The Daily Toke

July 18, 2026

# Federal Rescheduling Accelerates While States and Congress Chart Conflicting Paths

President Trump's December 2025 executive order on medical marijuana is now moving from policy to implementation. In April 2026, the Justice Department and DEA announced immediate rescheduling of FDA-approved marijuana products and state-regulated medical marijuana from Schedule I to Schedule III, with a broader administrative hearing set for June 29, 2026. 🚀 THIS IS COOL This action follows decades of federal gridlock: the FDA found credible scientific support for marijuana's use in treating chronic pain (affecting nearly 1 in 4 American adults), nausea and vomiting from chemotherapy, and anorexia related to medical conditions. The move recognizes that over 30,000 licensed healthcare practitioners across 43 jurisdictions are already recommending medical marijuana to more than 6 million registered patients—a reality that federal policy had ignored for over 50 years despite the National Institute on Drug Abuse and Department of Health and Human Services both supporting rescheduling.

💰 MONEY MOVES The rescheduling decision carries immediate economic and research implications. Moving marijuana from Schedule I—defined as having no medical use and high abuse potential—to Schedule III clears regulatory pathways for pharmaceutical research, manufacturer licensing, and clinical trials that federal law had blocked since the 1970 Controlled Substances Act. Acting Attorney General Todd Blanche framed the shift as delivering "on President Trump's promise to expand Americans' access to medical treatment options," while DEA Administrator Terry Cole emphasized that the action maintains "strict federal controls against illicit drug trafficking." The phased approach—immediate rescheduling of FDA-approved products and state-licensed medical marijuana, followed by a formal hearing for broader reclassification—gives researchers and patients clarity while the administrative process continues.

Meanwhile, Congress remains fractured on cannabis policy. In July 2026, Senate Democrats filed legislation to fully legalize marijuana under federal law, positioning their bill against Trump's reclassification-only approach. The distinction matters: rescheduling allows research and medical access but maintains federal prohibition, while legalization would remove cannabis from the Controlled Substances Act entirely. This split reflects a deeper tension. Forty states plus D.C. already have medical marijuana programs, yet federal law technically classifies those patients and their doctors as violating federal statute—a legal contradiction the Supreme Court has noted. In the 2026 Farm Bill debate, the House Agriculture Committee approved the legislation on a 34-17 vote but rejected amendments to delay a pending federal ban on hemp-derived THC products scheduled for November 2026, frustrating hemp industry stakeholders and advocates who argue for comprehensive regulation rather than outright prohibition.

State-level momentum tells a different story. 🚀 THIS IS COOL A recent study found that opioid use dropped in states that legalized recreational cannabis—a public health outcome worth noting given that prescription opioids kill over 16,000 Americans annually. Yet state-level progress remains uneven. Pennsylvania's adult-use legalization efforts appear stalled again, while Oklahoma's governor declared the state's medical marijuana program "failed" despite robust patient enrollment. These contradictions expose a market struggling with fragmented regulation: Missouri fined cannabis cultivators for using out-of-state seeds, and Ohio's Attorney General sued multistate operators for anti-competitive practices. The lack of federal consistency creates enforcement chaos that only legalization or uniform rescheduling can resolve.

🤔 THINK ABOUT IT Federal drug policy has now reached an inflection point. Schedule III status allows medical research on a substance that has never caused a recorded overdose death in human history, while Schedule I maintains that same substance has no medical use—a contradiction now being formally tested in federal court. The Trump administration's reclassification strategy sidesteps full legalization but opens the research floodgates and acknowledges state medical programs as legitimate. Senate Democrats want to go further. Congress can't agree on hemp-derived THC. And forty states have already made medical marijuana legal, forcing the federal government to either catch up or enforce prohibition against millions of patients and doctors. The June 2026 DEA hearing will likely determine which direction federal policy moves next—and whether state-level reality finally forces Washington to choose between reclassification, legalization, or maintaining a three-decade legal fiction that cannabis has no medical use.

