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The reclassification of medical marijuana as a Schedule III substance is expected to strengthen the financial outlook for licensed cultivators and retailers by providing tax relief and improving access to banking services.
According to Tampa-based CPA Dyezae Smith, owner of Aezalle Tax Advisor, the most immediate impact is that state-licensed medical marijuana businesses will be able to deduct ordinary operating expenses on their 2026 tax returns. Previously, Internal Revenue Code Section 280E prevented businesses handling Schedule I or II substances from deducting expenses such as rent, payroll, marketing, travel, and maintenance.
Mr. Smith says the change could return millions of dollars to cannabis operators that have experienced tax rates as high as 60%.
“A lot of companies are going to use that extra capital that's coming into their business to pay off loans and other business-related debt,” he points out. “A lot of these companies are underbanked, they're overleveraged, they don't have the cash flow that they had hoped over the past few years. They're going to use that first wave of relief to stabilize operations.”
Although the U.S. Department of Justice encouraged the Treasury Department to consider relief from past Section 280E tax penalties, the IRS has not indicated that businesses will be allowed to amend prior tax returns.
Mr. Smith doubts retroactive relief is likely and is more optimistic about the banking landscape. Because financial institutions already serve companies producing Schedule III prescription drugs, he expects regional banks and credit unions to be among the first to expand services to medical cannabis operators, including payroll processing, lending, and payment services.
Florida’s cannabis businesses may be particularly well-positioned to benefit because of the state’s vertically integrated “seed-to-sale” model, which allows a single company to oversee cultivation, processing, and retail sales. However, Mr. Smith notes that the structure remains costly for new entrants.
“I wouldn't necessarily expect any sort of immediate price drop because these companies have to really start to grow and expand,” he emphasizes.
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