Is Medical Marijuana Tax-Deductible? (2026 Update)

Short answer: Not clearly, yet. State-licensed medical marijuana moved to Schedule III on April 28, 2026, and some tax professionals now argue it can count as a deductible medical expense. But as of October 2026 the IRS has not said so, and its Publication 502 still lists marijuana as non-deductible. Recreational cannabis is not deductible. What is real today: in many states, medical cardholders pay less tax at the dispensary than recreational buyers.

If you buy cannabis through your state’s medical program, you have probably wondered whether you can claim it on your taxes. For decades the answer was a flat no. In 2026 the federal rules changed, and the answer got more complicated.

This guide covers what changed, what the IRS has and hasn’t said, and why most patients won’t see a federal benefit either way. It also covers the tax break that is real today: in many states, medical patients pay less tax at the dispensary.

Leafwell is not a law firm or a tax adviser. This article is general information as of October 2026, not tax or legal advice.

What changed in 2026: medical marijuana moved to Schedule III

On April 28, 2026, a federal final order published in the Federal Register (91 FR 22714) took effect. It moved two kinds of marijuana from Schedule I to Schedule III of the Controlled Substances Act:

• Marijuana in FDA-approved drug products.
• Marijuana subject to a state medical marijuana license, meaning products grown, made and sold inside a state’s licensed medical program.

Everything else, including recreational (adult-use) marijuana and unlicensed products, stays in Schedule I. Rescheduling also does not make medical patients “federally protected” in general. It changes how the federal government classifies medical-program cannabis.

That classification matters for taxes because the old rule against deducting marijuana was built on it being illegal under federal law.

Is medical marijuana tax-deductible now? What the IRS has said

Here is where things stand on the IRS side, as of October 2026.

The IRS has not issued guidance on deducting medical marijuana

On April 23, 2026, the Treasury Department and the IRS announced that they plan to issue guidance on the tax consequences of rescheduling. That announcement only discusses businesses and Section 280E (more on that below). It does not mention individual patients, medical expense deductions or Section 213, the part of the tax code that covers them.

We found no IRS notice, revenue ruling, FAQ or news release since then that tells individuals they can deduct medical marijuana.

IRS Publication 502 still says marijuana is not deductible

Publication 502 is the IRS guide to medical and dental expenses. The version on IRS.gov today is Publication 502 (2025), for 2025 returns. It was written before rescheduling, and under “Controlled Substances” it still says you can’t include amounts paid for controlled substances “(such as marijuana) that aren’t legal under federal law, even if such substances are legalized by state law.”

The 2026 edition, for returns filed in 2027, has not been published yet. Watch for whether that wording changes.

The old IRS ruling has not been withdrawn

The IRS’s formal position dates to Revenue Ruling 97-9. It held that marijuana bought on a physician’s recommendation, in a state that allowed it, was not deductible because it was obtained in violation of federal law. The ruling relies on the tax regulation that says “medicine and drugs” include only items that are “legally procured,” and that amounts spent on illegal treatments are not deductible.

We found no IRS action withdrawing or updating Revenue Ruling 97-9 after rescheduling.

Where a medical card does save you tax: at the dispensary

While the federal deduction is unsettled, state tax savings are not. In many states with adult-use sales, registered medical patients skip some or all of the cannabis taxes recreational buyers pay. That means a medical card lowers the tax on every purchase, whether or not you ever itemize.

Here is how medical and adult-use purchases are taxed in states we checked against state tax agency or statute pages, as of October 2026. Local taxes vary, and most exemptions require you to show a valid card at checkout.

The more you buy, the more the difference adds up. If you’re weighing whether a card pays for itself, compare the tax gap in your state with the cost of a card in our medical marijuana card cost guide.

Pay medical-patient tax rates at the dispensary

Check if you qualify for a medical card in your state with a licensed physician online.

See if you qualify →

Who says you can deduct it, and what the argument is

Some tax professionals read the change as opening the door. Tax publisher Spidell’s Flash E-mail 2026-16 (April 23, 2026) is headlined “Deductions can now be claimed for medical marijuana expenses.” In the same piece, Spidell says it is waiting for IRS guidance to confirm that.

The argument goes like this. Rev. Rul. 97-9 rested on federal illegality. State-licensed medical marijuana is now a Schedule III drug with a recognized medical use, so it can be “legally procured,” and the old barrier falls away.

