Oregon’s New Cannabis Laws: 2026 Edition

Sine die came for Oregon’s 2026 legislative session last Friday, March 6^th. I previewed the roster of cannabis bills in play back on February 12^th. Two of them passed; two of them failed. Below is a recap of the action, with links to each bill in the headers.

HB 4139 (FAILED)

This was the session’s omnibus cannabis bill, which I explained had a rough start due to various disagreements between the marijuana and hemp lobbies. On February 16^th, HB 4139 was shuttled to the Ways and Means Committee and never heard from again—a fate that befalls many bills in that committee, especially in short sessions.

The upshot is that we won’t see a variety of new police powers arrogated to state agencies, and we won’t get key definitions on hemp terms. Nor will we see a tax on the sale of intoxicating hemp items in Oregon. For a fuller description of what was at stake here, check out my prior post, or the engrossed version of HB 4139 that died in Ways and Means.

HB 4142 (PASSED)

This one was referred to as the “hospice bill” and also “Ryan’s Law.” It was named for Ryan Bartell, a terminal cancer patient who found relief through medical cannabis. I previously explained that HB 4142 expands the definition of “debilitating medical condition” for the medical use of marijuana, to include “the need for hospice, palliative care, comfort care or other symptom management, including [comprehensive] pain management.” That language stayed intact, with the only addition being the word “comprehensive.”

The law applies to hospice programs, residential facilities and palliative care settings, but exempts hospitals and their affiliated clinics. It also protects facilities and staff from state criminal liability for possessing, delivering, or manufacturing medical marijuana for patients. And it prohibits the Oregon State Board of Nursing from disciplining nurses for discussing medical cannabis with patients. All good stuff.

Assuming Governor Kotek either signs or doesn’t veto this bill, it becomes operative on January 1, 2027. Qualifying facilities are required to have written policies in place by June 30, 2027 for the procurement, storage and administration of medical marijuana. By December 31, 2027, facilities must make educational training available to staff. I have no reason to believe Governor Kotek won’t support this bill. It follows similar legislation in California from 2021, and it sailed through the session without controversy.

HB 4162 (PASSED)

Here’s what I wrote on LinkedIn some three weeks ago, regarding this bill:

True story 🙄🙄. HB 1462 was brought by the Local UFCW 55. They are attempting to repeal a law that took effect via a ballot measure that the Union itself initiated. Read that again.

UFCW first tried to push the law through legislatively, a few years back. But the Union couldn’t get traction due to Office of Legislative Counsel findings that the concept was UNCONSTITUTIONAL.

UFCW then pushed a recall effort against one of the opposing legislators, and started gathering signatures for a ballot measure to pass the unconstitutional law.

Oregon voters approved it, not appreciating the flaws. I and others criticized the measure for obvious reasons and said it should be challenged. That predictably happened, and UFCW/Oregon was routed at District Court. Case is now on appeal for some reason.

Now, rather than face another unfavorable ruling (Ninth Circuit), UFCW is asking the legislature to unwind what lawmakers and others told it not to do in the first place.

You don’t have to be anti-union (I’m not) to appreciate how asinine this is. Big waste of time and taxpayer money here in Oregon. I would like this to get some press.

That’s enough said, probably. We can expect a dismissal of the pending Ninth Circuit appeal sometime soon.

SB 1548A (FAILED)

This was styled as a “public health” bill that proffered additional edibles packaging and dispensary siting requirements. I viewed the bill as unnecessary and wasteful, which I imagine was the industry consensus. I also wasn’t surprised to see it falter, even as it got some traction in its journey through a few committees.

As with any of these failed bills, SB 1548A could always pop up again next session, as a stand-alone bill or in some other format. Hopefully it doesn’t, though.

