State-licensed medical cannabis operators just won a huge break from crushing federal taxes, but billions in past refunds hang in the balance as the Trump team pushes for retroactive relief.
The Justice Department’s April 23 order moved medical marijuana to Schedule III, ending Section 280E’s grip on deductions. This could unlock up to $15 billion paid extra since 2018. Yet Treasury holds the key on how far back relief goes, leaving firms in limbo.
Acting Attorney General Todd Blanche signed the order on April 23, 2026. It reclassifies FDA-approved marijuana products and state-licensed medical cannabis as Schedule III drugs.
This shift took effect right away. State medical operators no longer face 280E limits on everyday deductions like rent and payroll. The rule targets only medical sales under state licenses for now.
Recreational cannabis stays in Schedule I. Hearings start June 29 to consider wider changes.
One sentence sums it up: Relief hits medical first.
The Heavy Toll of 280E on Cannabis Firms
Section 280E blocks deductions for businesses in Schedule I or II drugs. Cannabis companies could only adjust cost of goods sold, not operating costs.
This pushed effective tax rates to 70% or higher. A firm with $100 million gross income might pay $70 million in taxes before.
Multi-state operators racked up pain. Publicly traded MSOs owe the IRS $1.6 billion in past-due 280E bills as of March 2026.
Whitney Economics reported the industry paid $27 billion in federal taxes since 2018. Of that, $15 billion came from 280E extras.
| Multi-State Operator | Est. 280E Liability (2026) |
|---|---|
| Curaleaf | $300 million |
| Green Thumb | $200 million |
| Trulieve | $250 million |
| Cresco Labs | $150 million |
| Others | $700 million |
These numbers show the stakes.
Calls Grow for Retroactive 280E Tax Breaks
Blanche’s order urges Treasury to eye “retrospective relief” for years state licensees ran medical programs.
Industry leaders cheer this. NCIA policy chair Michael Cooper called it “one of the most important elements.” He warns denying it hurts long-time operators most.
Debate rages on reach. Some push back to 2023, when HHS first recommended Schedule III. Others say license start dates, even pre-2018.
Treasury’s April 23 note hints at a transition rule. Relief kicks in for the full tax year with the order’s date. But it leaves retro open.
Experts like attorney Michael Rosenblum see fights ahead. “It’s a mess,” he said. Tax Court battles loom if refunds stall.
- Best case: Refunds from 2023, freeing $5-10 billion.
- Likely case: 2026 forward, with some open years amended.
- Worst case: No retro, just future savings.
Statute limits claims to three years usually.
Treasury Guidance Looms as Businesses Plan
Treasury and IRS pledged guidance soon after the order. It will cover mixed medical-adult ops, splitting expenses fairly.
No firm timeline yet. Firms file 2025 returns under old rules for safety.
Post-relief, tax rates drop to 21-30%, like normal biz. Cash flow surges could fuel growth or pay debts.
Green Thumb and Curaleaf, with big medical shares, stand to gain most. Curaleaf says 60% of sales qualify.
Operators watch closely. Some restructure now to max medical deductions.
One expert notes: Plan for audits on splits.
Change ripples to investors. Stocks jumped on news, but hold gains depend on refunds.
Medical focus aids patients too. Lower costs might cut prices at dispensaries.
This shift eases a decades-old federal-state clash. Cannabis firms finally compete like others.
As Treasury weighs refunds, the industry braces for windfalls or waits. Years of overpaid taxes could return, saving jobs and sparking booms.