News Roundup: Week 2025-07: Cannabis Crossroads: New Laws, Tax Hikes & Federal Uncertainty

Week of 15 Feb, 2025

Covered states: Alabama, Idaho, Michigan, Minnesota, Mississippi, New Jersey, Ohio, South Dakota.

As some states embrace cannabis, others are doubling down on restrictions. This week, we cover South Dakota’s push to reduce drug penalties, Idaho’s harsh new cannabis fines, and Michigan’s plan to impose a massive 32% wholesale tax on marijuana. Meanwhile, Ohio wants to double its cannabis tax, New Jersey aims to fast-track medical dispensaries into the recreational market, and Alabama & Mississippi crack down on hemp-derived THC. Plus, we explore how new federal leadership could impact cannabis laws nationwide.

 

 

 

SOUTH DAKOTA

 

South Dakota lawmakers are considering a major shift in the state’s drug laws. Senate Bill 83, which recently passed the Senate Judiciary Committee, would reduce the penalty for first- and second-time drug ingestion offenses from a felony to a misdemeanor. The bill, introduced by Republican Senator Tamara Grove, aims to lower incarceration rates and focus on treatment rather than punishment.

 

South Dakota is the only state where failing a drug test alone can lead to a felony conviction. Supporters argue that this policy traps people in cycles of addiction and poverty while contributing to the state’s high incarceration rate. The state is currently planning an $825 million expansion of its prison system due to overcrowding, raising concerns about the cost of incarceration for nonviolent drug offenses.

 

If passed, SB 83 would require offenders to complete probation and substance abuse treatment instead of serving time in prison. While the bill does not change South Dakota’s cannabis laws, it could signal a shift in how the state handles drug-related offenses. Opponents worry that reducing penalties may weaken deterrence and pose public safety risks.

 

The bill now moves to the full South Dakota Senate for further debate.

 

IDAHO

 

Idaho is poised to reinforce its reputation as one of the strictest states on marijuana policy. A bill that would impose a minimum $300 fine on individuals caught with three ounces or less of cannabis is advancing to the state Senate for a vote. House Bill 7, which cleared the state House last week in a 54 to 14 vote, moved forward along party lines in the Senate Judiciary and Rules Committee, with Republicans supporting the measure and Democrats opposing it.

 

The legislation reflects Idaho’s firm stance against marijuana, even as neighboring states embrace legalization. Supporters, including law enforcement agencies and conservative policy groups, argue that the state must maintain a strong deterrent against cannabis use. Opponents, however, warn that the law would disproportionately harm individuals who use cannabis for medical purposes. Beyond the immediate legal implications, the measure underscores Idaho’s resistance to cannabis legalization, a stance that could deter potential investment in a future medical or recreational market.

 

MICHIGAN

Michigan Governor Gretchen Whitmer has unveiled a controversial plan to impose a 32% wholesale tax on recreational cannabis, a move aimed at raising up to $470 million annually for road repairs. The proposed levy would be added to the state's existing 10% excise tax and 6% sales tax, making Michigan's cannabis taxation among the highest in the nation.

The measure is part of a broader 3 billion DOLLAR  infrastructure initiative, which also includes tax hikes on corporations, digital advertisements, and nicotine products. While Whitmer argues that the plan aligns cannabis taxation with existing tobacco product taxes, industry leaders warn that such a steep increase could cripple Michigan’s $3.3 billion cannabis market.

Critics say the tax hike could drive up retail prices, with estimates suggesting the average price of an ounce of cannabis could rise by over $22, potentially fueling illicit market activity—a problem already seen in high-tax states like California.

The proposal now heads to the Michigan Legislature, where it faces strong opposition from cannabis advocates and industry leaders. Will Michigan follow through with one of the highest cannabis taxes in the country, or will the industry push back hard enough to force a compromise? Stay tuned as the debate unfolds.

 

And now, a word from our partner - Buds Group: 

 

MINNESOTA

 

Minnesota's Office of Cannabis Management has launched the Can Renew Community Restoration Grants, a $1 million initiative designed to support communities disproportionately affected by past cannabis prohibition policies. The grants will fund projects in economic development, public health, violence prevention, youth services, and legal aid, but cannot be used for cannabis business operations. Applications close on March 24, 2025, with awards announced in the spring of 2025

NEW JERSEY

A new bill introduced in the New Jersey Senate could shake up the cannabis industry by allowing medical dispensaries to transition into the recreational market without needing approval from local governments. If passed, the legislation—led by Senate President Nicholas Scutari—could serve as a blueprint for other states struggling with local opposition to cannabis expansion.

