Harborside inc (CSE: HBOR) announced this morning that it had received a final ruling from the US Tax Court related to outstanding tax cases for its Harborside Oakland dispensary. The ruling indicates that the firm is required to pay approximately $11.0 million in outstanding tax bills for the dispensary, which are for the tax years of 2007 through 2012.
The tax issue has been a long standing cloud over Harborside, whom is believed to have gone public largely as a result of the big tax bills owed to the US government. Essentially, the firm was claiming tax deductions that are not permitted under Section 280e – a section of the US tax code that disallows any firm trafficking a controlled substance to utilize tax deductions for ordinary and necessary business expenses.
At the time of its go-public transaction, Harborside was in involved in a total of five different tax court cases, three of which applied to its Oakland dispensary. The total amount in payment, as estimated by the firm, was anywhere from $11.0 to $13.0 million as per Harborside’s filing statement. Today’s ruling announcement confirms that that figure will be at the low end of the estimate.
What’s news to investors, however, is that the Internal Revenue Service was chasing the company down for approximately $36 million in owed taxes for this time period, from this single dispensary. The ruling has thus saved the firm approximately $25 million in tax expenses. However, this is not enough of a win for the firm apparently, as they are appealing the ruling yet again as a result of the manner in which cost of goods sold was calculated.
The US Tax Courts have yet to rule on the two other outstanding taxes cases that apply to Harborside, both of which apply to its San Jose Wellness dispensary. That court case is expected to result in approximately $4.4 million worth of back taxes for the firm. It is currently not known what the IRS is currently stating the company owes.
Harborside closed Friday’s session at $1.43 on the Canadian Securities Exchange.
Information for this briefing was found via Sedar and Harborside Inc. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
