The IRS and Treasury have added guidance on Internal Revenue Code Section 280E to their 2026–2027 Priority Guidance Plan. That makes the issue a priority for agency resources during the plan year, but it does not set a publication deadline or reveal the final rules. Cannabis businesses affected by the federal rescheduling of certain medical-marijuana products will be watching for clarification on which activities remain subject to 280E, how expenses may be allocated, and when any changed treatment applies.
What the new priority plan says
The initial 2026–2027 Priority Guidance Plan, released by Treasury and the IRS on September 29, 2026, lists “Guidance under §280E” under “Other Priorities.” The plan contains 121 projects. Its 12-month period runs from October 1, 2026, through September 30, 2027.
Inclusion signals that the agencies consider the project a priority for resources during that period. It does not guarantee completion by September 30, 2027. Treasury and the IRS say the plan “does not provide any deadline for completing the projects.” The listing also does not say what the final guidance will contain.
Why Section 280E guidance matters to cannabis businesses
Section 280E generally bars deductions and credits for amounts paid or incurred in a business that consists of trafficking in Schedule I or II controlled substances. In a June 28, 2024 statement, the IRS said this restriction applied to marijuana businesses even in states where sales were legal. The agency also said properly calculated cost of goods sold could reduce gross receipts when determining gross income. That statement describes the IRS’s position at that time; it predates the 2026 developments concerning medical marijuana.
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The IRS said in 2024 that taxpayers were not entitled to refunds based on certain amended-return claims arguing that 280E did not apply while marijuana remained Schedule I. That historical position alone does not determine refund eligibility after later developments. The relevant law, agency guidance, facts, and tax year matter.
What Treasury and the IRS previously expected the guidance to address
In an April 23, 2026 announcement, Treasury and the IRS said they planned to address the federal tax consequences of the Justice Department’s Final Order concerning medical marijuana. The agencies described the order as placing certain marijuana in Schedule III: marijuana in FDA-approved products or subject to a state medical-marijuana license, along with specified extracts and naturally derived delta-9-tetrahydrocannabinols. Their account said unlicensed marijuana crops, bulk marijuana, and marijuana or extracts not yet incorporated into an FDA-approved drug product remained in Schedule I.
This is the agencies’ description of the order in their April announcement, not a blanket statement that all cannabis products or businesses are treated alike. The agencies said Section 280E generally ceases to bar deductions and credits for business activities that, because of the order, no longer involve trafficking in Schedule I or II substances.
Activities and expense allocation
The agencies expected guidance to clarify how 280E applies when a business has multiple activities and only some involve trafficking in Schedule I or II substances. They gave apportioning expenses as an example. The plan’s brief 280E listing does not confirm that the eventual guidance will adopt a particular allocation method or settle every business’s classification.
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Transition year
The April announcement also described an expected transition rule: for affected activities, rescheduling would generally first apply for 280E purposes to the business’s full taxable year that includes the Final Order’s effective date. This was an announced expectation, not the final text of guidance. Businesses should not assume the plan listing itself establishes the rule’s details or application to a specific return.
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The practical questions will differ by business and activity. The agencies’ announced expectations point to several facts that may matter when the guidance is issued:
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- Whether the activity involves a substance that remains in Schedule I or II.
- Whether the business has multiple activities that may need to be considered separately.
- Whether the product or activity falls within the categories the agencies described in connection with DOJ’s Final Order.
- Which taxable year includes the order’s effective date.
Because the plan provides no completion date and the final guidance is not stated in the materials cited here, businesses should avoid treating the priority listing as a tax-law change by itself. A qualified tax professional can assess how the applicable rules and a business’s specific facts affect its filings.
Quick Recap
Sources
- Treasury and IRS, 2026–2027 Priority Guidance Plan, initial version (September 29, 2026)
- Treasury, announcement on federal tax consequences of the medical-marijuana Final Order (April 23, 2026)
- IRS, statement on Section 280E and marijuana businesses (June 28, 2024)
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