Just weeks after Britain’s new vaping tax takes effect, another major set of nicotine regulations will take effect, adding to what is becoming one of the biggest transformations of the UK’s vaping market in years.

The Government itself has recognised the importance of maintaining a price advantage for vaping over smoking. When designing the duty, it explicitly provided for an accompanying tobacco-duty increase to preserve the financial incentive for smokers to choose vaping rather than cigarettes.

Another layer of regulations is added on October 29th

Adults will also be prohibited from buying—or attempting to buy—these products on behalf of someone under 18. Proxy purchasing can result in a £200 fixed penalty in England, Wales and Scotland and £250 in Northern Ireland, while retailers caught selling directly to minors can face larger penalties if prosecuted.

The new restrictions cannot be considered in isolation

The more difficult question concerns the cumulative effect of Britain’s new vaping policies. The previously discussed October tax does not arrive in isolation. The Government is also considering restrictions affecting vape displays, flavour descriptions, packaging and device appearance. Together, these policies could change not only how much vaping costs, but how easily smokers notice, understand and choose products as alternatives to cigarettes.

ELFBAR extrapolated that response across Britain’s vaping population and estimated that as many as 550,000 adults could potentially increase or resume smoking. Using estimates of smoking’s wider economic burden, the company calculated a theoretical maximum cost of approximately £4.5 billion annually.

That figure should not be interpreted as a prediction. It assumes stated intentions translate into behaviour and that all those affected are former smokers who subsequently resume smoking. Nevertheless, it highlights an unintended consequence policymakers need to consider.

Are lawmakers forgetting what actually matters?

Against that background, the key question surrounding restrictions should not be whether they reduce vaping, but whether they reduce smoking.  Preventing underage sales, proxy purchasing and irresponsible promotion can be pursued without undermining adult access. The 29 October measures largely illustrate that approach.

Timing matters here. From October 1st, vaping becomes more expensive through the VPD. Four weeks later, wider age and promotional controls arrive, while further restrictions on product presentation remain under consideration. Each measure may have a different objective, but smokers experience their cumulative effect.

The test for Britain’s evolving nicotine strategy should therefore be broader than whether fewer people vape. Youth uptake should fall, illegal sellers should face meaningful enforcement and regulated businesses should comply with strict age controls. But adult smoking should fall too – and this should be the priority

If Britain can strengthen youth protections while keeping regulated smoke-free products sufficiently affordable and accessible to compete with cigarettes, the two objectives can reinforce one another. If cumulative restrictions instead discourage switching, encourage relapse or drive consumers towards illicit markets, reducing vaping could come at the expense of reducing the behaviour responsible for vastly greater harm: smoking.

The UK’s Disposable Vape Ban One Year Later: Rising Smoking Rates and Illicit Markets, as Predicted

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The dispute extends well beyond tax rates. At its heart is a fundamental question for European tobacco policy: should cigarettes and smoke-free nicotine products be progressively regulated in similar ways, or should taxation and regulation reflect their very different risk profiles?

Sweden must continue to fight for its success

Sweden has historically experienced widespread snus use and more recently growing uptake of nicotine pouches, while maintaining exceptionally low cigarette smoking. Smoke Free Sweden’s Delon Human has therefore urged the incoming Swedish government to defend risk-proportionate taxation. He argues that narrowing the price advantage of smoke-free alternatives over cigarettes could weaken the incentive for smokers to switch. That principle—lower risk, lower tax—is increasingly important as Brussels considers not only the TED but a much broader overhaul of European tobacco policy.

Cochrane confirms vaping outperforms NRTs

World Vapers’ Alliance director Michael Landl said the results strengthen the case for formally incorporating vaping into European smoking-cessation policy. He argues that increasingly restrictive regulation risks limiting access to precisely the alternatives capable of helping smokers leave cigarettes behind.

Brussels want to “modernise” tobacco framework

The Commission says that existing tobacco-control legislation has contributed to declining smoking and tobacco-related mortality, and believes that the rapid emergence of novel nicotine products—particularly their use among young people—requires the framework to be modernised. Harm reduction advocates agree that youth access requires effective controls but dispute the idea that this necessitates regulating non-combustible alternatives increasingly like cigarettes.

Nicotine abstinence vs harm reduction: what will prevail?

