New York City, December 19, 2025
President Trump’s recent executive order to reclassify marijuana from a Schedule I to a Schedule III substance has significant implications for the cannabis industry in New York. This change promises to alleviate tax burdens and foster economic growth for local cannabis businesses. With potential federal tax reductions of 30% to 75%, entrepreneurs can expect enhanced operational flexibility and further investment opportunities in this rapidly expanding market.
New York City, NY
President Trump’s Executive Order: A New Era for Cannabis Businesses
How reclassifying marijuana could relieve tax burdens for New York entrepreneurs
On December 18, 2025, a significant shift occurred in the landscape of the cannabis industry when President Donald Trump signed an executive order directing the U.S. Attorney General to expedite the reclassification of marijuana from a Schedule I to a Schedule III substance under the Controlled Substances Act. This move is not just a legal adjustment; it holds the promise of fostering innovation, alleviating tax burdens, and enhancing the economic growth of businesses involved in this burgeoning sector.
For New York’s cannabis industry, the implications are profound. Since the state legalized adult-use cannabis in 2021 through the Marijuana Regulation and Taxation Act (MRTA), the sector has experienced rapid growth, showing the resilience of local entrepreneurs. The executive order, aimed at lowering federal tax burdens by enabling extensive deductions of ordinary business expenses, could yield tax reductions ranging from 30% to 75%, positioning local cannabis businesses for even greater success.
The Current Tax Landscape for Cannabis Businesses
Under existing federal law, cannabis businesses classified as dealing with Schedule I substances face significant challenges. These businesses are currently prohibited from deducting ordinary business expenses from their federal tax returns, putting them at a substantial disadvantage compared to other sectors. This barrier inhibits their growth potential and limits their operational flexibility.
Impact of Reclassification
The expected reclassification of marijuana to Schedule III is a game changer. With this new status, cannabis businesses will be able to benefit from tax deductions that have long been unavailable, enabling them to reinvest in their operations and drive further growth in an already thriving market. This change is anticipated to align federal and state cannabis policies, ultimately leading to enhanced job creation and entrepreneurial opportunities within the industry.
The Role of the Office of Cannabis Management
New York State’s Office of Cannabis Management (OCM) has been a strong advocate for the reclassification, helping to highlight marijuana’s therapeutic value and its potential to contribute significantly to the state’s economy. As discussions between the OCM and federal agencies progress, the alignment of federal and state policies could create a cohesive environment for cannabis businesses to flourish.
Economic Growth and Community Benefits
The overarching theme of the reclassification is economic growth. With expected tax relief, businesses can enhance their operations, invest in innovation, and expand their workforce, ultimately benefiting the local economy. This positive ripple effect can lead to additional community investments, improved infrastructure, and increased revenue for state programs funded by cannabis taxes.
Conclusion
The potential reclassification of marijuana is a significant stride toward a more favorable economic landscape for New York’s cannabis businesses. By advocating for reduced federal tax burdens, local leaders are creating opportunities for entrepreneurial innovation and economic resilience. As the cannabis industry continues to evolve, stakeholders are encouraged to remain engaged and supportive of local businesses that contribute to the vibrancy and growth of the New York economy.
Frequently Asked Questions (FAQ)
What did President Donald Trump’s executive order on December 18, 2025, entail?
President Donald Trump signed an executive order directing the U.S. Attorney General to expedite the process of reclassifying marijuana from a Schedule I to a Schedule III substance under the Controlled Substances Act.
How will the reclassification of marijuana affect federal taxes for cannabis businesses?
Reclassifying marijuana to Schedule III is expected to allow cannabis businesses to deduct ordinary business expenses on their federal tax returns, potentially reducing their federal taxes by 30% to 75%.
What is the current federal tax situation for cannabis businesses?
Under current federal law, businesses dealing with Schedule I or II substances are prohibited from deducting ordinary business expenses on their federal tax returns.
What is the Marijuana Regulation and Taxation Act (MRTA) in New York State?
The MRTA, enacted in 2021, legalized adult-use cannabis in New York and established a comprehensive regulatory framework for the industry, including the imposition of various taxes on cannabis products.
How does the reclassification of marijuana impact New York State’s cannabis industry?
The reclassification aligns federal and state cannabis policies, potentially fostering economic growth and providing tax relief to businesses in New York’s multi-billion dollar cannabis industry.
Key Features of the Reclassification of Marijuana
| Feature | Description |
|---|---|
| Executive Order | President Donald Trump’s directive to reclassify marijuana from Schedule I to Schedule III under the Controlled Substances Act. |
| Tax Impact | Potential reduction in federal taxes for cannabis businesses by 30% to 75% due to eligibility for ordinary business expense deductions. |
| Current Federal Tax Status | Businesses dealing with Schedule I or II substances are currently prohibited from deducting ordinary business expenses on federal tax returns. |
| New York’s MRTA | Enacted in 2021, the Marijuana Regulation and Taxation Act legalized adult-use cannabis in New York and established a comprehensive regulatory framework for the industry. |
| Industry Impact | The reclassification aligns federal and state cannabis policies, potentially fostering economic growth and providing tax relief to businesses in New York’s cannabis industry. |
Now Happening on X
- @WGRZ (Dec 18, 2025): New York cannabis industry anticipates major tax relief after marijuana reclassified. View on X
- @prophet (Dec 19, 2025): Highlights how marijuana reclassification brings huge tax relief to the cannabis industry by lifting IRS 280E restrictions, allowing normal business deductions and potentially slashing effective tax rates from 60-70%. View on X
- @White House Xray (Dec 18, 2025): Discusses how rescheduling marijuana provides corporate tax cuts disguised as reform, offering a $50B+ windfall to big operators while critiquing broader policy impacts. View on X
- @Giuseppe (Dec 13, 2025): Notes that rescheduling cannabis provides a lifeline to the sector, as businesses were losing up to 70% of operating income to IRS rules, improving industry sustainability. View on X
- @Amanda (Dec 18, 2025): Points out that reclassifying marijuana from Schedule I to III allows corporations massive tax breaks estimated at $2.3B, though other taxes like income and property remain. View on X
- @Black Enterprise (Dec 12, 2025): Reports that since New York legalized recreational cannabis in 2021, it has created a $1.8 billion market, with lawmakers supporting local businesses against larger corporations. View on X
- @Citizen Apprentice (Dec 15, 2025): Explains that post-descheduling, cannabis shifts to an agricultural good, collapsing risk premiums from illicit operations and boosting compliant production and economic value. View on X
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