PUBLISH 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

_________________________________ 

ALPENGLOW BOTANICALS, LLC, a 

Colorado Limited Liability Company; 

CHARLES WILLIAMS; JUSTIN 

WILLIAMS, 

 Plaintiffs - Appellants, 

v. 

UNITED STATES OF AMERICA, 

 Defendant - Appellee. 

No. 17-1223 

_________________________________ 

Appeal from the United States District Court 

for the District of Colorado 

(D.C. No. 1:16-CV-00258-RM-CBS)

_________________________________ 

James D. Thorburn (Richard Walker with him on the briefs), Thorburn Walker LLC, 

Greenwood Village, Colorado, for Plaintiffs - Appellants. 

Patrick J. Urda, Attorney, Tax Division (Gilbert S. Rothenberg and Michael J. Haungs, 

Attorneys, Tax Division, and Counsel Robert C. Troyer, United States Attorney, with 

him on the brief), Department of Justice, Washington, D.C., for Defendant - Appellee. 

_________________________________ 

Before HARTZ, MURPHY, and McHUGH, Circuit Judges. 

_________________________________ 

McHUGH, Circuit Judge. 

_________________________________ 

FILED 

United States Court of Appeals 

Tenth Circuit 

July 3, 2018

Elisabeth A. Shumaker 

Clerk of Court
2 

Alpenglow Botanicals, LLC (“Alpenglow”) sued the Internal Revenue Service 

(“IRS”) for a tax refund, alleging the IRS exceeded its statutory and constitutional 

authority by denying Alpenglow’s business tax deductions under 26 U.S.C. § 280E. 

The district court dismissed Alpenglow’s suit under Federal Rule of Civil Procedure 

12(b)(6) for failure to state a claim upon which relief could be granted, and denied 

Alpenglow’s subsequent motion under Federal Rule of Civil Procedure 59(e) to 

reconsider the judgment. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm. 

I. BACKGROUND 

Although twenty-eight states and Washington, D.C. have legalized medical or 

recreational marijuana use, the federal government classifies marijuana as a 

“controlled substance” under schedule I of the Controlled Substances Act (“CSA”). 

Green Sol. Retail, Inc. v. United States, 855 F.3d 1111, 1113 (10th Cir. 2017); see 21 

U.S.C. § 812(c), Schedule I(c)(10); 21 C.F.R. § 1308.11(d)(23). The CSA makes it 

unlawful to knowingly or intentionally “manufacture, distribute, or dispense . . . a 

controlled substance.” 21 U.S.C. § 841(a)(1). Under former President Obama, the 

Justice Department had declined to enforce § 841(a)(1) against marijuana businesses 

acting in accordance with state law,1

 but the IRS has shown no similar inclination to 

 1

 This policy encouraging federal prosecutors not to prosecute these cases was 

implemented through memoranda of the prior Attorneys General. See, e.g., 

Memorandum from David W. Ogden, Deputy Att’y Gen., U.S. Dep’t of Justice for 

Selected U.S. Att’ys (Oct. 19, 2009), revised by Memorandum from James M. Cole, 

Deputy Att’y Gen., U.S. Dep't of Justice for all U.S. Att’ys (Aug. 29, 2013). The 

current Attorney General has since rescinded this policy. Memorandum from 

Jefferson B. Sessions, Att’y Gen., U.S. Dep’t of Justice for all U.S. Att’ys (Jan. 4, 

2018). 
3 

“overlook federal marijuana distribution crimes.” Feinberg v. Comm’r, 808 F.3d 813, 

814 (10th Cir. 2015). Instead, the IRS consistently denies business deductions to 

state-sanctioned marijuana dispensaries under 26 U.S.C. § 280E,2

 which prohibits 

any “deduction or credit” for any business that “consists of trafficking in controlled 

substances (within the meaning of . . . the Controlled Substances Act).” E.g., id.; 

Olive v. Comm’r, 792 F.3d 1146, 1147 (9th Cir. 2015). 

This appeal is the product of the clash between these state and federal policies. 

Alpenglow is a medical marijuana business owned and operated by Charles Williams 

and Justin Williams, doing business legally in Colorado. See Alpenglow Botanicals, 

LLC v. United States (Alpenglow I), No. 16-cv-00258-RM-CBS, 2016 WL 7856477,

at *2 (D. Colo. 2016) (unpublished). After an audit of Alpenglow’s 2010, 2011, and 

2012 tax returns, however, the IRS issued a Notice of Deficiency concluding that 

Alpenglow had “committed the crime of trafficking in a controlled substance in 

violation of the CSA” and denying a variety of Alpenglow’s claimed business 

deductions under § 280E. Id. Alpenglow’s income and resultant tax liability were 

increased based on the denial of these deductions. Because Alpenglow is a “pass 

 2

 26 U.S.C. § 280E states in full: 

No deduction or credit shall be allowed for any amount paid or incurred 

during the taxable year in carrying on any trade or business if such trade 

or business (or the activities which comprise such trade or business) 

consists of trafficking in controlled substances (within the meaning of 

schedule I and II of the Controlled Substances Act) which is prohibited 

by Federal law or the law of any State in which such trade or business is 

conducted. 
4 

through” entity, the increased tax liability was passed on to Charles Williams and 

Justin Williams. As a result, Charles Williams owed the IRS an additional $24,133 in 

taxes and Justin Williams owed an additional $28,961. The two men paid the 

increased tax liability under protest and filed for a refund, which the IRS denied. Id. 

The men then filed a complaint in the United States District Court for the 

District of Colorado seeking to overturn the IRS’s decision. Id. at *1. The United 

States filed a Motion to Dismiss the Complaint under Federal Rule of Civil Procedure 

12(b)(6) for failure to state a claim upon which relief can be granted (“Motion to 

Dismiss”). In its Motion to Dismiss, the United States identified four claims raised by 

Alpenglow, three of which are relevant to this appeal: (1) the IRS does not have the 

authority to disallow deductions under 26 U.S.C. § 280E without a criminal 

conviction; (2) § 280E violates the Sixteenth Amendment’s definition of gross 

income; and (3) § 280E is an excessive fine that violates the Eighth Amendment.3

Following oral argument on the Motion to Dismiss, Alpenglow filed a Motion 

to Amend the Complaint “to allege further detail as to the specific deductions that the 

IRS denied.” Id. The Amended Complaint alleged “the deductions denied were: rent 

for where the business was conducted; costs of labor; compensation of officers; 

