Cannabis News
$113,000,000 and Counting in IRS 280E Tax Refunds
Published
8 months agoon
By
admin
In October, Cannabis.net covered the fact that the cannabis industry could be sitting on billions of dollars in tax refunds if the IRS 280E tax code is altered or eliminated for the marijuana industry.
With towns and cities starting to refund excess taxes collected from cannabis companies in the name of “social impact fees”, for things such as extra police work and trash pick up due to dispensaries entering their town, it appears the Federal government is also starting to give back taxes to the cannabis industry.
Trulieve Cannabis Corp, headquartered in Florida, has unveiled its financial performance for the fourth quarter and fiscal year, concluding on December 31, 2023. The reports reveal a dip in revenues and increased annual losses as the company strategically navigates its financial landscape through tax adjustments.
Building on initiatives announced in the preceding year, Trulieve executed amended federal tax returns for 2019, 2020, and 2021, vying for substantial refunds totaling $143 million. Concurrently, the company took steps to address state tax matters, submitting corresponding returns and aiming for an extra $31 million in refunds.
The tangible outcomes materialized in the fourth quarter, where Trulieve successfully secured $62 million in refunds. This significantly contributed to the overall tally, reaching an impressive $113 million in refunds accumulated thus far. However, the company encountered a minor setback as a $1.2 million refund claim was rejected.
The 280E Approach
Trulieve’s tax approach centers around the section 280E tax provision, a move CEO Kim Rivers hinted might be explained if and when they get to a court filing. During a recent investor call, Rivers emphasized the confidentiality of their position, considering it a trade secret tied to the company’s unique standing. She explained the decision not to disclose publicly, citing potential litigation concerns.
In January, an additional $50.3 million in refunds bolstered Trulieve’s financial landscape, stemming from their tax strategy. This infusion notably contributes to the growth of unrecognized tax benefits. However, this bold approach towards tax refunds has inherent risks.
Trulieve, in its filings, openly acknowledged the elevated scrutiny from the Internal Revenue Service (IRS), foreseeing an increased likelihood of audits, mainly targeting cannabis-related businesses. The recent flurry of refund claims, especially for multiple subsidiaries, further amplifies this risk, adding a layer of complexity to the company’s tax maneuvering.
Additionally, the company acknowledged the potential fallout from any ensuing audit, anticipating the emergence of additional tax liabilities, encompassing interest, penalties, and escalated legal and accounting expenses. This ongoing challenge has resulted in taxes being placed in an uncertain tax position, as outlined in the company’s earnings call presentation.
Despite the persisting uncertainty, Trulieve adheres to customary tax payments as a U.S. taxpayer, excluding costs associated with Section 280E of the tax code until a conclusive resolution is achieved. Regulatory filings disclose a substantial amount of $180.4 million designated as “uncertain tax position liabilities,” with a noteworthy portion, specifically $152.1 million, linked to the contested applicability of Section 280E to Trulieve.
Financial Results
In the latest financial update, the company experienced a 4% dip in quarterly revenue, registering at $287 million, down $89 million from the previous period. Remarkably, this exceeded the average expectations of Yahoo analysts by $19 million, constituting roughly 7%. In comparison, the company raked in $298 million during the corresponding period last year, with most sales stemming from its retail operations.
Despite the revenue setback, there’s a silver lining: a net loss improvement. The company reported a net loss of $33 million for the quarter, indicating a significant 57% enhancement compared to last year’s $77 million loss in the same quarter. On a more nuanced scale, the company disclosed an adjusted net loss of $23 million when adjusting for specific financial items.
Reflecting on the fiscal performance, CEO Kim Rivers highlighted the company’s successful execution of a resilience plan implemented last year. This strategic focus emphasized cash generation and preservation, concurrently making investments to fortify future growth prospects.
Positive shifts in consumer trends drove the momentum in the fourth quarter. As they stepped into 2024, the company found itself in a position of considerable strength, significantly as the industry’s growth and reform outlook brightened. Armed with robust cash generation and a well-defined strategy, Trulieve is the prime contender for the upcoming surge in substantial growth catalysts.