July 18, 2026

# Cannabis Industry Posts Record Profitability as Schedule III Rescheduling Unlocks $280E Tax Relief

💰 MONEY MOVES The U.S. cannabis industry's largest multi-state operators reported their most profitable quarter on record in Q1 2026, with Trulieve posting $287 million in revenue and a 35% adjusted EBITDA margin, while Curaleaf generated $324.2 million in revenue and $70.1 million in net income. These results mark the first earnings season under Schedule III classification for state-licensed medical cannabis operators—a regulatory shift that fundamentally reshapes the economics of an industry that has operated under crippling federal tax penalties for more than six years. The Trump administration's April 2026 reclassification of medical marijuana removed Internal Revenue Code Section 280E, the provision that historically forced cannabis sellers to pay federal income tax on gross profit rather than net income, effectively pushing operators' tax rates into the 70-75% range. With 280E relief now applying to qualifying medical operations retroactively from January 1, 2026, those effective tax rates are collapsing toward the standard 21% corporate rate.

🚀 THIS IS COOL Trulieve's 59% gross margin and $100 million adjusted EBITDA represent performance metrics on par with well-managed consumer packaged goods companies—a meaningful step up from the high-40s margins that have historically defined the sector. The company generated $56 million in operating cash flow and $42 million in free cash flow during the quarter while ending the period with $353 million in cash on the balance sheet. Trulieve operates 240 retail dispensaries and more than four million square feet of cultivation and processing capacity across the United States, making it the largest U.S. MSO by store count, and has filed DEA registration applications for 206 of its state-licensed medical retail locations to capitalize on the rescheduling opportunity. CEO Kim Rivers credited the reclassification as enabling new growth pathways: "With 206 dispensaries and over 3.5 million square feet of production serving medical patients, Trulieve is well positioned to explore new opportunities enabled by rescheduling."

Curaleaf's international expansion is providing a structural revenue cushion against domestic market saturation. The company's Q1 2026 results showed international revenue reaching $47.2 million, up 35% year-over-year, now accounting for roughly 15% of total revenue—a higher international mix than any U.S. peer. The company secured registration for standardized cannabis preparations in Spain in July 2026 and completed its acquisition of German medical cannabis producer Four 20 Pharma during the quarter, consolidating its European platform at a time when Germany's medical cannabis market is the single fastest-growing legal cannabis market globally. While Curaleaf's domestic gross margin compressed 220 basis points year-over-year to 49%, management attributed the pressure to ongoing wholesale price compression in mature adult-use markets like Massachusetts and Arizona, partially offset by efficiency gains at cultivation and retail levels.

🤔 THINK ABOUT IT The critical caveat for the broader industry is that adult-use and recreational marijuana remain Schedule I, leaving Section 280E fully in effect for those operations and creating immediate cost allocation complexity for dual-license multi-state operators. For investors managing an estimated $15 billion in deployed cannabis capital, Q1 2026 earnings determined portfolio valuations and merger activity—and the rescheduling catalyst remains the dominant overhang. The DEA's broader rescheduling decision, which would move all cannabis from Schedule I to Schedule III, remains stalled in administrative review with no firm timeline, though Acting Attorney General Todd Blanche announced an expedited hearing process beginning June 29, 2026. If broader rescheduling lands, operators serving adult-use markets would finally access the same tax deductions available to every other legal business in America—potentially unlocking an estimated $200-250 million in annual cash flow for the largest operators alone. The question isn't whether cannabis is safer than alcohol or prescription opioids—zero recorded cannabis overdose deaths in human history versus 95,000 annual alcohol deaths and 16,000+ annual prescription opioid deaths. The question is how much longer a Schedule I classification can survive in an industry generating hundreds of millions in quarterly profits while serving 428,000 full-time equivalent jobs across cultivation, processing, retail, and ancillary services.

