IRS Makes 280E Guidance a Priority; DEA Opens Cannabis Registration Path

The federal government’s new treatment of medical marijuana is moving from a scheduling decision toward implementation, with tax authorities making Section 280E guidance an official priority and the Drug Enforcement Administration opening a registration route for cannabis businesses operating under Schedule III.

The Department of the Treasury and Internal Revenue Service included “Guidance under §280E” in their newly released 2026–2027 Priority Guidance Plan, putting one of the cannabis industry’s most consequential tax questions on the agencies’ formal agenda.

The plan contains 121 guidance projects that Treasury and the IRS say will be the focus of their efforts during the plan year. Inclusion does not establish a deadline for completing a project.

For cannabis companies, however, the significance extends beyond whether 280E eventually disappears across the entire industry.

The federal government has already moved qualifying medical marijuana into Schedule III while leaving other marijuana in Schedule I. Then, how should businesses operating across both categories allocate expenses for federal tax purposes?

280E Becomes an IRS Priority

Section 280E prevents businesses trafficking in Schedule I or II controlled substances from deducting or claiming credits for many ordinary business expenses.

That has historically applied broadly to state-licensed marijuana businesses because marijuana was classified under Schedule I.

The landscape changed in April.

The Department of Justice’s final order placed marijuana contained in FDA-approved products or covered by qualifying state medical marijuana licenses, along with certain marijuana extracts and naturally derived delta-9 THC products, in Schedule III. Marijuana outside the categories covered by the order remains in Schedule I.

Treasury and the IRS quickly acknowledged the tax implications.

In an April 23 announcement, Treasury said the scheduling change was expected to have “significant positive tax consequences” for qualifying medical marijuana businesses because Section 280E applies to businesses trafficking in Schedule I and II substances.

But removing 280E from one part of a cannabis company’s operations while retaining it for another creates an accounting problem of its own.

A company operating both qualifying medical and adult-use businesses could have expenses connected to activities receiving different treatment under the federal tax code.

Treasury said forthcoming guidance is expected to address businesses engaged in multiple marijuana activities, including how expenses may be apportioned between operations that remain subject to 280E and those that do not.

That could make the eventual guidance particularly important for vertically integrated and multistate operators with both medical and adult-use operations.

Treasury also said it expects to establish a transition rule generally treating the scheduling change as applicable for the entire taxable year containing the effective date of the federal order for activities that no longer involve Schedule I or II substances.

The new Priority Guidance Plan moves the issue another step forward by formally placing 280E guidance among the projects Treasury and the IRS intend to work on.

It does not, however, say when the guidance will arrive.

DEA Registration Moves Forward Too

Tax treatment is only one part of the federal infrastructure now taking shape.

The DEA’s Diversion Control Division has also opened its registration system for businesses seeking controlled-substance registrations applicable to Schedule III cannabis activities.

Manufacturers, distributors and analytical laboratories can apply for new DEA registrations through Form 225, while the federal framework separately provides for medical-marijuana dispensary registration.

For cannabis manufacturers, federal registration can cover activities including cultivation, production, processing, packaging and labeling, as well as transfers permitted under the federal framework. Distributors can receive and transfer cannabis between appropriately registered entities.

The distinction matters because the April scheduling order did not federally legalize the entire state cannabis industry.

Instead, it established Schedule III treatment for defined categories of medical marijuana while marijuana outside the order’s scope remains in Schedule I.

The federal registration framework therefore sits alongside, rather than replaces, state licensing requirements.

An initial 60-day application period also provided special treatment for qualifying state-licensed medical cannabis businesses seeking federal registration. DEA was directed to make every effort to process applications filed during that period within six months, subject to the requirements established by the federal order.

The expiration of that early window did not close the registration process itself. Businesses can continue seeking DEA registration through the agency’s application system.

From Rescheduling to Implementation

Taken together, the IRS and DEA developments show what comes after a federal scheduling change.

Schedule III can alter the economics of qualifying medical cannabis businesses through 280E relief, but companies still need rules explaining how that relief works when medical and adult-use operations overlap.

Likewise, changing cannabis’s status under the Controlled Substances Act requires a federal registration system capable of handling the businesses manufacturing, distributing, and dispensing products covered by the new classification.

Those systems are now beginning to take shape.

For operators, the next important details will come from implementation: how Treasury tells mixed businesses to divide expenses, how the IRS treats the transition year, and how DEA registration works in practice for companies operating simultaneously under state cannabis laws and the federal Controlled Substances Act.