Cannabis Rescheduling to Schedule III: Marketing & 280E Impact

Launch Compliant Ads

Start Cannabis Marketing Training

Boost SEO Ranking

Start SEO Training

Launch Compliant Ads

Programmatic Advertising Course

Cannabis has officially begun the process of moving from Schedule I to Schedule III, marking the most meaningful shift in federal cannabis policy in decades. While rescheduling does not legalize cannabis at the federal level, it sets the stage for one of the most important operational changes the industry has ever seen: the eventual removal of 280E.

Flowhub published one of the clearest breakdowns of what rescheduling does and does not change from a regulatory standpoint. If you are looking for a straightforward explanation of the policy mechanics and timeline, it is worth reading.
You can read it here: Cannabis Rescheduling to Schedule III: What It Means for the Industry

This article builds on that foundation and focuses on a specific question many operators are now asking: once cannabis is fully rescheduled and 280E no longer applies, what actually changes for cannabis marketing?

The short answer is not “spend more.”
The real answer is far more consequential.

The reality cannabis marketers have been operating under

For years, cannabis marketing has been shaped less by strategy and more by cash pressure.

It was not that operators did not believe in marketing. It was that very few had the financial resources to invest at the level required for marketing to work properly. Budgets were tight. Margins were thinner than they looked. Every dollar had to come back fast.

Expectations were shaped by necessity. Campaigns were expected to deliver outsized returns in short windows because the business needed that money back immediately. There was little patience for learning curves, optimization cycles, or long payback periods.

Marketing was treated as a cash flow risk under extreme constraints.

That reality produced predictable behavior:

Smaller budgets than the opportunity actually required
Pressure for immediate returns
Limited tolerance for testing and iteration
Reliance on tactics that produced short-term spikes

This was not irrational. It was survival.

A necessary timing clarification on 280E

Cannabis has not yet been formally rescheduled, and the 280E tax code has not disappeared overnight. While recent announcements signal a clear shift in federal policy, 280E relief only takes effect once the rescheduling process is fully completed through federal rulemaking.

Under Section 280E, cannabis operators have historically been unable to deduct ordinary business expenses, including marketing costs. This restriction has been one of the most significant financial constraints in the industry, limiting how brands could approach growth and reinvestment.

Rescheduling initiates the process that would remove 280E and allow cannabis marketing tax deductions to be applied in the same way they are for other industries. Operators should work closely with their accountants and advisors to understand how and when 280E relief applies based on implementation timing and individual tax treatment.

That said, the direction is clear. Once rescheduling is finalized and 280E no longer applies, cannabis marketing after 280E will operate under fundamentally different financial logic. Marketing expenses will be deductible, lowering the after-tax cost of growth and changing how cannabis brands can plan, measure, and invest in long-term marketing strategies.

What deducting marketing actually does and does not do

Deducting marketing expenses reduces taxable income. It does not create demand on its own.

Once 280E no longer applies, marketing expenses are generally deductible as ordinary and necessary business expenses, meaning they reduce taxable income dollar for dollar. The actual tax savings depend on a company’s effective tax rate, so while marketing is not free, the after-tax cost is lower.

Marketing still costs money. What changes is that marketing can finally be evaluated using normal business logic instead of survival math.

What 280E actually changes for cannabis marketing

Removing 280E does not mean cannabis brands should spend more on marketing.
It means marketing finally has the chance to work the way it is supposed to.

When expenses are deductible, the pressure for instant payback begins to ease. Not because expectations disappear, but because the math becomes more rational.

Teams gain time.
Time to let campaigns learn.
Time to optimize instead of constantly replacing.
Time to invest in strategies that build value instead of chasing spikes.

Marketing is deductible. Guesswork is not.

The real opportunity of post-280E marketing

The biggest shift is not deductibility.
It is permission to reallocate.

When marketing becomes deductible, brands are no longer forced to demand immediate returns from every dollar just to stay afloat. They can move toward strategies that compound over time:

Demand creation instead of constant discounting
Retention and loyalty over one-time promotions
Owned channels like SEO that reduce future acquisition cost
Media that prioritizes quality of attention, not just reach

This is where cannabis marketing starts to resemble marketing in more mature industries. Not louder. More intentional.

Why attribution matters more after 280E

As the financial pressure eases, accountability does not disappear. It sharpens.

Post-280E, finance teams may no longer only ask, “How fast does this pay back?”
Instead, they can also ask, “What is actually contributing to revenue over time?”

That shift makes marketing attribution essential.

Without it, teams cannot distinguish between:

Short-term spikes and real growth
Discount-driven revenue and incremental demand
Noise and signal across channels

Smart operators will start asking different questions:

Which channels drive incremental revenue, not just clicks
Which audiences convert without relying on discounts
Which creatives earn attention instead of being ignored
Which investments reduce future CAC rather than inflate it

Without clear attribution, those questions remain unanswered, and budget decisions remain reactive.

Fewer dollars, better decisions

280E relief does not remove the need for discipline. It raises the bar for it.

This is not the moment to inflate budgets. It is the moment to tighten feedback loops.

Winning brands will:

Run fewer tests but learn faster
Optimize campaigns instead of constantly replacing or ending them prematurely
Align marketing metrics with finance metrics
Protect margin while maintaining visibility

Marketing after 280E is not about growth at all costs. It is about profitable, defensible growth.

The reset cannabis marketing has needed

For years, cannabis marketing operated under conditions that made true strategy difficult. Cash pressure distorted expectations. Short-term returns were prioritized because they had to be. As 280E is removed, that distortion will begin to lift.

The brands that win next will not be the ones that spend the most. They will be the ones that stop guessing, justify every dollar, and build demand that compounds. Marketing is no longer fighting the clock. Now it has to prove it knows what to do with the time.

Interested in launching a strategic GTM cannabis marketing strategy. Don’t hesitate to reach out, free strategy session here.

Want to go deeper on cannabis marketing strategy?

The MediaJel Cannabis Marketing Academy breaks down how modern cannabis brands build demand, measure performance, and grow sustainably across SEO and paid media.

→ Check out the Cannabis Marketing Academy

FAQ: Cannabis Rescheduling, 280E, and Marketing

When does 280E relief actually take effect? ▼

280E relief does not apply immediately upon announcement. It takes effect once cannabis is formally rescheduled and the regulatory process is completed. Operators should consult with their CPA on timing and applicability.

Does removing 280E mean cannabis brands should spend more on marketing? ▼

Not necessarily. Removing 280E lowers the after-tax cost of marketing, but it also raises expectations for accountability. The opportunity is to reallocate spend more intelligently, not inflate budgets.

Are marketing expenses fully deductible once 280E no longer applies? ▼

Marketing expenses are generally deductible as ordinary and necessary business expenses, meaning they reduce taxable income dollar for dollar. Actual tax savings depend on a company’s effective tax rate and accounting treatment.

Why does attribution matter more after 280E? ▼

When marketing becomes deductible, finance teams expect clearer proof of what is driving revenue. Attribution helps distinguish short-term spikes from incremental growth and supports more disciplined decision-making.