July 18, 2026

# Hemp Ban Watch: House Locks in November 2026 Deadline for Intoxicating Products

The House of Representatives voted 224-200 on April 30, 2026, to pass the Farm, Food, and National Security Act of 2026, and in doing so, rejected any attempt to extend relief for the $28 billion intoxicating hemp market. The vote marks the final legislative step before the federal ban on delta-8 THC, THCA flower, HHC, and other hemp-derived intoxicating products takes effect on November 12, 2026—a deadline that was originally set in November 2025 when President Trump signed the Continuing Appropriations Act, 2026. For millions of Americans purchasing these products from gas stations, smoke shops, and online retailers in states where traditional cannabis remains illegal, the clock is now officially ticking.

The legal mechanism closing this market is straightforward but consequential. The 2018 Farm Bill defined hemp solely by its delta-9 THC content—no more than 0.3 percent by dry weight—which created an obvious loophole. Companies quickly figured out how to extract CBD from legal hemp, synthesize it into delta-8 THC, or breed plants high in THCA (tetrahydrocannabinolic acid, which converts to psychoactive THC when heated), and sell intoxicating products in states where marijuana remained illegal, with zero age verification, testing requirements, or quality controls. The House-passed 2026 Farm Bill rewrites this definition to use total THC—including THCA and all other psychoactive cannabinoids—capping hemp at 0.3 percent total THC by dry weight. Finished products are simultaneously limited to 0.4 milligrams of combined total THC per container. 💰 MONEY MOVES Industry estimates suggest this single regulatory change eliminates roughly 95 percent of currently available hemp products and potentially displaces an unregulated market that some analysts valued at $28 billion annually.

The March 5 House Agriculture Committee vote (34-17 in favor) and the subsequent April 30 floor vote (224-200) both reflected efforts by some members to extend or delay the ban, but neither gained traction. The committee spent more than 20 hours marking up the bill, and multiple amendments to push back the November 2026 implementation date failed. This means the industry now has approximately seven months from the date of the House vote to clear inventory, rebrand products to comply with the 0.4 milligram cap, or shut down operations entirely. A bipartisan coalition of 39 state and territory attorneys general had pushed Congress to close the loophole in October 2025, citing concerns about unregulated products reaching consumers and confusion among law enforcement whose testing methods cannot reliably distinguish delta-9 THC from THCA.

🤔 THINK ABOUT IT The federal government is banning a plant-derived product with zero recorded overdose deaths in human history while alcohol kills approximately 95,000 Americans annually and remains perfectly legal. Prescription opioids kill roughly 16,000 people per year. Cannabis kills zero. So which one is Schedule I again? Veterans in particular face real consequences from this ban—many have been using legal delta-8 and THCA products to manage PTSD, chronic pain, and anxiety in states where traditional cannabis remains illegal. When November 12 arrives, these consumers will have fewer legal options and may be pushed toward unregulated black market alternatives or back toward pharmaceuticals that carry their own documented risks.

The Senate has not yet voted on a companion bill (S. 2256), though the Senate Appropriations Committee approved similar hemp restrictions in their FY2026 Agriculture appropriations language as of July 2025. Once the Senate acts, the bill will head to the President's desk. The November 12, 2026, date is now locked into federal law via the Continuing Appropriations Act signed in November 2025, meaning even if the Senate delays or modifies the 2026 Farm Bill language, the ban itself will take effect as originally scheduled. Legal hemp products that will remain permitted post-ban include pure CBD with no more than 0.4 milligrams of THC per container, industrial hemp fiber and seeds, and non-intoxicating hemp derivatives used for textiles or other non-consumable purposes.

