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by Jane Davenport
LAS VEGAS (KSNV) — A new executive order issued this morning by the Trump administration reclassified medical marijuana, a shift that could ease research restrictions, provide tax relief for cannabis businesses, and signal a more tolerant federal approach to the industry.
Medical marijuana had been listed as a Schedule I drug alongside heroin and ecstasy. Under the order, it moved to Schedule III, a less strictly regulated category that many researchers, business owners, and cannabis users have long awaited.
“It was placed as a Schedule I despite evidence that it did not belong in Schedule I,” said Riana Durrett, executive director of UNLV’s Cannabis Policy Institute.
Durrett said moving state-licensed medical marijuana to Schedule III “allows for more research of the product and it relieves the businesses from a tax penalty under IRS code 280e.”
She said the tax provision prevents standard business deductions.
“This is a big deal in the industry, it’s a heavy tax penalty, and while these businesses struggle and they struggle to compete against unlicensed products, this tax penalty is a really big burden on them that is being relieved,” Durrett said.
The change comes as Nevada’s legal cannabis market continues to soften. The most recent report showed $829 million in taxable sales for 2024, a 2% decrease from 2023.
“It is seemingly a very natural result and progression of legalization. The risk premium is gone, and the sales just need to become more and more competitive with the unlicensed sales. It’s a commodity, and people will pay less and less for that commodity,” Durrett said.
While many believe the executive order could make the marijuana industry more profitable, Durrett said questions remain, particularly in Nevada, where licensing has changed.
“Our licensees used to have medical marijuana licenses and recreational marijuana licenses; in 2023, they became dual licenses,” she said.
Durrett said that could complicate how businesses determine which costs qualify as tax-deductible.
On the research side, Durrett said scientists are welcoming the move because going from a schedule one to a schedule three will alleviate some of the really strict barriers.
She also said consumers could benefit if savings are passed along.
The executive order has drawn criticism from opponents of marijuana legalization.
Kevin Sabet, the chief executive of Smart Approaches to Marijuana, said, “There are many ways to increase our knowledge without giving a tax break to Big Weed and sending a confusing message about marijuana’s harms to the American public.”
Durrett said the change is only the beginning.
Another hearing is set to begin at the end of June, and the Trump administration said it is jump-starting the process for reclassifying marijuana more broadly.
The Cannabis Compliance Board and Taxation released a joint statement on the rescheduling:
The Nevada Cannabis Compliance Board (CCB) and Department of Taxation acknowledge the recent Order issued by the United States Attorney General as a historic development for Nevada’s cannabis industry and the patients it serves. Both agencies are conducting a thorough review of the Order’s requirements and its interaction with Nevada’s existing regulatory framework under NRS Title 56.
The State is aware of the potential federal tax implications of this Order for Nevada cannabis licensees. However, given the significant unresolved questions around the applicability of 280E relief to State of Nevada dual-licensees, and the absence of IRS guidance, both the CCB and Department of Taxation strongly advise all licensees to refrain from adjusting federal tax filings until authoritative federal direction is available. Nevada state tax requirements on cannabis will not change at this time.
Nevada licensees should continue operating under current state law. The CCB will issue specific operational guidance as implementation details become clear. Please refer to the table below regarding CCB’s current interpretation of the Order.
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