) | |
| West Virginia | Medical cannabis only; adult use not decriminalized | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions. |
| Wisconsin | Medical CBD oil only; adult use not decriminalized | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions. |
| Wyoming | Illegal | Restricted | Only hemp-derived CBD is legal in Wyoming. |
Sources: Forbes.com, DISA.com, Maryland.gov, and SouthDakotaCannabis.org.
It is important to note that even in states where cannabis and cannabinoids are legal or decriminalized, restrictions still apply. For example, while several states have now legalized adult use of cannabis, these states still have laws that restrict the amount of cannabis that individuals can possess and the number of plants (if any) they can grow in their homes. Public use, public impairment, possession in school zones, and driving under the influence of cannabis are all generally prohibited in states that have legalized cannabis and cannabinoids as well. Additionally, some states, such as Minnesota, have decriminalized certain cannabis-derived products but not others.
TABLE: An Overview of the Laws on Growing, Manufacturing, and Distributing Cannabis and Cannabinoids in All 50 States
The previous table provides an overview of the legality of possessing and using cannabis and cannabinoids in the United States. The table below covers the legality of growing, manufacturing, and distributing cannabis and CBD-based products at the state level. It is extremely important that business owners and prospective business owners address the implications of these laws carefully, as illegally growing, manufacturing, or distributing cannabis or CBD-based products can lead to serious criminal penalties.
As the laws governing the licensing of cannabis growing operations, dispensaries, and CBD-based businesses vary widely and are still largely in development, this table specifies whether there is a licensing process in place or under development only. To ensure compliance with the current laws and regulations in their states, all business owners should seek advice from a local lawyer.
| State | Cannabis Growing and Manufacturing Laws | Cannabis Distribution Laws | Cannabis and CBD-Based Business Licensing Information |
| Alabama | Felony offense for all amounts | Felony offense for all amounts | Alabama Hemp Program |
| Alaska | Misdemeanor or felony offense depending on amount (without license) | Misdemeanor or felony offense depending on amount (without license) | Alaska Marijuana License |
| Arizona | Felony offense for growing more than six plants or manufacturing more than two pounds (up to 12 plants at a personal residence with more than one adult) | Felony offense for sale of more than one ounce | Arizona Industrial Hemp License |
| Arkansas | Misdemeanor or felony offense depending on amount | Misdemeanor or felony offense depending on amount | Arkansas Hemp Program |
| California | Misdemeanor offense for growing six plants or more | Misdemeanor offense for any amount (if over 18 years old) | Department of Cannabis Control License |
| Colorado | Felony offense for growing more than six plants (without license) | Misdemeanor offense for selling four ounces or less, felony offense for all other amounts (without license) | Colorado Retail Marijuana License |
| Connecticut | Varying offenses depending on the number of plants or amount manufactured (without license) | Varying offenses depending on amount sold (without license) | Connecticut Adult-Use Cannabis Licensing Program |
| Delaware | Felony offense for all amounts | Felony offense for all amounts | Delaware Hemp Program |
| District of Columbia | Varying offenses depending on the number of plants or amount manufactured (without license) | Varying offenses depending on the amount sold (without license) | Washington D.C. Cannabis Licensing |
| Florida | Misdemeanor or felony offense depending on the number of plants or amount manufactured | Misdemeanor or felony offense depending on the amount sold | Florida Hemp Permit |
| Georgia | Felony offense for all amounts (without license) | Felony offense for all amounts (without license) | Georgia Access to Medical Cannabis Commission |
| Hawaii | Felony offense for all amounts (without license) | Felony offense for all amounts (without license) | Hawaii Office of Medical Cannabis Control and Regulation |
| Idaho | Felony offense for all amounts | Felony offense for all amounts | Idaho Office of Drug Policy |
| Illinois | Felony offense for five plants or more | Misdemeanor or felony offense depending on the amount sold | Illinois Industrial Hemp |
| Indiana | Misdemeanor or felony offense depending on the number of plants or amount manufactured | Misdemeanor or felony offense depending on the amount sold | Indiana Industrial Hemp |
| Iowa | Felony offense for all amounts | Felony offense for all amounts | Iowa Consumable Hemp Registration |
| Kansas | Felony offense for all amounts | Felony offense for all amounts | Kansas Industrial Hemp Applications |
| Kentucky | Misdemeanor offense for less than five plants (first offense); felony offense for all other amounts | Misdemeanor offense for less than eight ounces (first offense); felony offense for all other amounts | Kentucky Hemp Licensing Program |
| Louisiana | Varying offenses depending on the number of plants or amount manufactured (without license) | Varying offenses depending on the amount sold (without license) | Louisiana Department of Health Licensing |
| Maine | No penalties for three mature plants or up to 12 immature plants; varying offenses for all other amounts (without license) | Varying offenses depending on the amount sold (without license) | Maine Office of Cannabis Policy |
| Maryland | Felony offense for all amounts (without license) | Felony offense for all amounts (without license) | Maryland Medical Cannabis Commission |
| Massachusetts | No penalties for six plants; varying offenses for all other amounts (without license) | Varying offenses depending on the amount sold (without license) | Massachusetts Cannabis Control Commission – Licensing Process |