 3

 The Motion to Dismiss also asserted that the district court did not have 

subject matter jurisdiction to issue the injunctive relief requested by Alpenglow in 

the complaint. Alpenglow Botanicals, LLC v. United States (Alpenglow I), No. 16-cv00258-RM-CBS, 2016 WL 7856477, at *1 (D. Colo. 2016) (unpublished). The 

district court denied Alpenglow’s request for injunctive relief without addressing the 

subject matter jurisdiction argument, id. at *6 n.3, and Alpenglow does not challenge 

this ruling on appeal. Thus, the jurisdictional issue, which was limited to the 

injunction claim, is not before us. 
5 

advertising; taxes and licenses for doing business; depreciation; and other wages and 

salaries.” Id. at *2. Alpenglow also filed a Motion for Partial Summary Judgment 

Refund Claim (“Motion for Partial Summary Judgment”). In addition to the claims 

identified in the Motion to Dismiss, Alpenglow’s Motion for Partial Summary 

Judgment asserted two new claims: (1) the IRS’s decision to apply § 280E was 

arbitrary because it had no evidence Alpenglow trafficked in a controlled substance; 

and (2) the IRS incorrectly disallowed exclusions for Alpenglow’s costs of goods 

sold under 26 U.S.C. § 263A.4

 In its December 1, 2016 Opinion and Order, the 

district court granted Alpenglow’s Motion to Amend the Complaint, granted the 

United States’ Motion to Dismiss, and denied Alpenglow’s Motion for Partial 

Summary Judgment (“Rule 12(b)(6) Dismissal”).5 Id. at *8. 

Twenty-eight days after the entry of final judgment, Alpenglow filed a Motion 

to Alter or Amend the Judgment pursuant to Federal Rule of Civil Procedure 59(e) 

(“Rule 59(e) Motion”). Alpenglow Botanicals, LLC v. United States (Alpenglow II), 

No. 16-cv-00258-RM-CBS, 2017 WL 1545659, at *1 (D. Colo. 2017) (unpublished). 

The motion contained a proposed Second Amended Complaint and asserted that the 

 4

 In the Amended Complaint and Motion for Partial Summary Judgment 

briefing, Alpenglow also raised a Fifth Amendment claim, “alleg[ing] that the IRS 

should have informed plaintiffs that they were under investigation for violating the 

CSA.” Alpenglow I, 2016 WL 7856477, at *6. The district court denied this claim, 

id., and Alpenglow does not raise it on appeal. 

5

 Alpenglow also filed a Motion for Order to Certify Question of 

Constitutionality of Colorado’s Medical Marijuana Laws to Colorado State Attorney 

General Pursuant to 28 U.S.C. § 2403(b). Alpenglow I, 2016 WL 7856477, at *1. The 

district court denied this motion, id. at *8, and Alpenglow does not challenge that 

ruling on appeal. 
6 

district court “misapprehended controlling law” by failing to consider the three new 

claims Alpenglow raised as a request to amend the complaint—specifically, that 

(1) the IRS improperly disallowed costs of goods sold; (2) the IRS produced no 

evidence of trafficking; and (3) § 280E violates the Eighth Amendment. Id.

Alpenglow argued the district court should grant leave to amend because the United 

States would not be prejudiced by allowing Alpenglow to file the Second Amended 

Complaint. Id. The district court denied the motion, concluding it was not required to 

consider arguments not alleged in the Amended Complaint and Alpenglow was not 

entitled to amend because the request was untimely. Id. at *1–3. 

Alpenglow appeals both the Rule 12(b)(6) Dismissal and the court’s denial of 

its Rule 59(e) Motion. We address each order in turn, beginning with the Rule 

12(b)(6) Dismissal. 

II. DISCUSSION 

A. Federal Rule of Civil Procedure 12(b)(6) Dismissal 

“We review a district court’s dismissal under Federal Rule of Civil Procedure 

12(b)(6) de novo.” Khalik v. United Air Lines, 671 F.3d 1188, 1190 (10th Cir. 2012). 

“Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain ‘a short and 

plain statement of the claim showing that the pleader is entitled to relief.’” Id. While 

“the pleading standard Rule 8 announces does not require ‘detailed factual 

allegations,’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. 

Twombly, 550 U.S. 544, 555 (2007)), the “complaint must contain enough allegations 

of fact, taken as true, ‘to state a claim to relief that is plausible on its face,’” Khalik, 
7 

671 F.3d at 1190 (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility 

when the plaintiff pleads factual content that allows the court to draw the reasonable 

inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. 

at 678. 

Under the Twombly/Iqbal pleading standard, courts take a two-prong approach 

to evaluating the sufficiency of a complaint. Iqbal, 556 U.S. at 678–79. The first 

prong of the test requires the court to identify which pleadings “are not entitled to the 

assumption of truth.” Id. at 679. This includes “legal conclusions” as well as 

“[t]hreadbare recitals of the elements of a cause of action, supported by mere 

conclusory statements.” Id. at 678. The second prong of the test requires the court to 

“assume th[e] veracity” of the well-pleaded factual allegations “and then determine 

whether they plausibly give rise to an entitlement to relief.” Id. at 679. “Accordingly, 

in examining a complaint under Rule 12(b)(6), we will disregard conclusory 

statements and look only to whether the remaining, factual allegations plausibly 

suggest the defendant is liable.” Khalik, 671 F.3d at 1191. 

Alpenglow argues it raised three legal theories that plausibly stated a claim 

and therefore precluded the district court’s dismissal of the Amended Complaint 

under Rule 12(b)(6). First, Alpenglow asserts the IRS lacks the general authority to 

investigate and deny tax deductions under § 280E without a criminal conviction, and 

that, even if it had such authority, the IRS has insufficient evidence of trafficking to 

apply § 280E in this case. Second, Alpenglow claims the IRS’s calculation of 

Alpenglow’s income violates the Sixteenth Amendment. Third, Alpenglow contends 
8 

§ 280E violates the Eighth Amendment.6

 We now explain why none of these 

arguments supports a conclusion that the district court erred in dismissing the 

complaint, beginning with the IRS’s application of § 280E. 

