A Landmark Shift in Federal Cannabis Policy: A Perspective from Price Kong
We join our clients and colleagues in celebrating the federal government’s move to reschedule cannabis to Schedule III—a historic milestone that marks the beginning of a new financial era for an industry we have been proud to serve since its inception.
From the early days of state-level legalization, Price Kong chose to stand with the innovators, operators, and investors who built this industry. While many in the professional services world remained on the sidelines, we leaned in. We have spent years navigating the complex intersection of state-legal operations and restrictive federal tax codes, ensuring our clients remained compliant, transparent, and resilient in a high-risk environment.
The End of the 280E Era
For over four decades, Section 280E has acted as an anchor on the cannabis industry, taxing businesses on gross profit rather than net income and disallowing ordinary business deductions. Rescheduling represents more than just a policy shift; it is the catalyst for the long-awaited normalization of cannabis taxation.
This transition will unlock significant opportunities for our clients, including:
- Tax Efficiency: The ability to deduct ordinary and necessary business expenses, dramatically improving cash flow.
- Audit & Transparency: A move toward standardized financial reporting and a “permanent audit trail” that aligns with traditional corporate sectors.
- Capital Access: A cleaner tax profile and improved banking landscape will lower the cost of capital and invite institutional investment that was previously blocked by federal restrictions.
The Road Ahead: Strategy Over Theory
While we celebrate this progress, the regulatory journey is far from over. The transition from Schedule I to Schedule III brings a host of new challenges, from navigating IRS implementation timelines and potential “hard close” accounting requirements to evaluating the viability of protective tax claims.
The next phase of growth demands more than just basic accounting; it requires a partner with deep institutional knowledge and a history of real-world problem-solving. Having guided our clients through the most restrictive periods of cannabis prohibition, we are uniquely positioned to help them capitalize on this evolving federal landscape.
At Price Kong, our commitment to the cannabis industry remains unwavering. We look forward to continuing our work as your trusted thought partners—advocating for fair tax treatment, protecting your financial interests, and supporting the long-term sustainability of the legal cannabis market.