| Michigan | No penalties for less than 12 plants for personal use; varying offenses for all other amounts (without license) | Felony offense for all amounts (without license) | Michigan Cannabis Regulatory Agency |
| Minnesota | Misdemeanor offense for 42.5 grams or less; felony offense for all other amounts | Felony offense for all amounts | Minnesota Industrial Hemp License |
| Mississippi | Felony offense for all amounts, unless for personal use (without license) | Felony offense for all amounts (without license) | Mississippi Medical Cannabis Program |
| Missouri | Felony offense for all amounts (without license) | Felony offense for all amounts (without license) | Missouri Seed to Sale Program |
| Montana | No penalties for up to two plants; felony offense for all other amounts (without license) | Felony offense for all amounts (without license) | Montana Cannabis Control Division – Cannabis Licenses |
| Nebraska | Felony offense for all amounts | Felony offense for all amounts | Nebraska Hemp Licensing |
| Nevada | Felony offense for all amounts (without license) | Felony offense for all amounts (without license) | Nevada Cannabis Compliance Board |
| New Hampshire | Felony offense for all amounts (without license) | Felony offense for all amounts (without license) | New Hampshire Therapeutic Cannabis Program |
| New Jersey | Varying offenses for all amounts (without license) | No penalties for less than one ounce (first offense); varying offenses for all other amounts (without license) | New Jersey Cannabis Regulatory Commission |
| New Mexico | No penalties for up to six plants; felony offense for all other amounts (without license) | Felony offense for all amounts (without license) | New Mexico Cannabis Control Division |
| New York | No penalties for up to six plants (three mature); misdemeanor or felony offense for all other amounts (without license) | Misdemeanor offense for sale of 25 grams or less; felony offense for all other amounts (without license) | New York Office of Cannabis Management – Licensing |
| North Carolina | Felony offense for all amounts | Felony offense for all amounts | North Carolina Industrial Hemp Pilot Program |
| North Dakota | Misdemeanor or felony offense depending on amount (without license) | Felony offense for all amounts (without license) | North Dakota Medical Marijuana Program |
| Ohio | Misdemeanor or felony offense depending on amount | Felony offense for all amounts | Ohio Department of Agriculture Hemp Program and Ohio Medical Marijuana Control Program |
| Oklahoma | Misdemeanor or felony offense depending on amount (without license) | Felony offense for all amounts (without license) | Oklahoma Medical Marijuana Authority – Commercial Licenses |
| Oregon | Misdemeanor or felony offense depending on amount (without license) | Misdemeanor or felony offense depending on amount (without license) | Oregon Liquor & Cannabis Commission – Licensing |
| Pennsylvania | Felony offense for all amounts (without license) | Misdemeanor or felony offense depending on amount (without license) | Pennsylvania Department of Health – Resources for Dispensaries and Pennsylvania Hemp Program |
| Rhode Island | No penalties for growing six plants or less; felony offense for all other amounts (without license) | Felony offense for all amounts (without license) | Rhode Island Office of Cannabis Regulation |
| South Carolina | Felony offense for all amounts | Felony offense for all amounts | South Carolina Hemp Processor Application |
| South Dakota | Misdemeanor or felony offense depending on amount (without license) | Misdemeanor offense for sale of 0.5 ounces or less; felony offense for all other amounts (without license) | South Dakota Department of Revenue – Cannabis |
| Tennessee | Felony offense for all amounts (without license) | Felony offense for all amounts (without license) | Tennessee Department of Agriculture – Resources for Producers |
| Texas | Misdemeanor offense for four ounces or less; felony offense for all other amounts (without license) | Misdemeanor offense for seven grams or less; felony offense for all other amounts (without license) | Texas Medical Marijuana |
| Utah | Misdemeanor offense for one pound or less; felony offense for all other amounts (without license) | Felony offense for all amounts (without license) | Utah Industrial Hemp and Medical Cannabis Division |
| Vermont | No penalties for up to two plants (and up to four immature plants); felony offense for all other amounts (without license) | Misdemeanor offense for sale of less than 0.5 ounces; felony offense for all other amounts (without license) | Vermont Cannabis Control Board – Licensed Cannabis Establishments |
| Virginia | Varying offenses depending on the number of plants or amount manufactured (without license) | Felony offense for all amounts (without license) | Virginia Pharmaceutical Processors – Medical Cannabis and Virginia Industrial Hemp Program |
| Washington | Felony offense for all amounts (without license) | Felony offense for all amounts (without license) | Washington State Liquor and Cannabis Board – Cannabis Licensing |
| West Virginia | Felony offense for all amounts (without license) | Felony offense for all amounts (without license) | West Virginia Office of Medical Cannabis – Industry Permit Applications |
| Wisconsin | Felony offense for all amounts (without USDA license) | Felony offense for all amounts (without USDA license) | Wisconsin Hemp Resources |
| Wyoming | Misdemeanor offense for all amounts | Felony offense for all amounts | Wyoming Hemp Program |
Sources: Norml.org and links included above.
As you can see, the state laws on cannabis and cannabinoid cultivation, manufacture, and sale vary widely. While some states have taken an approach that promotes legalization, others are still tightly controlling the commercialization of cannabis and CBD-based products within their borders. While we have seen a strong trend toward legalization in recent times, it could still be several years (if not longer) until all states have programs in place that are designed to facilitate and promote legal cannabis and CBD-based businesses.
