How to Take Cannabis (related) Medical Deductions

First off, no, you can’t technically take cannabis as a medical deduction, even if it’s medicinal.

And the IRS is pretty clear about this:

According to Pub 502 – Medical and Dental Expenses, “You can't include in medical expenses amounts you pay for controlled substances (such as marijuana, laetrile, etc.) that aren't legal under federal law, even if such substances are legalized by state law.”

So anything that is directly considered cannabis isn’t going to qualify as far as the IRS is concerned.

However…

Not all cannabis-related products are scheduled substances.  For example, the Farm Bill removed hemp as a controlled substance.  This includes CBD.

Still, the general rule states that no deductions are allowed for over-the-counter drugs…  This is why you can’t usually take Tylenol or Aspirin as deductions.

Usually, the only medicines that are allowed to be deducted are those that require a prescription.  In the cannabis world, the only drug that meets this criteria is Epidiolex, a drug using CBD to treat epilepsy.

Given this, it looks like you couldn’t take medical deductions on cannabis, hemp, or CBD.  And generally this is true.  But there’s an exception to this rule.  That is, you can deduct over the counter medicines if they are prescribed to you by a doctor.  Also, the cost of supplies related to these products is generally allowed.

For example, you can deduct insulin that is prescribed, and the syringe for intake.

And it follows that you can deduct prescribed hemp/CBD, and related supplies for intake.

Furthermore, if you have an HSA, or an Archer MSA, you are allowed to take reimbursements for these products.

If you are going to deduct hemp/CBD, make sure that you have prescriptions, a doctor’s note, and receipts in order to be armed with proper substantiation.

And that’s it.

You now know how to deduct cannabis (related) medical expenses.

I hope that saves you some money.

And if you want to talk with a CPA that can help deduct more cannabis related medical expenses, then feel free to book a call with me and let’s make it happen.