Last year, I submitted a Freedom of Information Act request to the IRS asking for their most recent marijuana-related training materials, Audit Technique Guides, and internal documents used to train revenue and field agents on cannabis business audits and Internal Revenue Code § 280E. This was my second FOIA for such materials, the last being 6+ years ago. An Audit Technique Guide is essentially an internal IRS playbook that helps examiners understand an industry and identify audit issues. I just received the 1000+ page response, and have started digging into what those materials may reveal. 

In my initial pass, one sentence jumped off the page. In a January 21, 2026, IRS internal training slide, the Service told its agents: “Hemp is currently federally legal, but that is set to change later in 2026.”

Why does that matter? For tax folks, the punchline is not botanical, it is computational. Marijuana businesses have lived with IRC § 280E's buzzkill for years despite notable and ongoing challenges. 

Hemp has been largely ignored by the IRS because the 2018 Farm Bill removed qualifying hemp from the federal marijuana definition, defining hemp as Cannabis sativa L. with delta-9 THC not more than 0.3% on a dry-weight basis. The IRS’s own materials say hemp products are “no longer illegal for federal purposes,” and are “no longer subject to IRC § 280E.” But the same IRS training materials also tell examiners to “prepare alternative positions should the current tax law change.”

Translation: if hemp products fall out of their current federal safe harbor (as is set to happen in November 2026) and into Schedule I or II territory, even for a short period of time, § 280E may also become hemp’s problem and the IRS is seemingly prepared to audit hemp businesses for their § 280E compliance too. 

The takeaway is simple: hemp companies and advisors should model potential § 280E exposure now, and not wait for the plot twist. If federal hemp law changes, the tax consequences may arrive quickly and, as this FOIA response reveals, the IRS appears to be reading ahead.