1. Denial of Deductions Under 26 U.S.C. § 280E 

As indicated, Alpenglow raises two arguments relating to the IRS’s denial of 

its business deductions under § 280E: the IRS (1) lacks the authority to investigate 

whether Alpenglow trafficked in controlled substances because such a determination 

requires the IRS to conclude that the business violated federal drug laws and 

(2) acted in an arbitrary manner because it did not have any evidence that Alpenglow 

trafficked in controlled substances. 

a. Authority to investigate 

Alpenglow claims the IRS could not use § 280E to deny the deductions in the 

absence of a conviction from a criminal court that its owners had violated federal 

drug trafficking laws. At the core of Alpenglow’s argument is the assumption that a 

determination a person trafficked in controlled substances under tax law is essentially 

the same as a determination the person trafficked in controlled substances under 

criminal law. Because Alpenglow sees the two as inextricably linked, it contends the 

IRS lacks the authority to apply § 280E until after a federal prosecutor has 

 6

 Although the district court based its dismissal of these claims on the United 

States’ Motion to Dismiss, it also denied Alpenglow’s Motion for Partial Summary 

Judgment under Federal Rule of Civil Procedure 56 “with respect to whether the IRS 

improperly denied the cost of goods sold, whether the IRS has authority to apply 

§ 280E, and whether the application of § 280E violates the Sixteenth Amendment.” 

Alpenglow I, 2016 WL 7856477, at *7. 
9 

investigated and charged the taxpayer with violating federal criminal law and a judge 

or jury in a criminal proceeding has issued a verdict of guilty. 

We recently rejected this argument in Green Solution, 855 F.3d at 1120–21. 

There, Green Solution sued to enjoin the IRS from investigating Green Solution’s 

business records in connection with an audit focused on whether certain business 

expenses should be denied under § 280E. We concluded the Anti-Injunction Act 

(“AIA”) prevented the court from exercising jurisdiction over Green Solution’s “suit 

for the purpose of restraining the assessment or collection of any tax.” Id. at 1119 

(quoting 26 U.S.C. § 7421(a)). In an attempt to avoid that conclusion, Green Solution 

argued the AIA did not preclude the action because a determination of “whether [it] 

trafficked in a controlled substance . . . is a criminal investigation properly carried 

out by the United States Attorney,” id. at 1120, and thus “a determination of whether 

a taxpayer violated the CSA is not within the authority of the IRS,” id. at 1121 

(internal quotation marks omitted). In rejecting this argument, we noted that “§ 280E 

has no requirement that the Department of Justice conduct a criminal investigation or 

obtain a conviction before § 280E applies.” Id. at 1121. And we noted that under 26 

U.S.C. § 6201(a), “the IRS’s obligation to determine whether and when to deny 

deductions under § 280E[] falls squarely within its authority under the Tax Code.” Id.

But because our analysis was limited to determining that the AIA precluded Green 

Solution’s suit, we lacked subject matter jurisdiction to address the merits of the 

claim that “the IRS exceeded its authority under the Internal Revenue Code.” Id.
10 

at 1121 & n.8. Instead, we decided “only that the IRS’s efforts to assess taxes based 

on the application of § 280E fall within the scope of the AIA.” Id. at 1121 n.8. 

Although not directly on point, our analysis in Green Solution is persuasive. 

Alpenglow offers no reason why we should conclude the IRS has the authority to 

assess taxes under § 280E, but cannot impose excess tax liability under § 280E. 

There is also no evidence that Congress intended to limit the IRS’s investigatory 

power. Indeed, the Tax Code contains other instances where the applicability of 

deductions or tax liability turns on whether illegal conduct has occurred. See 26 

U.S.C. § 162(c)(2) (denying deductions for illegal bribes, kickbacks, etc.); id. § 6663 

(imposing civil tax penalty for fraud); id. § 165(e) (allowing deduction for theft loss). 

And other courts have upheld tax deficiencies against state-sanctioned marijuana 

dispensaries based on application of § 280E, without questioning the IRS’s authority 

on this issue. See Olive, 792 F.3d at 1151; Beck v. Comm’r, 110 T.C.M. (CCH) 141, 

*5–6 (2015); Canna Care, Inc. v. Comm’r, 110 T.C.M. (CCH) 408, *3–4 (2015), 

aff'd, 694 F. App’x 570 (9th Cir. 2017); Californians Helping to Alleviate Med. 

Problems, Inc. v. Comm’r (C.H.A.M.P.), 128 T.C. 173, 181–82 (2007).

Nonetheless, Alpenglow argues that because Congress has not expressly 

delegated the IRS authority to investigate violations of federal drug laws, the IRS 

cannot make the predicate finding necessary for a denial of deductions under § 280E. 

In support of this proposition, Alpenglow points to a series of cases from the 

Supreme Court striking regulations involving the taxation of illegal conduct: Leary v. 

United States, 395 U.S. 6 (1969); Grosso v. United States, 390 U.S. 62 (1968); 
11 

Haynes v. United States, 390 U.S. 85 (1968); and Marchetti v. United States, 390 

U.S. 39 (1968). But these cases concern the invocation of the privilege against selfincrimination where the IRS investigation involved gambling, marijuana, or, in 

Haynes, possession of an unregistered firearm. See Leary, 395 U.S. at 13. Critically, 

these cases struck down IRS regulations that required the taxpayers to disclose 

information such as the names and addresses of the sellers and buyers, their 

registration numbers, and the quantity of the products sold. See id. at 15; see also

Marchetti, 390 U.S. at 42–49. The Supreme Court concluded these tax provisions 

violated the Fifth Amendment due to the “substantial and ‘real’ . . . hazards of 

incrimination.” Marchetti, 390 U.S. at 53 (quoting Rogers v. United States, 340 U.S. 

367, 374 (1951)); Leary, 395 U.S. at 15. For example, in Marchetti, the Court noted 

that the regulation in question required the taxpayer to obtain a tax stamp, which 

necessarily “declar[ed] . . . a present intent” to violate gambling laws, and that 

federal and state courts had consistently relied on payment of the tax in subsequent 

criminal cases against the taxpayer. Marchetti, 390 U.S. at 47–48, 53. Indeed, some 

states and municipalities criminalized the mere possession of a tax stamp, making it 

impossible to comply with both laws. Id. at 48 n.10. 

