Congressional bills would provide federal marijuana tax relief, limited descheduling

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If Congress can’t – or won’t – legalize marijuana at the federal level, the least U.S. lawmakers can do is get out of the way of states with adult-use cannabis.

That’s part of the impetus for two marijuana-related bills introduced in the House of Representatives on Wednesday by a bipartisan group of lawmakers – one of which would provide relief from Section 280E of the Internal Revenue Code.

Notably, neither bill introduced Wednesday would legalize marijuana federally.

PREPARE Act and STATES 2.0 Act

However, a federal marijuana regulatory framework would be put in place if Congress passes and President Donald Trump signs the PREPARE Act of 2025, which is co-sponsored by House Democratic Leader Hakeem Jeffries and Ohio Republican U.S. Rep. Dave Joyce.

PREPARE is shorthand for Preparing Regulators Effectively for a Post-prohibition Adult-use Regulated Environment.

If passed, the PREPARE Act would direct U.S. Attorney General Pam Bondi to create a Commission on the Federal Regulation of Cannabis that would, in turn, present to Congress a “regulatory and revenue framework” that respects individual state law in a manner similar to alcohol.

Separately, Joyce and Nevada U.S. Rep. Dina Titus, a co-chair of the Congressional Cannabis Caucus, reintroduced the STATES 2.0 Act (aka Strengthening the
Tenth Amendment Through Entrusting States 2.0 Act).

That bill would change the way marijuana is treated under the Controlled Substances Act by eliminating federal enforcement in states that have established regulated cannabis markets.

The STATES 2.0 Act also would maintain federal resources for states that “opt to maintain prohibition,” according to a news release.

280E tax relief for marijuana businesses

But perhaps most importantly for state-licensed cannabis businesses, the bill would at least partially deschedule marijuana for federal tax purposes.

If the STATES 2.0 Act is passed, in adult-use or medical marijuana markets administered by a state or tribal government, the drug “shall be deemed to be a substance that does not meet the requirements for inclusion in any schedule” of the Controlled Substances Act.

That means that if a marijuana business is obeying state or tribal law, “it shall not be subject to section 280E of the Internal Revenue Code,” according to the bill’s language.

That’s a significant workaround that would bypass the need to finish the ongoing marijuana rescheduling process, which remains on indefinite hold.

The STATES Act 2.0 also would:

Regulate marijuana federally through the Alcohol Tobacco Tax and Trade Bureau (TTB) and the Food and Drug Administration.
Ban marijuana sales at truck stops and rest areas.
Prohibit marijuana for non-medical purposes for anyone younger than 21.

Neither bill is scheduled for a hearing, and their prospects under Republican House Speaker Mike Johnson are unclear at best.

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