04/29/2026
Good morning, all! We've received a lot of questions about a recent development that does have a taxation impact, so...let's talk about w**d! Specifically, medical ma*****na.
Last week, the acting U.S. attorney general signed an order changing the federal classification for medical ma*****na to a Schedule 3 controlled substance (such as codeine or ketamine). Note: recreational ma*****na is still a Schedule 1 controlled substance and remains illegal at the federal level.
Under IRS Section 280e, deductions available at the federal level for Schedule 1 classified drugs are limited to the Cost of Goods Sold (COGS). Items that go into growing ma*****na plants, packaging for products, minimal labor costs and very specific maintenance, security and hvac systems are the bulk of what can be taken as deductions. Rent, non-COGS repairs, wages paid for non-COGS specific labor and more are not allowed as deductions.
Prior to 4/23/26, green-centric businesses and business owners could face potentially high tax bills due to the limited deductions allowed without proper tax planning. Now, these businesses are allowed to take considerably more deductions that were previously disallowed, resulting in less complicated planning, labor agreements, etc.
Are you a "green" business owner or investor, and want to learn more? Give us a call or email us at [email protected] to set up an appointment!
