In a recent announcement, multistate cannabis operator Ascend Wellness Holdings revealed that it has filed amended federal tax returns for several years, looking to receive refunds. The company joins the growing list of U.S. marijuana businesses seeking the return of tariffs paid under Section 280E of the Internal Revenue Code.
Ascend’s plans entail filing their 2023 federal return as a normal corporate taxpayer, excluding 280E, to cover their 2023 federal tax obligations and receive the anticipated refunds. The company, however, did not provide any specific figures regarding the expected amount.
Moreover, an executive from Curaleaf Holdings recently hinted at possible legal challenges surrounding the application of Section 280E. This signifies a potential turning point for cannabis companies in terms of reclaiming taxes paid under this provision.
Positive Cash Flow and Debt Refinancing Prospects
Despite the ongoing struggle with taxation issues, Ascend’s leadership took the opportunity to emphasize the firm’s positive cash flow and operational success. These accomplishments put them in an excellent position when it comes to negotiating refinancing of their debt, which is due in August 2025. Achieving such favorable financial footing would undoubtedly benefit the company’s future growth and stability.
Q4 2023 Financial Performance Overview
Regarding financial performance, Ascend reported net revenue of $140.2 million for the fourth quarter, representing a 25% increase over the same period in 2022. However, these figures also showcased a slight dip compared to the previous quarter. This decline was attributed to a decrease in retail sales in Illinois, which was partially counterbalanced by wholesale growth in New Jersey and Massachusetts. The revenue performance was also bolstered by new store openings and improving Pennsylvania retail stores during the quarter.
Yearly Financial Performance Shows Signs of Improvement
Although Ascend posted a net loss of $19.3 million for the fourth quarter, which ended Dec 31, marking a 28.5% increase compared to the previous year, the company’s overall financial standing seems to be on an upward trajectory. For the full fiscal year of 2023, the reported net loss amounted to $48.2 million – a noteworthy 40.4% decrease from its full-year net loss in 2022.
Implications for the Cannabis Industry
Ascend Wellness Holdings’ pursuit of tax refunds under Section 280E sheds light on the burgeoning movement among cannabis companies to reclaim funds tied up through this provision. If successful, these efforts could have far-reaching implications for the marijuana industry as a whole, injecting more liquidity into businesses that would otherwise face significant financial barriers.
The company’s focus on operational efficiency and cash flow management serves as an inspiration for other businesses in the sector, emphasizing the importance of balancing rapid expansion with maintaining a solid financial base. As the cannabis market continues to evolve and grow, such strategies will become increasingly crucial for long-term success.
Rita Ferreira
Rita is a seasoned writer with over five years of experience, having worked with globally renowned platforms, including Forbes and Miister CBD. Her deep knowledge of hemp-related businesses and passion for delivering accurate and concise information distinguish her in the industry. Rita's contributions empower individuals and companies to navigate the complexities of the cannabis world, and her work remains a valuable resource for those seeking a deeper understanding of its potential.