Alpenglow’s case is easily distinguishable from these cases. First, Alpenglow 

has not raised a Fifth Amendment challenge on appeal and is instead citing these 

cases for the IRS’s authority to tax based on its conclusion that the taxpayer is 

engaged in illegal conduct. But the Supreme Court has repeatedly asserted, including 

in the cited opinions, that “the unlawfulness of an activity does not prevent its 
12 

taxation.” Id. at 44. The cases cited by Alpenglow were challenges to “the methods

employed by Congress” in enforcing these statutes, id. (emphasis added), not the 

authority of the IRS to investigate and tax illegal activity. Second, these statutes 

involved the imposition of a tax for specific illegal conduct, not the denial of a tax 

deduction. Third, the tax information at issue in the cited cases was routinely shared 

with the Department of Justice and frequently used to support criminal charges, 

creating a tax provision that served as a proxy for a criminal investigation. Here, 

Alpenglow has failed to cite a single case in which the government relied on a denial 

of deductions under § 280E as evidence of guilt in a criminal trial. Accordingly, these 

decisions do not prohibit the IRS from applying § 280E to deny Alpenglow’s 

deductions. 

In summary, it is within the IRS’s statutory authority to determine, as a matter 

of civil tax law, whether taxpayers have trafficked in controlled substances. Thus, the 

IRS did not exceed its authority in denying Alpenglow’s business deductions under 

§ 280E. 
13 

b. Evidence of trafficking7

Alpenglow also contends the IRS’s denial of its deductions was arbitrary 

because the IRS had no proof Alpenglow trafficked in a controlled substance. But in 

an action to recover taxes paid to the IRS, the “taxpayer has the burden to show not 

merely that the IRS’s assessment was erroneous, but also the amount of the refund to 

which the taxpayer is entitled.” Dye v. United States, 121 F.3d 1399, 1408 (10th Cir. 

1997). Under this rule, the burden falls on Alpenglow to show error, not on the IRS 

to prove trafficking. See Green Sol., 855 F.3d at 1121; Feinberg, 808 F.3d at 815. 

Alpenglow has not satisfied this burden. As the district court noted, the “Amended 

Complaint contains no allegations related to the IRS’[s] lack of evidence for 

disallowing plaintiffs’ business expenses” and is instead “entirely premised upon the 

IRS’[s] alleged lack of authority to disallow” them. Alpenglow I, 2016 WL 7856477,

at *7. 

Rather than challenge the district court’s conclusion, Alpenglow relies on 

26 U.S.C. § 7491 and argues that once it raised the allegation that the IRS lacked 

 7

 Unlike Alpenglow’s other arguments, the district court dismissed this claim 

solely within the context of Alpenglow’s Motion for Partial Summary Judgment. See 

Alpenglow I, 2016 WL 7856477, at *7 (“The only argument . . . remaining in the 

motion for summary judgment is whether the IRS has failed to produce sufficient 

evidence that plaintiffs trafficked in a controlled substance.”). “We review a district 

court’s grant of summary judgment de novo.” Amparan v. Lake Powell Car Rental 

Cos., 882 F.3d 943, 947 (10th Cir. 2018). “Summary judgment is appropriate ‘if the 

movant shows that there is no genuine dispute as to any material fact and the movant 

is entitled to judgment as a matter of law.’” Id. (quoting Fed. R. Civ. P. 56(a)). “On 

appeal, we examine the record and all reasonable inferences that might be drawn 

from it in the light most favorable to the non-moving party.” Id. (internal quotation 

marks omitted). 
14 

evidence of Alpenglow’s purported trafficking, “the burden shifted to the 

Government as a matter of law to show it actually had the evidence.” Aplt. Br. at 29 

(citing 26 U.S.C. § 7491). But § 7491 states: 

If, in any court proceeding, a taxpayer introduces credible evidence

with respect to any factual issue relevant to ascertaining the liability of 

the taxpayer . . . , the Secretary shall have the burden of proof with 

respect to such issue. 

26 U.S.C. § 7491(a)(1) (emphasis added). 

Alpenglow did not make an arbitrariness argument in the Amended Complaint 

or allege any “credible evidence” that it is not engaged in marijuana trafficking. 

Thus, even if we assume the burden shifts to the IRS to prove its action was not 

arbitrary, Alpenglow is not relieved of its initial obligation to provide “credible 

evidence” that it does not traffic in a controlled substance. By choosing not to 

advance this theory, or allegations supporting it, in the Amended Complaint, 

Alpenglow has waived the claim. See J.V. v. Albuquerque Pub. Sch., 813 F.3d 1289, 

1299 (10th Cir. 2016) (holding that “Appellants waived [a disparate impact] basis for 

ADA liability by omitting it from their complaint”). 

2. Taxable Income Under the Sixteenth Amendment 

Alpenglow next raises a Sixteenth Amendment claim consisting of two 

arguments: (1) under the constitutional definition of income, ordinary and necessary 

business expenses must be excluded from gross income calculations; and (2) the IRS 

improperly disallowed Alpenglow “costs of goods sold” exclusions under § 263A. 
15 

a. Ordinary and necessary business expenses 

The Sixteenth Amendment grants Congress the power “to lay and collect taxes 

on incomes, from whatever source derived, without apportionment among the several 

States, and without regard to any census or enumeration.” For purposes of calculating 

tax liability, the Internal Revenue Code includes two types of income: “gross 

income” and “taxable income.” 

The Tax Code codified the Sixteenth Amendment’s definition of income by 

defining gross income as “all income from whatever source derived, including . . . 

[g]ross income derived from business.” 26 U.S.C. § 61(a); see Comm’r v. Glenshaw 

Glass Co., 348 U.S. 426, 432 n.11 (1955) (Section 61(a) “is based upon the 16th 

Amendment and the word ‘income’ is used in its constitutional sense.” (internal 

quotation marks omitted)); Samples v. Comm’r, 98 T.C.M. (CCH) 27, *3 (2009) 

(“26 U.S.C. section 61(a) is in full accordance with Congressional authority under the 

Sixteenth Amendment to the Constitution to impose taxes on income without 

apportionment among the states.” (quoting Perkins v. Comm’r, 746 F.2d 1187, 1188 (6th 

Cir. 1984))). “The starting point in the determination of the scope of ‘gross income’ is the 

cardinal principle that Congress in creating the income tax intended to use the full 

measure of its taxing power.” Comm’r v. Kowalski, 434 U.S. 77, 82 (1977) (internal 

quotation marks omitted). To that end, Congress has the unquestioned constitutional and 

statutory authority to tax gross income. New Colonial Ice Co. v. Helvering, 292 U.S. 435, 

440 (1934). To ensure taxation of income rather than sales, the “cost of goods sold” is a 

mandatory exclusion from the calculation of a taxpayer’s gross income. See Max 
16 

Sobel Wholesale Liquors v. Comm’r, 630 F.2d 670, 671 (9th Cir. 1980); Sullenger v. 

