This action by the President is a monumental move forward for the cannabis industry.  Some have called this the most significant change for the cannabis industry in fifty years. There are a bunch of actions that are all very good, but I will simply focus on those items that pertain to things that affect our tax clients.

The essence of the executive order is to direct the attorney general to expedite the completion of the rescheduling process, taking cannabis from Schedule I to Schedule III.

The essence of the executive order is to direct the attorney general to expedite the completion of the rescheduling process, taking cannabis from Schedule I to Schedule III. When this is completed, it will do several things that will directly impact cannabis operators.

  1. 280E should not apply to the cannabis industry.
    1. Expenses like marketing, professional fees, and other “G&A expenses” should be deductible.
    2. Accelerated depreciation and bonus depreciation should be available.
    3. Other sections of the Internal Revenue Code should apply.
  2. Banking should be easier to deal with
    1. Traditional credit cards should be available.
    2. “Green” loans and “green” rates for loans should be reduced over time.
    3. Premium costs on banking services should be reduced over time
  3. General costs to operate businesses should be reduced, as additional costs to operate should start to be reduced.

The big question now is, how fast will the A.G. move?  Generally, changes like this were never effective for any date in the past.  An effective date would be expected for some time in the future so that the change in the law can be implemented smoothly.

For example, the new hemp bill was recently scheduled to be implemented about a year into the future. (Note, now with this Executive Order, there is speculation that the hemp bill date will be revised).

Knowing that the effective date for the rescheduling should be in 2026, what can cannabis operators do now?  For now, to follow good year-end procedures and get the books clean for year-end 2025 is a good activity.

Then, in early 2026, we will have to watch the movement of the rescheduling in Washington and plan our actions for next year.  I can see putting many tax returns on extension, so we have six more months to see how the rescheduling unfolds.

Timing will be a big part of all the decisions that are made.

We will follow up with news articles over the next few weeks and months as solid information is available.

Feel free to reach out to us at any time.  We have been with you in the past, and we are honored to be working with you in the future.  We will be taking our industry into a brighter future with lower costs, much lower taxes, and much better cash flow.

Bruce Andersen can be reached at Bruce@CannabisCPA.Tax

Thomas Andersen can be reached at Thomas@CannabisCPA.Tax