By Sheeba M. | May 5, 2026
Cannabis Tax Deduction Debate Heats Up in Congress
Cannabis industry stakeholders are watching Congress closely this week as a new bipartisan bill aims to address one of the sector’s oldest pain points: Section 280E of the Internal Revenue Code. This 1982 tax provision prevents cannabis businesses from deducting ordinary business expenses—a burden that doesn’t apply to any other legal industry.
The proposed Marijuana Opportunity Reinvestment and Expungement (MORE) Act amendments would allow cannabis operators to deduct employee wages, rent, utilities, and other standard operating costs. Currently, companies like Curaleaf (CURLF) and Trulieve (TRSSF) must pay federal taxes on gross revenue before expenses—creating effective tax rates of 60-70%.
Impact on MSOs
Multi-State Operators (MSOs) stand to benefit immediately from Section 280E repeal. Gross margins would improve significantly, translating to:
- Trulieve (TRSSF): Est. $40-60M annual tax relief
- Curaleaf (CURLF): Est. $35-50M annual tax relief
- Jreck Holdings (JRECK): Est. $8-12M annual tax relief
Industry analysts estimate that profitable MSOs could see 12-20% margin expansion if 280E is repealed. For investors, this represents a significant upside catalyst not yet priced into many cannabis stock valuations.
Timeline & Next Steps
The bill entered committee markup stage on May 3rd. Expect House floor voting within the next 6-8 weeks. While passage isn’t guaranteed, the bipartisan sponsorship suggests meaningful momentum. Track the progression closely—this could be the most pro-cannabis legislation in the 118th Congress.
Sources
- Congressional Records — MORE Act H.R. 5221 bill text
- Marijuana Policy Project — Legislative tracking and impact analysis
- SEC EDGAR — Q1 2026 MSO earnings filings
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