U.S. Congress: Legislation to Prevent Cannabis Businesses From Taking Tax Deductions Following Rescheduling Gains 15th Sponsor

Wed, Feb 11

Key Points

The federal bill, Senate Bill 471 and House Bill 1447, aims to prevent marijuana businesses from claiming standard tax deductions even if marijuana is rescheduled under the Controlled Substances Act.
Senator Ted Budd (R-NC) became the 15th sponsor of the bill, which seeks to maintain restrictions of Section 280E of the Internal Revenue Code on marijuana businesses regardless of rescheduling.
The legislation is designed to block marijuana businesses from deducting typical expenses like rent, utilities, and wages, overriding the usual tax benefits that would occur if marijuana moved from Schedule I or II to Schedule III.
This bill gained urgency following President Trump’s December rescheduling executive order and reports that the DEA will soon issue a final cannabis rescheduling order.

A federal bill designed to block marijuana businesses from claiming standard tax deductions even if marijuana is rescheduled has gained its 15th sponsor in the House and Senate, and its second new sponsor this week.

Senator Ted Budd (R-NC) signed on as a sponsor to Senate Bill 471 on February 10, bringing the total number of sponsors across the House and Senate to 15. The proposal would ensure that marijuana businesses remain subject to the restrictions of Section 280E of the Internal Revenue Code, regardless of any change in marijuana’s classification under the Controlled Substances Act.

The House version, House Bill 1447, was introduced by Representative Jodey Arrington (R-TX). It would also amend federal tax law so that marijuana businesses could not deduct common business expenses such as rent, utilities and employee wages, even if marijuana is moved from Schedule I to Schedule III. Under current law, Section 280E blocks such deductions for businesses tied to Schedule I or II substances. If marijuana is rescheduled to Schedule III, that restriction would typically no longer apply. This legislation is written specifically to override that outcome.

The legislation gained additional relevance in recent weeks, with President Trump signing a rescheduling executive order in December. According to an advisor to President Trump, Attorney General Pam Bondi informed multiple people at the end of January that the DEA will publish a final cannabis rescheduling order “in a matter of days”.

Below is the full list of current sponsors across both chambers:

House (HB 1447)

Jodey Arrington (R-TX)

Vern Buchanan (R-FL)

Blake Moore (R-UT)

Gregory Murphy (R-NC)

Adrian Smith (R-NE)

Nathaniel Moran (R-TX)

Charles Edwards (R-NC)

Gary Palmer (R-AL)

Pete Sessions (R-TX)

Andy Harris (R-MD)