Michael D. Schwamm – Cannabis Industry

December 18, 2025December 18, 2025 by Jim Hearon

Trumps Signs Executive Order to Reschedule Cannabis: A Dramatic Shift in Federal Cannabis Policy

On December 18, 2025, President Trump signed an Executive Order to expedite the administrative process of rescheduling cannabis, marking one of the most dramatic shifts in federal cannabis policy in the past few decades.

Under current federal law, cannabis is classified as a Schedule I controlled substance—the most restrictive category of drugs. Schedule I controlled substances are defined as having no accepted medical use and a high potential for abuse. Schedule I substances include inherently dangerous drugs, such as heroin and LSD.

The Executive Order directs the Attorney General to expedite rescheduling cannabis from Schedule I to Schedule III. Schedule III controlled substances are defined as having a lower potential for abuse and currently accepted medical uses, including substances such as ketamine and Tylenol with codeine.

The rescheduling process is handled through the Drug Enforcement Agency (“DEA”) and the Department of Health and Human Services (“HHS”). In 2022, at the direction of President Biden, DEA and HHS commenced the rescheduling process. Both HHS and the Department of Justice issued recommendations to reschedule cannabis, but the process eventually stalled, and there has been no movement on rescheduling since January 2025 until today.

Rescheduling cannabis to Schedule III will not only allow for medical research into cannabis, one of President Trump’s main selling points in issuing the Executive Order, but may also provide long awaited relief to cannabis operators, owners, investors, and other industry participants.

One of the most prominent and immediate benefits of rescheduling will be the removal of cannabis from the clutches of Section 280E of the Internal Revenue Code. Section 280E disallows standard business deductions for businesses engaged in the trafficking of Schedule I or II controlled substances. Once cannabis is rescheduled, cannabis operators will likely decrease their current tax liabilities and improve their financial viability.

What rescheduling will NOT do is open up the door for interstate commerce and may not immediately increase the number of federally chartered banks open to banking in the industry as many are still waiting for passage of the SAFER Banking Act or similar legislation. FinCEN guidance is not impacted by the Executive Order, which means that onerous reporting and other obligations for banks will remain in place. As such, any impact to banking will likely be minimal, as banks’ compliance obligations will remain the same until such time that the SAFER Banking Act or similar legislation is passed by Congress.

The Executive Order also seeks to expand research and access to CBD products. This comes on the heels of the funding bill passed to end the government shutdown, which included a controversial provision to close the loophole created by the 2018 Farm Bill and reclassify low-THC hemp products as controlled substances. The ban on low-THC hemp products goes into effect in November 2026.

While not full federal legalization, today’s Executive Order could mark the beginning of the end in draconian federal cannabis policy. The rescheduling process will take some time, and the Executive Order could still be challenged by Congress and stake holders in the cannabis industry, but operators should remain cautiously optimistic.

July 30, 2025July 30, 2025 by Michael D. Schwamm

NY OCM Issues Key Correction on 500 Foot Distance School Zone Requirement

The New York Office of Cannabis Management (OCM) has issued a significant correction to its previous guidance on how to measure the required 500-foot distance between retail cannabis dispensaries and schools. This change has immediate and potentially wide-ranging implications for both pending applicants and currently licensed dispensaries across New York State.

Prior Guidance
OCM had long advised applicants that the 500-foot proximity restriction should be measured in a straight line from the center of the nearest school entrance to the center of the dispensary’s main entrance—only considering entrances regularly used by patrons. In addition, this rule applied only when the dispensary and school were located on the same street or road.

Updated Measurement Standard
OCM recently stated that this method was incorrect and inconsistent with Cannabis Law § 72(6) which states that “No cannabis retail licensee shall locate a storefront within five hundred feet of a school grounds as such term is defined in the New York Education Law or within two hundred feet of a house of worship.” Section § 409(2) of the Education Law defines “school grounds” as “any building, structure and surrounding outdoor grounds, including entrances or exits contained within a public or private pre-school, nursery school, elementary or secondary school’s legally defined property boundaries as registered in a county clerk’s office.”