Above, we touched on the topic of delta-8 THC, and we noted that this cannabinoid specifically is seeing a high volume of synthetic manufacturing due to its limited natural quantities in cannabis and hemp. The federal government treats synthetics similarly to their natural alternatives (meaning that synthetic THC is also a Schedule I controlled substance), and most states do as well. However, as the Drug Policy Alliance (DPA) explains, this is a complex subject, and the 50 states’ approaches to synthetic THC have not been uniform. In many cases, the states are still yet to specifically address synthetic delta-8, although, as the DPA notes, “[m]ost states have also enacted criminal and civil penalties (and many others have pending legislation) for the sale of products that attempt to avoid being advertised as ‘synthetic drugs’ by claiming they are ‘not for human consumption.’”
As the DPA also notes, “manufacturers of synthetic cannabinoids can make small changes to the chemical formulas to skirt these laws, producing newer synthetic cannabinoids that have not yet been scheduled.” But, this can be a risky approach, both for manufacturers and their customers. As a result, for businesses (and prospective business owners) who are interested in selling delta-8, it is important to make sure they know the source of their products and that they can confidently sell them under their states’ laws.
It is also noteworthy that some states are taking a more hands-off approach to regulating cannabis and cannabinoids—and to regulating CBD-based products in particular. While many states require specific licensing in order to sell these products, some do not. Additionally, Wisconsin terminated its industrial hemp licensing program in 2022, deferring to the U.S. Department of Agriculture’s (USDA) hemp production licensing process. It will be interesting to see if other states take this approach as well in an effort to further encourage CBD-based commerce and promote uniformity across the United States.
Tax Treatment of Cannabis and Cannabinoids (CBD and THC)
For cannabis and CBD business owners, another important legal consideration is tax compliance. When states first started making the push toward marijuana legalization about a decade ago, there were serious questions about how businesses could meet their tax obligations without triggering a DEA investigation. Many business owners also had questions about whether they could deduct their business expenses, as tax laws generally do not allow deductions for illegal businesses.
While these remain concerns today, the Internal Revenue Service (IRS) and its state counterparts have provided some guidance. Additionally, thanks to the Farm Bill, businesses that sell hemp-derived cannabinoids are no longer “illegal businesses” at the federal level (as long as they comply with the Farm Bill’s restrictions and requirements). For example, as the IRS explains:
“While IRS Code Section 280E is clear that all the deductions and credits aren’t allowed for an illegal business, there’s a caveat: Marijuana business owners can deduct their cost of goods sold, which is basically the cost of their inventory. What isn’t deductible are the normal overhead expenses, such as advertising expenses, wages and salaries, and travel expenses, to name a few.”
At the state level, in the states that have legalized cannabis or CBD (or both), running an “illegal business” generally isn’t a concern when it comes to claiming the full benefits available under these states’ tax codes. Cannabis and CBD-based businesses can safely report their income (and they must do so), and they can claim all business deductions, credits, and exemptions that apply. However, federal tax compliance may still present risks, and neither the IRS nor the DEA has come out with a clear policy addressing how they intend to reconcile the federal government’s conflicting stances on supporting businesses operating in compliance with state law and enforcing the Controlled Substances Act’s prohibitions on Schedule I drugs.
What is clear, however, is that all cannabis and CBD-based businesses have at least the same tax obligations as all other businesses. This is true at both the state and federal levels. So, along with licensing and regulatory compliance, cannabis and CBD-based businesses must prioritize tax compliance as well. Failure to accurately report taxable income or pay tax on this income can lead to a state or federal tax audit; and, in many cases, this can lead to scrutiny of businesses’ other activities.
Ultimately, the most important thing to know about the state legalization of cannabis and cannabinoids is that the law is not uniform, and it is still continuing to evolve. While the majority of states are moving toward legalization, business owners and customers must be careful to ensure that they are making smart decisions based on the laws, rules, and regulations that apply in their state. In states across the country, new laws and regulations are paving the way for legal cannabis and cannabinoid businesses. Since California became the first state to legalize medical marijuana in 1996, many other states have followed suit, and in recent years we have finally seen the start of a push toward the legalization of recreational marijuana (within limits). As the health benefits of cannabinoids have become more widely recognized, many states have begun the push to legalize cannabinoid-based products as well.
Even so, a significant amount of uncertainty remains. State cannabis and cannabinoid laws are not uniform; and, even where cultivation and distribution are now legalized, business licensing requirements vary widely from state to state. As a result, businesses and customers alike often face significant challenges when it comes to understanding what is—and isn’t—allowed in their state. This guide serves as the starting point for understanding what you need to know about the legality of cannabis and cannabinoids in all 50 states.
- What Are Cannabinoids?
- Are Cannabinoids the Same as Marijuana?
- How Do the States Treat Cannabinoids for Legal Purposes?
- The Federal Legality of Cannabis and Cannabinoids
- The State Legality of Cannabis and Cannabinoids
- TABLE: An Overview of the Legality of Cannabis and Cannabinoids in All 50 States
- TABLE: An Overview of the Laws on Growing, Manufacturing, and Distributing Cannabis and Cannabinoids in All 50 States
- Tax Treatment of Cannabis and Cannabinoids (CBD and THC)
What Are Cannabinoids?
What are cannabinoids? Cannabinoids are the naturally-occurring chemicals found in the cannabis plant. Cannabis naturally produces more than 100 cannabinoids, all of which have different properties—and different effects. However, the two most common cannabinoids, and the two most important cannabinoids when discussing legality, are cannabidiol (CBD) and tetrahydrocannabinol (THC).