The bill challenges the status quo in New Jersey, where roughly two-thirds of municipalities have opted out of allowing recreational dispensaries despite the state legalizing adult-use cannabis in 2020. The proposed law would bypass these local bans, enabling medical dispensaries to start selling to adult-use customers immediately. Industry advocates argue that this measure is necessary to fix a sluggish licensing process that has stunted market growth since recreational sales began in April 2022. Meanwhile, critics claim it undermines local control and forces cannabis businesses into towns that deliberately chose to prohibit them.

This move could have national implications, as many other states face similar roadblocks to cannabis expansion due to municipal bans. Across the U.S., states like California, Michigan, and Massachusetts have seen retail growth slowed by local opposition, even after legalization. New Jersey’s approach—if successful—could inspire other lawmakers to explore ways to override local bans in favor of broader market access.

Another key component of the bill is streamlining New Jersey’s cannabis licensing by setting strict approval deadlines, addressing delays that have stalled business openings. It also helps struggling medical dispensaries by allowing them to reclassify excess inventory for recreational sales, though this raises concerns about medical product availability. If passed, the law could serve as a national model for overcoming local roadblocks and balancing medical and recreational markets. 

 

OHIO

Ohio Governor Mike DeWine has proposed a significant tax increase on recreational marijuana, doubling the rate from 10% to 20% to help fund law enforcement, jail construction, and public services. His budget plan also seeks to remove tax revenue from municipalities that host dispensaries, redirecting those funds to state programs instead. Additionally, DeWine supports reducing THC potency limits and banning outdoor cannabis smoking

 

ALABAMA + MISSISSIPPI

In a major crackdown on hemp-derived THC products, Alabama and Mississippi are moving to restrict or ban popular cannabinoids like Delta-8, Delta-9, and Delta-10—which are often sold in gas stations and convenience stores.

Mississippi’s House Bill 1502, recently passed by the state House, aims to regulate these products by setting THC limits, enforcing age restrictions, and requiring product testing. Lawmakers say some products exceed federal THC limits, creating an unregulated "recreational marijuana market." While the bill doesn’t ban these products, it introduces stricter rules that could limit availability and raise costs for businesses.

Meanwhile, Alabama is taking a harsher approach. Senate Bill 132 would classify hemp-derived THC as a controlled substance, effectively making it illegal. Supporters argue this will close legal loopholes and improve public safety, but business owners and medical users warn it could wipe out the state’s hemp industry and leave consumers without alternative health products.

If passed, Alabama’s ban could take effect by October 2025, while Mississippi’s tighter regulations may reshape the market rather than eliminate it. 

And now… a word from our partner:

TRUMP APPOINTEES

 

The federal landscape for cannabis policy is entering a period of uncertainty as two key political appointments—Robert F. Kennedy Jr. as U.S. Secretary of Health and Human Services and Terrance Cole as the new Drug Enforcement Administration (DEA) chief—signal potentially conflicting approaches to cannabis regulation.

 

Kennedy, a longtime advocate for marijuana legalization, now takes a more cautious stance, emphasizing a need to "follow the science" when determining cannabis policy. His confirmation as Secretary of Health and Human Services places him at the center of federal research efforts on marijuana’s effects, particularly as 25 states have already embraced legalization. While Kennedy acknowledges the harms of criminalization, he has raised concerns about high-potency cannabis products and their potential risks to consumers. His influence on research and regulation could lead to tighter controls, potentially affecting the cannabis industry’s compliance landscape, medical accessibility, and product availability.

 

Meanwhile, the appointment of Terrance Cole as DEA chief under President Donald Trump presents a challenge for cannabis reform. A former DEA official and Virginia public safety secretary, Cole has a history of opposing marijuana legalization. His appointment casts doubt on the Biden-era effort to reschedule marijuana from a Schedule I to a Schedule III substance, a change that would ease restrictions on banking, taxation, and research for cannabis businesses. Cole’s past statements, including warnings about cannabis-related mental health risks and youth exposure, suggest he may be inclined to stall or abandon the rescheduling process entirely.

 

The industry now finds itself at a crossroads. If Kennedy’s evidence-driven approach results in more research supporting cannabis’ medical benefits, there could be momentum for policy shifts. However, Cole’s authority over the DEA’s classification decisions may limit any progress on rescheduling, maintaining the current legal and financial challenges for cannabis businesses.

 

For now, cannabis remains entangled in a complex political battle, where scientific inquiry, regulatory caution, and ideological resistance collide. The coming months will determine whether federal policy moves toward reform or remains entrenched in prohibition-era restrictions.