Cannabis Business Glossary
48 essential cannabis industry terms and definitions for business owners, operators, and professionals.
280E
Section 280E of the Internal Revenue Code, which prevents businesses trafficking in controlled substances (including cannabis) from deducting ordinary business expenses on federal tax returns. Only Cost of Goods Sold (COGS) is deductible.
Learn moreAdult-Use
Cannabis that is legal for purchase and consumption by adults (typically 21+) without a medical recommendation. Also called recreational cannabis.
Learn moreBatch
A specific quantity of cannabis produced under the same conditions, assigned a unique identifier for tracking and testing purposes. Each batch must be tested before sale.
Learn moreBCC
Bureau of Cannabis Control - former California cannabis regulatory agency, now part of the Department of Cannabis Control (DCC).
Learn moreCannabinoid
Chemical compounds found in the cannabis plant that interact with the body's endocannabinoid system. The most well-known are THC (tetrahydrocannabinol) and CBD (cannabidiol).
Learn moreCBD
Cannabidiol - a non-intoxicating cannabinoid found in cannabis with potential therapeutic applications. CBD products derived from hemp (under 0.3% THC) are federally legal.
Certificate of Analysis (COA)
An official document from a licensed testing laboratory that reports the results of all required tests performed on a cannabis sample, including potency, contaminants, and terpenes.
Learn moreChild-Resistant Packaging
Packaging that meets Consumer Product Safety Commission standards for preventing children under 5 from opening. Required for all cannabis products in every legal state.
Learn moreClone
A genetically identical cutting taken from a mother cannabis plant. Clones preserve the exact genetics and traits of the parent plant.
COGS
Cost of Goods Sold - the direct costs of producing or acquiring inventory. Under Section 280E, COGS is the only federal tax deduction available to cannabis businesses, making its calculation critical.
Learn moreCompliance
The process of adhering to all state and local cannabis regulations, including licensing, testing, packaging, labeling, security, and record-keeping requirements.
Learn moreConcentrate
A cannabis product made by extracting cannabinoids and terpenes from plant material, resulting in a more potent product. Includes wax, shatter, oil, rosin, and distillate.
Consumption Lounge
A licensed establishment where adults can purchase and consume cannabis on-site. Currently permitted in 13 US states.
Learn moreCultivator
A licensed cannabis grower. License types may include indoor, outdoor, mixed-light, and nursery cultivation.
Learn moreDCC
Department of Cannabis Control - California's cannabis regulatory agency responsible for licensing, enforcement, and setting industry standards.
Learn moreDelta-8 THC
A naturally occurring cannabinoid found in small amounts in cannabis. Hemp-derived delta-8 products exist in a legal gray area under the 2018 Farm Bill, though a federal ban was signed in November 2025.
Delta-9 THC
The primary psychoactive compound in cannabis. Most THC references in regulations refer to delta-9 THC. Potency is typically measured as total THC (THCA x 0.877 + delta-9 THC).
Dispensary
A licensed retail location where cannabis products are sold to consumers. Medical dispensaries require a patient card; adult-use dispensaries sell to anyone 21+.
Learn moreEdible
A food or beverage product infused with cannabis. Edibles are subject to specific dosing limits (typically 5-10mg THC per serving) and homogeneity testing requirements.
Excise Tax
A state-level tax applied specifically to cannabis sales, separate from standard sales tax. Rates vary by state from 6% to 37%.
Extraction
The process of separating cannabinoids and terpenes from cannabis plant material using solvents (butane, CO2, ethanol) or mechanical methods (rosin press, ice water).
Farm Bill
The 2018 Farm Bill legalized hemp (cannabis with less than 0.3% delta-9 THC) at the federal level. A 2025 amendment banned intoxicating hemp-derived products effective November 2026.
Flower
The dried, cured buds of the cannabis plant, which are the primary smokable product. Flower represents approximately 44% of total US cannabis revenue.
Heavy Metals Testing
Required testing for lead, arsenic, cadmium, and mercury in cannabis products. Cannabis plants are bioaccumulators that absorb metals from soil.