Reading the two sections together, OCM has adopted a revised standard that requires the licensee to measure a straight line from the dispensary entrance to the nearest point on the school property line —regardless of whether they are on the same road. This new and broader interpretation significantly expands the areas considered off-limits.

Current Impact
According to the OCM, the revised guidance will affect the following applicants/licensees (subject to change upon further analysis) :
• 44 pending applicants whose proposed locations may now be noncompliant.
• 108 licensed dispensaries.

Over 80% of the affected parties are in New York City, while the remainder are spread across the rest of the State.

OCM Support for Applicants and Licensees

The applicants that don’t comply with the distance requirements must find new, compliant locations to proceed with their applicants.

To assist affected applicants, OCM and Empire State Development have created a $15 million Applicant Relief Program to help cover:

Costs of finding a new location.
Capital improvements made to the original (now non-compliant) location

Applicants may receive provisional licenses while they secure new locations.

Support for Licensees

For those affected licensed dispensaries, many of which already operating, the Governor’s Office and OCM are pursuing legislation to allow these businesses to remain at their current locations.

However, as there is the risk this legislation may not pass and OCM cannot renew licenses at locations that do not comply with the new interpretation of Cannabis Law § 72 (6), licensees will need a new compliant location before the Cannabis Control Board can finalize license renewal.

May 2, 2023May 2, 2023 by Michael D. Schwamm

Does SAFE Banking Have a Chance

Great analysis of the chances that the SAFE Banking Act becomes law from Howard Penney at Hedgeye Risk Management:

The MSOs rallied 7% last week on the back of a bipartisan group of lawmakers reintroducing the SAFE Banking Act. The bill has a 0% chance of passing without hearing from Senator Mitch McConnell. In reality, SAFE does not change much for the industry. Other reform elements around 280e taxes, interstate commerce, and an updated Cole memo are more impactful to the industry’s fundamentals. Unfortunately, lawmakers in Washington, DC, have had difficulty passing modest cannabis reform for several reasons, including the following:

- Playing Politics: The cannabis reform issue has become highly politicized, with Democrats typically favoring legalization and Republicans generally opposing it. This is because cannabis reform has become a highly controversial topic, with politicians more concerned with political posturing and pleasing their base than with finding common ground; this can make it difficult to pass any meaningful reform measures.
- No consensus: Even among people who favor cannabis reform, there may be differing opinions regarding the strategy that should be utilized. Some people may push for marijuana to be fully legalized, while others may merely favor incremental reform measures such as decriminalization or the legalization of medical marijuana. Because of this, it may be challenging to arrive at a consensus that has the potential to gain enough support to enact legislation.
- A seemingly insurmountable conflict: even though several states have decriminalized cannabis in some form, the drug is still Schedule 1, making it against the law on the federal level. Because of this, there is a potential for legislation at the state and federal levels to contradict one another, making it more challenging to enact effective rules and regulations.
- Lobbying and special interests: The cannabis sector in prohibition is in its infancy and rapidly undergoing change; as a result, a significant number of conflicting interests and stakeholders are involved. Lobbying efforts by these organizations (esp. pharma, tobacco, and alcohol) can sway legislators’ attitudes about the matter at hand and make it more challenging to enact reform measures that might not serve the interests of the lobbying organizations.

In general, achieving cannabis reform in D.C. is a complicated subject incorporating various elements, including political, social, and economic considerations. Even while there may be widespread popular support for cannabis law reform, D.C. is unlikely to change the challenging process actually to bring about significant change.

April 17, 2023 by Michael D. Schwamm

New York City Introduces Several Local Laws Aimed at Helping to Control the Unlicensed Cannabis Industry in NYC

Two pieces of legislation were recently introduced in the New York City Council aimed at controlling the unlicensed cannabis market in New York City.

