Licensed cannabis retailers in Canada set a new monthly sales record in June of CA$517.8 million, or about $374.5 million USD. This exceeds the $372.4 million USD generated by California during the same month, which means that Canada — at least for the month of June — became the world’s largest cannabis market, according to SF Gate.

As the world’s second-largest country by land mass, Canada is far bigger than California, but the territories have similarly sized populations. But while California’s cannabis industry has struggled with high taxes, strict regulations, local bans, and competition with a rampant illicit market, the Canadian market has continued growing with new businesses and overseas export opportunities.

California currently has 3.7 cannabis dispensaries or delivery services per 100,000 people, according to the report, while Canada has 7.9 cannabis stores per 100,000 people.

Los Angeles-based cannabis consultant Hirsh Jain told SF Gate that California had all of the advantages it needed to become a global leader in cannabis reforms, “Yet poor policymaking has turned what should have been the world’s premier legal cannabis market into a cautionary tale.”

Previously, Michigan outpaced California in total legal cannabis sales in 2024, although the California market still generated more revenue that year.

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“The practical question isn’t whether this is something to celebrate, it’s whether your business is positioned to be a consolidator, an attractive acquisition target or something different.”

By Christopher B. Lynch, Dickinson Wright PLLC

There are a lot of rumors and misinformation out there about what the April 23 federal marijuana rescheduling order means. Some will tell you a story about legalization finally arriving. Others will tell you that not much is changing. But if you look closely, there’s another interesting story emerging: one of careful planning, swift action and targeted consolidation.

Since Acting Attorney General Todd Blanche moved Food and Drug Administration (FDA)-approved and state-licensed medical marijuana products from Schedule I to Schedule III of the Controlled Substances Act, the businesses that I think are best positioned to take advantage of rescheduling aren’t popping champagne—they’re positioning themselves to take advantage of new first-mover opportunities.

That, more than any headline about “federal legalization,” is the real story of rescheduling’s first year: not a national market opening overnight, but a faster, harder sorting of who survives in the one we already have.

NewLake Capital Partners CEO Anthony Coniglio put it well: “Each year brings predictions of a major M&A wave in cannabis. And so far, each year has mostly delivered tuck-in deals rather than transformative consolidation.”

We’re seeing deals that are smaller, more frequent and often faster with less diligence. Two months after Blanche’s order, the Department of Justice opened an expedited administrative hearing to consider rescheduling marijuana in full, including adult-use. That hearing has now concluded, and a recommendation could come at any time.

But for license holders and investors making decisions today, the more immediate question isn’t when the Drug Enforcement Administration (DEA) and DOJ finish the bigger rulemaking. It’s whether their business is built to be an acquirer, an acquisition target or neither, in a race that’s already started.

What the order actually does

The April order reclassified medical marijuana that is FDA-approved or state-licensed, moving it out of Schedule I—reserved for drugs deemed to have no accepted medical use —and into Schedule III, the category for substances with accepted medical use and an abuse potential lower than Schedule I or II drugs. Blanche limited the order to medical products, citing U.S. international drug treaty obligations as the reason adult-use marijuana stayed on Schedule I.

Licensed operators got a 60-day window to opt into a priority DEA registration pathway.

Many took advantage of that pathway, and we’re seeing some of the results: in June, Trulieve restructured to separate its 206 DEA-registered medical dispensaries from its adult-use business and became the first U.S. cannabis company to list on the New York Stock Exchange proof that registration can be a path to markets and resources this industry has been shut out of for a decade.

Tax relief under Section 280E—which prevents deductions for operations that sell Schedule I and II drugs—is the clearest near-term benefit of registration, but there are arguments for federal trademark protection and other prospective benefits.

Where the broader rescheduling case stands today

The bigger question of full rescheduling was the subject of DOJ’s separate administrative hearing, which ran from June 29 through July 15. Final briefs were filed August 19, and Chief Administrative Law Judge Derek C. Julius is now finalizing the record ahead of a recommendation.

That recommendation won’t be law; it goes to DEA Administrator Terrance Cole, who, together with Blanche, will decide whether to issue a final rule. There’s no statutory deadline to rely on, so there could be an update next week or next year—and that’s assuming none of the legal challenges cause further delay.

What began as a single petition challenging the rescheduling move by Smart Approaches to Marijuana has become three consolidated lawsuits in the D.C. Circuit, plus a coalition of doctors, activists and the attorneys general of Indiana and Nebraska (Louisiana has since withdrawn).

And if you need proof that of the value of the opportunities that rescheduling can bring, just look to the claims by MMJ International Holdings, which argues it now faces competitors reaching Schedule III for free after it spent years (and significant capital) pursuing FDA approval the traditional way to get a market advantage.