Cannabinoids can also be derived from hemp—and this is critical for the legality of CBD, as discussed below. Even though cannabis and hemp produce the same chemical compound of CBD, CBD derived from hemp contains less THC than CBD derived from cannabis. CBD and THC are treated differently for legal purposes, and this effectively means that CBD derived from cannabis and CBD derived from hemp are treated differently as well.
What is Cannabidiol (CBD)?
Cannabidiol, more commonly known as CBD, is a cannabinoid found in cannabis, and it is the primary cannabinoid found in hemp. As more states make the push to legalize cannabis and cannabinoids, medical researchers are gaining a greater understanding of CBD’s possible benefits. Today, it is found in certain medications as well as a variety of foods, oils, cosmetics, lotions, and other products.
What is Tetrahydrocannabinol (THC)?
Tetrahydrocannabinol, more commonly known as THC, also has certain recognized beneficial effects—primarily as a pain reliever. But, THC also has psychoactive properties (which are less potent with delta-8), and this is what has prevented the widespread legalization of THC that we are currently seeing with CBD, albeit gradually in some states. Like CBD, THC comes from both cannabis and hemp; and, while THC is no longer fully illegal, it is still much more tightly controlled at the state and federal levels.
Are Cannabinoids the Same as Marijuana?
When discussing the legality of cannabinoids, it is also important to clarify the distinction between cannabinoids and marijuana. Marijuana and cannabis are often used interchangeably, although strictly speaking “marijuana” refers to the parts of the cannabis plant that contain high concentrations of THC.
As a result, cannabinoids and marijuana are not the same. Cannabinoids are specific chemical compounds derived from both cannabis and hemp, while marijuana refers to specific parts of the cannabis plant. This means that the laws regarding cannabinoids and marijuana are not the same, either. When researching the legality of CBD and THC, it is necessary to focus specifically on the laws that apply to these cannabinoids. In several states, for example, marijuana remains strictly illegal while the sale of CBD is permitted subject to compliance with the states’ licensing rules and other regulatory requirements.
How Do the States Treat Cannabinoids for Legal Purposes?
While there used to be a significant amount of confusion about the relationship between marijuana and cannabinoids at the government level (and this is likely still the case in some places), it seems that state lawmakers and regulators are beginning to gain a more accurate understanding of their differences. The states are beginning to treat marijuana, CBD, and THC differently, with each state currently taking its own unique approach to:
- Legalizing or decriminalizing marijuana for medical use
- Legalizing or decriminalizing marijuana for recreational use (or “adult use”)
- Legalizing CBD derived from hemp
- Legalizing CBD derived from cannabis
- Legalizing CBD products that contain THC
Some states are treating delta-8 and delta-9 THC differently as well. Delta-8 is a less-potent form of THC that does not have the same level of psychoactive effects as delta-9. However, delta-8 only exists naturally in cannabis and hemp in small quantities; and, with the ongoing push toward legalization, the synthetic development of delta-8 is becoming more common. So, when evaluating the legality of cannabinoids at the state level, it is necessary not only to examine the differences between the laws governing marijuana, CBD, and THC, but also to examine the differences between the laws governing natural delta-8, synthetic delta-8, and delta-9 (if any).
The Federal Legality of Cannabis and Cannabinoids
Before we get too deep into our discussion of the legality of cannabinoids at the state level, we should touch briefly on the matter of federal legality. As you may know, cannabis remains a Schedule I controlled substance at the federal level. According to the U.S. Drug Enforcement Administration (DEA), this means that there is, “no currently accepted medical use and a high potential for abuse.”
Yet, the National Institutes of Health (NIH) recognize that cannabinoids have a variety of potential health benefits. According to the NIH:
“Drugs containing cannabinoids may be helpful in treating certain rare forms of epilepsy, nausea and vomiting associated with cancer chemotherapy, and loss of appetite and weight loss associated with HIV/AIDS. In addition, some evidence suggests modest benefits of cannabis or cannabinoids for chronic pain and multiple sclerosis symptoms. Cannabis isn’t helpful for glaucoma. Research on cannabis or cannabinoids for other conditions is in its early stages.”
Additionally, the U.S. Food and Drug Administration (FDA) has approved three medications either derived from cannabis or that contain synthetic cannabinoids. Notably, however, the FDA also clarifies that it “has not approved a marketing application for cannabis for the treatment of any disease or conditions,” and that its approval of these drugs simply means that, “[the] FDA has concluded that [these drugs are] safe and effective for [their] intended use.”
This is among the reasons why many states have legalized the use of cannabis and cannabinoids for medical purposes. It is also why, in 2018, Congress enacted the Agriculture Improvement Act (also commonly known as the “Farm Bill”). The Farm Bill legalized CBD derived from hemp as long as it contains no more than 0.3 percent delta-9 THC. Otherwise, however, THC remains federally illegal, and the states have taken an inconsistent approach to legalizing THC—as discussed in detail below.
The federal government has drawn another important distinction as well. Under federal law, cannabinoids, including CBD derived from hemp, cannot be sold as dietary supplements. The FDA writes that, “THC and CBD products are excluded from the dietary supplement definition under [federal law].” At present, this is due in large part to a lack of scientific evidence of the dietary benefits of cannabinoids and CBD-based products. As researchers continue to study the dietary benefits of cannabinoids, it is possible that the FDA’s stance on marketing CBD-based products as dietary supplements will change as well.
