Q&A: Hirsh Jain on Cannabis Rescheduling, Interstate Commerce and the Next Wave of Market Growth
Cannabis federal reform has finally reached a historic moment. Medical cannabis is moving through the rescheduling process after decades under federal prohibition, marking one of the biggest developments in the industry’s history.
The final outcome could determine how companies expand, whether cannabis can move across state lines, and which markets become the next major opportunities.
Hirsh Jain, CEO of Ananda Strategy, shares his perspective on where rescheduling stands, whether interstate commerce will be allowed, and which states businesses should be watching next.
Where does the process stand today?
I think it is helpful to separate the rescheduling process into two parts: the rescheduling of medical marijuana and what is being described as the full rescheduling of marijuana.
Medical marijuana was rescheduled through the Todd Blanche order issued on April 23. The question now is whether that action survives the legal challenges that have been brought against it.
The lawsuits argue, among other things, that the process did not comply with the Administrative Procedure Act and that the government should have gone through a formal notice-and-comment process.
The key issue right now is standing. Before the court even considers the arguments on the merits, the plaintiffs need to demonstrate that they have suffered a concrete injury as a result of the rescheduling decision.
The Department of Justice has argued that some of the plaintiffs cannot meet that threshold. For example, one argument against MMJ Biopharmaceuticals is that it does not yet have a product on the market, meaning it has not suffered an economic injury from rescheduling.
If the court agrees that the plaintiffs lack standing, the case could be dismissed. If the court finds standing exists, the next question becomes whether a stay should be granted, which would pause the rescheduling process while the broader lawsuit moves forward.
What about the broader rescheduling hearing?
The hearing to consider the full rescheduling of marijuana concluded on July 15. The parties have until August 17 to submit their final briefs.
I expect that this process will continue for several months.
Some people have suggested we could see a final rule by late summer or early fall, but I think that timeline is unlikely.
After the administrative law judge receives the final briefs, they need to issue a recommendation. There is no statutory deadline requiring that decision to come quickly.
Then the decision moves to the DEA administrator, who has the authority to disagree with the administrative law judge’s recommendation as long as they provide a reasoned explanation.
We have historical precedent for this. In 1988, administrative law judge Francis Young recommended that cannabis be rescheduled, but the DEA ultimately rejected that recommendation.
After the DEA administrator weighs in, the matter moves to the Attorney General for a final rule. Then there is a 30-day window where parties can challenge the decision legally.
So while I am cautiously optimistic, I think we should recognize there are many procedural opportunities for delay.
The DEA appeared to take a narrower approach during the hearing by focusing on medical use rather than legalization. Does that improve the chances of rescheduling?
I think that strategy made a lot of sense.
The DEA was very clear that the question before them was not whether cannabis should be legalized or whether cannabis is harmless. The question was whether marijuana has a currently accepted medical use.
By narrowing the issue, they created a stronger legal argument.
I am optimistic about the substance of the hearing. My concern is less about the underlying argument and more about the procedural mechanisms that opponents can use to slow the process.
Companies like Trulieve have successfully uplisted to major exchanges. What does that signal about investor confidence?
I think it demonstrates that exchanges are evaluating cannabis through a very technical legal lens.
Trulieve and Glass House were able to structure their businesses in a way that emphasized their medical operations and created a pathway toward federal legality.
Other companies, like Curaleaf, have taken a more cautious approach and indicated they want to wait until full rescheduling occurs before pursuing uplisting.
I think the broader takeaway is that if we are in a world six months from now where full rescheduling has occurred, we could see many more operators pursue uplisting.
Could rescheduling finally open the door to interstate commerce?
This is one of the biggest questions facing the industry.
Historically, interstate commerce did not exist because cannabis was federally illegal, but I think the more complete explanation is the structure created by the Cole Memorandum.
After Colorado and Washington legalized cannabis in 2012, the federal government essentially allowed states to experiment as long as they avoided certain enforcement priorities. One of those priorities was preventing diversion across state lines.
That created the foundation for state-based markets.
Even after the Cole Memo was rescinded, states continued operating under that framework. Over time, every state built its own isolated system.
Rescheduling could change that conversation because it creates a stronger argument for federal legality. That could make courts more receptive to challenges based on the Dormant Commerce Clause.
But this would not happen overnight.
There are three potential pathways:
First, courts could determine that state restrictions on interstate commerce violate the Dormant Commerce Clause.
Second, individual states could reform their cannabis laws to allow interstate commerce.
Third, states could create interstate compacts where participating states agree to allow commerce between them.
I think interstate commerce will happen gradually. It will likely begin with groups of states that are willing to work together, rather than a nationwide opening all at once.
How would interstate commerce change the industry?
It would completely change the strategy of scaling cannabis businesses.
Right now, companies often have to build cultivation, manufacturing, and distribution infrastructure in every state where they operate.
If interstate commerce becomes possible, companies could manufacture products in one location and distribute them across multiple states.
That would dramatically change the economics of the industry and reduce some of the pressure operators face today.
Which states do you see driving the next wave of cannabis growth?
The industry has been starved for growth over the past few years.
Between 2016 and 2023, we saw a steady stream of states launching adult-use markets. Over the past three years, that momentum slowed.
The exciting thing is that by 2027, I think we can identify several meaningful growth markets.
The biggest one is Virginia.
Virginia is currently a limited medical market, but adult-use sales are scheduled to begin in 2027. Most analysts believe the state could eventually become a multibillion-dollar market.
What makes Virginia particularly interesting is its geography. It borders states including North Carolina and Tennessee that do not currently have adult-use programs.
Virginia could become a destination market for consumers across the region.
What about Minnesota?
Minnesota is another market I think people should watch.
One thing Minnesota has done particularly well is create pathways for hemp operators to transition into the regulated cannabis market.
That is a model other states should consider.
The challenge in Minnesota has been supply. The state licensed retailers, but cultivation capacity and testing infrastructure have not kept pace.
The result is that many stores have limited inventory and high prices.
I think 2027 could be a turning point because more cultivation comes online, testing capacity improves, and retailers have more products to sell.
What medical markets are worth watching?
I think Georgia and Texas are two of the most exciting medical markets in the country.
Together, those states represent more than 40 million people.
Georgia is particularly interesting because of the changes it has made to its medical program, including expanding qualifying conditions and allowing additional product formats.
The pharmacy model is also important.
Pharmacies are trusted healthcare providers. Many consumers who may hesitate to enter a dispensary may feel comfortable visiting a pharmacy.
Georgia has the opportunity to demonstrate a different model for cannabis distribution.
Final thoughts: What should cannabis businesses be watching over the next year?
I think the biggest thing is understanding that the industry is moving into a new phase.
Rescheduling, interstate commerce, new state markets, and changing distribution models all have the potential to reshape how cannabis companies operate.
But none of these changes happen instantly.
The long-awaited moment has arrived. After building markets state by state under federal prohibition, companies are ready for a new chapter in the industry.
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