A Short History Lesson: “It’s One Plant, Stupid!”

Bruce T. Andersen CPA, MBA, MS (Tax)
Executive Editor
[email protected]
April 27th, 2026

We have been wowed by the genius of our federal government today, April 23, 2026, by their introduction to their version of the federal re-scheduling of cannabis, or Marijuana, if you live in the swamp.

Bifurcation of marijuana… Oh, are they breaking out hemp?  No, not so lucky, this is just for cannabis.  But if you drop hemp out of the discussion, aren’t you left with just one plant?

But doesn’t that sound stupid?  How do you get two plants out of this rescheduling?  Well, you sell it two ways!  If you sell it to sick people, then you get a pass on the 280E issues.  If you sell it to adults, they can afford to pay the tax and don’t get the 280E “pass.”

So, my clients loathe 280E.  I have some clients in states that sell to adults, and some in states that only sell Medical.  Oh, and the ones that sell to adults generally have a medical license as well.

Now becomes the issue:  who wants to grow and sell adult-use cannabis if it is subject to 280E restrictions?  Probably no one, but how do you know what is what?  Easy, you have a license, you have to report activity?  Just let the government reporting handle it.

Here comes the history lesson.  For anyone wanting credit for reading this article, I have attached a 2-page cannabis tax report from California for Quarter 1, 2019.

The report has the excise tax and cultivation tax.  It also further breaks down the type of “plant product” produced: flowers, leaves, or a fresh cannabis plant. Oh, but there is more:  it also breaks down all categories into MEDICINAL and ADULT-USE.

Wow, that is a lot of detailed info!  This is great!

So how do the numbers look?  Excise has a significant split between the two, 18.6% and 81.4%.  Then we look at the cultivation tax.  Zero medicinal for all three plant product types and 100% for all Adult-Use plant products.

The numbers were never accurate.  The source was always questionable.

So that was California in 2019.  Where are we SIX years later in California?

Several changes:

1.     Excise tax was shifted from distributors to retailers for collection, remittance, and reporting.
2.     Cultivation tax was terminated.
3.     The reporting of the two “types” of products: medicinal and adult-use classification was removed from the cultivation side.

Let’s talk about the DOJ memo.

It appears to be pretty clear that Medical Cannabis will be rescheduled from I to III. Very exciting news for Medical-only states.  We just need to know an effective date.

But where is Adult Use?  Not much discussion.  So, does that mean all the Adult Use states will be reporting two sets of books: one for medical and one for adult use???

Let’s hope for two things:

1.     Medical use does not get bogged down by a lack of clarity of reporting for all cannabis activity; and,
2.     Adult use gets clarified to become Schedule III without having to go through the dreadful intermediate step that I showed in California in 2019.

It is ONE PLANT.  If I walk into a retail store in Los Angeles to buy weed and I show a medical card, under the new DOJ ruling, it is a Schedule III product.  If I do not have a medical card and I want the same product in the same jar, with the same labeling and the same UID (lot number), it is Schedule I, a dangerous, harmful drug.  That makes no sense.

It is one plant, stupid!

The following visual aids, drawn from BTA Cannabis CPA tax filings for Q1 2019, illustrate how these classifications were reported in practice.