The State Legality of Cannabis and Cannabinoids
Understanding the legality of cannabinoids at the state level is complicated. While the laws governing the legality of CBD and THC are still continuing to develop, this is only part of the challenge. Determining the legality of cannabinoids at the state level also gets confusing because:
- While cannabis remains a Schedule 1 controlled substance under federal law, some states have fully legalized cannabis—and, by extension, cannabinoids.
- While CBD is now legal under the federal Farm Bill (subject to certain limitations), some states still have laws that either restrict or prohibit the sale of CBD.
- When it comes to the legalization of CBD and THC, the states have taken very different approaches. While some of these differences are regional or political, there currently does not seem to be much rhyme or reason behind the states’ incongruent attempts to address the legality of cannabinoids.
As the U.S. Centers for Disease Control and Prevention (CDC) explains, while the Farm Bill legalized CBD derived from hemp by removing hemp from the federal Controlled Substances Act, “a few states have not removed hemp from their state’s controlled substances acts, so legality of CBD products differs across states.” Additionally, as noted above, not only do states treat CBD and THC differently in many cases, but there are potential concerns regarding the differing legality of delta-8 and delta-9 THC at the state level as well. With this in mind, while the following information can be used as a starting point, anyone who has questions or concerns about the legality of cannabinoids in their state should consult with a local lawyer who has experience in this evolving area of the law.
TABLE: An Overview of the Legality of Cannabis and Cannabinoids in All 50 States
The following table provides an overview of the legality of cannabis and cannabinoids in all 50 states. Keep in mind that these are the laws regarding possession and use only. Each state also has the authority to establish its own laws and regulations regarding the sale of cannabis and cannabinoids, and many states have developed (or are in the process of developing) systems for the licensing and regulation of growing, manufacturing, wholesale, and retail cannabis and CBD-based businesses.
| State | Legality of Cannabis (Possession Only) | Legality of Cannabinoids | Specific Restrictions and Limitations on Cannabinoids |
| Alabama | Medical cannabis only; adult use not decriminalized | Restricted | CBD oil with THC concentration in excess of 0.3 percent is legal with a medical cannabis license for specified conditions. |
| Alaska | Legal | Legal (subject to Farm Bill) | |
| Arizona | Legal | Legal (subject to Farm Bill) | |
| Arkansas | Medical cannabis only; adult use not decriminalized | Restricted | Cannabis-derived CBD oil with THC concentration in excess of 0.3 percent is legal only with a medical license for specified conditions. |
| California | Legal | Restricted | Hemp-derived CBD edibles are not currently legal in California, though cannabis-derived CBD edibles are. |
| Colorado | Legal | Legal (subject to Farm Bill) | |
| Connecticut | Legal | Legal (subject to Farm Bill) | |
| Delaware | Medical cannabis only; adult use decriminalized | Restricted | Cannabis-derived CBD oil with THC concentration in excess of 0.3 percent is legal only with a medical license for specified conditions. |
| District of Columbia | Legal | Legal (subject to Farm Bill) | |
| Florida | Medical cannabis only; adult use not decriminalized | Restricted | Only hemp-derived CBD oils are currently legalized in Florida. |
| Georgia | Medical CBD oil only; adult use not decriminalized | Restricted | Cannabis-derived CBD oil is legal only with a medical license for specified conditions; oil must contain equal amounts of CBD and THC, and THC content cannot exceed 5.0 percent |
| Hawaii | Legal | Restricted | Only hemp-derived CBD oils are currently legalized in Hawaii. |
| Idaho | Illegal | Restricted | CBD is legal in Idaho as long as it does not have any traceable amount of THC. |
| Illinois | Legal | Legal (subject to Farm Bill) | |
| Indiana | Medical CBD oil only; adult use not decriminalized | Restricted | CBD is legal in Indiana as long as it does not have more than 0.3 percent THC. |
| Iowa | Medical CBD oil only; adult use not decriminalized | Restricted | Cannabis-derived CBD oil with THC concentration in excess of 0.3 percent is legal only with a medical license for specified conditions. |
| Kansas | Illegal | Restricted | CBD is legal in Kansas as long as it does not have any traceable amount of THC. Up to 5.0 percent THC content is permitted with a medical license for specified conditions. |
| Kentucky | Medical CBD oil only; adult use not decriminalized | Restricted | Only hemp-derived CBD oils are currently legalized in Kentucky. |
| Louisiana | Medical cannabis only; adult use decriminalized | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions. |
| Maine | Legal | Legal (subject to Farm Bill) | |
| Maryland | Medical cannabis only; adult use decriminalized | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions. Maryland has passed a law that will legalize the sale of adult use cannabis beginning July 1, 2023. |
| Massachusetts | Legal | Legal (subject to Farm Bill) | |
| Michigan | Legal | Legal (subject to Farm Bill) | |
| Minnesota | Medical cannabis only; adult use decriminalized | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions. |
| Mississippi | Medical cannabis only; adult use decriminalized | Restricted | Cannabis-derived CBD oil with THC concentration of up to 0.5 percent is legal with a medical license for specified conditions; must be obtained from the University of Mississippi. |
| Missouri | Legal | Restricted | Cannabis-derived CBD oil with THC concentration exceeding 0.3 percent is only legal with a medical license (no specified conditions). |
| Montana | Legal | Legal (subject to Farm Bill) | |
| Nebraska | Legal | Restricted | Only hemp-derived CBD is legal in Nebraska. |
| Nevada | Legal | Legal (subject to Farm Bill) | |
| New Hampshire | Medical cannabis only; adult use decriminalized | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions. |
| New Jersey | Legal | Legal (subject to Farm Bill) | |
| New Mexico | Legal | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions. |
| New York | Legal | Legal (subject to Farm Bill) | |
| North Carolina | Illegal | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions; qualifying patients and study subjects only. |
| North Dakota | Medical cannabis only; adult use decriminalized | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions. |