Comm’r, 11 T.C. 1076, 1077 (1948); 26 C.F.R. § 1.61-3(a) (“‘[G]ross income’ means 

the total sales, less the cost of goods sold . . . .”). Treasury Regulations include 

“inventory price,” “transportation or other necessary charges incurred in acquiring 

possession of the goods,” “cost of raw materials and supplies,” “direct labor” costs, 

and “indirect production costs” as some of the mandatory exclusions to gross income. 

26 C.F.R. § 1.471-3.8

 

 8

 Cost means: 

(a) In the case of merchandise on hand at the beginning of the taxable year, 

the inventory price of such goods. 

(b) In the case of merchandise purchased since the beginning of the taxable 

year, the invoice price less trade or other discounts, except strictly cash 

discounts approximating a fair interest rate, which may be deducted or not 

at the option of the taxpayer, provided a consistent course is followed. To 

this net invoice price should be added transportation or other necessary 

charges incurred in acquiring possession of the goods. For taxpayers 

acquiring merchandise for resale that are subject to the provisions of 

section 263A, see §§ 1.263A–1 and 1.263A–3 for additional amounts that 

must be included in inventory costs. 

(c) In the case of merchandise produced by the taxpayer since the beginning 

of the taxable year, (1) the cost of raw materials and supplies entering into 

or consumed in connection with the product, (2) expenditures for direct 

labor, and (3) indirect production costs incident to and necessary for the 

production of the particular article, including in such indirect production 

costs an appropriate portion of management expenses, but not including 

any cost of selling or return on capital, whether by way of interest or profit. 

See §§ 1.263A–1 and 1.263A–2 for more specific rules regarding the 

treatment of production costs. 

26 C.F.R. § 1.471-3. “Treasury regulations must be sustained unless unreasonable and 

plainly inconsistent with the revenue statutes . . . .” Comm’r v. S. Tex. Lumber Co., 333 

U.S. 496, 501 (1948).
17 

In contrast, taxable income is the taxpayer’s “gross income minus the 

deductions allowed” by statute. 26 U.S.C. § 63(a). Deductions under § 162(a) are 

matters of “legislative grace” specifically authorized by statute, see Commodore 

Mining Co. v. Comm’r, 111 F.2d 131, 134 (10th Cir. 1940), and “Congress has 

unquestioned power to condition, limit, or deny deductions from gross income in 

arriving at the net which is to be taxed,” id. at 133 (citing Helvering v. Indep. Life 

Ins. Co., 292 U.S. 371, 381 (1934)). One such statutorily-authorized deduction 

“allows a business to deduct from its gross income ‘all the ordinary and necessary 

expenses paid or incurred during the taxable year in carrying on the trade or 

business.’” Olive, 792 F.3d at 1148 (quoting 26 U.S.C. § 162(a)). The Supreme Court 

has defined “ordinary and necessary expenses” as those expenses that are 

“‘appropriate and helpful’ to ‘the development of the (taxpayer’s) business,’” Colo. 

Springs Nat’l Bank v. United States, 505 F.2d 1185, 1191 (10th Cir. 1974) (quoting 

Comm’r v. Tellier, 383 U.S. 687, 689 (1966)), and “normal[] in the particular business,” 

id. at 1193 (quoting Deputy v. du Pont, 308 U.S. 488, 496 (1940)). However, § 162(a) 

prohibits certain deductions, such as “when the ‘amount paid or incurred during the 

taxable year’ is for the purpose of ‘carrying on any trade or business consisting of 

trafficking in controlled substances.’” Olive, 792 F.3d at 1148 (quoting 26 U.S.C. 

§ 280E). 

Alpenglow does not challenge Congress’s authority to limit or deny 

deductions. Nor does Alpenglow contest that the IRS specifically enumerates nearly 

all of the challenged expenses listed in the Amended Complaint as “Deductions.” 
18 

Instead, Alpenglow argues that, despite being listed in the Tax Code as deductions, 

“certain necessary items like . . . ordinary and necessary [business] expenses” are 

actually exclusions that, like the cost of goods sold, must be subtracted from the 

calculation of a business’s gross income. See Davis v. United States, 87 F.2d 323, 

324 (2d Cir. 1937). Consequently, Alpenglow claims § 280E violates the Sixteenth 

Amendment because it “prevent[s] the deduction of expenses that a business could 

not avoid incurring.” See Aplt. Br. at 25; Alpenglow I, 2016 WL 7856477, at *4. 

Although there can be similarity between expenses that qualify as cost of 

goods sold and ordinary and necessary business expenses (such as labor),9

 the cost of 

goods sold relates to acquisition or creation of the taxpayer’s product, while ordinary 

and necessary business expenses are those incurred in the operation of day-to-day 

business activities. The cost of goods sold is a well-recognized exclusion from the 

calculation of gross income, while ordinary and necessary business expenses are 

deductions. Indeed, while the Tax Code has statutorily excluded certain expenses 

from the calculation of gross income, only the cost of goods sold is mandatorily 

excluded by “[t]he very definition of ‘gross income’ . . . even in the absence of 

specific statutory authority for such exclusion.” See Max Sobel, 630 F.2d at 671. In 

contrast, ordinary and necessary business expenses have been repeatedly recognized 

as statutorily-authorized deductions. See, e.g., Woolford Realty Co. v. Rose, 286 U.S. 

 9

 For example, while the cost of labor is typically considered “a subtractable 

cost of goods sold,” Congress has the constitutional authority to “limit[] the amount 

which may be subtracted for income tax purposes, on account of salaries and labor, 

from the selling price of goods to a ‘reasonable allowance’ for salaries and wages.” 

See Pedone v. United States, 138 Ct. Cl. 233, 239–40 (1957). 
19 

319, 328 (1932); Burnet v. Sanford & Brooks Co., 282 U.S. 359, 363 (1931); United 

States v. Akin, 248 F.2d 742, 743–44 (10th Cir. 1957). Although the Supreme Court 

has never been confronted with the exact argument Alpenglow makes—that 

necessary business expenses are actually exclusions—the Court has indicated that 

Congress has the authority to disallow the types of unavoidable expenses Alpenglow 

identifies. 

For example, prior to the enactment of 26 U.S.C. § 280E, the Supreme Court 

refused the IRS’s attempt to deny the cost of rent and wages as ordinary and 

necessary business expense deductions for a gambling business operating in violation 

of state law. Comm’r v. Sullivan, 356 U.S. 27, 28 (1958). The Court held that, to 

deny the business “the normal deductions of the rent and wages necessary to operate 

it” would “come close to making this type of business taxable on the basis of its 

gross receipts, while all other businesses would be taxable on the basis of net income. 