July 18, 2026

Researchers presented groundbreaking results from the LiBBY trial at the Alzheimer's Association International Conference in London this week, revealing that a specially formulated combination of THC and CBD dramatically reduces agitation in hospice-eligible dementia patients. The Phase 2 randomized, double-blind, placebo-controlled study tracked 120 participants with advanced Alzheimer's disease and other late-stage dementias, delivering a novel oral formulation containing 2 mg THC and 100 mg CBD twice daily. 🚀 THIS IS COOL Nearly 90% of patients receiving the treatment showed significant improvement in agitation by week 12, compared to just 23.6% of those receiving placebo—a response rate rarely seen in psychiatric trials for dementia. Within just two weeks, participants on the active treatment experienced a 6.27-point greater reduction in agitation scores on the Cohen-Mansfield Agitation Inventory, a clinically meaningful improvement that continued strengthening through the end of the study period.

Lead investigator Jacobo Mintzer, MD, from the Medical University of South Carolina, emphasized the historic significance of these findings. "This is a robustly positive, randomized, controlled trial that represents a major step forward in treatment for a population that has been historically overlooked in clinical research," Mintzer stated. The trial specifically enrolled hospice-eligible participants with a mean age of 80 and conducted all clinical visits in patients' homes, avoiding the additional distress of hospital travel. Agitation affects roughly half of all advanced dementia patients and has been notoriously difficult to treat—previously relying on heavy sedatives that carry their own serious risks. Caregivers reported striking behavioral changes: one participant's son, Dennys Gonzalez, noted that his 87-year-old father, Emilio, became dramatically less aggressive and more cooperative with daily tasks like dressing while on the treatment.

The safety profile proved reassuring for most participants. Overall adverse event rates were comparable between treatment and placebo groups (46.7% versus 42.4%), and researchers determined that none of the serious adverse events were related to the study medication itself. However, the UCI MIND analysis noted a higher mortality rate in the THC/CBD treatment arm than in placebo—a detail worth monitoring in future Phase 3 trials, though this may reflect the extremely frail population being studied rather than direct drug toxicity. Mintzer and his team emphasized a critical distinction: 🚀 THIS IS COOL these clinical benefits cannot be replicated with over-the-counter cannabis products purchased from dispensaries, which vary dangerously in purity, dosing, and composition. The formulation tested in LiBBY is specifically engineered for medical use and not currently available for recreational or clinical use outside this research setting.

These results arrive alongside broader recognition of women pioneers whose foundational research made cannabinoid therapeutics possible. Allyn Howlett, PhD, discovered the CB1 cannabinoid receptor in 1988—a discovery that opened the entire field of endocannabinoid system research and fundamentally changed how scientists understand the brain's molecular pharmacology. Cecilia Hillard and Heather Bradshaw have built on that foundation, revealing how cannabinoids regulate immune function, mood, stress responses, and even lipid signaling in reproductive neurology. Their decades of work established the scientific legitimacy that allows trials like LiBBY to move forward. 🤔 THINK ABOUT IT A class of compounds with zero recorded overdose deaths in human history has been Schedule I for over 50 years, restricting research and keeping patients from accessing treatments that could dramatically reduce suffering in their final months—while prescription opioids kill over 16,000 Americans annually and alcohol kills approximately 95,000. The LiBBY data suggest that targeted cannabinoid therapy deserves its place in the end-of-life care conversation, pending peer review and larger Phase 3 confirmation.

July 18, 2026

# Texas Cannabis Rules Shift Again: Smokable Ban Holds, But Enforcement Remains a Question Mark

Texas's hemp market has spent the past nine months in regulatory whiplash, and the latest court decision suggests that turbulence isn't over. On March 31, 2026, the Texas Department of State Health Services implemented a sweeping ban on smokable hemp products—THCA flower, pre-rolls, live resin—by redefining how the state calculates total THC. The new "Total THC Rule" counts THCA (the non-intoxicating precursor to delta-9) at a conversion rate of 0.877 toward the total, which means most raw cannabis flower now exceeds the 0.3% legal threshold, even if it technically contains only 0.28% delta-9 by weight. The rule survived a temporary injunction issued in May that had allowed hemp retailers to keep selling flower and concentrate, and a Texas appeals court decision in early June cleared the way for the regulations to take effect. But here's the catch: the state agency still hasn't said whether it will actually enforce them.

