California 280E tax needs fixing

I was surprised and heartened to that California Governor Brown vetoed AB 1863, keeping non-deductibility of #marijuana#advertisingexpenses on California individual income tax returns. His rationale is revenue loss and the bill’s evasion of the budget process. https://www.gov.ca.gov/wp-content/uploads/2018/09/AB-1863-Veto-Message.pdf

And I was surprised and heartened to see that the California Legislature hasn’t overridden a veto since 1979.

So there is an opportunity for California to tinker with 280E conformity to treat individuals and corporations the same and not lose revenue.

The state could allow deductions for everything but advertising and marketing.

Corporations can now deduct attorney’s fees, license fees, health insurance premiums for retail workers, etc.  Individuals can’t deduct anything beyond cost of goods sold.

So California could increase taxes on corporations and cut them on individuals.

My hope is to form a template for federal 280E – which could extend to opioids, and maybe tobacco. Alcohol lobby is probably too strong.

The tricky part is defining “marketing.”  Rent on retail space is marketing expense, but a sweetener for industry could allow deductions at least for retail workers’ health insurance, and maybe their salaries up to a generous living wage.  Maybe all salaries – even for super-persuasive salespeople.

More details on how a compromise might be struck are at https://newrevenue.org/2018/09/07/cnr-urges-veto-of-california-ab-1863/ and https://www.brookings.edu/blog/fixgov/2015/12/18/how-bob-dole-got-america-addicted-to-marijuana-taxes/.  Details on current California 280E conformity are at https://newrevenue.org/2015/05/15/technicalities-of-california-marijuana-advertising-discrepancy/

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