A provision of the farm bill that received final approval in Congress on Wednesday removes hemp from the list of federally controlled substances and treats it like a regular crop.
President Donald Trump is expected to sign the bill into law next week.
Hemp is a type of cannabis that does not get the user high.
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The change means an industry already seeing explosive growth is likely to grow more.
Most of that growth will be due to demand for CBD, a non-psychoactive compound found in hemp that many believe has health benefits.
Estimates show the federal legalization could triple the overall hemp market to $2.5 billion by 2022, with $1.3 billion of those sales from CBD products.