February 20, 2026
In late 2025, federal policy on worker noncompetes snapped back—hard—from sweeping rulemaking to targeted enforcement.
On September 5, 2025, the Federal Trade Commission publicly announced it would accede to nationwide vacatur of its 2024 Non-Compete Clause Rule and move to dismiss the agency’s pending appeals, signaling a pivot away from a one-size-fits-all national ban and toward case-by-case enforcement under Section 5 of the FTC Act and traditional antitrust/UDAP tools. For employers in regulated industries like cannabis—where IP, formulations, genetics, customer lists, wholesale relationships, and SOPs are core enterprise value—this development removes the immediate threat of a blanket federal prohibition, but it does not mean “open season” for aggressive restraints.
The practical result for 2025 (and going into 2026) is a compliance paradox:
This post maps the current federal posture and the state-law trendlines that matter most to multistate operators (MSOs) and multi-state hemp brands, then lays out a defensible, post-vacatur hierarchy of tools: targeted NDAs, carefully scoped non-solicits, TRAP/“stay-or-pay” scrutiny, and trade secret operational controls.
Informational only, not legal advice.
In April 2024, the FTC issued its final Non-Compete Clause Rule (codified at 16 C.F.R. Part 910) that would have broadly prohibited most employer-worker noncompetes and required notice to workers with existing clauses. The rule was challenged immediately.
In Ryan, LLC v. FTC, the U.S. District Court for the Northern District of Texas ultimately vacated the rule nationwide (the merits decision followed a preliminary injunction). The FTC appealed, but on September 5, 2025, the agency announced it would accede to vacatur and move to dismiss its appeals.
Primary sources:
Even before the rule, the FTC began bringing noncompete cases under Section 5 (unfair methods of competition). In January 2023, the FTC announced actions against firms that allegedly imposed harmful noncompetes on workers across roles, from low-wage workers to engineers.
This enforcement posture was reinforced by the FTC’s 2022 Policy Statement on Section 5, which adopted a broader view of “unfair methods of competition.”
Compliance takeaway: Post-vacatur, the biggest federal risk is not that your company accidentally violates a bright-line rule. The risk is that the FTC (and sometimes state AGs using state UDAP statutes) targets patterns that look coercive, deceptive, or unnecessarily restrictive—especially when applied to workers who do not truly have access to trade secrets or who lack bargaining leverage.
Cannabis businesses tend to have:
These features tempt employers to deploy broad restraints. But broad restraints—especially those binding hourly staff, entry-level budtenders, trimmers, packagers, or drivers—are precisely the type of use the FTC has criticized as suppressing labor mobility.
At the same time, cannabis employers cannot rely on a uniform federal standard because state employment law still drives enforceability and varies sharply by jurisdiction.
The vacatur did not roll back state restrictions. If anything, the state patchwork has accelerated.
Below are major categories of state restrictions that matter to multistate operators.
Some states broadly prohibit post-employment noncompetes (with limited exceptions, often for sale-of-business).
Compliance takeaway: If you have remote workers, a ban state can become your “weakest link” jurisdiction. Attempting to impose a noncompete on a worker who lives/works in a ban state can create litigation exposure and may complicate separation agreements.
Several states allow noncompetes only above an earnings floor (often inflation-adjusted annually). This is especially relevant for cannabis businesses with mixed wage structures.
Compliance takeaway: A “single national form” noncompete is likely to be unenforceable for a meaningful portion of your workforce in threshold states—and potentially sanctionable depending on the statute.
More states require advance notice and/or specific disclosures. A noncompete can fail for technical reasons even if the restriction is substantively reasonable.
Practical examples:
Some states require a form of compensation during the restricted period (or a garden-leave clause / mutually agreed consideration).
Compliance takeaway: If your business model cannot support paying a departing employee for months, a post-employment noncompete may be structurally incompatible in some states.
A strong “2025 playbook” is less about banning competition and more about protecting information, preventing unfair solicitation, and documenting legitimate interests.
Overbroad NDAs can be attacked as de facto noncompetes, so drafting matters.
What to do:
Federal trade secret overlay: If your agreements govern trade secrets or confidential information, consider the Defend Trade Secrets Act (DTSA) whistleblower immunity notice requirement.
Non-solicits (customers, employees) can be more enforceable than noncompetes, but states increasingly regulate them too.
Better drafting norms post-vacatur:
Important: If you operate in ban states, some customer non-solicits may be treated as unlawful restraints depending on how they are written and enforced.
Cannabis businesses often innovate fast (new SKUs, brand assets, packaging, hardware design, SOP refinements). A tight IP posture reduces the perceived need for broad restraints.
Include/refresh:
“Stay-or-pay” provisions are under growing scrutiny from regulators and state AGs. The FTC’s 2024 rulemaking record described certain training repayment requirements as potential de facto noncompetes when payments are not reasonably related to actual training costs.
Practical guardrails:
Trade secret enforcement is won or lost on “reasonable measures” to maintain secrecy.
Core components for regulated operators:
Compliance takeaway: The more disciplined your internal trade secret controls, the more credible (and less coercive) your legal posture becomes—reducing reliance on blunt post-employment restraints.
Use this as a starting framework for harmonizing HR, legal, and compliance across jurisdictions.
Even post-vacatur, enforcement risk is elevated when employers:
If you need a simple “north star”:
Multistate cannabis and hemp businesses already run compliance programs across licensing, testing, packaging/labeling, advertising, and track-and-trace. Employment restrictions should be treated the same way: documented controls, state-by-state rules, and auditable processes.
If your company is revising restrictive covenant templates, onboarding packets, or separation agreements after the FTC noncompete vacatur, use https://cannabisregulations.ai/ to support your broader compliance operations—so your employment practices align with evolving federal enforcement priorities and the state-by-state regulatory patchwork.