| Ohio | Medical cannabis only; adult use decriminalized | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions. |
| Oklahoma | Medical cannabis only; adult use not decriminalized | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions. |
| Oregon | Legal | Legal (subject to Farm Bill) | |
| Pennsylvania | Medical cannabis only; adult use not decriminalized | Restricted | CBD oil with THC concentration in excess of 0.3 percent is legal only with a medical license for specified conditions. |
| Rhode Island | Legal | Restricted | CBD oil with THC concentration in excess of 0.3 percent is legal only with a medical license for specified conditions. |
| South Carolina | Illegal | Restricted | CBD oil with THC concentration in excess of 0.9 percent is legal only with a medical license for specified conditions. |
| South Dakota | Medical cannabis only; adult use not decriminalized | Restricted | Only hemp-derived CBD oils containing less than 0.3 percent THC are currently legalized in South Dakota. |
| Tennessee | Medical CBD oil only; adult use not decriminalized | Restricted | CBD oil with THC concentration in excess of 0.9 percent is legal only with a medical license for specified conditions. |
| Texas | Medical CBD oil only; adult use not decriminalized | Restricted | CBD oils containing less than 1.0 percent THC are available to patients with qualifying conditions. |
| Utah | Medical cannabis only; adult use not decriminalized | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions. |
| Vermont | Legal | Legal (subject to Farm Bill) | |
| Virginia | Legal | Legal (subject to Farm Bill) | |
| Washington | Legal | Legal (subject to Farm Bill) | |
| West Virginia | Medical cannabis only; adult use not decriminalized | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions. |
| Wisconsin | Medical CBD oil only; adult use not decriminalized | Restricted | Cannabis-derived CBD oil is legal with a medical license for specified conditions. |
| Wyoming | Illegal | Restricted | Only hemp-derived CBD is legal in Wyoming. |
Sources: Forbes.com, DISA.com, Maryland.gov, and SouthDakotaCannabis.org.
It is important to note that even in states where cannabis and cannabinoids are legal or decriminalized, restrictions still apply. For example, while several states have now legalized adult use of cannabis, these states still have laws that restrict the amount of cannabis that individuals can possess and the number of plants (if any) they can grow in their homes. Public use, public impairment, possession in school zones, and driving under the influence of cannabis are all generally prohibited in states that have legalized cannabis and cannabinoids as well. Additionally, some states, such as Minnesota, have decriminalized certain cannabis-derived products but not others.
TABLE: An Overview of the Laws on Growing, Manufacturing, and Distributing Cannabis and Cannabinoids in All 50 States
The previous table provides an overview of the legality of possessing and using cannabis and cannabinoids in the United States. The table below covers the legality of growing, manufacturing, and distributing cannabis and CBD-based products at the state level. It is extremely important that business owners and prospective business owners address the implications of these laws carefully, as illegally growing, manufacturing, or distributing cannabis or CBD-based products can lead to serious criminal penalties.
As the laws governing the licensing of cannabis growing operations, dispensaries, and CBD-based businesses vary widely and are still largely in development, this table specifies whether there is a licensing process in place or under development only. To ensure compliance with the current laws and regulations in their states, all business owners should seek advice from a local lawyer.
| State | Cannabis Growing and Manufacturing Laws | Cannabis Distribution Laws | Cannabis and CBD-Based Business Licensing Information |
| Alabama | Felony offense for all amounts | Felony offense for all amounts | Alabama Hemp Program |
| Alaska | Misdemeanor or felony offense depending on amount (without license) | Misdemeanor or felony offense depending on amount (without license) | Alaska Marijuana License |
| Arizona | Felony offense for growing more than six plants or manufacturing more than two pounds (up to 12 plants at a personal residence with more than one adult) | Felony offense for sale of more than one ounce | Arizona Industrial Hemp License |
| Arkansas | Misdemeanor or felony offense depending on amount | Misdemeanor or felony offense depending on amount | Arkansas Hemp Program |
| California | Misdemeanor offense for growing six plants or more | Misdemeanor offense for any amount (if over 18 years old) | Department of Cannabis Control License |
| Colorado | Felony offense for growing more than six plants (without license) | Misdemeanor offense for selling four ounces or less, felony offense for all other amounts (without license) | Colorado Retail Marijuana License |
| Connecticut | Varying offenses depending on the number of plants or amount manufactured (without license) | Varying offenses depending on amount sold (without license) | Connecticut Adult-Use Cannabis Licensing Program |
| Delaware | Felony offense for all amounts | Felony offense for all amounts | Delaware Hemp Program |
| District of Columbia | Varying offenses depending on the number of plants or amount manufactured (without license) | Varying offenses depending on the amount sold (without license) | Washington D.C. Cannabis Licensing |
| Florida | Misdemeanor or felony offense depending on the number of plants or amount manufactured | Misdemeanor or felony offense depending on the amount sold | Florida Hemp Permit |
| Georgia | Felony offense for all amounts (without license) | Felony offense for all amounts (without license) | Georgia Access to Medical Cannabis Commission |
| Hawaii | Felony offense for all amounts (without license) | Felony offense for all amounts (without license) | Hawaii Office of Medical Cannabis Control and Regulation |
| Idaho | Felony offense for all amounts | Felony offense for all amounts | Idaho Office of Drug Policy |
| Illinois | Felony offense for five plants or more | Misdemeanor or felony offense depending on the amount sold | Illinois Industrial Hemp |
| Indiana | Misdemeanor or felony offense depending on the number of plants or amount manufactured | Misdemeanor or felony offense depending on the amount sold | Indiana Industrial Hemp |
| Iowa | Felony offense for all amounts | Felony offense for all amounts | Iowa Consumable Hemp Registration |
| Kansas | Felony offense for all amounts | Felony offense for all amounts | Kansas Industrial Hemp Applications |
