Justin Leiby

“Rescheduling removes a major structural penalty, but tariffs will reshape who captures the gains. All else equal, dispensary-heavy companies may emerge as the primary beneficiaries.” By Justin Leiby, Cannabis Research Institute With federal cannabis rescheduling partially underway and the potential end of the 280E tax penalty approaching, how much relief the cannabis industry will experience is an open question.

The regulated cannabis industry confronts a strange moment: long-awaited federal tax relief may arrive in 2026 as tariffs offset the benefits. For years, operators have awaited the end of Section 280E, a federal tax rule that prevents cannabis businesses from deducting ordinary operating expenses like rent and payroll. Operators in Illinois estimate that 44% of 2024 operating expenses were nondeductible under 280E, according to regulatory disclosures.

“Time is money.” – Benjamin Franklin 1 Introduction It is an axiom of auditing regulation and theory that auditors’ commercial motivation to maximize wealth conflicts with their responsibility to act in society's interest by exercising skepticism, independence, and due care (Carey and Doherty [1966], Goldman and Barley [1974], U.S. Supreme Court [1984], Bazerman et al. [1997], Suddaby et al. [2009], AICPA [2021]).