Two GOP senators have introduced a bill that would continue to block marijuana businesses from taking federal tax deductions under Internal Revenue Service (IRS) code 280E—even if it’s ultimately rescheduled.
Sens. Sens.
Although a rescheduling of hearings by the Drug Enforcement Administration on this proposal has been put off, senators hope to prevent the industry from gaining momentum.
Businesses that deal with marijuana would not be allowed to take tax deductions available to businesses in other industries.
The proposed revision to 280E is as follows:
No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in—
The term marijuana is defined as follows: 802(16 ))),
(2) controlled substances, within the meanings of schedules I and 2 of the Controlled Substances Act.
Which is illegal under Federal law, or any state law in which the trade or business takes place.
Lankford’s bill was a product of the Smart Approaches to Marijuana group, a prohibitionist organization.
“We are grateful to Senator Lankford’s strong leadership on fiscal responsibility as well as drug policy. Kevin Sabet, SAM’s president said that the federal government shouldn’t be giving tax breaks to an industry which is federally illegal and profits from addiction. This legislation will prevent deficits while making sure that the taxpayers are not left to pay for tax breaks for those who violate federal laws and poison children.
Senators on a key committee introduce a bill that will prevent a $2 Billion Marijuana Tax Breach before the budget re-conciliation.
Declaration from @KevinSabet In support of @SenatorLankford The following are some examples of how to get started: @SenatorRicketts‘s legislation to prevent a $2.3 billion marijuana industry tax cut. pic.twitter.com/hnPTNFQtlu
— SAM (@learnaboutsam) February 7, 2025
The bill was a fantasy when SAM’s federal affairs team presented it to Senator Lankford in the last year. In just two months, Senator Lankford’s staff took this idea to heart,” said he. We are thankful for his courage to stand up and do the right thing. “We look forward to seeing this bill gain support and, hopefully, be included in the budget reconciliation package.”
Lankford was critical of the push for rescheduling. He led a letter to the public last year, opposing reforms and claiming that the government’s recommendations were based more on politics than science.
As Nebraska’s governor and now as a senator, Rickets has consistently opposed cannabis reform efforts at the state and congressional levels, including proposals to legalize medical cannabis in Nebraska, streamline the state pardon process and allow banks to work with state-licensed marijuana businesses.
In 2021, as Ricketts advocated against a medical cannabis proposal in his home state, he asserted that marijuana is a “dangerous drug that will impact our kids,” and he took that claim a step further by asserting that if states enact legalization, “you’re gonna kill your kids—that’s what the data shows from around the country.”
Another Republican congressman withdrew a bill amendment that was intended to undermine the marijuana rescheduling effort.
It is possible that the legislation would have created a dilemma for those who support marijuana legalization under Donald Trump’s leadership. Acting Administrator Derek Maltz subscribes to the “gateway drug” theory for marijuana and believes most people living in states that have legalized cannabis will continue to obtain it from illicit sources such as cartels due to high taxes in regulated markets, for example.
You can read the entire text of the No Deductions for Marijuana Businesses Act below.
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