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DEA approvals could bring big tax benefits for medical marijuana businesses

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DEA approvals could bring big tax benefits for medical marijuana businesses
News

News

DEA approvals could bring big tax benefits for medical marijuana businesses

2026-10-31 05:42 Last Updated At:06:00

The U.S. Drug Enforcement Administration has for the first time issued registrations to medical marijuana dispensaries, a bureaucratic maneuver under President Donald Trump's historic rescheduling of the drug that could pave the way for the businesses to receive tax benefits long denied the industry.

The agency issued the registrations Friday to more than 900 state-licensed dispensaries in Alabama, Florida, Mississippi, South Dakota, Texas, Virginia and West Virginia, the Justice Department said in a news release. The department did not immediately identify the approved businesses.

Attorney General Todd Blanche said in the statement that the regulated distribution of cannabis for medical use from those shops “will help ensure broader access to chronic pain treatment and the safety of the American people.”

In April, Blanche signed an order shifting the classification of state-licensed medical marijuana from Schedule I — reserved for drugs without medical use and with high potential for abuse, like heroin — to the less strictly regulated Schedule III.

The decision largely legitimized medical marijuana programs in the 40 states that have adopted them, and it set up an expedited system for state-licensed medical marijuana producers, manufacturers and distributors to register with the DEA. Businesses must undergo a pre-registration investigation and have security, recordkeeping, inventory controls and other safeguards governing the handling of controlled substances.

Registering with the agency is also expected to ensure immense tax benefits. Historically, state-licensed cannabis businesses haven't been able to deduct normal business expenses — like advertising, rent or labor costs associated with sales — on their federal taxes because they were dealing with a federally illegal, Schedule I drug. Many in the industry have found that financially crippling.

Nearly 7,000 other cannabis dispensaries, manufacturers and distributors across the country have similarly applied for registration, according to a list published by the DEA on Friday.

Steph Sherer, the founder of the medical cannabis organization Americans for Safe Access, noted that the registrations were issued just days before the 30th anniversary of California becoming the first state to legalize the medical use of marijuana.

“For the first time, the federal government is recognizing and registering the medical cannabis dispensaries that patients fought to establish," Sherer said in a written statement. "This is a tremendous victory for patient access and an opportunity to build on 30 years of progress.”

But questions abound. The way state-licensed medical marijuana businesses are regulated is vastly different from how most companies dealing with Schedule III drugs are overseen, and it remains unclear exactly what requirements the DEA may seek to impose on medical cannabis.

For example, some cannabis industry attorneys have noted, state regulators have often sought to mitigate the effects of the drug war by allowing people with some criminal history to run licensed marijuana businesses. It isn't certain whether the DEA will adopt that approach with the businesses it registers.

Furthermore, many states have merged their recreational and medical marijuana industries. While the Trump administration has sought to reschedule marijuana more broadly, it remains unclear how the DEA will treat businesses that handle both adult-use and medical cannabis.

Two dozen states plus Washington, D.C., have authorized adult recreational use of marijuana, 40 have medical marijuana systems, and eight others allow low-THC cannabis or CBD oil for medical use. Only Idaho and Kansas ban marijuana outright.

“It's obviously a positive step to see the program taking shape,” said Chris Lindsey, vice president of policy and state advocacy at the American Trade Association for Cannabis and Hemp. “What everybody's watching for is, what can we expect to see now that we have companies that are going to be operating in this class? What are they going to have to start to do?”

Johnson reported from Seattle. Associated Press writer Jennifer Peltz in New York contributed.

FILE - Marijuana clones are shown for sale in Santa Ana, Calif., April 23, 2026. (AP Photo/Jae C. Hong, File)

FILE - Marijuana clones are shown for sale in Santa Ana, Calif., April 23, 2026. (AP Photo/Jae C. Hong, File)

ANCHORAGE, Alaska (AP) — The top federal prosecutor in Alaska confirmed on Friday the existence of a criminal investigation related to an alleged scheme to confuse voters by putting a Senate candidate on the ballot with the same name as the Republican incumbent.

The investigation has been ongoing for several months, but revelations this week from The New York Times that Democratic Senate candidate Mary Peltola’s campaign appeared to be involved in recruiting

Dan J. Sullivan have resulted in a “significant surge of law enforcement assets to Alaska,” U.S. Attorney Michael Heyman told reporters.

“When credible information comes out, we are committed to pursuing that information to deceive voters and we will act on it. We are acting on it intensely and swiftly,” Heyman said.

The department also confirmed in court documents that they seek to isolate ballots ranking Dan J. Sullivan to probe “confusion” with the GOP incumbent senator.

Assistant U.S. Attorney Bryan Wilson in Alaska, in a filing Friday, said the government “seeks to preserve and segregate all ballots ranking Daniel J. Sullivan for the purposes of investigating whether such ranking was the product of voter confusion, should such an investigation become necessary.”

The Department of Justice also filed with the court a list of proposed questions it seeks to compel the Peltola campaign and the Democratic Senatorial Campaign Committee to answer about their reported role in recruiting the challenger Dan. J. Sullivan. The civil litigation is playing out in parallel to the criminal probe confirmed by Heyman Friday.

This comes as part of the ongoing litigation filed by the Department of Justice last week, seeking to block certification of the Alaska Senate race if the incumbent, Republican Dan Sullivan, loses

The request to segregate the ballots in Alaska comes after the 9th Circuit Court of Appeals rejected the Justice Department’s request for California to set aside disputed ballots received in the midterm election sent to some 20,000 people the administration contends may not be U.S. citizens. California officials argued the list is highly unreliable and most likely includes many people who are U.S. citizens.

Justice Department attorneys said there is a “substantial risk” that the candidacy of Dan J. Sullivan “will mislead voters and ultimately result in an electoral process that lacks integrity.”

