Soon after a lengthy legal fight with the Internal Income Service more than the applicability of 280E business enterprise deductions to state-legal marijuana firms, Harborside on Monday got its final tax bill from the case: $11 million in back taxes from 2007 to 2012.
The case dates to 2016, when Harborside, primarily based in Oakland, California, took the IRS to U.S. Tax Court in an try to invalidate 280E – a portion of the federal tax code that prevents MJ firms from taking normal business enterprise tax breaks – for all state-licensed cannabis firms.
On the other hand, Harborside lost in December when the Tax Court ruled in favor of the IRS.
According to a news release from Harborside, the updated bill is truly excellent news for the corporation: If the U.S. Tax Court had ruled that IRS penalties had applied, the tab could have been $36 million.
Harborside’s executives referred to the selection as a “good outcome,” a single it knew was coming.
“We have succeeded in minimizing Harborside’s liability from the $36 million initially sought by the IRS to around $11 million – a $25 million reduction,” Harborside CEO Andrew Berman mentioned in the release.
“The reduction involves $six million in penalties that the court previously ruled we did not have to have to spend due to the fact of the unclear state of the law, and due to the fact Harborside acted in excellent faith,” Berman mentioned.
He added that the corporation intends to file a further appeal relating to the calculation of expense of goods sold for federal tax purposes.
Harborside co-founder and Chairman Emeritus Steve DeAngelo added in the release that the news “has strengthened our currently-powerful resolve to continue pursuing … the aim of modifying or minimizing 280E liability for Harborside and, in the future, eliminating it for every single other state-legal cannabis business enterprise in the United States.”
Earlier this month, California Gov. Gavin Newsom signed a bill into law that will permit some MJ firms to deduct business enterprise expenditures on state taxes.
Harborside trades on the Canadian Securities Exchange as HBOR.
For additional on Harborside’s tax fight, click right here.
Meanwhile, listen in Thursday when Harborside’s Berman seems in an exclusive webcast with Mike Regan, an analyst for Marijuana Company Daily’s Investor Intelligence.
John Schroyer can be reached at [email protected]
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