Looking at the broader picture, Trulieve’s annual revenue reached $1.13 billion, marking a 7% decline from the previous year’s $1.22 billion. The net loss for the whole year tallied up to $527 million, marking a 114% increase from the $246 million net loss in 2022. Accounting for certain adjustments, the adjusted net loss settled at $70 million, reflecting a 139% surge compared to the preceding year.
Exploring the financial details, the operational cash flow for the quarter surged to $131 million, with a parallel free cash flow of $122 million. By December 31, 2023, the company’s cash and cash equivalents reached $201.4 million, revealing a noteworthy spike of $178.7 million compared to the net cash of $23.1 million in the prior year.
The marked improvement can be attributed to the company’s effective execution of the inventory wind-down strategy, as highlighted in its filings. The impact of income tax accruals, reductions in sales and marketing, and general and administrative expenses further contributed to this positive shift.
On the front of its debt management approach, Trulieve successfully redeemed $130 million of senior secured notes and secured an additional $25 million through a mortgage financing deal. Looking into the future, the company anticipates a cash flow from operations of at least $225 million in 2024.
In terms of operational developments, Trulieve provided insights into opening 17 new dispensaries over the year, expanding its nationwide presence to 192 locations. Simultaneously, strategic decisions led to the company exiting the California and Massachusetts markets.
The company’s push for recreational legalization in Florida this election season, spearheaded by Smart & Safe Florida, has gained significant traction. Trulieve has emerged as the primary financial supporter of the campaign, channeling tens of millions of dollars to bolster the initiative.
The Florida Supreme Court is expected to decide on the ballot placement by April 1, despite staunch resistance from the state’s attorney general. CEO Kim Rivers conveyed to investors that the court’s stance appeared favorable, providing a positive outlook for the campaign.
Conclusion
Trulieve’s recent financial reports indicate a mixed landscape, marked by a fourth-quarter revenue dip and substantial strides in net loss improvement. The company’s strategic tax adjustments and inventory wind-down have played pivotal roles in shaping its financial narrative. Additionally, Trulieve’s proactive debt management and operational expansion underscore a forward-looking approach.
The company’s significant involvement in advocating for recreational legalization in Florida is noteworthy, reflecting a commitment to shaping industry landscapes beyond its financial performance. With potential ballot approval and industry developments, the coming months will be crucial in determining Trulieve’s trajectory.
280E COULD BE A GAME CHANGER FOR THE WEED BIZ, READ ON…
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Latest Trump Weed Rumor – Trump Will Federally Deschedule and Decriminalize Cannabis, but Not Legalize It
Published
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November 14, 2024By
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In a recent interview, former New Jersey Governor Chris Christie made headlines by asserting that President-elect Donald Trump will pursue significant reforms in federal policies regarding marijuana and cryptocurrency. As the nation grapples with evolving attitudes toward cannabis and the burgeoning digital currency market, Christie’s predictions have ignited discussions about the potential implications of such changes on both industries. This article delves into Christie’s insights, the current state of marijuana and cryptocurrency regulations, and the broader implications of these anticipated reforms.
The Current Landscape of Marijuana Legislation
Federal vs. State Laws
Marijuana remains classified as a Schedule I substance under the Controlled Substances Act (CSA), which places it in the same category as heroin and LSD. This classification has created a complex legal landscape where states have moved to legalize cannabis for medical and recreational use, while federal law continues to impose strict prohibitions. As of now, over 30 states have legalized marijuana in some form, leading to a burgeoning industry that generates billions in revenue.
Challenges Faced by the Cannabis Industry
Despite its legality in many states, the cannabis industry faces significant hurdles due to federal restrictions. These challenges include:
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Banking Access: Many banks are hesitant to work with cannabis businesses due to fear of federal repercussions, forcing these businesses to operate largely in cash.
