Which statement regarding California licensed cannabis businesses is false?

Licensed cannabis businesses can deduct wages paid to employees, making this statement false in the context of the question. Under federal tax law, particularly Section 280E of the Internal Revenue Code, businesses that deal in controlled substances cannot deduct ordinary business expenses. However, cost of goods sold (COGS) is an exception, allowing licensed cannabis businesses to deduct the direct costs associated with the production of their goods, such as labor and materials used in manufacturing.

Additionally, rent for properties used in the cannabis business is typically not deductible under 280E, and while other operational expenses generally are not deductible either, the ability to deduct wages (except as COGS) is limited and governed by stringent regulations. Since wages are a direct cost incurred in the operation of the business, they do fall under COGS, leading to the conclusion that wages can be deductible, but under specific conditions. Thus, stating that licensed cannabis businesses can deduct wages paid to employees is incorrect in a broader interpretation of Section 280E restrictions, confirming the assertion made in this answer.