Marijuana rescheduling doesn’t go into effect overnight, and many questions are left unanswered. But MJBizDaily tries to answer some of the industry’s most pressing concerns.
On top of the practical questions, such as what exactly this does and when it happens, some wild theories and strange conjecture abound, including allegations this is all a looming Big Pharma takeover (not anytime soon) and that this means cannabis companies can claim federal tax relief going back years (don’t push your luck).
MJBizDaily participated in a webinar with Denver-based law firm Vicente LLP on Dec. 22 addressing these and a few other urgent issues. Some are points of law that will be argued (and re-argued) in court. Other question marks hinge on future action. But there are some known knowns.
Here are some of the industry’s most pressing and most-asked questions around marijuana rescheduling.
When is cannabis officially Schedule 3?
Unclear, but soon, or soonish – probably. Unless someone screws something up, and then it could be years.
On Dec. 18, Trump directed Attorney General Pam Bondi to “take all necessary steps to complete the rulemaking process related to rescheduling marijuana to Schedule III,” and to do so “in the most expeditious manner in accordance with Federal law.” How fast is “the most expeditious”? No one knows – maybe not even the White House. “There is no deadline,” Shane Pennington, a partner with national law firm Blank Rome, recently told MJBizDaily.
In theory, the Justice Department could move quickly, declare the currently paused process left over from the Biden administration finished and publish a final rule in the Federal Register, the official record of what the federal government does – after which time final rules are usually effective in 30 days.
But there are complications. Critics dragged the Biden administration rescheduling process for taking too long, in part because the DOJ adhered to the process: taking public comment, responding to some of them, scheduling hearings before an administrative law judge – that is, building a record should the question come up in court of whether federal law was followed.
Legalization opponents have vowed to sue to stop rescheduling no matter what. If corners are cut and cannabis foes can convince a federal judge that the process wasn’t right, rescheduling could end up stuck in the courts. And United States court is rarely an expeditious process.
Does marijuana rescheduling mean 280E no longer applies in 2025? Is 280E relief retroactive?
For many operators, the top question relates to tax relief, how much of it and when. “Everybody’s super excited about not having to deal with 280E,” said Rachel Gillette, a Denver-based partner at Holland & Hart, in the understatement of the year.
But some operators appear to be ready to file their 2025 returns free from 280E or go even further and file amended returns going back years. They are certainly free to do so, but that seems to guarantee a fight with the Internal Revenue Service in tax court – which is probably where the issue was destined, anyway.
Keep in mind cannabis remains Schedule 1 until the above process plays out – that is, until sometime in 2026 at the earliest. That means cannabis was Schedule 1 for all of 2025 – which means 280E applies.
As some tax experts recently noted in Bloomberg Law, the Internal Revenue Service has generally never allowed retroactive amendments to prior year returns based on changes in the law. (Think about it this way: marijuana legalization has allowed certain past offenses expunged but only because of accompanying changes in the law allowing for expungements; Congress could in theory also allow past 280E bills wiped out, but seems unlikely to do so.)
“That’s the official position of the IRS,” Gillette noted.
However, that doesn’t mean some enterprising cannabis operators won’t push the issue anyway and file amended returns for past years and/or 2025 returns claiming immunity. But that means spoiling for a fight.
“Everything can be argued by a lawyer,” Gillette noted.
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