If that choice is to be made, Congress should do it.” Id. at 29 (emphasis added); see 

also Tellier, 383 U.S. at 692, 693 (“Deduction of expenses falling within the general 

definition of § 162(a) may, to be sure, be disallowed by specific legislation, since 

deductions are a matter of grace and Congress can, of course, disallow them as it 

chooses.” (internal quotation marks omitted)). And, in passing 26 U.S.C. § 280E, 

Congress did exactly that by denying ordinary and necessary business expenses 

incurred by businesses engaged in drug trafficking. Where the Supreme Court 

proposed that Congress make the choice whether to deny such deductions, we find it 

difficult to conclude Congress acted unconstitutionally in doing so. It would be 
20 

strange indeed for the Supreme Court to invite Congress to pass legislation violating 

the Constitution. It follows then that the business expenses here are deductions, not 

costs of goods sold. Indeed, the United States Tax Court has expressly reached that 

same conclusion. 

In Californians Helping to Alleviate Medical Problems, the United States Tax 

Court analyzed § 280E and concluded that the ordinary and necessary business 

expenses associated with operating a medical marijuana business were deniable 

deductions. C.H.A.M.P., 128 T.C. at 181–82. The tax court noted that the legislative 

history of § 280E indicates the statute was enacted “as a direct reaction to the 

outcome of a case in which [the tax] [c]ourt allowed a taxpayer to deduct expenses 

incurred in an illegal drug trade.” Id. at 181. That case, Edmondson v. Comm’r, 

permitted the taxpayer to deduct not only the cost of goods sold, but also his 

“ordinary and necessary” business expenses. 42 T.C.M. (CCH) 1533 (1981), 

superseded by statute, 26 U.S.C. § 280E. In its report discussing the enactment of 

§ 280E, the Senate Finance Committee cited Edmonson as the impetus for the 

provision and explained that § 280E was designed to disallow “[a]ll deductions and 

credits for amounts paid or incurred in the illegal trafficking in drugs.” C.H.A.M.P., 

128 T.C. at 182 (citation omitted). Tellingly, the report’s next sentence stated: “[t]o 

preclude possible challenges on constitutional grounds, the adjustment to gross 

receipts with respect to effective costs of goods sold is not affected by this provision 

of the bill.” Id. (citation omitted); see Peyton v. Comm’r, 85 T.C.M. (CCH) 1345, *5 
21 

(2003) (“[S]ection 280E disallows deductions and credits (but not costs of goods sold) 

with respect to the sale of controlled substances.”). 

Alpenglow also argues that, by refusing to allow deductions for unavoidable 

business expenses, Congress is permitting the IRS to tax its gross receipts rather than 

its income. But, “it is [not] a violation of due process to impose a tax on gross receipts 

regardless of the fact that expenditures exceed the receipts. . . . The mere fact of intake 

being less than outgo does not relieve the taxpayer of an otherwise lawfully imposed 

tax.” Penn Mut. Indem. Co. v. Comm’r, 277 F.2d 16, 20 (3d Cir. 1960). 

The Internal Revenue Code and United States Tax Court have characterized 

ordinary and necessary business expenses as discretionary deductions—not 

mandatory exclusions—to gross income calculations. Congress’s choice to limit or 

deny deductions for these expenses under § 280E does not violate the Sixteenth 

Amendment. 

b. Costs of goods sold 

Alpenglow also claims the IRS improperly denied it an exclusion from income 

for costs of goods sold. Although Alpenglow did not make this argument until its 

Motion for Partial Summary Judgment, the district court treated it as part of 

Alpenglow’s Sixteenth Amendment claim and dismissed it under Rule 12(b)(6). The 

court concluded Alpenglow did not “plausibly allege[] a claim that the IRS 

improperly disallowed the cost of goods sold [because] the Amended Complaint 

neither raises such a claim nor alleges any facts in that regard.” Alpenglow I, 2016 

WL 7856477, at *5. We agree. 
22 

In its Amended Complaint, Alpenglow alleges the IRS issued a Notice of 

Deficiency “denying all ordinary and necessary business deductions and increasing 

the income of Alpenglow.” See Aplt. App. vol. 1, at 197 (emphasis added). The 

Amended Complaint does not include “costs of goods sold” as one of the denied 

deductions and nowhere in the Amended Complaint does Alpenglow claim, or allege 

facts to support, that the IRS’s characterization of the denied expenses as 

deductions—rather than costs of goods sold—was erroneous. 

3. Eighth Amendment 

Alpenglow’s third assertion is that § 280E is a penalty and enforcing it violates 

the Eighth Amendment. Our recent decision in Green Solution, 855 F.3d 1111, 

forecloses this argument. Green Solution held that “Section 280E is not a penalty,” 

because “[t]he disallowance of a deduction is not an exaction imposed as a 

punishment. Deductions are not a matter of right. Neither do they turn upon equitable 

considerations. They are a matter of legislative grace.” Id. at 1121 (internal quotation 

marks omitted). Alpenglow contends this conclusion in Green Solution is nonbinding dicta. We are not convinced. 

In Green Solution, the taxpayer argued the district court could assert subject 

matter jurisdiction over its injunction action against the IRS because § 280E is a 

penalty, not a tax subject to the AIA. Id. We rejected that argument, concluding 

instead that the attempt to enjoin the IRS’s investigation into the applicability of 

§ 280E fell squarely within the jurisdiction-stripping provision of the AIA. Id. 

Because the panel’s holding in Green Solution that § 280E is not a penalty was 
23 

necessary to its disposition of the case, that holding was not dicta. See Bishop v. 

Smith, 760 F.3d 1070, 1083 (10th Cir. 2014) (“Statements which appear in an opinion 

but which are unnecessary for its disposition are dicta.”). And although Green 

Solution assessed whether § 280E was a penalty under the Anti-Injunction Act, 

Alpenglow has offered no reason why the result should be different under the Eighth 

Amendment. We remain convinced that § 280E is not a penalty. 

* * * 

Alpenglow has failed to state a claim entitling it to relief because § 280E does 

not violate the Eighth or Sixteenth Amendments and the IRS did not exceed its 

statutory authority in applying it to deny Alpenglow’s business deductions. We 

therefore affirm the district court’s Rule 12(b)(6) Dismissal. 