| Kentucky | Misdemeanor offense for less than five plants (first offense); felony offense for all other amounts | Misdemeanor offense for less than eight ounces (first offense); felony offense for all other amounts | Kentucky Hemp Licensing Program |
| Louisiana | Varying offenses depending on the number of plants or amount manufactured (without license) | Varying offenses depending on the amount sold (without license) | Louisiana Department of Health Licensing |
| Maine | No penalties for three mature plants or up to 12 immature plants; varying offenses for all other amounts (without license) | Varying offenses depending on the amount sold (without license) | Maine Office of Cannabis Policy |
| Maryland | Felony offense for all amounts (without license) | Felony offense for all amounts (without license) | Maryland Medical Cannabis Commission |
| Massachusetts | No penalties for six plants; varying offenses for all other amounts (without license) | Varying offenses depending on the amount sold (without license) | Massachusetts Cannabis Control Commission – Licensing Process |
| Michigan | No penalties for less than 12 plants for personal use; varying offenses for all other amounts (without license) | Felony offense for all amounts (without license) | Michigan Cannabis Regulatory Agency |
| Minnesota | Misdemeanor offense for 42.5 grams or less; felony offense for all other amounts | Felony offense for all amounts | Minnesota Industrial Hemp License |
| Mississippi | Felony offense for all amounts, unless for personal use (without license) | Felony offense for all amounts (without license) | Mississippi Medical Cannabis Program |
| Missouri | Felony offense for all amounts (without license) | Felony offense for all amounts (without license) | Missouri Seed to Sale Program |
| Montana | No penalties for up to two plants; felony offense for all other amounts (without license) | Felony offense for all amounts (without license) | Montana Cannabis Control Division – Cannabis Licenses |
| Nebraska | Felony offense for all amounts | Felony offense for all amounts | Nebraska Hemp Licensing |
| Nevada | Felony offense for all amounts (without license) | Felony offense for all amounts (without license) | Nevada Cannabis Compliance Board |
| New Hampshire | Felony offense for all amounts (without license) | Felony offense for all amounts (without license) | New Hampshire Therapeutic Cannabis Program |
| New Jersey | Varying offenses for all amounts (without license) | No penalties for less than one ounce (first offense); varying offenses for all other amounts (without license) | New Jersey Cannabis Regulatory Commission |
| New Mexico | No penalties for up to six plants; felony offense for all other amounts (without license) | Felony offense for all amounts (without license) | New Mexico Cannabis Control Division |
| New York | No penalties for up to six plants (three mature); misdemeanor or felony offense for all other amounts (without license) | Misdemeanor offense for sale of 25 grams or less; felony offense for all other amounts (without license) | New York Office of Cannabis Management – Licensing |
| North Carolina | Felony offense for all amounts | Felony offense for all amounts | North Carolina Industrial Hemp Pilot Program |
| North Dakota | Misdemeanor or felony offense depending on amount (without license) | Felony offense for all amounts (without license) | North Dakota Medical Marijuana Program |
| Ohio | Misdemeanor or felony offense depending on amount | Felony offense for all amounts | Ohio Department of Agriculture Hemp Program and Ohio Medical Marijuana Control Program |
| Oklahoma | Misdemeanor or felony offense depending on amount (without license) | Felony offense for all amounts (without license) | Oklahoma Medical Marijuana Authority – Commercial Licenses |
| Oregon | Misdemeanor or felony offense depending on amount (without license) | Misdemeanor or felony offense depending on amount (without license) | Oregon Liquor & Cannabis Commission – Licensing |
| Pennsylvania | Felony offense for all amounts (without license) | Misdemeanor or felony offense depending on amount (without license) | Pennsylvania Department of Health – Resources for Dispensaries and Pennsylvania Hemp Program |
| Rhode Island | No penalties for growing six plants or less; felony offense for all other amounts (without license) | Felony offense for all amounts (without license) | Rhode Island Office of Cannabis Regulation |
| South Carolina | Felony offense for all amounts | Felony offense for all amounts | South Carolina Hemp Processor Application |
| South Dakota | Misdemeanor or felony offense depending on amount (without license) | Misdemeanor offense for sale of 0.5 ounces or less; felony offense for all other amounts (without license) | South Dakota Department of Revenue – Cannabis |
| Tennessee | Felony offense for all amounts (without license) | Felony offense for all amounts (without license) | Tennessee Department of Agriculture – Resources for Producers |
| Texas | Misdemeanor offense for four ounces or less; felony offense for all other amounts (without license) | Misdemeanor offense for seven grams or less; felony offense for all other amounts (without license) | Texas Medical Marijuana |
| Utah | Misdemeanor offense for one pound or less; felony offense for all other amounts (without license) | Felony offense for all amounts (without license) | Utah Industrial Hemp and Medical Cannabis Division |
| Vermont | No penalties for up to two plants (and up to four immature plants); felony offense for all other amounts (without license) | Misdemeanor offense for sale of less than 0.5 ounces; felony offense for all other amounts (without license) | Vermont Cannabis Control Board – Licensed Cannabis Establishments |
| Virginia | Varying offenses depending on the number of plants or amount manufactured (without license) | Felony offense for all amounts (without license) | Virginia Pharmaceutical Processors – Medical Cannabis and Virginia Industrial Hemp Program |
| Washington | Felony offense for all amounts (without license) | Felony offense for all amounts (without license) | Washington State Liquor and Cannabis Board – Cannabis Licensing |
| West Virginia | Felony offense for all amounts (without license) | Felony offense for all amounts (without license) | West Virginia Office of Medical Cannabis – Industry Permit Applications |
| Wisconsin | Felony offense for all amounts (without USDA license) | Felony offense for all amounts (without USDA license) | Wisconsin Hemp Resources |
| Wyoming | Misdemeanor offense for all amounts | Felony offense for all amounts | Wyoming Hemp Program |
Sources: Norml.org and links included above.