Conclusion

Stay tuned for Governor Kotek’s signature on HB 4142 and HB 4162. If Kotek doesn’t sign or veto either bill by April 17^th, 2026, each bill becomes law automatically. We’ll also see some agency rulemaking around HB 4142, likely beginning this fall. As always, we’ll continue to update on any major developments. Onwar

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Belushi’s Farm and Blues Brothers are serving up Hash Burger, the Leafly Strain of the Year

Turn up the volume for Hash Burger from Belushi’s Farm and Blues Brothers—the flavor packed-headliner that has been crowned the Leafly Strain of the Year for 2025. This isn’t just a strain — it’s a full-on jam session. Hash Burger hits with bold, gassy funk layered over savory earth and a peppery kick that lingers […]

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Spectacular delta-9 and kratom deals for spring

This spring, the focus is on fresh, innovative formats that fit seamlessly into an active lifestyle.

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What the 2026 Federal Hemp Ban Means for Unsold Hemp Inventory

Most commentary on the “hemp ban” included in the November funding bill has focused on two related questions: (1) which products and activities may become unlawful on November 12, 2026; and (2) whether Congress will materially amend or delay the ban before then.

I recently discussed another consequence operators should be considering as the deadline approaches: bankruptcy eligibility. But focusing only on insolvency planning misses a much more immediate operational problem: inventory.

Many hemp operators are currently holding large volumes of unsold material. At the same time, portions of the domestic cannabinoid manufacturing sector are already contracting. Some manufacturers are shutting down, others are reducing intake, and many are unlikely to purchase new raw material as November approaches. The closer we get to November without any change or extension to the law, the more unsold inventory will be at risk of destruction rather than sale. The predictable result is that a significant amount of compliant hemp may have no viable domestic buyer before the legal landscape changes.

There is, however, a potential solution receiving far less attention than it should: exporting that material to markets where demand still exists.

Why November 12 creates a domestic market failure

The November 12 deadline is not just a regulatory change. It is a market-structure event.

If the law takes effect as written, hemp plant material exceeding the new statutory threshold of 0.4 mg of total THC will effectively become unlawful to transport across state lines. In addition, operators in states without a closed-loop internal (intrastate) hemp market may be unable to participate in local commerce at all. Even for material cultivated lawfully beforehand, downstream purchasers will not want to hold inventory that may soon become legally risky to process, store, transport, or resell. Businesses operating in states without intrastate markets will be particularly exposed, and even robust state markets are likely to prioritize in-state sourcing to ensure supply stability after November 12.

Recent reporting that Chicago’s United Center has begun selling Señorita and RYTHM hemp-derived THC beverages at certain events illustrates the point. Those products are associated with Illinois cannabis operator, Green Thumb Industries, and their production and distribution appears structured to occur entirely within a single state. As long as Illinois and local law remain unchanged, those beverages can continue to be sold because no interstate transport is required (assuming no other applicable federal law will prohibit sales at the United Center). Opportunities like these will only be available to cultivators and producers that operate in states with intoxicating hemp programs. Those that operate in states that prohibit such products won’t be so lucky.

For operators whose business model depends on interstate distribution, this creates a classic end-of-regulatory-cycle dynamic:

• processors stop buying
• manufacturers draw down existing inventory
• wholesalers delay purchases
• prices collapse
• cultivators hold unsold stock

In other words, the problem for many operators will not be compliance but liquidity. Starting material that was lawful to grow may simply become commercially stranded.

Why the EU matters

Unlike the rapidly changing U.S. consumable hemp market, many European Union jurisdictions regulate hemp differently. Several EU countries permit the importation of raw hemp plant material. Once imported, goods may circulate within the EU and, in some cases, move into non-EU markets such as the United Kingdom.

These markets often value U.S. hemp for consistency and production scale. As domestic U.S. demand contracts, lawful foreign demand may still exist, but primarily for certain categories of raw material.

Important limits

This strategy is narrow and operators should understand its boundaries.

The opportunity primarily concerns:

• hemp flower
• hemp biomass
• hemp kief

It does not apply to:

• finished products
• consumable goods, especially those that contain any measurable amounts of THC
• vapes, edibles, or retail extracts

It also does not address exporting THCa plant material. That presents a separate and substantially higher-risk legal analysis involving both U.S. enforcement interpretation and destination-country controlled-substance law.

