U.S. Congress: Bicameral Bill to Keep Marijuana Tax Penalties Intact Even After Rescheduling Gains 14th Sponsor
- Representative Michael Lawler (R-NY) became the first new backer since April 2025 of a federal bill, HB 1447, aimed at preventing marijuana businesses from claiming standard tax deductions even if cannabis is rescheduled federally.
- HB 1447, introduced by Rep. Jodey Arrington (R-TX), seeks to amend the tax code to keep marijuana businesses ineligible for common deductions like rent and wages, overriding changes that would occur if marijuana is moved from Schedule I to Schedule III.
- Currently, Section 280E bars businesses associated with Schedule I or II substances from standard deductions, but rescheduling marijuana to Schedule III would normally lift this restriction; HB 1447 ensures this tax penalty remains regardless of rescheduling.
- The bill has 14 Republican sponsors across both the House and Senate, and President Trump has directed federal agencies to proceed with marijuana rescheduling, with the DEA expected to finalize the change soon, making HB 1447 critical to maintain existing tax barriers for marijuana businesses.
A federal proposal designed to keep marijuana businesses from claiming standard tax deductions even after cannabis is rescheduled nationwide has added its first new backer in nearly a year. Representative Michael Lawler (R-NY) has signed on to the House version of the measure, bringing the bill to 12 sponsors in the chamber and 14 total when including the Senate companion. Lawler is the first lawmaker to join the proposal since April 2025. All 14 sponsors are Republican.
The legislation, HB 1447, was introduced by Representative Jodey Arrington (R-TX). It would amend the Internal Revenue Code to ensure that marijuana businesses remain ineligible for common deductions such as rent, utilities and employee wages, even if marijuana is moved from Schedule I to Schedule III under federal law.
Under current tax rules, Section 280E blocks businesses tied to Schedule I or II substances from taking standard business deductions. If marijuana is rescheduled to Schedule III, as recommended by the U.S. Department of Health and Human Services, that restriction would normally no longer apply. HB 1447 is written specifically to override that outcome, keeping the tax penalties in place regardless of how marijuana is classified under the Controlled Substances Act.
A companion bill in the Senate, S. 471, has two sponsors, bringing total congressional support for the proposal to 14 lawmakers across both chambers.
Since the measure was first introduced, President Donald Trump has signed an executive order directing federal agencies to move forward with marijuana rescheduling. The Drug Enforcement Administration is now expected to issue a final ruling in the near future, with Bondi telling several people at the end of January that the ruling would be published in a matter of days.
Once the DEA follows through with a shift to Schedule III, marijuana businesses nationwide would otherwise be positioned to claim the same tax deductions as most other industries for the first time in decades. Passage of HB 1447 would prevent that from happening, maintaining one of the most burdensome financial barriers facing the legal marijuana industry.