As you can see, the state laws on cannabis and cannabinoid cultivation, manufacture, and sale vary widely. While some states have taken an approach that promotes legalization, others are still tightly controlling the commercialization of cannabis and CBD-based products within their borders. While we have seen a strong trend toward legalization in recent times, it could still be several years (if not longer) until all states have programs in place that are designed to facilitate and promote legal cannabis and CBD-based businesses.
Above, we touched on the topic of delta-8 THC, and we noted that this cannabinoid specifically is seeing a high volume of synthetic manufacturing due to its limited natural quantities in cannabis and hemp. The federal government treats synthetics similarly to their natural alternatives (meaning that synthetic THC is also a Schedule I controlled substance), and most states do as well. However, as the Drug Policy Alliance (DPA) explains, this is a complex subject, and the 50 states’ approaches to synthetic THC have not been uniform. In many cases, the states are still yet to specifically address synthetic delta-8, although, as the DPA notes, “[m]ost states have also enacted criminal and civil penalties (and many others have pending legislation) for the sale of products that attempt to avoid being advertised as ‘synthetic drugs’ by claiming they are ‘not for human consumption.’”
As the DPA also notes, “manufacturers of synthetic cannabinoids can make small changes to the chemical formulas to skirt these laws, producing newer synthetic cannabinoids that have not yet been scheduled.” But, this can be a risky approach, both for manufacturers and their customers. As a result, for businesses (and prospective business owners) who are interested in selling delta-8, it is important to make sure they know the source of their products and that they can confidently sell them under their states’ laws.
It is also noteworthy that some states are taking a more hands-off approach to regulating cannabis and cannabinoids—and to regulating CBD-based products in particular. While many states require specific licensing in order to sell these products, some do not. Additionally, Wisconsin terminated its industrial hemp licensing program in 2022, deferring to the U.S. Department of Agriculture’s (USDA) hemp production licensing process. It will be interesting to see if other states take this approach as well in an effort to further encourage CBD-based commerce and promote uniformity across the United States.
Tax Treatment of Cannabis and Cannabinoids (CBD and THC)
For cannabis and CBD business owners, another important legal consideration is tax compliance. When states first started making the push toward marijuana legalization about a decade ago, there were serious questions about how businesses could meet their tax obligations without triggering a DEA investigation. Many business owners also had questions about whether they could deduct their business expenses, as tax laws generally do not allow deductions for illegal businesses.
While these remain concerns today, the Internal Revenue Service (IRS) and its state counterparts have provided some guidance. Additionally, thanks to the Farm Bill, businesses that sell hemp-derived cannabinoids are no longer “illegal businesses” at the federal level (as long as they comply with the Farm Bill’s restrictions and requirements). For example, as the IRS explains:
“While IRS Code Section 280E is clear that all the deductions and credits aren’t allowed for an illegal business, there’s a caveat: Marijuana business owners can deduct their cost of goods sold, which is basically the cost of their inventory. What isn’t deductible are the normal overhead expenses, such as advertising expenses, wages and salaries, and travel expenses, to name a few.”
At the state level, in the states that have legalized cannabis or CBD (or both), running an “illegal business” generally isn’t a concern when it comes to claiming the full benefits available under these states’ tax codes. Cannabis and CBD-based businesses can safely report their income (and they must do so), and they can claim all business deductions, credits, and exemptions that apply. However, federal tax compliance may still present risks, and neither the IRS nor the DEA has come out with a clear policy addressing how they intend to reconcile the federal government’s conflicting stances on supporting businesses operating in compliance with state law and enforcing the Controlled Substances Act’s prohibitions on Schedule I drugs.
What is clear, however, is that all cannabis and CBD-based businesses have at least the same tax obligations as all other businesses. This is true at both the state and federal levels. So, along with licensing and regulatory compliance, cannabis and CBD-based businesses must prioritize tax compliance as well. Failure to accurately report taxable income or pay tax on this income can lead to a state or federal tax audit; and, in many cases, this can lead to scrutiny of businesses’ other activities.
Ultimately, the most important thing to know about the state legalization of cannabis and cannabinoids is that the law is not uniform, and it is still continuing to evolve. While the majority of states are moving toward legalization, business owners and customers must be careful to ensure that they are making smart decisions based on the laws, rules, and regulations that apply in their state.