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Taxation Issues: The IRS enforces Section 280E of the tax code, which prohibits businesses engaged in illegal activities from deducting normal business expenses, leading to disproportionately high tax burdens for cannabis companies.
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Interstate Commerce: The lack of federal legalization prevents cannabis businesses from operating across state lines, limiting their growth potential.
Chris Christie’s Perspective on Marijuana Reform
Christie, a former presidential candidate known for his tough stance on drugs during his tenure as governor, has evolved his views on marijuana over the years. In his recent statements, he emphasized that Trump is likely to pursue descheduling cannabis, which would remove it from the Schedule I classification. This move would not only provide clarity for businesses operating in legal markets but also open avenues for banking and investment.
Christie highlighted that descheduling would allow for a more regulated market where safety standards could be established, thus protecting consumers. He believes that this approach aligns with a growing consensus among Americans who support legalization and recognize the potential benefits of cannabis use for both medical and recreational purposes.
The Future of Cryptocurrency Regulation = The Rise of Cryptocurrencies
Cryptocurrencies have surged in popularity over the past decade, with Bitcoin leading the charge as the first decentralized digital currency. The market has expanded to include thousands of alternative coins (altcoins), each with unique features and use cases. As cryptocurrencies gain traction among investors and consumers alike, regulatory scrutiny has intensified.
Current Regulatory Challenges
The cryptocurrency market faces several regulatory challenges that hinder its growth and adoption:
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Lack of Clarity: Regulatory frameworks vary significantly across states and countries, creating confusion for investors and businesses.
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Fraud and Scams: The rapid growth of cryptocurrencies has led to an increase in fraudulent schemes targeting unsuspecting investors.
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Consumer Protection: Without clear regulations, consumers are often left vulnerable to risks associated with volatile markets.
Christie’s Vision for Crypto Regulation
Christie believes that under Trump’s leadership, there will be an effort to find a “sweet spot” for cryptocurrency regulation balancing innovation with consumer protection. He argues that overly stringent regulations could stifle growth in this emerging sector while too little oversight could expose consumers to significant risks.
In his view, a balanced regulatory framework would include:
1. Clear Definitions: Establishing clear definitions for different types of cryptocurrencies and tokens to differentiate between securities and utility tokens.
2. Consumer Protections: Implementing measures to protect investors from fraud while promoting transparency within the market.
3. Encouraging Innovation: Creating an environment conducive to innovation by allowing startups to thrive without excessive regulatory burdens.
Christie’s insights reflect a growing recognition among policymakers that cryptocurrencies are here to stay and that appropriate regulations are necessary to foster growth while safeguarding consumers.
Implications of Proposed Reforms
Economic Impact
The potential reforms proposed by Christie could have far-reaching economic implications:
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Job Creation: Legalizing marijuana at the federal level could lead to significant job creation within the cannabis industry—from cultivation and production to retail sales.
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Investment Opportunities: Descheduling cannabis would open up investment opportunities for institutional investors who have been hesitant due to federal restrictions.
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Boosting Local Economies: Legal cannabis markets have proven beneficial for local economies through increased tax revenues and job creation.
Similarly, clear regulations around cryptocurrencies could stimulate investment in blockchain technology and related industries, fostering innovation and economic growth.
Social Justice Considerations
Both marijuana legalization and sensible cryptocurrency regulations have social justice implications:
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Addressing Past Injustices: Legalizing marijuana could help rectify past injustices related to drug enforcement policies that disproportionately affected marginalized communities.
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Financial Inclusion: Cryptocurrencies offer opportunities for financial inclusion for those underserved by traditional banking systems, particularly in low-income communities.
Political Landscape
The political landscape surrounding these issues is complex. While there is bipartisan support for marijuana reform among certain lawmakers, challenges remain in overcoming entrenched opposition. Similarly, cryptocurrency regulation has garnered attention from both sides of the aisle but requires collaboration to establish effective frameworks.