The plaintiffs in the consolidated lawsuits have asked the court to stay the order while the case proceeds. The DOJ opposed that, and plaintiffs filed their reply on July 17. Two operators, MedPharm Iowa and Tri-Mountain Pure, have since moved to intervene in defense of the order.

A ruling granting a stay could freeze DEA registrations and potentially suspend benefits that operators are banking on.

Why “rescheduled” doesn’t necessarily mean “legalized”

If you operate under a state medical marijuana license, hold dual medical and adult-use authorizations or are evaluating an investment in this industry, treat this moment as the start of a compliance project, not the arrival of a legalized market—we still have many more questions than answers.

State law compounds this, since no two states built their systems alike. The right strategy in Maryland may be wrong in Michigan or Washington, and the ground could shift again fast if the D.C. Circuit grants a stay, or if the ALJ’s recommendation or the eventual final rule reshapes the framework.

Some states could tie state licensure to DEA registration—Oklahoma already has, telling license holders to get DEA registration or risk losing their state permits next year.

Layer on top of all that new DEA regulation of license holders, which could mean on-demand facility access and inspection authority, DEA security requirements, mandatory disclosure of employees’ Social Security numbers and potential exposure for co-located medical and adult-use businesses.

This industry could look very different twelve months from now.

Striving for pole position

Rescheduling alone isn’t going to turn leaden cannabis equities into gold overnight, and I don’t think institutional capital is going to dive into the market immediately—that still requires congressional legislation such as the SAFER Banking Act and operators with the earnings and balance sheets to earn institutional trust.

But in the meantime, rescheduling is drawing interest from pharmaceutical, agricultural and consumer products companies that stayed on the sidelines while marijuana sat on Schedule I and well-positioned operators are already using this window to plan restructurings, seek new partners, acquire distressed assets and target new markets.

This is a genuinely significant moment in the fifty-year history of federal cannabis policy, and one that I think will reward careful, jurisdiction-specific planning and analysis.

The practical question isn’t whether this is something to celebrate, it’s whether your business is positioned to be a consolidator, an attractive acquisition target or something different, and the race for pole position is already underway.

As the smoke clears on rescheduling, start preparing now to take advantage of the opportunity.

Christopher B. Lynch is a Member in Dickinson Wright PLLC’s Seattle office, where he practices in the firm’s Mergers and Acquisitions and Cannabis Law groups.

Photo by Kyle Jaeger.

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The WNBA has officially removed marijuana from its prohibited substances list while also laying out rules for how players can invest in and promote cannabis companies.

At the same time, however, the women’s basketball league is also adding several psychedelics to the list of banned drugs.

As part of negotiations between the Women’s National Basketball Players Association and WNBA earlier this year, the league offered to remove cannabis from its drug testing protocol. Now, under the terms of the long-form version of a new Collective Bargaining Agreement (CBA) signed by representatives of both sides, marijuana no longer appears on the prohibited substances list, whereas under the prior CBA it was included under “Drugs of Abuse.”

Prior WNBA policy treated cannabis significantly more restrictively compared to the NBA, as well as multiple other professional sports leagues beyond basketball that have also adopted reforms amid the state legalization movement. First-time offenses generally resulted in treatment referrals, but repeated violations could lead to fines and suspensions.

Under the new rules, players could still be subject to testing for cannabis if they enter the league’s Drugs of Abuse Program, if they are found to have been under the influence “while engaged in activities” for the team or the league or if they have “a dependency or other related issue involving the use of marijuana.”

Those who are referred to a marijuana treatment program and do not comply with the rules would be subject to fines of $300 per day. Any player who exhibits a “pattern of behavior that demonstrates a mindful disregard for her treatment responsibilities” or tests positive for marijuana would face escalating penalties such as a $3,000 fine or suspension for three or more games.

Players could be subject to “reasonable cause” drug testing or administrative proceedings if they are convicted of a felony involving the distribution or marijuana.

At the same time WNBA and the players union are loosening up on marijuana, however, it has also added specific entries for the psychedelics dimethyltryptamine (DMT), ibogaine, psilocybin and psilocin to the prohibited substances list for the first time.

Also prohibited under the new policy are synthetic cannabinoids, which the document describes as “including, but not limited to, Delta-8 tetrahydrocannabinol (also called delta-8-THC)) and their By-Products.”

Separately, the CBA also addresses players’ investment in and promotion of companies that sell marijuana and hemp-derived CBD products.

It says that players can hold a direct or indirect ownership interest in marijuana companies as long as the interest is passive (meaning no management, governance, voting, or executive role or other operational rights or roles” and they have less than a 50 percent stake in the business.

