Just when the cannabis industry thought tax relief was on the horizon, two U.S. senators are throwing a wrench into the plan. Senators James Lankford (R-OK) and Pete Ricketts (R-NE) have teamed up with prohibitionist groups to oppose efforts to repeal the 280E tax code under the upcoming cannabis rescheduling.
For those unfamiliar, 280E is a tax rule that prevents cannabis businesses from writing off standard expenses like rent, payroll, and marketing—something legal businesses can do with no issue. Since marijuana remains federally illegal, even state-licensed cannabis operators pay taxes at a much higher rate, which has squeezed businesses already struggling with oversupply and price drops.
The Fight Over Rescheduling & Tax Relief
The push to move cannabis from Schedule I to Schedule III would bring much-needed tax breaks to the industry. Schedule III substances, like certain prescription medications, aren’t subject to 280E—which is why many cannabis businesses have supported the shift.
But prohibitionist groups, with backing from Lankford and Ricketts, are lobbying against this tax relief. Their argument? They claim the Biden administration is using rescheduling as a “backdoor” to full legalization and worry it will weaken federal control over cannabis.
What This Means for the Industry
If cannabis remains in a legal limbo—regulated by states but taxed like an illegal drug at the federal level—many businesses could struggle to stay afloat. The industry is pushing back, arguing that if the government acknowledges medical benefits of cannabis (as Schedule III suggests), then businesses should be taxed fairly.
With 2024 elections looming, the cannabis industry and policymakers are gearing up for a major fight over taxes, regulations, and the future of federal legalization.