The discussion here concerns exporting raw agricultural hemp material, not cannabinoid consumer products.

Why timing matters

The operational point is straightforward: the legal window may close before many operators act. After November 12, exporting hemp plant material that no longer qualifies as federally lawful hemp will become unlawful, even if the crop was cultivated prior to the deadline. Once the material is treated as non-compliant cannabis under federal law, cross-border shipment, even between U.S. states, becomes problematic simultaneously under federal controlled substances law, customs export procedures, carrier policies, and foreign import certification requirements.

At that stage, inventory may not merely be unsellable but effectively immovable.

The practical implications

The industry has been treating November 12 primarily as a future compliance date. For many operators, it is more accurately a sales deadline.

If, by late summer or early fall, domestic processors shift to in-state sourcing or stop purchasing raw material altogether, cultivators may be left holding product that was lawful when grown but has no viable domestic buyer before the regulatory change takes effect.

Exporting to the EU or other countries may therefore function as a bridge strategy – a way to monetize inventory that might otherwise go unsold. Unlike restructuring strategies, this approach cannot wait for legislative certainty. Exporting agricultural material requires documentation, phytosanitary compliance, logistics planning, import-country regulatory verification, customs coordination, and buyers. Each step requires lead time, and the regulatory deadline is fixed.

Start planning now

Congress may amend the law, delay implementation, or do nothing. Operators should not base operational strategy on legislative uncertainty. If the deadline remains, the purchasing slowdown will likely begin well before November 12, meaning the practical deadline for selling inventory may arrive months earlier.

For some hemp businesses, the question is no longer simply whether they can remain compliant after November. It is whether they can convert existing inventory into revenue before the market disappears.

If you interested in learning more about exporting hemp material, corporate structuring, regulatory compliance, or evaluating how the November 12 deadline may affect your operations, please contact me to discuss your specific situation.

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A look back at the Leafly Strain of the Year hall of fame

Talk a walk through the hall of fame with our look back at past Leafly Strain of the Year winners. This year's winner is announced March 4th.

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IRC 280E Still Applies to Your Marijuana Business, Unfortunately

In the last year or two, we have seen a growing number of marijuana businesses take the position that IRC 280E no longer applies to them. Some of these businesses have taken that position in consultation with lawyers and CPAs. This shift in strategy predates Trump’s Executive Order of December 18, 2025, to reschedule marijuana under the federal Controlled Substances Act (CSA). In any case, I believe this is a misreading of the law and a dangerous position for these businesses to take.

What is IRC 280E?

IRC 280E is a federal tax provision that prohibits businesses engaged in the “trafficking” of Schedule I or Schedule II controlled substances from deducting ordinary and necessary business expenses on their federal tax returns. This rule applies to state-legal marijuana businesses, and it forces many of them to pay federal income tax on gross income (revenue minus cost of goods sold) rather than net income (profit). It’s harder on some businesses than others, but overall IRC 280E is a scourge for any marijuana taxpayer.

Has IRC 280E been challenged?

Yes, cannabis businesses have challenged the law repeatedly over the past decade or so, on constitutional and “as applied” grounds. We have supported those efforts, including in litigation brought by clients of this law firm. Still, I’ve explained that “except for Champ v. Commissioner, no cannabis taxpayer has won an IRC 280E case (and there have been a bunch of them).”

I stand by the statement, while acknowledging that parties have achieved limited successes via COGS adjustments and refund requests. Overall, though, courts have consistently upheld the validity of IRC 280E as applied to marijuana businesses, and they have cast aside every constitutional challenge to date. It’s just a very difficult situation.

