Cannabis Companies Were Taxed Like Drug Traffickers For Years. A New Federal Order Could Unlock Billions

LifestyleVicesCannabis Companies Were Taxed Like Drug Traffickers For Years. A New Federal Order Could Unlock BillionsByJavier Hasse,Senior Contributor.Forbes contributors publish independent expert analyses and insights. Javier Hasse is a cannabis and psychedelics reporter and book author.Follow AuthorMay 22, 2026, 12:00pm EDT--:-- / --:--This voice experience is generated by AI. Learn more.This voice experience is generated by AI. Learn more.The legal cannabis industry generated billions in revenue for years — and paid taxes on most of it, barred from deducting standard business expenses that every other legal industry takes for granted.gettyA new analysis from GreenWave Advisors shows that a federal tax rule written for drug traffickers has cost the cannabis industry billions. Rescheduling could finally change the math.For more than two decades, legal cannabis operators paid taxes under a provision written to punish criminals. Section 280E of the Internal Revenue Code, drafted in 1982 to prevent trafficking organizations from deducting business expenses, applied to state-licensed cannabis companies because federal law classified the plant as a Schedule I controlled substance. The practical effect: operators owed taxes on gross profit, unable to deduct ordinary business expenses (like rent, payroll or utilities) that every other legal industry takes for granted.On April 23, 2026, Acting Attorney General Todd Blanche signed a final order moving certain state-regulated medical cannabis activities from Schedule I to Schedule III of the Controlled Substances Act, effective April 28. The order followed a December 2025 executive order from President Trump and applies to FDA-approved marijuana products and cannabis sold through state-authorized medical programs. Recreational cannabis remains Schedule I, at least until a scheduled June 29 administrative hearing considers whether broader rescheduling should apply to all marijuana.For state-licensed medical operators, it op...