The first bill bill would prohibit knowingly leasing commercial premises to a tenant who uses the premises for distribution or sale of cannabis or cannabis products without a license. The first time that an unlicensed cannabis seller is found to be operating in leased commercial premises, the Sheriff, Police Department, or any other relevant agency would issue a warning to the owner of the premises. If an unlicensed cannabis seller is later found to be operating in the same commercial premises, the owner would be liable for civil penalties. https://legistar.council.nyc.gov/LegislationDetail.aspx?From=Alert&ID=6165428&GUID=33A0F77B-950A-4A9E-8033-F0316A346404&Options=ID%7CText%7C&Search=cannabis

The second bill would require the Department of Health and Mental Hygiene to collaborate with the Department of Consumer and Worker Protection and any other relevant agency to create and implement a public awareness campaign on the dangers of purchasing cannabis or cannabis products from unlicensed cannabis retailers. The campaign would target minors and young adults and focus on the risks of consuming cannabis products adulterated with synthetic cannabinoids and other harmful substances and the risk of purchasing such products from unlicensed cannabis retailers .https://legistar.council.nyc.gov/LegislationDetail.aspx?ID=6165413&GUID=59A6FC8D-E54A-43D2-B621-906AA1B706A2&Options=&Search=

March 22, 2023 by Michael D. Schwamm

New York State Advertising Rules Effective Today

Effective March 22, 2023, New York’s cannabis advertising rules are now in place. These rules aim to protect public health, particularly minors, and ensure that cannabis advertising is truthful and not misleading.

- Cannabis advertisements cannot be displayed within 1,000 feet of a school or daycare center.
- Ads cannot target individuals under 21 years of age or depict minors, toys, characters, or cartoons.
- Advertising cannot claim cannabis is safe or healthy or that it has curative or therapeutic effects unless supported by substantial evidence.
- Ads cannot contain false, misleading, or deceptive information.
- The warning statement “This product may be intoxicating and may be habit-forming” must be included in all cannabis advertisements.
- Promotions, such as giveaways or coupons, are prohibited except in licensed dispensaries.
- Advertising cannot be displayed on any public transportation or property owned or leased by the state or local government.
- All ads must include the New York State Department of Health’s “Know the Facts” educational campaign website address.

September 6, 2022 by Michael D. Schwamm

Could the NY conditional adult use retail dispensary program (CAURD) be in jeopardy?

A Maine law requiring all owners of medical marijuana businesses to be residents of the state was recently struck down by the US Court of Appeals for the First Circuit, which ruled that the statute is a violation of the “Dormant Commerce Clause” of the United States Constitution, which prohibits states from passing legislation that restricts interstate trade. In its opinion (Northeast Patients Group et al. v. United Cannabis Patients and Caregivers of Maine, the Appellate Court upheld a lower court ruling that the residency requirement is an unconstitutional restriction on interstate trade.
Under the Maine’s medical marijuana program, all directors or officers of a licensed medical cannabis dispensary are required to be residents of the state. Interestingly, Maine had already dropped its residency requirement for its adult-use market following an earlier legal challenge that was also based on the Dormant Commerce Clause but it sought to keep it in place for its medical cannabis program.
This could be a problem for NY’s new adult use cannabis program, as of the requirements is that the potential licensees must have been arrested (or are related to someone who was arrested) for a marijuana related crime in New York and must also have been a New York resident at the time of the arrest. This could like be deemed a residency requirement and thus lead to challenges not only to any individual licenses grants but the entire CAURD program.
Equally or possibly even more problematic is the fact that this ruling could also open the door to legal challenges to a variety of other State laws banning the exporting or importing of cannabis from other states, as the same rationale invalidating the residency requirements could come, as disallowing cannabis exports and imports between states could be construed as similarly placing unreasonable restrictions on interstate commerce.

April 14, 2022 by Michael D. Schwamm

NY State Department of Taxation Creates New Webpage with Information on the Adult-use Cannabis Excise Tax.

New York State Department of Taxation and Finance has created a new webpage with information on the Adult-use cannabis products excise tax.

This cannabis excise tax will apply to both:

- Distributors of adult-use cannabis products on sales of retailers, and
- Adult-use retailers on sales to retail customers.

