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ARTICLE · 24 SEPTEMBER 2023

Tax Implications Of Reclassifying Cannabis As A Schedule 3 Controlled Substance

Duane Morris LLP
Duane Morris LLP
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On August 29, 2023, the U.S. Department of Health and Human Services responded to President Biden's October 2022 call for a federal review of marijuana scheduling: The drug should be reclassified as a Schedule 3 controlled substance.

United StatesCannabis & Hemp
Thomas Ostrander
Thomas Ostrander
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On August 29, 2023, the U.S. Department of Health and Human Services responded to President Biden's October 2022 call for a federal review of marijuana scheduling: The drug should be reclassified as a Schedule 3 controlled substance. Below, we explore questions on the tax ramifications to the cannabis industry if marijuana is reclassified as such.

Frequently Asked Questions on Cannabis Reclassification

What Is the Impact on the Application of Section 280E to the Industry If Marijuana Is Reclassified As a Schedule 3 Controlled Substance?

Answer: Section 280E provides that:

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 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

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Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.

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