WASHINGTON DC – U.S. Sen. James Lankford is seeking answers from the Treasury Department about whether marijuana businesses could gain access to federal tax deductions and credits if marijuana is reclassified under federal law.
Lankford, R-Oklahoma, and House Budget Committee Chairman Jodey Arrington sent a letter to Treasury Secretary Scott Bessent requesting details on how the department would handle tax treatment for marijuana businesses if the drug is moved from a Schedule I to a Schedule III controlled substance.
“We have long been concerned about the potential fiscal and societal consequences of rescheduling,” the lawmakers wrote.
Current federal tax law generally prohibits businesses trafficking in Schedule I or Schedule II controlled substances from claiming many ordinary business deductions and tax credits. Lankford argues that moving marijuana to Schedule III could make cannabis businesses eligible for tax benefits that are currently unavailable under federal law.
The lawmakers asked Treasury whether marijuana businesses could qualify for federal tax deductions or credits, how eligibility would be determined and whether any retroactive tax relief could be available.
In their letter, Lankford and Arrington pointed to Oklahoma’s medical marijuana industry, noting that some state-licensed operations have been linked to investigations involving black market activity, money laundering and human trafficking.
They also requested information on the potential cost to taxpayers, the impact on federal deficits and the legal authority for extending tax benefits to marijuana businesses. The lawmakers requested a response by June 29.
Lankford has previously introduced the No Deductions for Marijuana Businesses Act, legislation that would prohibit marijuana businesses from claiming federal tax deductions or credits regardless of the drug’s classification under federal law.