Taxation can powerfully influence that choice. If cigarettes and smoke-free alternatives become similarly expensive, some of the economic incentive for switching disappears. Excessive restrictions could also encourage cross-border purchasing and illicit markets rather than eliminating demand.

With both the TED and wider tobacco legislation under review, Brussels has an opportunity to place that distinction at the centre of policy: maintain strong protections against youth uptake and smoking while ensuring adult smokers retain affordable access to regulated alternatives. If Europe’s ultimate objective is reducing smoking-related death and disease, taxing and regulating nicotine according to risk rather than treating every product like a cigarette may offer the more effective route to a smoke-free future.

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“Cannabis companies should consider various pitfalls to ensure not only legal compliance, but to maximize potential benefits.”

By Meeren Amin, William Bogot and Douglas W. Charnas, Fox Rothschild LLP

With rescheduling of medicinal marijuana and potential relief coming for recreational use, cannabis companies should be aware of tax benefits available to the industry.

One such incentive for companies not subject to Internal Revenue Code (IRC) § 280E—which blocks tax benefits to entities that sell Schedule I and II substances—is the IRC § 41 R&D (research and development) tax credit. The R&D tax credit provides a dollar-for-dollar reduction of tax owed for qualifying companies. It is not industry specific and can be claimed by a qualifying company in any sector, including cannabis.

The R&D tax credit was enacted in 1981 to incentivize U.S. companies to increase R&D activity. For years the credit was extended temporarily by Congress at the end of each calendar year. However, in 2015, Congress made it permanent. And then in 2025, lawmakers breathed even more life into the credit by eliminating the requirement that R&D expenditures be amortized over a five-year period.

Now, with IRC § 280E on the chopping block as cannabis moves toward Schedule III status, certain companies in the industry can claim the credit that others have taken advantage of for years. Having said that, careful planning is required when considering the R&D tax credit.

Cannabis companies should consider various pitfalls to ensure not only legal compliance, but to maximize potential benefits.

Pitfall #1: Thinking you don’t qualify for the credit because you don’t do research in a laboratory.

The R&D tax credit is not industry specific. Instead, to qualify for the credit, a company must meet each part of a four-part test:

1. A company needs to develop a new or improved product, process, software, technique, formula or invention. Practically, this means that many cannabis companies can qualify by developing a new or improved product.
2. The research needs to eliminate uncertainty about a product’s capability, method or appropriate design. Often, research will qualify by means of having uncertainty as to a product’s ultimate design.
3. The research must involve a process of experimentation. This does not need to be in a laboratory, but instead simply requires evaluating alternatives through system trial and error.
4. The research must be technological in nature, in that it requires the use of principles of hard science.

This formulaic approach to determining qualification for the credit allows companies in many industries—from pharmaceutical companies to architectural firms—to claim the R&D tax credit. Cannabis companies involved in breeding, cultivation, growing, extraction and product development could potentially qualify for the credit if they meet the four-part test and do not fall under any applicable exclusions.

Pitfall #2: Not maintaining proper records of research activities and expenditures.

The Internal Revenue Service (IRS) commonly attacks R&D credit claims for a lack of substantiation. Taxpayers have the burden to prove they are entitled to the credit, so they must adequately substantiate their claims.

Cannabis companies that qualify can claim the tax credit on qualified wages or supply costs. However, companies must have evidence of wages and supply costs to claim the R&D tax credit.

Evidence of supply costs includes receipts of goods and logs showing how supplies are used in the research process. Since supplies that are later sold to customers would not qualify for the credit, cannabis companies need to track how research supplies are used.

Evidence of wages usually requires detailed activity logs. Most small and mid-sized operators do not require employees to keep a log of activities, but to be able to withstand IRS scrutiny, companies should require employees involved in research to track their time using a consistent methodology.

Maintaining detailed records or R&D activities is difficult for rapidly growing businesses. While granular level records may not be necessary, it is important for cannabis companies to consult with their tax advisors on the level of detail needed and how to implement tracking systems.

Pitfall #3: Relying on unscrupulous or shady promoters of R&D tax credits.

The R&D tax credit is complicated and can be overwhelming. There are a number of reliable firms that can determine qualification, draft a study and calculate the credit. Unfortunately, there are a large number of firms that do not perform the necessary due diligence and are not credible. These firms sometimes charge large contingency fees and make guarantees about eligibility. Their calculations are often greatly overstated for the purpose of generating high fees. These firms may seem credible but can be overly aggressive in their approach.