If you plan to sell adult use cannabis you must register with the Department of Taxation (which is in the process of developing an online registration process and other guidance. More information is available on the NYS Department of Taxation website (https://www.tax.ny.gov/bus/auc/)

NY Adult

March 23, 2022 by Michael D. Schwamm

Key Cannabis Industry Projections and Trends from the New Frontier Data’s Recently Released 2022 U.S. Cannabis Report

- With a combined 148 million Americans living across those 19 adult-use states, and 248 million living across the 39 medical-use states, 44% of American adults now have access to legal adult use cannabis, and nearly three-quarters (74%) of the country now have access to legal medical cannabis in some form. Conversely, 89 million Americans (26% of the U.S. population) live in states where possession and use of cannabis remain illegal.

- The US legal marijuana industry could surpass $72 billion by 2030 (assuming that an additional 18 states will legalize adult-use marijuana or comprehensive medical marijuana programs by then (with the current legal states reaching $57 billion by 2030), up from $32 billion this year.

- Self-reported usage rates have risen sharply since 2012, and if this is sustained, the number of U.S. consumers will grow from 47 million in 2020 to 71 million by 2030.
- U.S. medical markets continue to expand, with the number of registered patients forecast to increase to 5.7 million in 2030 (1.6% of the adult population).

- Assuming legalization in all 18 potential markets by 2030, 47% of total demand would be met by the legal cannabis purchases, up from 27% in 2021, indicating continued disruption of illicit markets.

- Despite strong state-level momentum, the near-term prospects for federal reform are dim, but a limited measure, like cannabis banking reform, is possible following the 2022 mid-term elections.

March 11, 2022 by Deanna J. Lucci

New York’s “Seeding Opportunity Initiative” Opens up Adult-Use Cultivator License Applications to Hemp Farmers on March 15 and Introduces Proposed Regulations that Will Favor Those With Past Marijuana Convictions for Retail Dispensary Licenses

On March 10, New York State’s cannabis regulators filed proposed regulations for conditional adult-use retail dispensary regulations. The public will have 60 days to provide comment on the proposed regulations before the Cannabis Control Board votes on them.

The proposed regulations place “justice-involved” individuals – those who have been convicted for a marijuana-related offense and their family members – at the front of the line for retail dispensary applications. To assist those applicants, Gov. Kathy Hochul has proposed a $200 million budget that, if approved by the Legislature next month, would be used to help find, secure and renovate storefronts for the dispensaries. The state’s goal is for the dispensaries operated by “justice-involved” individuals to open by the end of 2022, with other dispensaries to follow in early 2023. New York’s approach differs from other states that have legalized cannabis in that it is attempting to address head-on the struggles that social equity license applicants often face in raising capital and starting a business in a highly-regulated industry. Chris Alexander, the executive director of the state’s Office of Cannabis Management, said he expects 100-200 licenses to go to “justice-involved” individuals.

Under the “Farmers First Program,” the application period for adult-use cultivator licenses will also open up on Tuesday, March 15 and end on June 30, 2022. Gov. Hochul signed legislation last month that created a new Adult-Use Conditional Cultivator License, authorizing eligible hemp growers to apply for a license to grow cannabis containing over 0.3% THC for the upcoming adult-use market. To be eligible to apply, the hemp grower must have been authorized to grow hemp under the Department of Agriculture and Markets Industrial Hemp Research Pilot Program and meet certain other requirements. These conditional licenses make it possible for farmers to grow cannabis in the 2022 growing season.

With these moves, the Seeding Opportunity Initiative seeks to establish a supply chain from New York State farmers to social equity retailers.

The general regulation package for cannabis licenses is expected to be released in May.

February 28, 2022 by Michael D. Schwamm

New York Conditional Cultivation License – Advanced Preparation (What You Can Do Now To Be Ready)

As we noted is our blog post earlier this week, New York recently adopted legislation to allow licensed hemp farmers to grow and process cannabis for the adult use market with the aim to have product available once retail sales are permitted.

While the New York Office of Cannabis Management has yet to release the form of application (and any implementing regulations), that doesn’t mean that potential applicants should sit idly by and wait. In reviewing the legislation, its clear that there is plenty of work that can be done now. Continue reading “New York Conditional Cultivation License – Advanced Preparation (What You Can Do Now To Be Ready)”