Illinois May Cut Cannabis Tax Relief, According to Industry Group

OG Article

05-19-2025

Cole Preston

In 2023, Illinois joined a growing number of states that decoupled from Section 280E of the federal tax code, allowing licensed cannabis businesses to deduct ordinary business expenses on their state taxes. The change was enacted as part of HB3817, which included a few other cannabis-related provisions.

Now, according to the Cannabis Business Association of Illinois (CBAI), lawmakers are considering reversing that relief to help balance the state budget.

“In 2023, the Illinois General Assembly passed legislation to give cannabis businesses relief from Section 280E — a federal tax rule that prevents them from deducting ordinary business expenses. Now, lawmakers are considering eliminating this crucial support to help balance the state budget.”

In the social media post, the Cannabis Business Association of Illinois urged individuals to contact their lawmakers now via this link: https://thevirtualcitizen.com/cbail_280e/.

In the past, CBAI has stated that “Not allowing these deductions will have a severe financial impact on new cannabis businesses and will negatively impact the ability to achieve profitability in the first and second years of operations. The inability to deduct these expenses can make the effective tax rate on dispensaries more than 70%.”