With the emergence of the cannabis companies as potential new credit claimants, these companies will likely be aggressive in their pitch. However, poor work on the front end can lead to adverse determinations by the IRS.

Cannabis companies need to properly vet the firms they hire to conduct R&D studies and then have those studies reviewed by a third party. Credit experts can analyze the work done by firms to help strengthen the front-end studies. Companies that are not careful face the risk of losing the credit, while also owing promoters huge fees.

Pitfall #4: Not separating non-IRC § 280E and IRC § 280E activities.

As of now, only state-licensed medical marijuana is not subject to IRC § 280E and thus eligible for the R&D tax credit. That means research related to recreational use marijuana is not eligible for the R&D tax credit.

This makes it difficult for most eligible companies who are involved in both medicinal and recreational uses, as they need to separate their research activities relating to the two. This may be almost impossible for vertically integrated companies. But other companies can use entity structuring to help allocate costs and ensure segregation of qualifying and non-qualifying research activities.

The R&D tax credit is a very powerful incentive that certain cannabis companies can now claim. However, it is a major area of focus for the IRS due to the complexity of the credit and the aggressive positions pushed by certain promoters. While this may cause concern to companies seeking to claim the credit, careful due diligence and reliance on advisors can help businesses ensure that their credit claims are well supported.

Meeren Amin is a partner in the Taxation & Wealth Planning Department at Fox Rothschild. William Bogot is co-chair of the Cannabis Law Practice at Fox Rothschild. Douglas W. Charnas is counsel in the Taxation & Wealth Planning Department at Fox Rothschild.

Photo courtesy of National Institute of Standards and Technology.

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Federally legalizing marijuana would generate $57.9 billion in new tax revenue over a decade, according to a new Yale University analysis—and additional states also moving to legalize cannabis would nearly double that haul.

The report, from the university’s Budget Lab, notes that the “cannabis market has grown into a substantial economic sector” but caveats that there is an “unusual degree of uncertainty” about the fiscal projections, however, given the “complicated legal context” of marijuana.

“Marijuana presents an appealing target for taxation,” the Yale analysis says, noting that it is considered by many policymakers to be “socially undesirable”—as is the case with alcohol and cigarettes.

“A tax levied specifically on marijuana could serve the dual purposes of discouraging use and raising revenue, thereby funding new public spending or replacing taxes on socially desirable activities like work or savings,” it says.

Researchers projected that if cannabis were federally rescheduled and an excise tax of $0.00625 per mg of THC were applied, a gram of marijuana would be taxed at $1.31. “At an average price of $8.59 per gram of marijuana, this tax would amount to about a 15% increase in the tax-inclusive price,” the report says.

The tax would result in $57.9 billion in new revenue over the course of ten years, the researchers project, If all remaining states were to also legalize marijuana in their jurisdictions, the total haul would be $111.3 billion over a decade.

The Yale report bases its estimates on existing state tax revenue to determine that the recreational marijuana market was about $25 billion in 2024

“We project that, if the market continues to grow without federal legalization or any new states legalizing, the market will reach nearly $40 billion in 2035,” it says. “The medical segment, while more established, represents the smaller share of total activity at only about 20 percent. As such, the medical marijuana segment accounts for between $5 and $8 billion in sales each year from 2024-2035.”

Uncertainties underlying the revenue estimates include how much illicit activity would convert to the regulated market under legalization, as well as the effect of taxes on consumer purchases.

Legalization would also cause some cannabis workers who are not currently paying income and/or payroll taxes to begin doing so.

“Federal legalization would likely generate income and payroll tax revenue beyond that collected through the excise tax. Workers in the illicit cannabis economy—cultivators, trimmers, distributors, and retail-facing sellers—currently earn income that is neither reported to the IRS nor subject to FICA withholding, because their employers have no lawful basis for establishing formal employment relationships at the federal level. Federal legalization would bifurcate this formerly invisible workforce into two distinct categories for tax purposes. Employees absorbed into licensed, formally structured cannabis firms—the multistate operators, vertically integrated cultivators, and dispensary chains that already operate in the state-legal market—would receive W-2 wages, generating both the employer and employee shares of FICA taxes as well as federal income tax withholding.”

People who own cannabis businesses would also enter into the tax system and be subject to self-employment taxes or federal income tax on net profit—”income streams that are currently entirely outside the federal tax base,” the report says.