Conclusion
Chris Christie’s predictions about President-elect Donald Trump’s approach to federal marijuana descheduling and cryptocurrency regulation suggest a potential shift in U.S. policy that could significantly reshape both industries. As public opinion evolves on these issues, lawmakers have an opportunity to enact meaningful reforms that promote economic growth while ensuring consumer protection. The anticipated changes could foster a more robust cannabis industry that contributes positively to the economy and addresses social justice concerns, while clear regulatory frameworks for cryptocurrencies could encourage innovation and protect consumers in the digital economy. Stakeholders in both sectors are closely watching these developments, eager to see how potential reforms might impact their futures. While the realization of Christie’s predictions remains uncertain, it’s clear that the conversation around marijuana and cryptocurrency regulation is ongoing and far from settled.
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Cannabis News
Webinar Replay: Post-Election Cannabis Wrap – Smoke ’em if You’ve Got ’em
Published
1 day agoon
November 13, 2024By
admin
On Thursday, November 7th, Vince Sliwoski, Aaron Pelley and Fred Rocafort held a post election discussion “Post-Election Cannabis Wrap – Smoke ’em if You’ve Got ’em”. Watch the replay!
Key Takeaways from the “Smoke ’em if You’ve Got ’em – 2024 Post Election Cannabis Wrap” Webinar:
- Panelists:
- Vince Sliwoski: Oregon Business lawyer specializing in cannabis and commercial real estate.
- Aaron Pelley: Experienced in cannabis law since Washington’s legalization in 2012.
- Fred Rocafort: Trademark attorney working closely with the cannabis team.
- Election Results Overview:
- Most 2024 cannabis ballot measures did not pass.
- Florida, South Dakota, and North Dakota saw failures.
- Nebraska became the 39th state to legalize cannabis for medical use when it passed two cannabis initiatives, Initiatives 437 and 438.
- Federal and State-Level Developments:
- Medical use is currently legal in 38 states, and 24 states allow recreational use.
- Republican support for marijuana legalization is growing.
- Federal Policy Implications:
- Schedule III Rescheduling: The process to move cannabis to Schedule III is ongoing, which could significantly impact the industry.
- Importance of Federal Appointments: The future of cannabis policy depends heavily on who is appointed to key positions in the administration.
- International and Domestic Trade:
- Schedule III status could ease import/export restrictions on cannabis.
- Unified control of House, Senate, and presidency might expedite legislative progress.
- Economic and Industry Impact:
- Cannabis stocks experienced volatility post-election, reflecting investor uncertainty.
- Federal legalization and banking reforms are crucial for industry stability and growth.
- Future Outlook:
- The potential for federal rescheduling remains strong, with hearings scheduled for early 2025.
- State-level initiatives and regulatory developments will continue to shape the industry.
“How Long Does One Puff of Weed Stay in Your System?”… This topic can be difficult to answer since it is dependent on elements such as the size of the hit and what constitutes a “one hit.” If you take a large bong pull then cough, it might linger in your system for 5-7 days. A moderate dose from a joint can last 3-5 days, whereas a few hits from a vaporizer may last 1-3 days.
The length of time that marijuana stays in the body varies based on a number of factors, including metabolism, THC levels, frequency of use, and hydration.
Delta-9-tetrahydrocannabinol, or THC, is the primary psychoactive component of cannabis. THC and its metabolites, which remain in your body long after the effects have subsided, are detected by drug tests.
Since these metabolites are fat-soluble, they cling to bodily fat molecules. They could thus take a while to fully pass through your system, particularly if your body fat percentage is higher.
THC is absorbed by tissues and organs (including the brain, heart, and fat) and converted by the liver into chemicals such as 11-hydroxy-THC and carboxy-THC. Cannabis is eliminated in feces at a rate of around 65%, while urine accounts for 20%. The leftover amount might be kept within the body.
THC deposited in bodily tissues ultimately re-enters the circulation and is processed by the liver. For frequent users, THC accumulates in fatty tissues quicker than it can be removed, thus it may be detectable in drug tests for days or weeks following consumption.
The detection time varies according to the amount and frequency of cannabis usage. Higher dosages and regular usage result in longer detection times.
