v3.25.2
Income Tax Expense
 6 Months Ended
Jun. 30, 2025
Income Tax Disclosure [Abstract]  
Income Tax Expense

10. INCOME TAX EXPENSE

 

 

 

The following table summarizes the Company’s income tax expense and effective tax rates for the three and six months ended June 30, 2025 and 2024:

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2025

 

2024

 

2025

 

2024

 

 

(in thousands)

Income before Income Taxes

$

22,308

$

52,817

$

62,024

$

116,314

Income Tax Expense

 

21,576

 

31,899

 

52,891

 

64,048

Effective Tax Rate

 

96.7%

 

60.4%

 

85.3%

 

55.1%

 

 

The effective tax rates for the three months ended June 30, 2025 and 2024 were based on the Company’s forecasted annualized effective tax rates and were adjusted for discrete items that occurred within the periods presented.

The IRS has taken the position that cannabis companies are subject to the limitations of the U.S. Internal Revenue Code of 1986, as amended (“IRC”) Section 280E under which cannabis companies are only allowed to deduct expenses directly related to sales of product. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E. Therefore, the effective tax rate can be highly variable and may not necessarily correlate with pre-tax income and provides for effective tax rates that are well in excess of statutory tax rates.

Taxes paid during the six months ended June 30, 2025 and 2024 were $14,657 thousand and $52,904 thousand, respectively.