Two GOP senators have introduced a bill that would continue to block marijuana businesses from taking federal tax deductions under Internal Revenue Service (IRS) code 280E—even if it’s ultimately rescheduled.
Sens. James Lankford (R-OK) and Pete Ricketts (R-NE) filed the “No Deductions for Marijuana Businesses Act” on Thursday to maintain the tax barrier for the industry, which has been eagerly following the ongoing administrative process of moving cannabis from Schedule I to Schedule III of the Controlled Substances Act (CSA) in large part because it would address their 280E challenges under current law.
While rescheduling isn’t a guarantee, and Drug Enforcement Administration (DEA) hearings on the proposal have been delayed, the senators are aiming to preemptively take the wind out of the industry’s sails.
The bill would amend the IRS code to say that, in addition to all Schedule I and Schedule II drugs, businesses that work with marijuana specifically would be barred from taking tax deductions that are available to other industries.
Here’s the proposed revision of 280E:
No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in—
(1) marijuana (as defined in section 102(16) of the Controlled Substances Act (21 U.S.C. 802(16))), or
(2) controlled substances (within the meaning of schedule I and II of the Controlled Substances Act),
which is prohibited by Federal law or the law of any State in which such trade or business is conducted.
The prohibitionist group Smart Approaches to Marijuana (SAM) took credit for pitching the idea behind the bill to Lankford last year.
“We thank Senator Lankford for his strong leadership in both fiscal responsibility and drug policy. The federal government should not be in the business of giving tax relief to the federally illegal, addiction-for-profit marijuana industry,” SAM President Kevin Sabet said in a press release. “This legislation would prevent deficit increases while ensuring that taxpayers don’t foot the bill for the revenue gap made by tax write-offs for people who choose to violate federal law and poison our kids.”
SENATORS ON KEY COMMITTEES INTRODUCE BILL TO PREVENT $2 BILLION MARIJUANA INDUSTRY TAX BREAK AHEAD OF BUDGET RECONCILIATION
Statement from @KevinSabet in support of @SenatorLankford and @SenatorRicketts‘s legislation to prevent a $2.3 billion marijuana industry tax cut. pic.twitter.com/hnPTNFQtlu
— SAM (@learnaboutsam) February 7, 2025
“When SAM’s federal affairs team pitched Senator Lankford on this bill last year, it was just a pipe dream. But in a short couple of months, the Senator’s team took the idea and ran with it,” he said. “We are grateful for his courage in standing up and doing the right thing. We look forward to this bill gaining support and hopefully being added to the budget reconciliation package.”
Lankford has been sharply critical of the rescheduling push, leading a public comment letter with GOP colleagues last year opposing the reform and alleging the government’s recommendation was based on politics rather than science.
As Nebraska’s governor and now as a senator, Rickets has consistently opposed cannabis reform efforts at the state and congressional levels, including proposals to legalize medical cannabis in Nebraska, streamline the state pardon process and allow banks to work with state-licensed marijuana businesses.
In 2021, as Ricketts advocated against a medical cannabis proposal in his home state, he asserted that marijuana is a “dangerous drug that will impact our kids,” and he took that claim a step further by asserting that if states enact legalization, “you’re gonna kill your kids—that’s what the data shows from around the country.”
Meanwhile, another Republican congressman recently withdrew an amendment to a fentanyl-related bill that was aimed at undermining the ongoing marijuana rescheduling process.
The legislation could have been a problem for advocates under the current leadership of DEA under President Donald Trump. Acting Administrator Derek Maltz subscribes to the “gateway drug” theory for marijuana and believes most people living in states that have legalized cannabis will continue to obtain it from illicit sources such as cartels due to high taxes in regulated markets, for example.
Read the text of the “No Deductions for Marijuana Businesses Act” below:
The post New GOP Bill Would Block Marijuana Industry Tax Deductions, Even After Federal Rescheduling appeared first on Marijuana Moment.