“Federal legalization could result in a large-scale transfer of economic activity from the untaxed underground economy into the tax-compliant legal market,” the analysis says. “This shift holds implications for income and payroll tax revenue that is analytically distinct from, and additive to, the excise tax revenues. The scale of the illicit market that would be subject to this transition is substantial.”

Another piece of uncertainty that researchers did not attempt to account for in their calculations stems from the fact that federally legal marijuana businesses would be able to take advantage of tax deductions and credits that they are not eligible for in light of cannabis’s Schedule I status under the law known as 280E.

Despite the uncertainty, the report says, federal legalization would undoubtedly lead to new revenue.

“Federal legalization, by eliminating federal restrictions on banking access, interstate commerce, and formal employment relationships for many illicit operators, would reduce the structural advantages that sustain the black market and pull a meaningful share of that activity into the regulated economy,” the analysis says.

A separately recently published federal report from the U.S. Census Bureau shows that states where marijuana is legal have generated nearly $15 billion in tax revenue from legal cannabis sales since late 2021.

Another report from the advocacy group the Marijuana Policy Project found that states have generated more than $28.4 billion in tax revenue from recreational marijuana sales since the first markets launched over a decade ago.

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A Michigan Republican representative has filed legislation that would reverse a recently enacted tax increase on marijuana businesses.

The new bill, from Rep. James DeSana (R) would repeal the 24 percent wholesale cannabis tax that was enacted as part of legislation negotiated by Gov. Gretchen Whitmer (D) and House and Senate leaders last year.

The tax was projected by state officials to raise $420 million, with the revenue aimed at funding road repairs and construction.

The levy has been challenged in court through lawsuits filed by the cannabis industry.

“It’s time to repeal this failed tax and stop forcing taxpayers and businesses to pay for a policy that simply isn’t working,” DeSana told WNEM-TV

The GOP lawmaker said the tax is generating in less than half of what its supporters anticipated—falling roughly $70 million less in the first four months of the fiscal year, which could rise to a $210 million shortfall from projections, he told the local news outlet.

Removing the new wholesale tax would ease the fiscal burden on legal cannabis businesses and help them compete with the unregulated market, he argues.

—
Marijuana Moment is tracking hundreds of cannabis, psychedelics and drug policy bills in state legislatures and Congress this year. Patreon supporters pledging at least $25/month get access to our interactive maps, charts and hearing calendar so they don’t miss any developments.

Learn more about our marijuana bill tracker and become a supporter on Patreon to get access.
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To that point, the company Higher Love Cannabis Co. on Monday announced it will be suspending operations at five of its nine dispensaries, citing the “mounting tax burden” on marijuana businesses in the state and specifically calling out the new wholesale tax, which it said “introduced another substantial cost in a market already subject to a 10% retail excise tax and 6% sales tax.”

“This decision comes amid broader pressure across Michigan’s cannabis industry, where oversupply, price compression and declining revenue have already forced numerous businesses to consolidate, suspend operations facilities and eliminate jobs,” Higher Love said in a press release. “The added tax burden has further strained the supply chain and made it increasingly difficult for responsible operators to remain viable.

“Higher Love joins industry leaders in calling for balanced policies that protect consumers while allowing businesses to retain employees, serve their communities and build a sustainable future,” it said.

DeSana’s new bill, HB 6224, is only a sentence long, simply reading, “The comprehensive road funding tax act, 2025 PA 23, MCL 205.901 to 205.913, is repealed.”

It has been referred to the House Appropriations Committee.

Meanwhile, earlier this year, the Michigan Cannabis Regulatory Agency announced it is distributing nearly $100 million in marijuana tax revenue to over 300 local governments and tribes across the state. The money is intended to support various local infrastructure, education and other programs and services in 313 municipalities, counties and tribal areas.

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HB 513, one of the bills that may be a slight break for vape sellers, has passed. Described as a “tax deduction for cigarette wholesalers when retailers fail to pay”, this may be one of the few pieces of legislation that doesn’t leave vapers unhappy with the law. 

Recap: What does this bill do?

As stated above, the majority of the bill focuses on taxes and how to cope with debts from uncollected tobacco taxes. Ohio is one of the states that taxes e liquids at a fairly high rate – 10 cents per milliliter of juice. That tax adds up quickly, and with a tax that high, there is incentive to start finding ways around the tax. One way that may have been done is through lack of clarity as to who pays the tax. When e liquid is sold from wholesale to retailers, there should be tax collected, but with lack of communication, it may not be clear who is responsible for this large tax.

