Trump’s Cannabis Rescheduling Opens the Door to New Tax Planning Opportunities

How Cannabis Rescheduling Changes Tax Planning

Historically denied tax benefits for cannabis businesses may soon be within reach. In December 2025, President Trump ordered federal agencies to speed up rescheduling marijuana. By April 23, 2026, the DOJ and DEA moved FDA-approved and state-regulated medical marijuana to Schedule III under the Controlled Substances Act, while other types remain in Schedule I. The DOJ also initiated a fast-tracked process to consider moving more marijuana products from Schedule I to Schedule III.

For qualifying medical cannabis businesses, the tax impact could be significant. Section 280E generally disallows ordinary business deductions and credits for businesses trafficking Schedule I or II controlled substances. If medical cannabis products move to Schedule III, these businesses may regain access to standard tax deductions and credits, likely reducing their tax burden.

Tax Credits That May Become Available to Medical Cannabis Businesses

R&D Tax Credits

Consider the R&D Tax Credit. Many cannabis companies already engage in activities that may qualify, such as developing new strains and formulations, improving yield and potency, increasing stability or shelf life, and optimizing cultivation methods. They also design extraction techniques, test manufacturing processes, and develop specialized equipment. R&D Credits from these efforts can be substantial. Federal reclassification may also increase or expand opportunities for state-level R&D credits, depending on each state’s laws.

Work Opportunity Tax Credit

Other federal credits may also become more relevant. The Work Opportunity Tax Credit, if prolonged past 2025, could incentivize cannabis businesses to hire individuals from targeted groups for various roles. Companies in empowerment zones may also receive wage-based incentives for qualifying employees working in those areas.

Disabled Access Credit

Retail dispensaries and other customer-facing cannabis businesses should consider the Disabled Access Credit. This credit offers up to $5,000 annually for qualifying ADA compliance expenditures. Eligible costs can include improvements to entrances, restrooms, signage, and accommodations for individuals with disabilities.

Depreciation Planning After Cannabis Rescheduling

In addition to credits, cannabis companies should revisit accelerated depreciation strategies. Cannabis businesses are often capital-intensive, needing substantial investment in cultivation facilities, processing equipment, extraction systems, HVAC systems, lighting, security, and other specialized assets. Before rescheduling, Section 280E limited the practical benefit of many deductions. For medical cannabis businesses no longer subject to Section 280E, cost segregation studies may become a more valuable tool for identifying shorter-lived assets and accelerating depreciation deductions.

The One Big Beautiful Bill Act (OBBBA) of 2025 restored 100% bonus depreciation, making this analysis more important. OBBBA permanently reinstated 100% bonus depreciation under Section 168(k) for qualifying property and added a new elective 100% depreciation allowance under Section 168(n) for qualified production property. Cannabis businesses with significant facility investments could realize major tax savings if they meet the legal requirements. However, eligibility calls for careful review of the facility, conducted activities, service dates, construction timing, and production-related areas.

Entity Structure Considerations for Medical and Recreational Cannabis Businesses

Entity structure will also become increasingly important. Cannabis companies may need to separate operations that qualify for Schedule III treatment from activities that remain under Schedule I. This is particularly relevant for businesses with both medical and recreational divisions. Separate entities, books of account, records, intercompany agreements, and transfer pricing may be necessary to properly allocate income, expenses, and assets. Because the April 23 order applies immediately to state-licensed medical marijuana and FDA-approved products, companies should promptly ensure their medical operations are appropriately segmented from recreational operations.

What Cannabis Businesses Should Do Next

Cannabis rescheduling does not eliminate the complexity surrounding the industry, but it materially changes the tax planning landscape for qualifying medical cannabis businesses. Companies that have historically focused on managing the limitations of Section 280E should now reexamine their credit eligibility, depreciation strategies, entity structure, accounting methods, and documentation practices. Those who act early will be more likely to capture available tax benefits while continuing compliance in an area that remains highly regulated and quickly evolving.

Whether you’re a CPA advising cannabis businesses or a company navigating these changes, the McGuire Sponsel team can help evaluate the tax planning opportunities created by cannabis rescheduling. Contact us to discuss your specific circumstances.