There is also a requirement for the company to operate “in compliance with all applicable laws and regulations,” and the document specifically notes that players may not hold any ownership interest in a business “that produces or sells any products containing any Prohibited Substance or any other Schedule I or II substance under the Controlled Substances Act.”

While marijuana has been classified under Schedule I of the Controlled Substances Act since 1970, the Trump administration in April announced that it was moving state-licensed medical cannabis, as well as any cannabinoid products approved by the Food and Drug Administration, to Schedule III, where WNBA’s prohibition would presumably no longer apply. Broader reclassification of marijuana to Schedule III will be the topic of a hearing scheduled to begin later this month.

WNBA’s rules for CBD-specific companies are looser than those for marijuana businesses in that they don’t require passive interest or less than 50 percent ownership. The document also says that players can actively promote and endorse that sell CBD products. If the products are produced by a marijuana company, however, players will first need to receive permission from the league and the union.

“Without limiting such approval right of the WNBA and the Players Association, the promotion or endorsement by a player of a CBD Product that is produced or sold by a Marijuana Company (A) will not be permitted if such CBD Product is associated by the Marijuana Company with any Marijuana Product (e.g., the CBD Product is marketed or sold under a brand that also includes or refers to Marijuana Products) or if any proposed promotion creates a reasonable risk of public confusion with any Marijuana Product, and (B) if approved, shall be subject to any terms and conditions imposed by the WNBA and/or the Players Association.”

“For clarity, any investments in or promotions or endorsements of entities that produce or sell products containing a form of cannabis (including, for clarity, a CBD form of cannabis) not expressly permitted…are prohibited,” the agreement that was finalized on May 22 says. “In the event a player engages in a prohibited investment, promotion, or endorsement, then, without limiting other WNBA rights or remedies, the player shall be required to promptly dispose of her ownership interest in the prohibited investment and/or immediately terminate her participation in the prohibited promotion or endorsement, as applicable.”

The league gave some indication about its willingness to accept the changing tides around cannabis in 2024, when the WNBA team New York Liberty entered into a partnership with a CBD beverage company.

Meanwhile, Brittney Griner—a WNBA player who was previously incarcerated in Russia over possession of marijuana—pulled out of an appearance at a cannabis event last year after discovering what she felt was a threatening message in her hotel room.

Conference attendees had hoped to hear from Griner about the nature of her incarceration in Russia, which helped fuel international debate about cannabis prohibition laws domestically and abroad.

How other sports leagues have navigated marijuana policy for players amid the reform movement.

NBA, for its part, removed marijuana from the banned substances list for players in 2023, and it also freed them up to invest in and promote cannabis companies.

The NFL, meanwhile, reached an agreement with its players union in 2024 to further reform its marijuana policies, significantly reducing fines for positive tests while increasing the allowable THC threshold for players. About four years after NFL ended the practice of suspending players over cannabis or other drugs as part of a collective bargaining agreement, the league again revised its Substances of Abuse Policy and Performance Enhancing Substances Policy.

The National Collegiate Athletic Association (NCAA) in 2024 voted to remove marijuana from its banned substances list for Division I players.

The reform builds on a 2022 change that increased the allowable THC threshold for college athletes, aligning NCAA’s rules with those of the World Anti-Doping Agency (WADA).

In 2024, Nevada regulators officially adopted a rule change that will protect athletes from being penalized for using or possessing marijuana in compliance with state law.

The head of the U.S. Anti-Doping Agency (USADA) blasted the “unfair” ban on marijuana for athletes competing in international sport events, including the Olympics that were underway in Paris at the time of the comments.

USADA CEO Travis Tygart said it was “disappointing” that WADA has maintained the cannabis prohibition based on what he considers a misguided justification.

WADA did carry out a review into its marijuana policy at the request of USADA and the White House Office of National Drug Control Policy (ONDCP) following the controversial suspension of U.S. runner Sha’Carri Richardson, who was barred from participating in the Olympics in 2021 after she tested positive for THC. Richardson said she used cannabis to cope with the recent passing of her mother.

While UFC announced in late 2023 that it was formally removing marijuana from its modified banned substances list for athletes, the league notified participants that the reform didn’t apply under California State Athletic Commission (CSAC) rules.

UFC advised fighters that they could be subject to a $100 fine by CSAS if they tested over 150 nanograms of THC per milliliter ahead of the UFC 298 event that took place in February.

In 2024, NFL announced it was partnering with Canadian researchers on a clinical trial to test the safety and efficacy of CBD for pain management and neuroprotection from concussions—key issues for many football players who experience injuries as part of the game.

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