Most of the bill deals with how to handle those taxes, particularly if they have not been paid. However, the taxation part is not the part that concerns vapers – it is the part of HB513 described by Ohio Capital Journal as “A late amendment tacked on prohibitions for local tobacco regulations.” The relevant parts of the bill are as follows:

“No political subdivision may enact, adopt, renew, maintain, enforce, or continue in existence any charter provision, ordinance, resolution, rule, or other measure that conflicts with or preempts any policy of the state regarding the regulation of tobacco products or alternative nicotine products.”

What happens now?

The reason this HB513 was referred to as a preemption bill was because the bill prevents any regulations that are more stringent than state tobacco laws from taking precedence. Currently, there are two main cities that would come into conflict with this bill. Since HB513 is a state law and the others are city laws, state law would take precedence over the bans. The fact that HB513 conflicts with those laws is what attracted attention in the first place. 

Columbus is a city in Ohio that has banned all flavored tobacco products –  a ban that is stricter than the FDA allowed products. Columbus’s ban was set to start in January 2024, but is likely not to come into effect due to the passing of HB513. Toledo is another city that has a ban on flavored cartridges. That ban is also in conflict with HB513. 

Though law and its application are two different things, HB513 passing is one of the more positive pieces of legislation concerning vapers for a long time.

References: 

What will DeWine sign? Lawmakers passed more than 30 bills on last day of session

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The cannabis industry has no shortage of financial hurdles, but few innovators are rewriting the financial playbook to meet operators where they are. With a background in hedge funds and high-frequency trading, Darren Gleeman didn’t arrive in cannabis to ride a trend. He arrived to fix a broken system. In a space where traditional M&A is limited and Section 280E guts profitability, Gleeman and his team at MBO Ventures have introduced an alternative: a patent pending ESOP model that makes federal income tax, and the pain of 280E, virtually disappear.

As the cannabis industry’s only ESOP-focused investment bank, MBO Ventures has helped execute the industry’s first ESOP exit, preserving founder equity, boosting employee ownership, and turning tax liabilities into long-term value.

In this interview, Gleeman shares how he’s using financial engineering to solve one of the industry’s most entrenched challenges and why he believes ESOPs might be the future of not just cannabis exits, but equitable capitalism.

Cannabis & Tech Today: You’ve called 280E “the silent killer” of cannabis businesses. For readers less familiar with the tax code, can you explain how it impacts cash flow and valuations, and why it creates such a challenge for exits?

Darren Gleeman: 280E disallows cannabis companies from deducting ordinary business expenses. That means even if a company breaks even or loses money on a pre-tax basis, it still pays full federal income tax on gross profit. This crushes cash flow, which in turn suppresses growth and hence valuation multiples are almost non-existent. Buyers don’t want to acquire companies that have very little cash flow due to income tax, and sellers can’t justify their prices based on after-tax earnings. The result is a market with stalled M&A activity and owners with no viable exit path.

C&T Today: Traditional M&A hasn’t taken off in cannabis the way many expected. What’s missing from the current exit landscape that the ESOP model helps solve?

DG: Buyers either don’t exist or are offering fire-sale prices. Most of the large MSOs are capital constrained, and traditional PE avoids cannabis due to federal illegality. Our ESOP model flips the buyer-seller dynamic: the company sells to a trust for the benefit of the employees, using seller financing and future profits to fund the transaction. The owner gets liquidity and upside through warrants, while the company pays zero federal income tax, making the deal financially viable where others fail.

C&T Today: What inspired you to adapt ESOPs, typically used in more mature industries, for cannabis operators? What did you see that others missed? No one else was solving the 280E problem.

DG: Everyone kept asking how to find buyers. I asked how to make the company more profitable without a buyer. The answer was eliminating taxes. When you remove federal and state income tax, cash flow doubles or triples, and that’s without cutting costs or adding revenue. ESOPs already existed. I just applied them to a space where tax inefficiency is the core issue.

C&T Today: Your ESOP methodology has a patent pending. At a high level, what makes your approach different from a standard ESOP structure?

