<p>The medicinal and recreational uses of <i>Cannabis sativa</i> have been recognized for thousands of years. Today, cannabis-derived medicines are used to treat a variety of conditions, including chronic pain, epilepsy, multiple sclerosis, and chemotherapy-induced nausea. However, cannabis use disorder (CUD) has become the third most prevalent substance use disorder globally. Cannabinoid receptors are the primary targets that mediate the effects of cannabis and its analogs. Despite their importance, the mechanisms of modulation and the full therapeutic potential of cannabinoid receptors remain unclear, hindering the development of the next generation of cannabinoid-based drugs. This review summarizes the discovery and medicinal potential of phytocannabinoids and explores the distribution, signaling pathways, and functional roles of cannabinoid receptors. It also discusses classical cannabinoid drugs, as well as agonists, antagonists, and inverse agonists, which serve as key therapeutic agents. Recent advancements in the development of allosteric drugs are highlighted, with a focus on positive and negative allosteric modulators (PAMs and NAMs) that target CB1 and CB2 receptors. The identification of multiple allosteric sites on the CB1 receptor and the structural basis for allosteric modulation are emphasized, along with the structure-based discovery of ago-BAMs for CB1. This review concludes by examining the future potential of allosteric modulators in cannabinoid drug development, noting that ongoing progress in cannabinoid-derived drugs continues to open new avenues for therapeutic use and paves the way for future research into their full medicinal potential.</p>