CFO: A Unique Opportunity
- After completing a compensation study for Harborside Health Center, they offered Luigi the position of Chief Financial Officer. At that time (end of 2009) the medical marijuana industry was just beginning to blossom as a result of the apparent relaxation of the federal prohibition; causing a tremendous surge in the size and shape of the industry. HHC was the industry leader, both in terms of total revenues and in terms of industry leadership. Luigi was the first accountant with his level of credentials in the industry, thus providing him with a very unique opportunity to lay the accounting groundwork for an industry just coming of age.
- Luigi’s purpose at HHC was to ensure that they were professionally operated in accordance with all state and local laws, that all of the various taxes were accurately reported and timely paid, and that all corporate governance procedures were followed. The goal was to establish HHC as the most transparent and legitimate business in the medical marijuana industry.
- The well-known conflict between federal law and California’s medical marijuana law played itself out right across Luigi’s desk!
- The difference at Harborside Health Center between “Before Luigi” and “After Luigi” is startling! He completely revamped all of their books and records going all the way back to inception of the company.
- He amended all of their income tax returns for all of these years, presenting their operations to the IRS in the most favorable light possible; while he minimized risk and exposure for other taxes, such as sales & use taxes and local revenue-based taxes.
- He put in place internal control procedures which significantly lowered their losses.
- He created and instituted budgetary systems to measure company progress toward goals.
- Most importantly, Luigi identified and executed cost-saving measures estimated to be in excess of four times his salary.
A Pioneer of IRC Section 280E Issues
- Internal Revenue Code Section 280E is being inappropriately applied by the federal government to onerously tax the medical marijuana industry. Luigi identified that this was a serious issue for the entire industry and was the first person to organize an industry-wide response.
- He published journal articles which describe the history of IRC Section 280E, why the provision is unfair when applied to the industry, and how it should be changed.
- He helped to draft legislation submitted to the 110th U.S. Congress (H.R. 1980) and he helped to draft a letter to the U.S. Congress that was signed by Tom Ammiano, Mark Leno, Betty Yee and other senior California politicians.
- He developed the tax-planning technique he called the “Transactional Factor” (now known sometimes as the “Stop-Watch Method”) which narrowly construes the language of Section 280E. If this technique is ultimately sanctioned by the courts, he will have saved the industry hundreds of millions of dollars of onerous tax liabilities.