If you run a dispensary, a grow, a CBD shop, or a hemp product line, 2026 has handed you two federal changes that sound like they point in opposite directions. Medical marijuana got lighter treatment. Hemp products got a lot tighter. Both affect how your business is insured, and neither one does what the headlines suggested.
What the April rescheduling order actually moved
The final order, published in the Federal Register on April 28, 2026 (91 FR 22714) and effective that day, placed two narrow categories in Schedule III:
- FDA-approved drug products containing marijuana.
- Marijuana covered by a state medical marijuana license to manufacture, distribute, or dispense for medical purposes.
The order says plainly that any other form of marijuana remains in Schedule I. That includes every adult-use sale, every adult-use grow, and every consumption lounge serving the adult-use market.
Two practical pieces came with it. The order set up an expedited DEA registration for state medical licensees, and those who applied within 60 days of publication can keep operating under their state license while DEA reviews the application. And because Section 280E only disallows deductions for trafficking in Schedule I or II substances, the order states that medical licensees are no longer subject to it. Adult-use operations still are, and if you run both, how you split the books is a question for your tax advisor.
What it didn't change
- Adult-use is still Schedule I. A separate DEA proceeding on moving all marijuana to Schedule III held hearings this summer, and final briefs were filed in early November. As of this writing there's no recommendation from the judge and no final rule.
- Schedule III is still a controlled substance. Rescheduling isn't legalization. It's a different set of federal rules.
- Banking is unchanged. Cannabis banking legislation was reintroduced in the Senate in June 2026 (S. 4942) but has not become law, so many operators still handle more cash than a typical retailer.
Why your coverage still lives in the surplus lines market
Here's the part most owners assume rescheduling fixed. It didn't. Standard insurance forms keep cannabis out through exclusion endorsements, and those endorsements define cannabis by what's in the product (THC and other cannabinoids), not by which federal schedule it sits in. ISO's commercial general liability cannabis exclusions, for example, come in three versions: a full exclusion (CG 40 14), one with a hemp exception (CG 40 15), and one with hemp and lessor's risk exceptions (CG 40 16). A medical dispensary's product is still cannabis under that wording on April 29 the same as on April 27.
So most cannabis risks are still written in the excess and surplus (E&S) lines market. E&S policies can be well built, but they're written on the carrier's own forms, wording varies widely, and surplus lines policies generally aren't protected by state guaranty funds if the insurer fails. That puts more weight on reading the form and on the financial strength of whoever is behind it. Our cannabis business insurance page walks through the core lines.
The federal hemp redefinition
The hemp change came from Public Law 119-37, signed November 12, 2025. It rewrote the federal definition of hemp in ways that hit most intoxicating and many non-intoxicating hemp products:
- The 0.3% limit now applies to total THC, including THCA, on a dry weight basis, not just delta-9 THC.
- Products containing cannabinoids that can't be naturally produced by the plant, or that were synthesized or manufactured outside the plant, are excluded from hemp.
- Intermediate products over 0.3% combined total THC and similar cannabinoids are excluded.
- Final products with more than 0.4 milligrams combined total THC and similar cannabinoids per container are excluded. Many full-spectrum CBD products can exceed that.
Anything excluded is treated as marijuana under federal law.
The law was set to take effect November 12, 2026. In September, Public Law 119-103 pushed most of it to December 11, 2026. The exclusion for cannabinoids that can't be naturally produced by the plant took effect November 12 as originally scheduled. Bills to delay the rest by two years have been introduced, but none had passed as of mid-November, and FDA still hadn't published the cannabinoid lists or the "container" guidance the law called for. The December date is tied to a funding deadline, so watch for another extension, but plan for December 11.
The gotcha: your product liability policy follows the federal definition
This is the trap for CBD and hemp stores and hemp and CBD manufacturers. Many hemp product liability policies cover products that meet the federal definition of hemp, or exclude anything that doesn't. The hemp exceptions on standard cannabis exclusions carry their own legality conditions, so a product that becomes unlawful can fall outside them too.
On December 10 your delta-8 gummies, THCA flower, or full-spectrum tincture may fit that wording. On December 11 the policy hasn't changed, but the federal definition it points to has, and the same product can land outside your coverage. That includes claims from product already on shelves or already sold. Nobody sends you an endorsement to warn you. Review your product list against the new limits and your policy wording now, and talk to your attorney about what you can still lawfully sell.
Crop, property, and cash
- Crop and property. For cultivators, counting THCA means more hemp crops can test over the limit. A crop destroyed because it tested hot, or seized by order of a government authority, is generally not a covered property loss. Plant and stock coverage needs to be specifically scheduled, and inventory that becomes federally non-compliant raises its own coverage questions.
- Cash and theft. Without banking reform, crime insurance still matters. Crime policies often set conditions for cash on premises and in transit, such as safes, alarms, or armored transport, and missing a condition can cost you the claim.
- Fines and penalties. Regulatory fines and penalties are generally uninsurable, so compliance itself is the protection there.
Our approach
At Cory Washington & Co., we start with your license type and your product list, not a generic cannabis package. For medical licensees, we confirm your coverage reflects your registration status and what you actually sell. For adult-use and dual operators, we read the cannabis exclusions and E&S wording line by line. For hemp and CBD businesses, we're comparing product liability wording against the December 11 definition now, before it bites, and flagging anything that falls outside it.
For the broader picture, see our guide to insurance for cannabis businesses. If you'd like your policies reviewed against these changes, request a quote or a policy review.
Frequently Asked
Did marijuana rescheduling make cannabis federally legal?
No. The April 2026 federal order moved only two categories to Schedule III: FDA-approved drug products containing marijuana and marijuana covered by a state medical marijuana license. Everything else, including all adult-use marijuana, remains a Schedule I controlled substance, and Schedule III substances are still federally controlled. A broader proceeding to move all marijuana to Schedule III was still pending as of November 2026.
Does rescheduling mean my cannabis business can get standard insurance now?
Not in most cases. Standard policies typically exclude cannabis through endorsements that define cannabis by THC and cannabinoid content, not by federal schedule, so rescheduling doesn't remove them. Most cannabis risks are still placed in the excess and surplus lines market, where policies generally are not backed by state guaranty funds.
When does the new federal hemp definition take effect?
Most of it takes effect December 11, 2026, after Congress delayed the original November 12, 2026 date in a September 2026 funding law. The exclusion for products containing cannabinoids that can't be naturally produced by the cannabis plant took effect on November 12 as scheduled. Bills to delay the rest further have been introduced but none had become law as of mid-November 2026.
Will my CBD or hemp product liability policy still cover me after December 11?
Only if your products still fit the policy's wording. Many hemp and CBD product liability policies cover products that meet the federal definition of hemp or exclude products that don't. After December 11, a product over 0.4 milligrams of total THC per container, or containing synthesized cannabinoids, falls outside that definition and may fall outside your coverage too.
This article is general information for business owners, not insurance or legal advice, and does not bind or alter coverage. Policy terms, eligibility, and pricing vary by carrier and state — confirm specifics with our licensed team before making decisions.