Politics
Federal Officials Say Marijuana Industry Tax Guidance Will Be A ‘Priority’ For The Next Year
Federal officials say they will prioritize issuing tax-related guidance for marijuana businesses within the next year in light of the Trump administration’s move to federally reschedule cannabis.
Moving marijuana from Schedule I of the Controlled Substances Act (CSA) to Schedule III will have large tax implications for cannabis industry operators.
That’s because an Internal Revenue Service (IRS) code known as 280E, which has prevented them from taking ordinary tax deductions and credits that are available to most businesses, only applies to Schedule I and II substances.
The U.S. Department of the Treasury and IRS said in April that they plan to issue guidance on tax issues for marijuana businesses stemming from rescheduling, but that hasn’t yet happened.
But now, Treasury and IRS officials have included the issue in their 2026–2027 Priority Guidance Plan, indicating that they intend to follow through on providing tax clarity for cannabis businesses in the coming months.
The document includes “Guidance under §280E” in a list of 121 items officials plan to prioritize over the next year, though it doesn’t provide any additional marijuana-related information beyond that.
“Each year, the Treasury Department’s Office of Tax Policy and the IRS use the Guidance Priority List to identify and prioritize that tax issues that should be addressed through regulations, revenue rulings, revenue procedures, notices, and other published administrative guidance,” IRS said. “The Guidance Priority List focuses resources on guidance items that are most important to taxpayers and tax administration. Published guidance plays an important role in increasing voluntary compliance by helping to clarify ambiguous areas of the tax law.”
The current plan, released last week, will cover the federal fiscal year that runs from October 1, 2026 to September 30, 2027, but it “does not provide any deadline for completing the projects,” the document says.
In May, a group of congressional Democrats sent a latter asking Treasury Secretary Scott Bessent and IRS Chief Executive Officer Frank Bisignano to issue “prompt guidance” on tax issues for marijuana businesses in light of the Trump administration’s move to federally reschedule cannabis.
“The absence of clear and timely guidance for the cannabis industry will leave taxpayers uncertain as to how they can benefit from the tax code—whether it is the treatment of ordinary and necessary business deductions or accessing of tax credits,” the lawmakers wrote.
In contrast, a pair of Republican lawmakers in June sent a letter to the treasury secretary saying they are “concerned” and “troubled” that marijuana businesses will be eligible for tax relief now that cannabis is being partially rescheduled under federal law.
Those lawmakers previously filed legislation called the No Deductions for Marijuana Businesses Act that would continue to prevent the cannabis industry from escaping the 280E penalty even under rescheduling.
Under an order issued by Attorney General Todd Blanche in April, marijuana regulated by a state medical cannabis license immediately moved to Schedule III. Marijuana products such as those in state-legal recreational markets remain in Schedule I for now, however, subject to an ongoing hearing process that is considering broader rescheduling of cannabis.
In their previous announcement about forthcoming guidance, IRS and Treasury said they “expect DOJ’s action to have significant positive tax consequences for businesses in the medical marijuana industry.”
“Accordingly, rescheduling generally removes section 280E as a bar to claiming deductions and credits for businesses that as a result of the Final Order no longer traffic in Schedule I or II controlled substances under the CSA,” they said.
Because of the way the rescheduling action is being rolled out in phases, state-licensed marijuana companies that serve both the medical and recreational markets may only be able to immediately obtain tax relief for parts of their businesses.
“Guidance is expected to clarify the ways in which, for businesses with multiple activities, section 280E applies only to those activities related to trafficking in Schedule I or II controlled substances (e.g., by apportioning expenses),” the tax agency and Treasury Department said.
Blanche’s rescheduling order for DOJ said he “encourages” the treasury secretary “to consider providing retrospective relief from Section 280E liability for taxable years in which a state licensee operated under a state medical marijuana license.”
But the Treasury and IRS announcement said that, at least for an initial transition rule, “rescheduling generally will be considered to first apply for a business’s full taxable year that includes the effective date of the Final Order, for the business’s activities that do not involve Schedule I or II controlled substances as a result of the Final Order.”
