Curaleaf Cries Misquote, Claims Boris Jordan Never Said Firm Will Not Pay Taxes
Curaleaf Holdings (TSX: CURA) has refuted claims of being misquoted by Bloomberg in a recent article. The controversy arose from statements attributed to Chairman Boris Jordan suggesting that Curaleaf might protest against Section 280E of the US tax code by withholding tax payments.
Contrary to the reported remarks, the cannabis firm clarified that Jordan never explicitly stated that Curaleaf would engage in such a protest. Instead, he reaffirmed the company’s stance, stating that they are merely reviewing their tax position, a sentiment supposedly consistent with what was conveyed during Curaleaf’s earnings call.
“Like other companies in the industry, Curaleaf has an obligation to review this tax and consider its validity. Curaleaf historically pays its taxes and will continue to do so,” the firm posted on X.
The said Bloomberg article reported that Curaleaf is exploring the possibility of rebelling against what it deems an unfair tax law, according to Jordan. The company is in discussions with legal firms and accounting experts to assess the potential repercussions of such an action.
The focal point of concern is Section 280E of the US tax code, which prohibits marijuana companies from deducting expenses, unlike other businesses. Jordan expressed frustration with the lack of regulatory changes in the industry and suggested that Curaleaf and other companies are contemplating protesting against this tax provision.
“If the whole industry stops paying it, what will the federal government do, step in and shut things down?” he said.
This perceived anti-government stance is a departure from succeeding comments by Curaleaf CEO Matt Darin, who emphasized the recent mention of cannabis rescheduling in President Joe Biden’s State of the Union speech was “a significant moment for the country.”
“This level of public support of cannabis reform at the federal level is long overdue, and demonstrates a strong point of leverage for cannabis politically. We hope that the DEA will follow President Biden’s lead by rescheduling cannabis from Schedule I to Schedule III this year,” Darin added.
However, Darin still noted the aspiration to remove “the burden of 280-E, [which] would allow businesses to place further focus on growth and job creation.” The chief executive added that “removal of 280-E could equate to savings of more than $150MM in excess tax contributions.”
But in the Bloomberg article, Jordan emphasized that the industry views Section 280E as unfair, unconstitutional, and detrimental, as cannabis businesses receive no benefits from the taxes they pay.
The chairman estimated that at least seven other companies within the sector are considering similar actions. The potential repeal or amendment of Section 280E could significantly benefit cannabis companies, particularly if marijuana were to be rescheduled.
Other companies, such as Trulieve, have already challenged Section 280E, as evidenced by their recent fourth-quarter report, in which they disclosed filing amended tax returns based on their own legal interpretations of the tax law.
Curaleaf reported revenue exceeding $1.34 billion in 2023, a jump from 2022’s $1.27 billion. However, the firm ended the year with a net loss of $290.3 million, heavily driven by provision for income taxes at $114.6 million.
For Q4 2023, the company reported a net loss of $57.7 million, or 8 cents per share. This compares to a net loss of $176.4 million, or 7 cents per share, during the same period last year. Adjusted earnings showed a loss of one cent per share.
Revenue for the quarter experienced a marginal increase of 1%, totaling $345.3 million compared to $340.2 million in the corresponding quarter of the previous year. The results failed to beat expectations as analysts surveyed by FactSet had anticipated a net loss of 7 cents per share on revenue of $458 million.
Curaleaf last traded at $5.71 on the TSX.
Information for this story was found via Bloomberg and the sources mentioned. The author has no securities or affiliations related to this organization. Views expressed within are solely that of the author. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