B. Federal Rule of Civil Procedure 59(e) Motion 

We turn now to the denial of Alpenglow’s Motion to Alter or Amend the 

Judgment pursuant to Federal Rule of Civil Procedure 59(e). “We review Rule 59(e) 

decisions for abuse of discretion.” Etherton v. Owners Ins. Co., 829 F.3d 1209, 1228 

(10th Cir. 2016). “An abuse of discretion is defined in this circuit as judicial action 

which is arbitrary, capricious, or whimsical.” United States v. Pacheco, 884 F.3d 

1031, 1047 (10th Cir. 2018) (quotation marks omitted). Grounds warranting a motion 

to alter or amend the judgment pursuant to Rule 59(e) “include (1) an intervening 

change in the controlling law, (2) new evidence previously unavailable, and (3) the 

need to correct clear error or prevent manifest injustice.” Servants of the Paraclete v. 

Does, 204 F.3d 1005, 1012 (10th Cir. 2000). “Thus, a motion for reconsideration is 
24 

appropriate where the court has misapprehended the facts, a party’s position, or the 

controlling law.” Id. “It is not appropriate to revisit issues already addressed or 

advance arguments that could have been raised in prior briefing.” Id. To reverse the 

district court’s denial of a Rule 59(e) motion, “we must have a definite and firm 

conviction that the lower court made a clear error of judgment or exceeded the 

bounds of permissible choice in the circumstances.” Etherton, 829 F.3d at 1228 

(internal quotation marks omitted). 

1. Motion to Amend the Complaint

“An issue raised for the first time in a motion for summary judgment may 

properly be considered [as] a request to amend the complaint, pursuant to Federal 

Rule of Civil Procedure 15.” Pater v. City of Casper, 646 F.3d 1290, 1299 (10th Cir. 

2011). “We therefore construe the district court’s refusal to address the new issue as 

a denial of plaintiffs’ request.” Id. “Although leave to amend shall be freely given 

when justice so requires,” Las Vegas Ice & Cold Storage Co. v. Far W. Bank, 893 

F.2d 1182, 1185 (10th Cir. 1990) (internal quotation marks omitted), “[t]he decision 

to grant leave to amend the pleadings is within the discretion of the trial court, and 

we will not reverse the court’s decision absent an abuse of discretion,” Pater, 646 

F.3d at 1299 (internal quotation marks omitted). 

In light of our liberalized pleading rules, plaintiffs generally “should not be 

prevented from pursuing a claim merely because the claim did not appear in the 

initial complaint.” Id. at 1299. But plaintiffs cannot “wait until the last minute to 

ascertain and refine the theories on which they intend to build their case.” Id.
25 

(quotation marks omitted). We have repeatedly held that, “untimeliness alone is a 

sufficient reason to deny leave to amend when the party filing the motion has no 

adequate explanation for the delay.” Id. (quotation marks omitted); see Las Vegas Ice 

& Cold Storage Co., 893 F.2d at 1185. And, “[w]here the party seeking amendment 

knows or should have known of the facts upon which the proposed amendment is 

based but fails to include them in the original complaint, the motion to amend is 

subject to denial.” Las Vegas Ice & Cold Storage Co., 893 F.2d at 1185 (quotation 

marks omitted). 

In its Rule 59(e) Motion, Alpenglow challenges the district court’s Rule 

12(b)(6) Dismissal Order and asserts that three of its claims should have been 

permitted to be advanced in a Second Amended Complaint: (1) the IRS incorrectly 

disallowed deductions for costs of goods sold under § 263A; (2) the IRS failed to 

provide any evidence of trafficking to support its denial of Alpenglow’s deductions 

under § 280E; and (3) § 280E violates the Eighth Amendment. Alpenglow II, 2017 

WL 1545659, at *1–3. Alpenglow claimed the court “misapprehended controlling 

law” by dismissing these claims for failure to sufficiently raise and/or support them 

in its Amended Complaint rather than treating them as a request to further amend the 

complaint. Id. at *1. Alpenglow also asserted that the district court relied on an 

erroneous public policy announcement to support its dismissal of Alpenglow’s claim. 

The district court noted that, although it had the ability to consider the 

arguments as a request to further amend the complaint, it was not required to do so. 

Id. The court also indicated that, even if it elected to consider Alpenglow’s request to 
26 

amend the complaint, it would deny the motion as untimely because Alpenglow had 

sufficient facts to raise all three arguments in its original or Amended Complaint. Id.

at *2. And the court noted that it did not make a public policy analysis and would not 

consider Alpenglow’s newly raised “Dead Letter Rule” argument on untimeliness 

grounds. On appeal, Alpenglow argues this decision was an abuse of the district 

court’s discretion. We have reviewed the district court’s decision on each of these 

claims above and concluded the court did not err in dismissing them for failure to 

state a claim. We now conclude the district court did not abuse its discretion in 

refusing to allow Alpenglow to amend its complaint to address the relevant 

deficiencies. 

a. Costs of goods sold 

Alpenglow first argues the district court abused its discretion in refusing to 

grant it leave to amend the complaint to include a claim that the IRS improperly 

included Alpenglow’s cost of goods sold in calculating its tax liability. As discussed 

above, the district court denied this claim because Alpenglow’s Amended Complaint 

failed to plausibly allege it. To address this deficiency, Alpenglow attached a 

proposed Second Amended Complaint to its Rule 59(e) Motion. The critical 

difference between the two complaints is that Alpenglow’s proposed Second 

Amended Complaint asserts the IRS “den[ied] all ordinary and necessary business 

deductions, including the cost of goods sold,” whereas the Amended Complaint made 

“[t]he same allegation (minus reference to cost of goods sold).” Id. (emphasis added). 
27 

The district court denied the motion to amend the complaint on untimeliness 

grounds because, despite having all the necessary facts, Alpenglow failed to raise the 

claim earlier. As discussed above, Alpenglow failed to include the IRS’s alleged 

denial of its cost of goods sold expenses in its Amended Complaint or to challenge 

the IRS’s characterization of its denied expenses as deductions, despite having 

received the Notice of Deficiency and the United States’ Motion to Dismiss—both of 

which claimed the denied deductions excluded costs of goods sold. Under these 

circumstances, the district court’s determination that Alpenglow had the facts 

necessary to raise this argument sooner is not “a clear error of judgment.” See 

Etherton, 829 F.3d at 1228 (quotation marks omitted). 