The regulatory confusion traces back to Governor Greg Abbott's September 2025 executive order—a move that sidestepped a deadlocked legislature where Abbott wanted regulation while lawmakers pushed toward an outright ban. Abbott directed DSHS and the Texas Alcoholic Beverage Commission to tighten hemp rules using existing authority rather than wait for new legislation. The smokable ban wasn't the only change. 💰 MONEY MOVES Retailer and manufacturer licensing fees increased sharply under the new rules, which could drive up consumer prices or force smaller operators out of business. Edible hemp products—gummies, oils, tinctures—remain legal with stricter packaging and testing requirements. The regulations also followed a federal roadmap: the U.S. Department of Agriculture proposed a similar THCA-counting rule during Trump's first term, and Texas agriculture regulators had been counting THCA in hemp tests since 2020, so the state framed the March 31 change as consistent with existing federal and state precedent.

What makes June's court decision remarkable is its ambiguity. The appeals court denied the hemp industry's emergency request to keep the temporary injunction in place, which technically unblocked the enforcement rules. But the decision itself doesn't determine whether those rules are legal—the underlying lawsuit against them continues. DSHS responded by saying it's "still determining how to proceed" given there's no final disposition yet. That leaves hemp retailers in limbo. Lukas Gilkey, CEO of Hometown Hero, an Austin-based hemp retailer and manufacturer who helped establish the Texas Hemp Business Council as the lead plaintiff in the lawsuit, acknowledged the chaos: "This is really going to impact the small stores. If they have flower that qualifies under the rules, then they're allowed to sell it. If they don't, then theoretically, yes, they would have to stop." But without clear enforcement guidance, retailers don't know which products actually qualify or whether they're taking legal risk by staying open.

The medical cannabis side of Texas's market has moved in the opposite direction—expanding. Under House Bill 46 and updated regulations finalized in December 2025, the state's Texas Compassionate Use Program added nine new conditional dispensary licenses, expanded qualifying conditions for patients, and raised THC limits on medical products. Physicians can now propose additional qualifying conditions. The expansion signals state recognition that cannabis has therapeutic value for certain patients, even as the recreational hemp market faces restriction. 🤔 THINK ABOUT IT Texas is simultaneously tightening rules on smokable hemp products sold at smoke shops while approving higher-THC medical cannabis for patients—which suggests the state's real concern might be less about THC itself and more about regulatory control and tax revenue.

💰 MONEY MOVES The financial stakes are substantial. Hemp retail is a multi-billion-dollar unregulated market that has thrived in legal gray zones across the country. Higher licensing fees and product bans will consolidate that market toward larger, compliant operators who can absorb regulatory costs—or eliminate it entirely if enforcement proceeds. Meanwhile, Texas Agriculture Commissioner Sid Miller broke ranks in November 2025, calling for the federal government to repeal or overhaul the new federal hemp ban (which caps THC at 0.4 milligrams per container), signaling that at least some state officials see the federal restrictions as economically damaging. The June court decision leaves the door open for the hemp industry's legal challenge to proceed, but every week of uncertainty costs retailers inventory decisions, attorney fees, and lost sales.

What happens next depends on whether DSHS decides to enforce rules that courts haven't yet validated. New THC regulations are also set to take effect July 31, targeting synthetic cannabinoids like delta-8 and THCP. For now, Texas has created a system where medical cannabis patients can access higher-THC products legally, while recreational hemp consumers face a narrowing marketplace and retailers operate in regulatory fog. The Legislature tried to decide this question in 2025 and failed. The courts are still working through it. And the state agency tasked with enforcement is waiting to see who wins before it decides what to actually do.