A leading marijuana industry association is advocating for Congress to allow cannabis businesses to take federal tax deductions, similar to other industries, and to apply this change retroactively. The current IRS code 280E prevents these deductions, leading to effective tax rates over 70% for state-licensed cannabis businesses. The association argues that this policy threatens small and equity-owned businesses and could push consumers to the illicit market. They propose a retroactive tax credit to preserve the legal cannabis market.

Cannabis Industry Urges Congress for Tax Relief and Retroactive Fixes on 280E

Sep 18, 2025

Source:

Kyle Jaeger

Marijuana Moment

The National Cannabis Industry Association is calling on Congress to finally address the unfair tax burden on state-legal cannabis businesses. Currently, the IRS code known as 280E prevents these shops from taking standard business deductions because marijuana is still federally illegal. This results in an insane effective tax rate of over 70%, which is essentially a "poison pill" for the small businesses and social equity operators we love to support. The NCIA isn't just asking for future relief; they want a retroactive tax credit to help businesses recover from years of these draconian penalties.

For everyday tokers, this is actually a huge deal. When local dispensaries are crushed by federal taxes, they are forced to keep prices high or, worse, close their doors entirely. By leveling the playing field, these businesses can stay sustainable, invest more in high-quality products, and keep the legal market competitive against unregulated sources. Supporting this change means ensuring our favorite local spots can survive and thrive alongside any other normal business.

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