b. Evidence of trafficking 

Alpenglow concedes it did not raise the IRS’s alleged lack of trafficking 

evidence in the Amended Complaint, but claims it could not have done so because 

“the fact that the IRS did not have any evidence of purported trafficking came about 

due to the representations made by the IRS in its response to the Plaintiff’s Motion 

for Summary Judgment.” Aplt. Br. at 33. But, in its Motion for Partial Summary 

Judgment on this issue, Alpenglow cites the IRS’s failure to make factual findings 

establishing the purported trafficking conduct in the Notice of Deficiency as evidence 

of the arbitrariness of the IRS’s decision. Because Alpenglow received the Notice of 

Deficiency before it filed its initial complaint, as well as its Amended Complaint, the 

district court’s conclusion that Alpenglow had all the necessary facts to argue this 
28 

claim sooner is not “a clear error of judgment.” See Etherton, 829 F.3d at 1228 

(quotation marks omitted).

c. Eighth Amendment 

Unlike its other arguments on appeal, Alpenglow’s claim that § 280E violates 

the Eighth Amendment was raised in the Amended Complaint and dismissed by the 

district court under Federal Rule of Civil Procedure 12(b)(6). See Alpenglow II, 2017 

WL 1545659, at *2. The district court held Alpenglow did not raise a plausible 

Eighth Amendment claim because “[t]he Amended Complaint is entirely devoid of 

any allegations pertaining to the effect that § 280E has had on plaintiffs’ ability to do 

business.” Alpenglow I, 2016 WL 7856477, at *6. Although Alpenglow argues the 

district court should have allowed it to amend the complaint to allege sufficient 

factual allegations to support its Eighth Amendment argument, we have concluded 

that § 280E is not a penalty and thus does not violate the Eighth Amendment. So any 

amendment to the complaint would be legally futile and the district court did not 

abuse its discretion by denying the motion. See United States v. Greer, 881 F.3d 

1241, 1244 (10th Cir. 2018), petition for cert. filed, 17-8775 (May 4, 2018). (“We are 

not bound by the district court’s reasoning and may affirm on any ground adequately 

supported by the record.” (internal quotation marks omitted)). 

2. Public Policy/Dead Letter Rule

Alpenglow raises two distinct but related policy arguments to support its claim 

that the IRS should not be permitted to apply § 280E to tax the gross income, rather 

than the net income, of marijuana dispensaries operating in accordance with state 
29 

law. For the reasons discussed below, we reject both arguments and conclude the 

district court acted well within its discretion in denying Alpenglow’s Rule 59(e) 

Motion with respect to this claim. 

First, Alpenglow asserts that, in its order granting the United States’ Motion to 

Dismiss, the district court conducted an inaccurate analysis regarding the “public 

policy exception” to the requirement that taxpayers be taxed on net income and that 

“the court relied upon this analysis, at least in part, in its rulings.” Aplt. Br. at 34. In 

support, Alpenglow quotes the district court’s statement: “[i]t is at least arguable 

whether allowing a taxpayer to deduct from its gross income expenses incurred in 

allegedly selling marijuana to the public frustrates the policy of the CSA.” Alpenglow 

I, 2016 WL 7856477, at *5 n.2. According to Alpenglow, this comment shows the 

district court conducted a public policy analysis and concluded the state-approved 

sale of medical marijuana frustrates a sharply-defined public policy. Alpenglow takes 

issue with this inferred conclusion, but we need not address it here. The district court 

clarified in its order denying the Rule 59(e) Motion that the public policy discussion 

was “entirely irrelevant to the [c]ourt’s ultimate finding,” Alpenglow II, 2017 WL 

1545659, at *3, and “had nothing to do with resolving the issue before the [c]ourt: 

plaintiffs’ argument that the Constitution forbids including in gross income the cost 

of ordinary and necessary business expenses,” id. at *4. 

Second, Alpenglow relies on Sterling Distributors, Inc. v. Patterson, to claim 

there is a “generally accepted” Dead Letter Rule prohibiting the IRS from denying 

deductions under a law “[w]hen there is a public policy of non-enforcement of the 
30 

law.” Aplt. Br. at 39, 40 (citing 236 F. Supp. 479, 483–84 (N.D. Ala. 1964)). First, 

Alpenglow has failed to demonstrate any widespread acceptance or adoption of the 

“Dead Letter Rule” announced in Sterling Distributors. To the contrary, the Supreme 

Court has held that a public policy analysis on the disallowance of deductions under 

the Tax Code is only appropriate “where Congress has been wholly silent,” Tellier, 

383 U.S. at 693, because “[d]eduction of expenses falling within the general definition 

of § 162(a) may, to be sure, be disallowed by specific legislation, since deductions ‘are a 

matter of grace and Congress can, of course, disallow them as it chooses,’” id. (quoting 

Sullivan, 356 U.S. at 28). See also Sullivan, 356 U.S. at 29 (“If th[e] choice [to tax illegal 

business on the basis of gross income] is to be made, Congress should do it.”). Congress 

has not been silent here; by enacting § 280E, Congress has spoken expressly on its intent 

to prohibit the deduction of business expenses related to drug trafficking illegal under 

federal law. 

Second, even assuming the existence of a Dead Letter Rule, Alpenglow cannot 

succeed on such a theory. The district court refused to consider this argument 

because Alpenglow “failed to raise it when [it] could have done so at any time during 

the parties’ pre-Judgment briefing.” Alpenglow II, 2017 WL 1545659, at *3 n.4. The 

district court did not abuse its discretion in failing to consider this untimely 

argument. See Las Vegas Ice & Cold Storage Co., 893 F.2d at 1185. Furthermore, the 

Department of Justice has specifically rescinded its former policy of non-prosecution 

for marijuana dispensaries complying with state law, evidencing governmental intent 

to enforce this law. See Memorandum from Jefferson B. Sessions, Att’y Gen., U.S. 
31 

Dep’t of Justice for all U.S. Att’ys (Jan. 4, 2018). As such, § 280E would not 

constitute a Dead Letter Rule, even if such a rule existed. 

* * * 

The district court was not “arbitrary, capricious, or whimsical” in holding that 

Alpenglow’s request to amend the complaint was untimely. See Pacheco, 884 F.3d 

at 1047. Therefore, the court did not abuse its discretion in denying Alpenglow’s 

Rule 59(e) Motion. 

III. CONCLUSION 

We AFFIRM the dismissal of Alpenglow’s suit under Federal Rule of Civil 

Procedure 12(b)(6) and the denial of Alpenglow’s Motion to Alter or Amend the 

Judgment pursuant to Federal Rule of Civil Procedure 59(e).