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.
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.