BILLINGS, Mont. – The Trump administration is moving to reclassify marijuana under federal law, a decision that could significantly impact Montana’s cannabis industry. The proposed executive order would shift cannabis from a Schedule I drug to Schedule III, recognizing its medical use and allowing for new research and tax relief.

David Hiller, owner of Yellowstone Buds in Billings, discussed the financial burden cannabis businesses face due to the current classification – namely, IRS Rule 280E, which prohibits businesses from deducting ordinary expenses due to the drug classification.

“So we literally can’t write off payroll or expenditures within the store… typically with 280E, most operators are spending between 65 to 70 percent in taxes,” said Hiller.

Hiller expressed hope that rescheduling cannabis would allow dispensaries to operate more like traditional businesses.

“We’re hopeful we go back into a regular business model where our tax liabilities aren’t more than 50 percent,” said Hiller.

He added that the tax relief could lead to more hiring and reinvestment in Montana.

“I’m just excited not to spend as much on taxes and potentially be able to hire a few more folks with the savings that we’ll have,” said Hiller.

James Stephens, CEO of Missoula-based Sinful Beverages, shared similar optimism.

“We’re absolutely going to see the ability of tax relief to occur for cannabis companies at the state level. And I think that’s going to lead to, you know, kind of a surge in hiring and jobs and actually reinvestment as we see the federal government ease up restrictions on it,” said Stephens.

Industry experts, like Karl Rude, Director of Operations at New Frontier Laboratory, highlighted the potential for scientific advancement.

“The reclassification to Schedule III promises a start that people have been asking for from a research perspective, from a prescribe-ability perspective – this is the opportunity for the industry to prove the medicinal value that they’ve known for years existed,” said Rude.

Rude noted that reclassification could shift research efforts toward understanding cannabis’ effects and uses.

Consumer and patient advocates also see potential benefits in terms of access and safety, as noted by Kari Boiter, a legislative committee member of the American Council of Cannabis Medicine.

“I think it opens a door that wasn’t open to them before. And so, yes, in a place where it’s legal, perhaps this isn’t as big of a victory, but there’s a lot of states where people don’t have access to the products they need, or they’re not affordable, or they need access to medical care, and they’re not getting that right now,” said Boiter.

Some Montana growers, like Uncle Buck, owner of Uncle Buck’s Dispensary and Glass Shop in Lockwood, welcome the opportunity for scientific scrutiny.

“My reaction to that is joy…and the reason I’m joyful is because it means that genuine research will now be able to happen on cannabis so that the scientific community can join us in discovering the benefits of cannabis,” said Uncle Buck.

Uncle Buck also highlighted the importance of addressing safety concerns.

“That means that as a whole, people are going to find out the truth, okay, about what is actually in cannabis,” said Uncle Buck.

Despite the optimism, industry leaders caution that rescheduling does not equate to full legalization. Federal oversight could expand, and future regulations may shape cannabis production and sales nationwide. Hiller expressed a balanced perspective.

“That’s my hope – that things don’t change very much except for the tax liabilities… there are going to be pros and cons to this,” said Hiller.

Rude pointed out that while the reclassification may not instantly change public perception, it provides an opportunity for data-driven understanding.

“I don’t know that the change in how it’s scheduled will instantly change perception… but it gives us the opportunity to put data to what people are observing,” said Rude.

For many in Montana’s cannabis industry, this opportunity marks a turning point.

“It does really create an opportunity to really solidify this as a career pathway and an expansion business pathway for Montana businesses,” said Stephens.

The process of rescheduling involves federal agencies going through a formal rulemaking process, which could take months. However, Montana cannabis businesses are already planning for the future, hoping to reinvest savings into jobs, expansion and long-term stability.

This change does not legalize cannabis at the federal level. It will still be regulated state by state, including in Montana. Industry leaders believe it opens the door to research, transparency and a better understanding of the risks and benefits for consumers.