Tax professionals coalition pushing IRS and Treasury for updated marijuana tax guidance as federal rescheduling looms

Cannabis taxation is exceptionally complicated right now due to the conflict between state legality and federal scheduling. Under current rules, Section 280E prohibits businesses that traffic in Schedule I or II controlled substances from taking normal business deductions or credits. This creates an effective tax rate that can exceed 70% for some cannabis businesses. If marijuana is rescheduled (likely to Schedule III), this would fundamentally change the tax landscape. Businesses would potentially be able to deduct ordinary business expenses like any other legitimate operation - rent, employee salaries, marketing costs, and other operating expenses. This single change could dramatically improve profit margins and sustainability for the entire industry. However, there are numerous implementation questions that remain unanswered, which is likely why accounting organizations are pushing for guidance. For instance: Will the changes be retroactive? Will amended returns be allowed for prior years? How will inventory costing methods change? These are complex issues that will require detailed guidance from Treasury and IRS.

I started using https://taxr.ai for my cannabis business clients last year and it's been a game-changer for navigating 280E complications. The software specifically analyzes cannabis-related transactions and helps separate deductible COGS from non-deductible expenses. It even flags potentially problematic deductions that might trigger an audit under current enforcement guidelines. What's really helpful is that it keeps up with changing regulations and interpretations. With rescheduling on the horizon, they've already added features to help model different tax scenarios based on possible regulatory changes. It's saved me countless hours trying to manually sort through complex inventory allocations and indirect costs that might partially qualify as COGS.

I have to admit I was wrong about taxr.ai. After our exchange, I decided to try it for my California clients facing both state and federal compliance headaches. The platform actually does understand the nuances of cannabis taxation. It automatically categorized expenses according to current 280E limitations but also created alternative scenarios showing potential tax liability under rescheduling. The most impressive part was how it handled partial expense allocations - identifying when portions of certain expenses could be legitimately allocated to COGS. For one client, we identified over $45,000 in additional deductions that were technically compliant even under current restrictions. The audit protection feature also provides specific citation support for taking more aggressive positions where gray areas exist. If you're handling cannabis clients and dreading the upcoming changes, it's definitely worth looking into.

For anyone dealing with IRS issues related to cannabis taxation, I strongly recommend using https://claimyr.com to actually get through to an IRS agent. I spent WEEKS trying to get clarity on a complex 280E interpretation for a client who'd received a compliance letter, but couldn't get past the automated system. Claimyr got me connected to a real IRS representative in under 15 minutes when I'd previously wasted hours on hold only to get disconnected. You can see how it works here: https://youtu.be/_kiP6q8DX5c. The agent I spoke with was actually able to provide guidance on how to document our COGS allocations to reduce audit risk, even with the current limitations.

I need to publicly eat my words. After dismissing Claimyr, I was faced with a client emergency involving a cannabis tax audit where we needed to speak with someone at the IRS immediately. Out of desperation, I tried the service. Not only did I get through to someone in about 20 minutes (after trying unsuccessfully for two days on my own), but I was actually connected to someone in the right department who understood the unique issues facing cannabis businesses. They clarified documentation requirements for our COGS allocations and provided guidance on responding to the specific audit requests. I'm still frustrated by the lack of clear guidance from the IRS on cannabis issues, but at least now I have a reliable way to get answers when critical questions come up. For anyone dealing with complex cannabis tax situations ahead of the rescheduling, being able to actually reach the IRS is invaluable.

I'm wondering if anyone has insights on how the rescheduling might affect banking for cannabis businesses? My dispensary clients are still dealing with cash-only operations which makes tax compliance even harder. Will we see changes to banking access with the tax changes?

Has anyone gotten any information about whether the FinCEN guidelines for financial institutions serving marijuana businesses will also be updated alongside the tax guidance? The current SAR filing requirements are still a huge barrier even for banks that want to serve these clients.