Why some cannabis businesses say 280E no longer applies — and how operators are filing anyway
As cannabis operators enter another tax season under Section 280E, a recent Outlaw Report webinar signaled that the ground may already be shifting. Speakers argued that evolving interpretations of federal law — including HHS’s conclusion that cannabis no longer fits the definition of a Schedule I substance — could undermine 280E’s application, even before formal rescheduling. Panelists also outlined practical strategies already in use, from expanded inventory accounting under Section 471(c) to filing with disclosure forms to manage risk. The message for operators was clear: relying on old assumptions around 280E could be more dangerous than adapting to the new legal and tax landscape.
- Rep. Andy Harris, R-Md., could lose his Congressional seat if Maryland’s redistricting passes. This of course doesn’t mean that the Harris Rider which blocks D.C. from using funds to set up retail cannabis would go away. It currently remains in this year’s proposed spending bill which President Trump signed last week.
- D.C. shuts down another unlicensed business.
- The next ABC Board meeting is Feb. 11, 2026: watch, agenda.
- Feb. 4 disposition.
New bill proposes restorative approach for Virginia youth cannabis penalties
HB1432 seeks to align cannabis penalties for minors with those for alcohol by replacing criminal charges with a restorative civil framework. Under this bill, individuals under 21 would receive a series of warnings and social service referrals rather than facing arrests, criminal records, or the loss of driving privileges. The goal is to prioritize education and support over punitive legal measures for youth.
New criminal sanctions proposed for unlicensed cannabis activity
SB542 establishes the framework for Virginia’s legal retail cannabis market but includes new, strict criminal penalties for unlicensed activity. While it creates a pathway for legal sales, recent amendments would reclassify youth possession as a Class 1 misdemeanor and elevate unlicensed cultivation and distribution to high-level felonies. The proposal aims to protect the legal market by aggressively suppressing the unlicensed “gray market.” Critics say it harkens back to “War on Drugs” policy.
- More on individual lawmakers input from VPM here.
- The next CCA meeting is Feb. 17, 1-3 P.M.
- The Cannabist Co. completed a $130 million sale of its Central Virginia medical cannabis business — including five operating dispensaries, one in development, and about 82,000 sq ft of cultivation and production space — to an affiliate of Boston-based hedge fund Millstreet Credit Fund LP. The deal replaces a previously planned sale to Curaleaf and comes as Virginia’s legislature advances plans for a regulated adult-use cannabis market.
- Medical cannabis suppliers like Jushi Holdings are preparing to transition into Virginia’s anticipated adult-use cannabis retail market, emphasizing the importance of regulated cultivation, seed-to-sale tracking, and third-party testing for product safety and quality. Executives say the current medical cannabis market generates roughly $180–$200 million annually, but the potential adult-use market could be up to 20× larger if it captures illicit demand.
Maryland moves to protect gun rights for registered medical cannabis patients
Maryland lawmakers are advancing legislation that would prevent individuals from being denied the right to purchase, own, or carry firearms solely because they are registered medical cannabis patients, aiming to resolve a conflict between state medical cannabis law and federal gun-ownership restrictions.
East Coast Roundup
A campaign to repeal recreational cannabis sales in Massachusetts has been fueled by more than $1.5 million in funding from Smart Approaches to Marijuana’s SAM Action Inc., a Virginia‑based nonprofit that does not disclose its donors, as the ballot initiative moves forward despite challenges over petition tactics.
Police in Wilmington, Delaware, charged a man after executing a search warrant at a smoke shop and seizing roughly 9.57 pounds of cannabis and THC‑related products allegedly sold illegally from the business.
After more than four years of regulatory delays following New York state’s legalization, Haze & Harvest, Newark’s first licensed cannabis dispensary, is set to open on February 21, bringing tested, regulated products and new jobs to the local market.
Culture & More
Rescheduling cannabis from Schedule I to Schedule III under federal law would provide a significant tax break for legal cannabis businesses by allowing standard business deductions currently barred under Section 280E, potentially saving the industry billions and quietly reducing federal oversight without fully legalizing cannabis.
Although hemp and cannabis are botanically the same species (Cannabis sativa), U.S. law treats them differently based on THC content and use — hemp is defined by low THC and broader industrial uses, while cannabis with higher THC remains federally controlled, leading to a complex patchwork of legal distinctions and regulations.
In a New York Times op-ed, editors argue that cannabis legalization has dramatically increased use, addiction, and health-related harms, particularly from high-THC products, while the legal cannabis industry has profited from lax regulation and misleading claims about medical benefits.
Around the Country
Democratic lawmakers in Wisconsin introduced legislation to legalize cannabis for both recreational and medical use, including provisions to regulate the market and offer pathways to expunge past cannabis convictions — though Republican leaders may limit the scope to medical only.
Multiple cannabis‑related bills are progressing through the Florida House this session, addressing issues like regulatory reforms and policy changes, even as broader legalization remains a topic of debate.
Ohio AG sues cannabis companies over alleged price fixing: Ohio’s attorney general has filed a lawsuit accusing nine major multistate cannabis operators of running a price‑fixing “cannabis cartel” that harms competition and keeps consumer prices high, seeking injunctions and penalties under state antitrust laws.
From the swamp
A Republican senator told Marijuana Moment that President Trump was “poorly advised” on his decision to move forward with federal cannabis rescheduling from Schedule I to Schedule III, arguing the policy change isn’t necessary for research and could harm workforce and economic growth — positions the senator directly raised with Trump, though they ultimately disagreed.
President Trump’s December executive order directing the Justice Department to expedite cannabis rescheduling looks more like a public relations play than meaningful reform, noting that the rulemaking process will likely be slow and contentious and that deep red tape and federal obstacles remain.
Federal rescheduling could be a major economic win for cannabis businesses, especially by reducing tax and regulatory burdens and affecting how taxes and fees shape state markets like Colorado’s; a University of Colorado tax expert breaks down how shifts in law might prompt industry growth and operational shifts.