The type of drug test also affects detection windows. Blood and saliva tests typically detect cannabis metabolites for shorter periods, while urine and hair samples can reveal use for weeks or even months. In some cases, hair tests have detected cannabis use over 90 days after consumption.
Detection Windows for Various Cannabis Drug Tests
Urine Tests
Among all drug tests, urine testing is the most commonly used method for screening for drug use in an individual.
Detection times vary, but a 2017 review suggests the following windows for cannabis in urine after last use:
– Single-use (e.g., one joint): up to 3 days
– Moderate use (around 4 times a week): 5–7 days
– Chronic use (daily): 10–15 days
– Chronic heavy use (multiple times daily): over 30 days
Blood Tests
Blood tests generally detect recent cannabis use, typically within 2–12 hours after consumption. However, in cases of heavy use, cannabis has been detected up to 30 days later. Chronic heavy use can extend the detection period in the bloodstream.
Saliva Tests
THC can enter saliva through secondhand cannabis smoke, but THC metabolites are only present if you’ve personally smoked or ingested cannabis.
Saliva testing has a short detection window and can sometimes identify cannabis use on the same day. A 2020 review found that THC was detectable in the saliva of frequent users for up to 72 hours after use, and it may remain in saliva longer than in blood following recent use.
In areas where cannabis is illegal, saliva testing is often used for roadside screenings.
Hair Tests
Hair follicle tests can detect cannabis use for up to 90 days. After use, cannabinoids reach the hair follicles through small blood vessels and from sebum and sweat surrounding the hair.
Hair grows at approximately 0.5 inches per month, so a 1.5-inch segment of hair close to the scalp can reveal cannabis use over the past three months.
Factors Affecting THC and Metabolite Retention
The length of time THC and its metabolites stay in your system depends on various factors. Some, like body mass index (BMI) and metabolic rate, relate to individual body processing, not the drug itself.
Other factors are specific to cannabis use, including:
– Dosage: How much you consume
– Frequency: How often you use cannabis
– Method of consumption: Smoking, dabbing, edibles, or sublingual
– THC potency: Higher potency can extend detection time
Higher doses and more frequent use generally extend THC retention. Cannabis consumed orally may remain in the system slightly longer than smoked cannabis, and stronger cannabis strains, higher in THC, may also stay detectable for a longer period.
How Quickly Do the Effects of Cannabis Set In?
When smoking cannabis, effects appear almost immediately, while ingested cannabis may take 1–3 hours to peak.
The psychoactive component THC produces a “high” with common effects such as:
– Altered senses, including perception of time
– Mood changes
– Difficulty with thinking and problem-solving
– Impaired memory
Other short-term effects can include:
– Anxiety and confusion
– Decreased coordination
– Dry mouth and eyes
– Nausea or lightheadedness
– Trouble focusing
– Increased appetite
– Rapid heart rate
– Restlessness and sleepiness
In rare cases, high doses may lead to hallucinations, delusions, or acute psychosis.
Regular cannabis use may have additional mental and physical effects. While research is ongoing, cannabis use may increase the risk of:
– Cognitive issues like memory loss
– Cardiovascular problems including heart disease and stroke
– Respiratory illnesses such as bronchitis or lung infections
– Mood disorders like depression and anxiety
Cannabis use during pregnancy can negatively impact fetal growth and development.
Duration of Effects
Short-term effects generally taper off within 1–3 hours, but for chronic users, some long-term effects may last days, weeks, or even months. Certain effects may even be permanent.
Bottom Line
The amount of time that cannabis remains in your system following a single use varies greatly depending on individual characteristics such as body fat, metabolism, frequency of use, and mode of intake. Frequent users may maintain traces of THC for weeks, whereas infrequent users may test positive for as little as a few days. Hair tests can disclose usage for up to 90 days, while blood and saliva tests identify more recent use. Urine tests are the most popular and have varying detection durations. The duration that THC and its metabolites are detectable will ultimately depend on a number of factors, including dose, strength, and individual body chemistry.
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