DG: It’s about structural edge. Just like in my previous hedge fund, the advantage doesn’t come from doing something others can’t… it comes from doing it differently. Our model isn’t built around tweaks or legal gimmicks. It’s a fundamentally different way of thinking about ownership, taxation, and alignment. The edge is in the structure.

C&T Today: You’ve executed every ESOP in the cannabis cannabis to-date. What surprised you most during those early transactions, either from the business owners or the employees?

DG: Business owners were skeptical at first. They thought ESOPs were complicated or too good to be true. Once they saw the math—no taxes, full deduction of the purchase price, deferred capital gains—it became real. Employees, on the other hand, didn’t always grasp it immediately. But when they understood they owned the company and that it paid no taxes, it changed the conversation.

C&T Today: Many cannabis founders worry about “losing control” or diluting their vision. How does the ESOP model preserve culture while still enabling an exit?

DG: Founders still manage the company (assuming they still want to)  The ESOP trust is a passive shareholder. The board of directors governs the company. If the founder wants to stay, and the Board wants them, they can stay to operate the company. If they want to leave, the Board can install a new CEO. Culture isn’t lost because the people running the company—management—don’t change unless the founder wants them to.

C&T Today: We hear a lot about creating generational wealth in cannabis. How does employee ownership factor into that conversation, and how do employees typically respond?

DG: In traditional exits, employees get nothing. With an ESOP, they’re the buyer via this employee trust. The longer the employees stay, the more they accumulate. It’s not a lottery ticket. It’s wealth earned through continued work. For many, it’s the first time they’ve had any ownership in a company. Over time, this builds retirement value that wouldn’t exist under traditional structures.

C&T Today: As someone who comes from the world of hedge funds and high-frequency trading, what perspectives or skills have you brought into this highly regulated, people-driven space?

DG: I bring quantitative thinking to a market that often lacks financial structure. Hedge funds are built on tax arbitrage and capital efficiency. Cannabis is the opposite—tax-inefficient and capital-starved. So I apply the same logic from trading: eliminate friction, optimize after-tax returns, and find structural edges others overlook. That’s what the ESOP does.

C&T Today: With federal rescheduling on the table, how might that shift the value proposition of ESOPs in the cannabis sector?

DG: If 280E disappears, then all companies get a boost in cash flow. This is awesome. The difference is, an ESOP still pays zero federal income tax and zero state income tax. That advantage doesn’t go away. If anything, it increases valuations across the board, making ESOP exits even more attractive for owners looking to defer capital gains and retain upside.

C&T Today: Finally, for cannabis business owners who feel stuck, burned out but hesitant to sell, what’s the one question you think they should be asking themselves right now?

Ask yourself: “Why am I still paying income tax and worrying about 280E when there’s a structure that can eliminate income tax entirely and double my cash flow?” Most owners think their only options are to grind it out or sell at a discount. But there’s a third path, an ESOP, that lets the business pay zero income tax, giving you the freedom to stay, step back, or exit gradually, all while keeping the future upside.

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President Donald Trump’s Dec. 18 executive order directing the Justice Department to officially classify cannabis as a less-dangerous drug with medicinal value under federal law is historic and transformative.

But marijuana rescheduling is also generating confusion, wild speculation and genuine misinformation in and around the $32 billion U.S. regulated cannabis industry.

On top of the practical questions, such as what exactly this does and when it happens, some wild theories and strange conjecture abound, including allegations this is all a looming Big Pharma takeover (not anytime soon) and that this means cannabis companies can claim federal tax relief going back years (don’t push your luck).

MJBizDaily participated in a webinar with Denver-based law firm Vicente LLP on Dec. 22 addressing these and a few other urgent issues. Some are points of law that will be argued (and re-argued) in court. Other question marks hinge on future action. But there are some known knowns.

Here are some of the industry’s most pressing and most-asked questions around marijuana rescheduling.

When is cannabis officially Schedule 3?

Unclear, but soon, or soonish – probably. Unless someone screws something up, and then it could be years.

On Dec. 18, Trump directed Attorney General Pam Bondi to “take all necessary steps to complete the rulemaking process related to rescheduling marijuana to Schedule III,” and to do so  “in the most expeditious manner in accordance with Federal law.” How fast is “the most expeditious”? No one knows – maybe not even the White House. “There is no deadline,” Shane Pennington, a partner with national law firm Blank Rome, recently told MJBizDaily.

