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The proposed reclassification would recognize marijuana as having accepted medical benefits while still maintaining restrictions due to potential abuse concerns.
Matt Perrin and Megan Raines of Flatland Financial said the change could have a major financial impact on cannabis businesses, especially when it comes to taxes.
Raines said many cannabis business owners currently pay significantly higher taxes than traditional businesses because of Section 280E of the federal tax code. The provision prevents businesses tied to Schedule I and II drugs from claiming most normal business deductions.
According to Raines, many cannabis operators are paying 30 to 40 percent more in taxes than other businesses.
Perrin explained the current tax structure often causes taxable income to appear much higher than the actual cash flow businesses have available after expenses.
If marijuana officially moves to Schedule III, businesses could become eligible for more deductions and possible tax credits, potentially lowering tax burdens across the industry.
Raines said the change could also benefit consumers by allowing dispensaries to lower prices. She noted some products that once sold for $40 to $45 can now be found for around $15 at some dispensaries.
Despite the possible tax benefits, both accountants stressed marijuana would still remain federally illegal even with the reclassification.
They also said Arkansas law would remain unchanged under Amendment 98, which legalized medical marijuana in the state but not recreational use.
Business owners are now waiting for additional guidance from the IRS on how the potential reclassification would affect federal tax rules moving forward.
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Temps: High: 79 Low: 48
Rain 24hrs: 0.00″
Month: 0.50″ Year: 13.35″