Most marijuana consumers believe that cannabis businesses that are no longer subject to a longstanding tax penalty due to the Trump administration’s federal rescheduling move should pass along the savings in the form of lower product prices, a new poll shows.
Under an Internal Revenue Service (IRS) code known as 280E, sellers of Schedule I and II substances are not eligible to take tax deductions and credits that are otherwise available to most businesses. As a result, operators in the cannabis industry often have extremely high effective tax rates.
But under the Trump administration’s move to transfer marijuana to Schedule III of the Controlled Substances Act (CSA), compliant cannabis operators will no longer be subject to 280E and will be able to finally deduct business expenses from their taxes.
In a new poll, the cannabis telehealth platform NuggMD asked consumers, “If cannabis companies get tax relief that comes with federal rescheduling, do you expect them to pass along the savings to you via lower prices?”
Seventy-four percent said yes, they do expect marijuana businesses to lower their product prices in line with their new reduced operating expenses—compared to just 26 percent who expect the companies themselves to keep all the savings while maintaining current price levels.
“Rising prices, high interest rates and a despondent job market are all squeezing consumers. They’re looking for relief wherever they can find it,” Tyler Elson, director of content at NuggMD, told Marijuana Moment. “And because cannabis banking and 280E have been such hot topics, many are aware of just how much cannabis companies stand to save if federal rescheduling brings tax relief.”
The survey was based on interviews with 654 cannabis consumers who live in state-legal markets from October 8-15 and has a margin of error of +/- 3.83 percentage points.
The U.S. Department of the Treasury and IRS said in April that they plan to soon issue guidance on tax issues for marijuana businesses stemming from rescheduling, but that hasn’t yet happened.
In their announcement about forthcoming guidance, IRS and Treasury said they “expect DOJ’s action to have significant positive tax consequences for businesses in the medical marijuana industry.”
“Accordingly, rescheduling generally removes section 280E as a bar to claiming deductions and credits for businesses that as a result of the Final Order no longer traffic in Schedule I or II controlled substances under the CSA,” they said.
The agencies did not specify when they expect to issue the forthcoming guidance.
In May, a group of congressional Democrats sent a latter asking Treasury Secretary Scott Bessent and IRS Chief Executive Officer Frank Bisignano to issue “prompt guidance” on tax issues for marijuana businesses in light of the Trump administration’s move to federally reschedule cannabis.
On the other side of the debate, a pair of Republican lawmakers in June sent a letter to the treasury secretary saying they are “concerned” and “troubled” that marijuana businesses will be eligible for tax relief now that cannabis is being partially rescheduled under federal law.
Earlier this year, the Congressional Research Service published a report on the 280E tax penalty’s application to the marijuana industry.
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