In theory, the Justice Department could move quickly, declare the currently paused process left over from the Biden administration finished and publish a final rule in the Federal Register, the official record of what the federal government does – after which time final rules are usually effective in 30 days.

But there are complications. Critics dragged the Biden administration rescheduling process for taking too long, in part because the DOJ adhered to the process: taking public comment, responding to some of them, scheduling hearings before an administrative law judge – that is, building a record should the question come up in court of whether federal law was followed.

Legalization opponents have vowed to sue to stop rescheduling no matter what. If corners are cut and cannabis foes can convince a federal judge that the process wasn’t right, rescheduling could end up stuck in the courts. And United States court is rarely an expeditious process.

Does marijuana rescheduling mean 280E no longer applies in 2025? Is 280E relief retroactive?

For many operators, the top question relates to tax relief, how much of it and when. “Everybody’s super excited about not having to deal with 280E,” said Rachel Gillette, a Denver-based partner at Holland & Hart, in the understatement of the year.

But some operators appear to be ready to file their 2025 returns free from 280E or go even further and file amended returns going back years. They are certainly free to do so, but that seems to guarantee a fight with the Internal Revenue Service in tax court – which is probably where the issue was destined, anyway.

Keep in mind cannabis remains Schedule 1 until the above process plays out – that is, until sometime in 2026 at the earliest. That means cannabis was Schedule 1 for all of 2025 – which means 280E applies.

As some tax experts recently noted in Bloomberg Law, the Internal Revenue Service has generally never allowed retroactive amendments to prior year returns based on changes in the law. (Think about it this way: marijuana legalization has allowed certain past offenses expunged but only because of accompanying changes in the law allowing for expungements; Congress could in theory also allow past 280E bills wiped out, but seems unlikely to do so.)

“That’s the official position of the IRS,” Gillette noted.

However, that doesn’t mean some enterprising cannabis operators won’t push the issue anyway and file amended returns for past years and/or 2025 returns claiming immunity. But that means spoiling for a fight.

“Everything can be argued by a lawyer,” Gillette noted.

What does this mean for the hemp THC ban?

Very little, at least directly.

Thanks to the spending bill Trump signed into law last month to end the record-long government shutdown, the federal definition of hemp will change in November 2026. When it does, nearly all of the products keeping the $28.3 billion U.S. hemp sector afloat become illegal – at least under federal law. Many states still have hemp regulations that remain unchanged regardless of what the feds do – and exactly what they can do, if they do anything at all, is far from clear.

(If that sounds familiar, it should: That’s the status quo for state-regulated cannabis.)

Nothing in Trump’s executive order changes this, either on the state or the federal level. However, the order does direct top White House officials to “work with the Congress to update the statutory definition of final hemp-derived cannabinoid products to allow Americans to benefit from access to appropriate full-spectrum CBD products while preserving the Congress’s intent to restrict the sale of products that pose serious health risks.”

Keep in mind that Mehmet Oz, the director of the Centers for Medicaid Services, promised that senior citizens in the U.S. could see up to $500 in annual reimbursements for CBD products by April. It will be hard for them to have any products to reimburse if they can’t get anything – and the hemp industry has said that the limit, set to go into effect next year, of no more than 0.4 milligrams of THC per container of finished product is unworkable.

Trump’s EO puts the executive and legislative branches on notice to revisit the hemp question. Presidential encouragement is likely to encourage action, but it does not guarantee it.

For hemp-derived THC beverages to enjoy federal protections or for full-spectrum CBD products to stay on the market, Congress must act.

What else does this mean for existing cannabis businesses?

For now, that’s pretty much it.

It’s true that other Schedule 3 drugs, like Tylenol with codeine and anabolic steroids, are legally obtained only via prescription and only from valid pharmacies via the U.S. Food and Drug Administration approval process. It’s also true that botanical products, like cannabis flower, aren’t generally sold in pharmacies with a doctor’s note.

Few serious cannabis industry observers will tell you that the existing state-regulated dispensary/retail model is suddenly going to end or that cannabis somehow becomes more illegal when restrictions are relaxed. (That’s the whole point of relaxing restrictions – and cannabis was already Schedule 1, the strictest control available, and the feds didn’t shut it all down.)

More changes to federal law are almost certainly coming. Some could come as soon as 2026. But rescheduling isn’t meant to disrupt the existing industry, and by itself should not.

Chris Roberts can be reached at chris.roberts@mjbizdaily.com.

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