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This article marks the end of this series’ emphasis on income tax. After introducing section 280E’s confiscatory effect, identifying the need for cannabis enterprise to maximize cost of goods sold adjustments (hereinafter “COGS”) and to diversify the enterprise’s business lines, I will conclude this discussion by describing California’s bifurcated state income tax treatment of cannabis enterprises.

I finished Part 2 of this series emphasizing section 280E’s principle force. Section 280E does not universally bar illegal commercial enterprises from deducting necessary and ordinary business expenses. Rather, section 280E only applies to businesses trafficking in substances banned under the Controlled Substances Act.

Last week I introduced the conflict between federal income tax law and state-sanctioned cannabis enterprises here and here.[1] In brief, the Internal Revenue Code (“Code”) section 280E proscribes state-sanctioned cannabis enterprises from deducting their ordinary and necessary business expenses like rent and employee salaries from gross income. Thus, cannabis enterprises are currently subject to tax on their gross income, not their net income.

The death penalty is setting up to be a hot topic in the next California election.  Advocates on both sides of the issue have proposed legislation to be voted on in 2016.  Proponents of the death penalty have asserted a ballot measure that would speed up executions in California while anti-death penalty advocates such as criminal defense attorneys aim to get a measure on the ballot which would repeal the state death penalty entirely.