“To guard against this danger, the United States seeks an order directing Defendants to preserve and segregate all ballots ranking Daniel J. Sullivan for the purposes of investigating whether such ranking was the product of voter confusion, should such an investigation become necessary,” the filing states. “These modest precautionary measures will be impossible after Election Day, so there is good cause for expedited consideration.”

Attorneys for the state have argued that Alaska elections officials already took steps to distinguish the two Sullivans on the ballot and argued the state’s ranked voting system further addresses concerns about potential confusion.

Heyman would not say what potential crimes authorities are looking into or the targets of the probe, but encouraged the public to come forward with tips that could help investigators.

It’s highly unusual for Justice Department officials to publicly discuss a criminal investigation or even confirm its existence. And the timing of the press conference is particularly notable given that the Justice Department has had a longstanding practice of avoiding taking public steps in the weeks leading up to an election that could be perceived as attempting to influence a political outcome.

Peltola denied Thursday that she knew anything about the effort to put Dan J. Sullivan on the ballot, where Peltola is challenging Republican Sen. Dan Sullivan.

“I just want to clear the air,” she said at a campaign rally at a downtown bar in Juneau, Alaska’s capital. “I knew nothing about any other candidate on the ballot except for me and the incumbent. That is all I have ever known about. I am not interested in tricking voters.”

Federal prosecutors this week issued dozens of grand jury subpoenas and requests to preserve records, a person familiar with the matter told The Associated Press.

Dan J. Sullivan has long denied he was running at Democrats’ behest and has said he had no contact with Peltola’s campaign. “Zero, none, zilch,” he said in June after announcing his run.

The race is among a handful of Senate contests this year expected to determine control of the chamber.

Trump had previously directed his Department of Justice to sue to block certification of the Senate race should Peltola defeat Republican Sen. Dan Sullivan.

State attorneys have asked a court to rule on the Justice Department’s lawsuit by Monday, saying the case could “cast a cloud over Alaska’s election that is contrary to the public interest.”

Separately, Republican Alaska Gov. Mike Dunleavy has ordered an investigation into Peltola, saying the newspaper’s reporting “reveals disturbing new evidence of an organized effort to manipulate Alaska’s elections by recruiting candidates — including one with the same name as an incumbent U.S. Senator — to deliberately confuse voters and misdirect their votes.”

“Deliberately tricking voters into casting their ballots for someone else strikes at the integrity of our elections,” Dunleavy added, noting that the reporting “substantially supports” earlier findings by the state’s elections board into the matter.

Trump on Thursday cast doubt on whether Peltola would be seated in the Senate even if she won the election. “Well, you’re going to have to see what happens,” the president told reporters on his way to a rally in South Carolina. “It’s hard to believe that she could even be allowed to run.”

Durkin Richer reported from Washington. Bohrer reported from Juneau, Alaska.

U.S. Attorney for the District of Alaska Michael J. Heyman holds a news conference on a criminal investigation related to an alleged scheme to confuse voters by putting a Senate candidate on the ballot with the same name as the Republican incumbent, at the James M. Fitzgerald U.S. Courthouse and Federal Building, Friday, Oct. 30, 2026, in Anchorage, Alaska. (AP Photo/Lindsey Wasson)

U.S. Attorney for the District of Alaska Michael J. Heyman holds a news conference on a criminal investigation related to an alleged scheme to confuse voters by putting a Senate candidate on the ballot with the same name as the Republican incumbent, at the James M. Fitzgerald U.S. Courthouse and Federal Building, Friday, Oct. 30, 2026, in Anchorage, Alaska. (AP Photo/Lindsey Wasson)

U.S. Attorney for the District of Alaska Michael J. Heyman holds a news conference on a criminal investigation related to an alleged scheme to confuse voters by putting a Senate candidate on the ballot with the same name as the Republican incumbent, at the James M. Fitzgerald U.S. Courthouse and Federal Building, Friday, Oct. 30, 2026, in Anchorage, Alaska. (AP Photo/Lindsey Wasson)

U.S. Attorney for the District of Alaska Michael J. Heyman holds a news conference on a criminal investigation related to an alleged scheme to confuse voters by putting a Senate candidate on the ballot with the same name as the Republican incumbent, at the James M. Fitzgerald U.S. Courthouse and Federal Building, Friday, Oct. 30, 2026, in Anchorage, Alaska. (AP Photo/Lindsey Wasson)

FILE - This combination photo shows Sen. Dan Sullivan, R-Alaska, left, in Palmer, Alaska, Aug. 17, 2026, and a candidate in Alaska's Senate race, Dan Sullivan, right, in Petersburg, Alaska, July 3, 2026. (AP Photos/Mark Thiessen/Becky Bohrer, File)

FILE - This combination photo shows Sen. Dan Sullivan, R-Alaska, left, in Palmer, Alaska, Aug. 17, 2026, and a candidate in Alaska's Senate race, Dan Sullivan, right, in Petersburg, Alaska, July 3, 2026. (AP Photos/Mark Thiessen/Becky Bohrer, File)

Democratic Senate candidate Mary Peltola speaks during a campaign event Thursday, Oct. 29, 2026, in Juneau, Alaska. (AP Photo/Chloe Anderson)

Democratic Senate candidate Mary Peltola speaks during a campaign event Thursday, Oct. 29, 2026, in Juneau, Alaska. (AP Photo/Chloe Anderson)

A sample election ballot is displayed in Anchorage, Alaska, on Friday, Oct. 23, 2026. (AP Photo/Haven Daley)

A sample election ballot is displayed in Anchorage, Alaska, on Friday, Oct. 23, 2026. (AP Photo/Haven Daley)

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