Arkansas Dispensaries Weigh Tax Relief Against New Federal Scrutiny After Rescheduling

Marijuana's move to Schedule III promises deductions for Arkansas dispensaries even as sales slip and patient counts climb, according to Talk Business & Politics.

FILE — statehouse · B.D. Gilfry / CC BY-SA 2.0

Arkansas medical marijuana dispensaries are bracing for a mixed set of consequences from the federal rescheduling of cannabis, which took effect April 22 and is being applied retroactively to Jan. 1, according to Talk Business & Politics.

The rule reclassifies marijuana from Schedule I to Schedule III, ending decades-old restrictions that barred cannabis businesses from taking standard tax deductions under a 1982 federal law, the outlet reported.

Tax Break Comes With Federal Strings

Curtis Winar, a Little Rock certified public accountant who represents The Source dispensary in Rogers, told Talk Business & Politics the change lets dispensaries deduct ordinary business expenses for the first time, which he said would meaningfully lower their effective tax rate — for example, from roughly 40% to 25%.

But Winar and Amanda Strickland, CEO of The Source, said in the same report that the benefit may be offset by tougher federal compliance demands. Strickland said she has met with Drug Enforcement Administration officials and expects stricter oversight than the state currently requires, including possibly daily inventory checks compared with the state's twice-yearly requirement.

Winar said the minimum fine for a single federal offense is $19,000, and unlike ordinary business costs, such fines are not tax-deductible. "You'll be able to take compliance costs and deduct those down, but if you're out of compliance, that's a pretty big stick," he said, according to Talk Business & Politics.

Strickland summarized the trade-off: "Sure there might be some plusses, but it's going to probably balance out when you think of how prepared we have to be for just the amount of regulation."

Sales Slide as Patient Rolls Grow

The tax changes arrive as Arkansas' medical marijuana market shows signs of strain. According to the Arkansas Department of Finance and Administration, cited by Talk Business & Politics, statewide sales fell 2.6% to $140.3 million in the first half of 2026, down from $144 million in the same period last year. That follows a record $291.1 million in full-year 2025 sales, up 5.5% from 2024.

The state collected $16.8 million in sales tax revenue in the first half of 2026 through the 6.5% state sales tax and 4% cultivator-to-dispensary privilege tax, most of which funds state food-insecurity programs, the outlet reported.

Meanwhile, the Arkansas Department of Health reported active patient counts rose 9.1% to 119,013 in September, up from 109,060 a year earlier — meaning more registered patients are competing for a smaller overall sales pool.

Strickland attributed the revenue decline to price compression from rising competition, particularly from Missouri dispensaries roughly 20 minutes from The Source's Rogers location, where adult-use sales require only a driver's license rather than Arkansas' medical card process. The Source's own sales are down about 5% from last year's more than $13 million, she said, though she expressed confidence the rescheduling would help make up the shortfall.

Rule-Making Continues on Other Fronts

The tax and compliance shift comes amid other regulatory activity in Arkansas' cannabis program. State licensing bodies have moved this year to draft new rules governing dispensary relocations, as reported by the Arkansas Democrat-Gazette, and lawmakers advanced a rule regulating medical marijuana management contracts, according to the Northwest Arkansas Democrat-Gazette. Separately, the state renewed nearly all cannabis business licenses this spring while delaying five over paperwork issues, per earlier Democrat-Gazette coverage.

Arkansas' medical marijuana program was created after voters approved a constitutional amendment in November 2016 by a 53%-47% margin, covering 17 qualifying conditions. The Source, one of the state's licensed dispensaries, opened in Bentonville in 2019 before relocating to a two-story, 20,000-square-foot building in Rogers in 2022.

What to Watch

Whether the tax benefits from rescheduling ultimately outweigh new compliance costs remains unresolved, according to the businesses interviewed by Talk Business & Politics. Winar noted the rescheduling order also encouraged the U.S. Treasury to consider allowing dispensaries to amend prior years' tax filings, though he said that determination has not yet been made. Both Winar and Strickland said they hope state and federal rules will eventually align, reducing the burden of operating under two separate regulatory regimes.