This Tax Break Could Reshape The Cannabis Landscape With A $700M Boost

Section 280e of the Internal Revenue Code has emerged as an unexpected catalyst, potentially injecting a staggering $700 million boost into cash flow for major cannabis companies.

The cannabis industry has faced numerous challenges, including falling prices, excessive debt and stagnant sales in mature markets. While many believed that banking legislation or stock exchange listings would be the saviors, a surprising alternative has come to light: Section 280e of the Internal Revenue Code.

Viridian Capital Advisors, one of the earliest financial and strategic advisory firms in the cannabis sector, says that eliminating this provision would have a more significant effect than anticipated, potentially increasing free cash flow (FCF) and profitability for major cannabis companies, as reported by Debra Borchardt for Green Market Report.

By removing the restriction on deducting business expenses, an estimated $700 million could be added to the 2023 FCF, making the eradication of 280e a critical factor for the industry's recovery.

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Photo by Kelly Sikkema on Unsplash.