Top GOP Congressman Files Bill To Block Marijuana Industry Tax Deductions, Even After Federal Rescheduling

A key GOP congressman has filed bill that would continue to block marijuana businesses from taking federal tax deductions under Internal Revenue Service (IRS) code 280E, even if cannabis is federally rescheduled. And his unique influence on a powerful committee could grease the wheels to its enactment through must-pass budget legislation.

Rep. Jodey Arrington (R-TX), chair of the House Budget Committee, introduced the legislation on Friday—about two weeks after Republican senators came out with their chamber’s version of the bill.

The measure would maintain the tax barrier for the cannabis industry, which has been eagerly following the ongoing administrative process of moving marijuana 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.

Whether there’s sufficient appetite to pass the proposal as a standalone in either GOP-controlled chamber is unclear—but its prospects could increase demonstrably if Arrington exercises his influence over the budget reconciliation process by pushing for the bill’s inclusion in the larger legislation that’s in the works.

According to The Washington Post, Arrington takes a “values perspective” on the cannabis tax issue. And while marijuana might not be at the top of his priorities list for the budget, it’s possible the 280E bill he’s now sponsoring could ultimately get in the large-scale legislation.

Text of the standalone bill isn’t available yet, but it has the same short title as a Senate measure from Sens. James Lankford (R-OK) and Pete Ricketts (R-NE) that’s called the “No Deductions for Marijuana Businesses Act.”

The new House legislation is also being cosponsored by Reps. Blake Moore (R-UT), Pete Sessions (R-TX), Vern Buchanan (R-FL), Greg Murphy (R-NC), Chuck Edwards (R-NC) and Gary Palmer (R-AL).

While rescheduling isn’t a guarantee—and Drug Enforcement Administration (DEA) hearings on the proposal have been delayed—the anti-cannabis lawmakers 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.

The prohibitionist group Smart Approaches to Marijuana (SAM) has taken credit for pitching the idea behind the Senate bill and is cheering the House measure’s powerful backing.

“Rep. Jodey Arrington (R-Texas), the House Budget Committee chairman, is driving the reconciliation process and has first dibs.

“His issue of choice? Weed.”

— SAM (@learnaboutsam) February 24, 2025

Meanwhile, another GOP congressman, Rep. Brian Mast (R-FL), recently introduced a different bill aimed at providing military veterans with access to medical marijuana.

Rep. Greg Steube (R-FL) has separately filed a proposal seeking to protect military veterans from losing government benefits for using medical cannabis in compliance with state law.

Advocates and stakeholders are also awaiting the reintroduction of another bipartisan proposal that would protect banks from being penalized by federal regulars simply for working with state-legal cannabis businesses.

The GOP House sponsor of the Secure and Fair Enforcement (SAFE) Banking Act will be filing it again this year, but a spokesperson for his office told Marijuana Moment last month that the introduction is “not imminent” as some recent reports have suggested.