By Michael Cooper, National Cannabis Industry Association
A small group of Republican members of Congress is advancing legislation that would effectively raise taxes on state-legal cannabis operators — contradicting the Trump administration's own policy direction and benefiting the illicit market over regulated businesses.
The No Deductions for Marijuana Businesses Act would preserve Section 280E, the federal provision that bars state-legal cannabis businesses from claiming ordinary business deductions. The bill's sponsors also wrote to Treasury officials this month following recent changes to marijuana's federal classification.
The legislation directly conflicts with the Trump administration's decision to move medical cannabis into Schedule III, a reclassification that eliminates the 280E penalty. The administration is also holding a hearing on extending Schedule III to adult-use cannabis, which would carry the same tax relief. The bill's sponsors appear to be working against the DOJ's Final Order rescheduling state-regulated medical cannabis by keeping punitive tax treatment in place for licensed cannabis businesses regardless of their federal classification.
The contradiction is sharp. Republicans have long campaigned on cutting taxes for small businesses, yet this bill imposes exactly that burden on a class of heavily regulated, often small operators already running on thin margins. Acknowledging cannabis's accepted medical use while simultaneously pushing to preserve one of the industry's harshest financial penalties is difficult to reconcile.
Even granting the bill's sponsors the most charitable reading — that they want cannabis as tightly controlled as possible — the legislation still undermines that goal. Licensed dispensaries excel at age verification, both anecdotally and in studies. Raising costs for regulated businesses will force some to close and push consumers toward the unregulated illicit market, which pays no taxes, sells untested products, and imposes no age restrictions.
Roughly two-thirds of Americans support cannabis legalization, and nearly every state has moved away from blanket prohibition. Congress should be reinforcing regulated markets, not weakening them.
Michael Cooper is policy chair for the National Cannabis Industry Association.
