Can marijuana businesses deduct expenses?

Section 280E of the Internal Revenue Code bars deductions by a business involved in the growing or selling of a Schedule I substance, other than the cost of goods sold. To date, marijuana has been a Schedule I substance (hemp was removed from the definition of marijuana in 2018). The U.S. Department of Justice, through an Attorney General Order issued April 22, 2026, is in the process of placing certain marijuana products in Schedule III, which would allow holders of state medical marijuana licenses to take deductions and credits. The order suggests there may be retroactive relief for affected businesses. What’s more, individuals paying for medical marijuana may now be able to deduct their costs. #IdeaoftheDay