Vermont has become the ninth state to legalise recreational use of pot, defying attempts by the US attorney-general Jeff Sessions to crack down on cannabis.
Unlike other states where legalisation followed a state-wide referendum, the initiative was taken by Vermont's elected politicians.
Phil Scott, the Republican governor, has said he will sign the bill which was passed by Vermont's senate on Wednesday.
New Jersey is expected to follow suit later this year and cannabis campaigners are stepping up pressure for legalisation in Delaware, Rhode Island and Connecticut.
Similar legislation was passed in neighbouring New Hampshire, but it is expected to be vetoed by the governor, Chris Sununu, also a Republican.
US state rules on use of cannabis
Under the Vermont legislation, which comes into force on July 1, anyone over the age of 21 will be allowed to possess up to one ounce of cannabis.
Even though Vermont is a small state, the timing of the move is a rebuff for Mr Sessions and the Trump administration.
Mr Sessions is trying to reverse the hands-off policy adopted by the Obama administration towards the drug in states where pot had been legalised.
Even in states where recreational use and sale of pot is legal, cannabis businesses are hampered by federal laws outlawing the drug.
The federal prohibition effectively denies them the use of banking facilities, meaning that transactions have to be carried out in cash.
"The progress in Vermont is ground-breaking. Should the Green Mountain State's leadership move forward as promised, it will mark a huge turning point in the national movement to end the criminalisation of marijuana," said Justin Strekal, politcal director of the National Organization for the Reform of Marijuana Laws.
"The political courage of Vermont's lawmakers to break with nearly a century of legislative stagnation should be interpreted as a siren call in the halls of the state legislatures nationwide as well as the US Capitol."