There is a second hurdle the argument has to clear. Under Section 213(b) of the tax code, a medicine or drug counts only if it is a “prescribed drug,” which the law defines as one that “requires a prescription of a physician for its use.” Medical cannabis patients get a state certification or recommendation, not a pharmacy prescription. The federal order says state certifications are enough for a dispensary to sell to a patient, but the IRS has not said whether a certification counts as a prescription for tax purposes.

Recreational cannabis is a clear no. It is still Schedule I, and it is not a prescribed drug.

What this means for you

• Do not assume you can deduct medical marijuana on your 2026 return until the IRS says so.
• If you want to claim it anyway, do it with a tax professional who can weigh the risk with you. The IRS could disagree, and you could owe the tax plus interest and penalties.
• Even on the optimistic reading, only medical-program purchases made after rescheduling in late April 2026 are in play. Earlier purchases fall squarely under Rev. Rul. 97-9.
• Keep your dispensary receipts and your card records either way. If guidance arrives, you will need them.

Can you deduct your medical card evaluation or state registration fee?

Patients usually pay for three different things. They are not the same for tax purposes.

The physician evaluation. The tax code defines medical care as amounts paid “for the diagnosis, cure, mitigation, treatment, or prevention of disease,” and Publication 502 says medical expenses include payments for “legal medical services rendered by physicians.” A visit with a licensed physician to assess your condition looks like that kind of service. But Publication 502 also excludes amounts paid for illegal treatments, and we found no IRS guidance that addresses card evaluations specifically. Treat it as unsettled and ask your tax professional.

The state registration or card fee. This is a fee paid to a state agency to register you in the program, not a payment to a provider for care. We found no IRS guidance treating it as a medical expense, and it is harder to fit within the definition of medical care.

The cannabis itself. This is the item covered by the “prescribed drug” and “legally procured” questions above. It is not confirmed as deductible.

Would a deduction even help you?

For most patients, probably not, even if the IRS eventually allows it. Two rules get in the way.

You have to itemize. Medical expenses are deducted on Schedule A, so they only help if your itemized deductions add up to more than the standard deduction. For 2026, the standard deduction is $16,100 for single filers, $24,150 for heads of household and $32,200 for married couples filing jointly.

Only costs above 7.5% of your income count. Under Section 213(a), you can deduct only the part of your total unreimbursed medical expenses that exceeds 7.5% of your adjusted gross income (AGI).

Here is how that plays out. If your AGI is $60,000, the first $4,500 of medical expenses for the year doesn’t count. If you had $5,500 in total qualifying medical costs, only $1,000 could be deducted, and only if you itemize. People with large medical bills in a single year are the ones most likely to benefit.

Can you use an HSA or FSA for medical marijuana?

Health savings accounts use the same definition of medical care as the deduction. IRS Publication 969 says qualified medical expenses are amounts paid for “medical care” as defined in Section 213(d). So the same open questions apply, and no IRS guidance yet says cannabis qualifies.

Health FSAs are run through your employer’s plan, and plan administrators decide what they will reimburse. Check with your administrator before you spend account money on cannabis or card fees. Our guide on using an FSA or HSA for medical marijuana covers payment options in more detail.

What about cannabis businesses? Section 280E

You may have seen headlines saying rescheduling is a big tax win. Most of that is about businesses, not patients.

Section 280E bars businesses that traffic in Schedule I or II controlled substances from taking deductions or credits. Because state-licensed medical marijuana is now Schedule III, the federal order says state licensees will no longer be subject to it, while noting it is not a determination of anyone’s federal tax liability. Treasury and the IRS said guidance is coming, including a transition rule and how to split expenses for businesses that still have Schedule I activities, such as recreational sales. Those activities are still covered by 280E.

For patients, the indirect effect is lower tax costs for medical dispensaries. Whether that shows up in shelf prices is up to each business.

What to do before you file

• Don’t claim medical marijuana on your return just because a headline said you could. The IRS has not confirmed it as of October 2026.
• Talk to a tax professional if your medical costs are high enough that a deduction might matter.
• Keep receipts for dispensary purchases, physician evaluations and state fees, with dates. Medical-program purchases made after rescheduling in late April 2026 are the only ones the new argument could cover.
• Watch for the 2026 Publication 502 and any IRS notice on medical marijuana. We will update this page when the IRS acts.
• Keep your card current. The pro-deduction argument only applies to cannabis bought through your state’s medical program, and the state tax savings above only apply while your card is valid. See how to renew your medical marijuana card.

The bottom line

Rescheduling undercut the old “marijuana isn’t deductible” rule, but the IRS has not yet said what it means for patients. Until it does, treat a federal deduction as unconfirmed. The tax break you can count on is at the state level, where a medical card can lower the tax on every purchase.