The 70% Tax Burden Could Disappear This Week 💸

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President Trump is expected to sign an executive order as early as Thursday directing federal agencies to reclassify cannabis from Schedule I to Schedule III.

If it happens, this will be the most significant shift in federal cannabis policy in over 50 years - and the financial implications for operators are massive.

Here's exactly whats happening.

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What's Coming

Multiple sources confirmed to NBC News, CNN, CNBC, and The Washington Post that Trump is preparing to sign the order this week.

Trump confirmed the plans himself on Monday: "We are considering that, because a lot of people want to see it - the reclassification - because it leads to tremendous amounts of research that can't be done unless you reclassify."

The executive order is expected to do three things.

First, direct the DEA to finish the rescheduling process.

The order would instruct the DEA or Attorney General Pam Bondi to bypass the stalled administrative hearing and move directly to publishing a final rule. This process started under Biden in 2022 but got stuck in procedural limbo. Trump's order essentially tells the agencies to get it done.

Second, authorize Medicare CBD coverage for seniors.

This is the wildcard. The order is expected to direct CMS to allow reimbursement for certain CBD products treating chronic pain, sleep issues, and other age-related conditions.

Timothy Seymour of Seymour Asset Management called Medicare coverage "the holy grail" that could unlock institutional capital.

If cannabis-derived products become reimbursable through federal insurance, the investment thesis changes completely.

Third, push Congress on SAFER Banking.

Sources told NBC News the order may include language urging Congress to pass the SAFER Banking Act, which would finally give state-legal cannabis businesses access to traditional banking.

The market is already pricing this in. 

Tilray jumped 44% and Canopy Growth surged 52% on Friday when CNBC broke the news. The Amplify Seymour Cannabis ETF rallied 54% - its best day on record.

What This Means for Your Tax Bill

For cannabis operators, the most immediate impact of Schedule III status is the death of Section 280E.

Here's why that matters to your business.

Section 280E prohibits businesses trafficking in Schedule I or II substances from deducting ordinary business expenses. You pay taxes on gross revenue, not profit.

The result: effective tax rates that often exceed 70%.

One Illinois MSO executive estimated his company paid tens of millions per year to the IRS solely because of 280E. Verano Holdings expects to pay $80-100 million this year in combined state and federal taxes from this single provision.

Industry-wide, cannabis businesses paid $1.8 billion in excess taxes in 2022 compared to non-cannabis companies. That grew to $2.1 billion in 2023. Without reform, it's projected to hit $5.2 billion by 2030.

If cannabis moves to Schedule III, 280E no longer applies.

You'd be able to deduct rent, salaries, utilities, marketing - every ordinary business expense. 

Just like any other industry.

This is why only 27% of U.S. cannabis businesses are currently profitable. Remove the 280E burden, and that equation changes fast.

One important caveat: Rescheduling would only apply going forward. Past taxes paid under 280E probably aren't coming back. And taxes you already owe? The IRS will still want those.

Some companies have filed protective refund claims to preserve their rights in case 280E is later declared unconstitutional. If you haven't explored this, it's worth a conversation with your tax advisor.

The $6 Billion Debt Wall

This news arrives at a critical moment.

The cannabis sector faces a debt reckoning: $6 billion in loans mature by end of 2026. The top five borrowers account for $3.4 billion of that total.

Here's where the major MSOs stand:

• Curaleaf: $460M due December 2026. Largest borrower, refinancing pending.

• Cresco Labs: $325M refinanced August 2025 at 12.5%, maturity extended to 2030.

• Trulieve: $368M paid off November 2025. Still has $110M at 7.9%.

• Ayr Wellness: $368M. Restructuring through asset sales in eight states.

• Verano Holdings: $350M due October 2026. $403M total debt.

Cresco's refinancing shows how this is supposed to work. The company closed a $325 million senior secured term loan in August, extending maturity to 2030 and removing near-term refinancing risk.

Trulieve took a different approach - paying off $368 million in full before the 2026 due date using cash on hand.

Ayr Wellness shows what happens when the math doesn't work. The company is selling licenses in eight states to satisfy lenders.

The timing of rescheduling matters enormously here. If 280E relief arrives before these maturities hit, MSOs will have significantly better cash flow to either pay down debt or refinance on favorable terms.

If it doesn't, expect more distressed sales and consolidation.

Meanwhile, Hemp Operators Face a Different Crisis

While cannabis watches the rescheduling news, the hemp industry is dealing with an existential threat.

Last month's federal spending bill included provisions that will effectively ban 99% of hemp products currently on the market. 

The new law caps final products at 0.4 milligrams of total THC per container - a typical hemp gummy contains 5-25mg.

These provisions take effect November 13, 2026.

On December 10, Oregon Senators Ron Wyden and Jeff Merkley introduced the Cannabinoid Safety and Regulation Act as an alternative.

"We learned from the failed war on drugs that a one-size-fits-all approach banning hemp products from the market outright does nothing to protect kids and consumers," Wyden said.

The bill creates a regulatory framework instead of a ban: 5mg THC per serving, 50mg per container for edibles, 21+ age requirement, FDA registration, and a ban on synthetic cannabinoids. States could still impose stricter rules.

The U.S. Hemp Roundtable endorsed it as "a key first step to developing consensus around a robust regulatory framework."

Whether Congress acts before November 2026 is uncertain. If you're in hemp, plan for both scenarios now.

M&A Signal: Distressed Deals Are Here

The Curaleaf-Cannabist deal announced December 2nd gives us a glimpse of what's coming.

Curaleaf agreed to acquire The Cannabist Company's Virginia assets for $110 million - five dispensaries, an 82,000-square-foot cultivation facility, and the right to open one more store.

$80 million cash at closing, $20 million deferred, $10 million promissory note.

Cannabist is using the proceeds to pay down debt and the company acknowledged "ongoing operational and financial challenges" earlier this year.

For Curaleaf, this is strategic positioning ahead of Virginia's expected adult-use launch in November 2026.

Expect more deals like this as the debt wall approaches. Companies with cash will find opportunities. Companies that can't refinance will become sellers.

A Smart Move for You

If you're a cannabis operator:

• Document your 280E burden. Know exactly how much you're paying in excess taxes. This is your baseline for measuring rescheduling's impact - and for any protective refund claims.

• Review your debt maturities. If you have significant debt due in 2026, start lender conversations now. The refinancing environment could look very different in six months.

• Build banking relationships. Rescheduling to Schedule III reduces perceived risk for financial institutions. Start conversations with cannabis-focused lenders like Chicago Atlantic and FundCanna before everyone else does.

• Watch the timeline. An executive order doesn't reschedule cannabis overnight. The DEA still needs to publish a final rule, which could take months.

If you're a hemp operator:

• Model both scenarios. Plan for a world where the ban takes effect and a world where Wyden-Merkley creates a regulated market.

• Start reformulation R&D. If the ban stands, you'll need products that comply with the 0.4mg cap. That work takes time.

• Engage the legislative process. The Hemp Roundtable and Hemp Beverage Alliance are working on this. Make sure your voice is in the room.

Rescheduling won't legalize cannabis. It won't solve every problem.

But it would eliminate the 280E tax burden that has crushed profitability for a decade and it would signal to banks and investors that the federal risk profile has fundamentally changed. 

And it could open the door to Medicare reimbursement for cannabinoid products.

The executive order is expected tomorrow 🤞

The operators who've built solid financial foundations - clean books, manageable debt, documented tax positions - will be best positioned to capitalize when it happens.

If that's you, this could be the week everything starts to shift.

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