The inherently modular characteristics of multilevel cascaded converters are reduced if centralized control and communication architectures are required within the converter system. In contrast, this paper presents a distributed control and communication approach for a cascaded converter, where the switching and control actions of each individual submodule (SM) are determined based on local voltage measurements. The state-space model of the resulting dynamic system is derived. Additionally, an observer based full-state feedback controller is utilized for current regulation to achieve similar performance to that of a centralized controller. The controller design principles are presented using discrete linear-quadratic-regulator (LQR) theory, along with a Luenberger Observer (LO) which estimates the state variables. Experimental results carried out on a single-phase grid-connected seven-level cascaded converter are included to validate the theoretical analysis and effectiveness of the proposed control and communication architecture.