Learn moreISO 17025
International standard for testing and calibration laboratories. Most states require cannabis testing labs to hold ISO/IEC 17025 accreditation.
Learn moreLab Shopping
The practice of testing cannabis at multiple labs to find one that provides the most favorable results, particularly for THC potency. Considered an integrity issue in the industry.
METRC
Marijuana Enforcement Tracking Reporting Compliance - the most widely used seed-to-sale tracking system in the US cannabis industry. Mandatory in 20+ states.
Microbial Testing
Testing for harmful microorganisms including E. coli, Salmonella, Aspergillus, and total yeast and mold. Required in all legal states.
Learn moreMSO
Multi-State Operator - a cannabis company that holds licenses and operates in multiple states. The largest MSOs include Curaleaf, Trulieve, and Green Thumb Industries.
Mycotoxin
Toxic compounds produced by mold, specifically aflatoxins and ochratoxin A. Cannabis mycotoxin testing is required in most legal states.
OMMA
Oklahoma Medical Marijuana Authority - the regulatory body overseeing Oklahoma's medical cannabis program, one of the largest in the US with 7,300+ licenses.
Learn morePesticide Screening
Testing for residual pesticide chemicals on cannabis products. California tests for 66 pesticides, making it one of the strictest states. Any detection above state limits results in a failed test.
Learn morePotency Testing
Laboratory analysis measuring cannabinoid concentrations (THC, CBD, CBG, CBN, etc.) in cannabis products. Required in all legal states and reported as percentage or mg/g.
Learn morePre-Roll
A pre-made cannabis joint sold in retail packaging. Pre-rolls are the fastest-growing cannabis product segment by revenue, with 12% growth in recent years.
Residual Solvents
Chemical solvents (butane, propane, ethanol, CO2) that may remain in cannabis concentrates after extraction. Testing is required for all extract products.
Rescheduling
The process of moving cannabis from Schedule I to Schedule III of the Controlled Substances Act. Initiated by an executive order in December 2025, it would eliminate Section 280E tax restrictions.
Learn moreSAFER Banking Act
Secure and Fair Enforcement Regulation Banking Act - proposed federal legislation that would protect financial institutions serving state-legal cannabis businesses from federal penalties.
Learn moreSchedule I
The most restrictive DEA classification for controlled substances, defined as having no accepted medical use and high abuse potential. Cannabis has been Schedule I since 1970.
Schedule III
A DEA classification for substances with accepted medical use and moderate-to-low abuse potential. Cannabis rescheduling to Schedule III was ordered in December 2025.
Seed-to-Sale
A tracking system that monitors cannabis from cultivation through processing, testing, distribution, and retail sale. Required by all legal states to prevent diversion to the black market.
Social Equity
Cannabis licensing programs designed to benefit communities disproportionately impacted by cannabis prohibition. Benefits may include reduced fees, priority processing, and technical assistance.
Learn moreTerpene
Aromatic compounds in cannabis that contribute to flavor, aroma, and potentially therapeutic effects. Common terpenes include myrcene, limonene, pinene, and caryophyllene.
THC
Tetrahydrocannabinol - the primary psychoactive cannabinoid in cannabis. Total THC is calculated as THCA x 0.877 + delta-9 THC.
THCA
Tetrahydrocannabinolic acid - the non-psychoactive precursor to THC found in raw cannabis. THCA converts to THC when heated (decarboxylation).
Tincture
A liquid cannabis extract typically administered under the tongue. Tinctures allow precise dosing and are popular in medical cannabis programs.
Track-and-Trace
See Seed-to-Sale. A system for monitoring cannabis products throughout the supply chain, typically using METRC or BioTrack.
Vertically Integrated
A cannabis company that controls multiple stages of the supply chain - typically cultivation, processing, and retail - under a single entity. Required in some states (Florida, New Jersey).
Water Activity
A measure of the moisture available for microbial growth in cannabis products, expressed as Aw. Values above 0.65 indicate elevated mold risk.
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