TerrAscend Charts New Fiscal Path Amid Cannabis Industry’s Tax Challenges

LOS ANGELES- TerrAscend Corp. a igure in the multi-state cannabis sector, has announced a bold fiscal maneuver during its financial disclosures for the fourth quarter and the entirety of the 2023 fiscal year. The Canadian-headquartered company is set to challenge the status quo by ceasing tax payments under Section 280E of the Internal Revenue Code, a move underpinned by a nuanced legal interpretation.

This decision is not without precedent; it follows the footsteps of several peers in the industry seeking refuge from the financial strain imposed by 280E. TerrAscend’s executive team disclosed intentions to submit amended tax returns for the years 2020 through 2022, eyeing refunds from federal and state taxes for 2020 and 2021.

Jason Wild, Executive Chair of TerrAscend, highlighted the potential fiscal relief this strategy may afford the company, with anticipated refunds approximating $26 million. This pivot could substantially reposition $59.2 million in tax liabilities, as detailed by Chief Financial Officer Keith Stauffer. Stauffer also indicated a future where TerrAscend navigates taxation more conventionally, sidestepping the burdens of 280E.

The legal groundwork for this strategy appears to mirror arguments seen in the ongoing Boies Schiller litigation, which challenges federal cannabis prohibition. This move by TerrAscend signals a growing trend among cannabis companies to leverage legal frameworks to alleviate tax pressures.

In financial terms, TerrAscend showcased a robust fourth quarter, reporting a 25.4% increase in net revenue year-over-year, despite a net loss from continuing operations. The full-year figures similarly reflected growth, with net revenue marking a 28% increase from the previous year.

This strategic pivot by TerrAscend is a testament to the evolving fiscal landscapes and legal strategies within the cannabis industry, as companies navigate the complexities of federal taxation and regulatory environments.