On Dec. 18, 2025, President Trump signed an executive order to expedite the rescheduling of cannabis from a Schedule I to a Schedule III drug. Although this action wouldn’t legalize marijuana on the federal level, rescheduling will have significant tax implications for cannabis businesses. Currently, they’re subject to IRC Sec. 280E, which prevents them from deducting business expenses. After the rescheduling, they’ll be able to claim deductions for “ordinary and necessary” business costs. They’ll also be able to take advantage of any applicable tax credits. If you own a cannabis business, consult with your tax advisor now.
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