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ARTICLE · 21 SEPTEMBER 2026

IRC Section 280E And Cannabis Tax Planning: Recent Developments And Practical Considerations

Foley Hoag LLP
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The landscape surrounding Section 280E of the Internal Revenue Code continues to evolve with President Trump's Executive Order on medical marijuana rescheduling, advancing litigation in New Mexico Top Organics v. Commissioner, and shifting regulatory signals. Cannabis taxpayers face critical decisions about taking "non-280E" positions on their tax returns while the IRS maintains its enforcement stance and the U.S. Tax Court case addressing common arguments remains pending.

United StatesCannabis & Hemp
Jesse Alderman
Jesse Alderman
Christopher Cawley
Christopher Cawley
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Since the April 2026 filing season, the landscape surrounding Section 280E of the Internal Revenue Code has continued to evolve in significant ways. President Trump’s Executive Order directing the rescheduling of medical marijuana from Schedule I to Schedule III of the Controlled Substances Act (“CSA”), the advancing litigation in New Mexico Top Organics Inc., d/b/a Ultra Health v. Commissioner of Internal Revenue, and shifting regulatory signals have all added new dimensions to the calculus facing cannabis taxpayers.

Key Takeaways

For cannabis taxpayers, so much is changing, but so much also remains the same:

  • For Tax Year 2025, medical and adult use cannabis remained listed on Schedule I of the CSA. While taxpayers are presenting arguments about the inapplicability of Section 280E to their state-legal businesses (and disclosing the uncertain tax position on their returns), the in a press release that rescheduling will generally be considered to first apply for a business's

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