The current litigation to watch is a tax court case known as New Mexico Top Organics, Inc. d/b/a Ultra Health v. Commissioner (“NMTO”), filed last October. The primary argument is that marijuana is no longer “within the meaning” of Schedule I of the CSA, despite being listed there. The case relies on a 2023 determination by the Department of Health and Human Services (HHS) that marijuana should be placed in Schedule III. It also relies on Congressional spending bills, and finally, on the proposed rescheduling that began under President Biden.

I don’t find the arguments persuasive. Without analyzing the merits, though, it’s important to note that the NMTO plaintiff is a medical marijuana business. The plaintiff is not arguing that IRC 280E doesn’t apply to generalized adult-use sales (which are most sales nationwide, at this point). It’s also important to note that any decision by the tax court could be appealed by either party to the Tenth Circuit, and a ruling likely would not grant immediate relief to anyone–let alone non-litigants.

What advice are marijuana businesses getting these days on IRC 280E?

I’d like to think that most of advice is along the lines of what we tell our clients, viz. that marijuana is still a Schedule I controlled substance, unfortunately, and IRC 280E still applies. And I think that is what a clear majority of attorneys and CPAs are saying. That said, we’ve seen outlying and aggressive advice from professionals on whether marijuana businesses are still subject to IRC 280E, and even on whether marijuana remains in Schedule I (it does). Here’s a prominent example:

I’m not sure what the law firm there was thinking, and to be fair, they deleted the post following my comment. On the CPA side, the position I first vetted last year parrots the arguments in NMTO. The CPA I spoke with argued that marijuana is no longer “within the meaning of Schedule I” (despite its placement there), and that NMTO’s arguments apply equally to income from adult-use sales. The kindest thing I can say, euphemistically, is that it’s an interesting position.

What does the IRS say? What about Congress?

In June of 2024, following the HHS recommendation that marijuana be moved to Schedule III, the IRS published a memo titled “Marijuana remains a Schedule I controlled substance; IRC 280E still applies.” The Service stated that this would be true “until a final federal rule is published.” That never happened under the Biden administration’s flawed rescheduling process, and still hasn’t occurred following Trump’s executive order.

For good measure, the IRS followed on its memo six months later with another straight-ahead publication, observing that “some taxpayers have taken the position of disregarding the section 280E limitation using a variety of rationales that do not constitute reasonable basis.” The term “reasonable basis” is a relatively high standard of tax reporting (see 26 CFR 1.6662-3(b)(3)), and a myriad of penalties may ensue where the standard is not met. Straight talk.

For its part, Congress has failed to pass legislation to nullify the effects of IRC 280E, and every bill to de- or reschedule marijuana has ultimately failed. However, the Congressional Research Service, which I like, issued relevant guidance on IRC 280E earlier this month. The February 6 report is titled: “The Application of Internal Revenue Code Section 280E: Selected Legal Issues.” Notwithstanding the IRS publications discussed above, the CRS report maintains there is “little tax guidance concerning the application of Section 280E.” It then discusses a series of proposals that, if enacted, “would no longer prohibit marijuana businesses from taking deductions and credits.” In other words, without the enactment of any of these proposals, IRC 280E still applies.

Conclusion

I’m sure any business paying tax on gross receipts would love to enjoy the same deductions as other U.S. taxpayers. For this reason, and because certain advisors have jumped the shark with rescheduling in the air, we’ve seen more cannabis businesses filing returns that ignore IRC 280E. We’ve also had clients file amended returns seeking refunds for taxes paid under the IRC 280E regime, contrary to IRS warnings (not to give anyone any ideas!). Some of these refunds have been processed, and our best advice is “set that cash aside, at least through the audit window.”

Let’s hope the rules change for tax year 2026, and that the Department of Justice picks up the ball with President Trump’s rescheduling order. Specifically, let’s hope for a final rule, or better. For now, though, I believe the correct advice is that IRC 280E still applies to marijuana businesses. Unfortunately.

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WTF is The New York Times’ problem?

The New York Times has published a poorly researched, misleading op-ed on the cannabis industry and the effects of legalization. Read our response.

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