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INCOME TAXES
 6 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
INCOME TAXES
 14. INCOME TAXES
The following table summarizes the Company’s income tax expense and effective tax rates for the three and six months ended June 30, 2026 and 2025:
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
Loss before income tax
$(8,305)$(2,403)$(19,435)$(10,440)
Income tax benefit (expense)$976 $(9,928)$(7,741)$(18,906)
Effective income tax rate11.8 %(413.2)%(39.8)%(181.1)%

The Company computed its provision for income taxes for the three and six months ended June 30, 2026 using the actual effective tax rate for each respective interim period, taking into consideration the impact of the U.S. Department of Justice’s regulatory action, effective April 28, 2026, reclassifying certain state-licensed medical marijuana products and FDA-approved marijuana products from Schedule I to Schedule III under the Controlled Substances Act (the “Rescheduling Rule”). The Company computed its provision for income taxes for the three and six months ended June 30, 2025 using the actual effective tax rate for each respective interim period. Therefore, the Company’s effective income tax rates for the three and six months ended June 30, 2026 and 2025 are not indicative of the effective income tax rate for each respective fiscal year of 2026 and 2025. The Company’s effective income tax rate differs significantly from the applicable statutory income tax rates due in part to (i) uncertain tax position liabilities associated with tax positions under Internal Revenue Code Section 280E (“280E”) relating to adult-use cannabis activities, qualifying medical cannabis activities occurring before April 28, 2026, and prior taxable years, (ii) interest and penalties associated with uncertain tax positions, and (iii) state income taxes. These items were partially offset during the three and six months ended June 30, 2026 by a net discrete income tax benefit of approximately $6,397 resulting from the reassessment of unrecognized tax benefits associated with certain deferred tax balances following the federal rescheduling of qualifying medical cannabis activities, as described below.
The Internal Revenue Service (“IRS”) has historically taken the position that cannabis companies are subject to the limitation of 280E, a position held by state tax regulators in Nevada, Ohio and Virginia. Under the IRS’s interpretation of 280E, cannabis companies are only allowed to deduct expenses directly and indirectly related to the production of inventory. The Rescheduling Rule states that qualifying medical cannabis activities conducted by state-licensed entities will no longer be subject to the deduction disallowance imposed by 280E. The Rescheduling Rule also established an expedited process for state-licensed medical cannabis entities, including medical marijuana dispensaries, to register with the U.S. Drug Enforcement Administration (“DEA”), enabling qualifying registrants to engage in the manufacture, distribution and/or dispensing of cannabis for medical purposes under federal law. The Company has submitted DEA registration applications for its medical and dual-use operations, and all such applications remain pending as of the date of this Quarterly Report on Form 10-Q (this “report”). The Rescheduling Rule further provides that the U.S. Department of Treasury and the IRS will be issuing formal guidance addressing the federal income tax implications of the Rescheduling Rule, including transition and allocation matters. As of the date of this report, the U.S Department of Treasury and IRS have not issued any formal guidance. Consequently, in preparing its income tax provision for the three and six months ended June 30, 2026, the Company applied its interpretation of the effects of the Rescheduling Rule beginning on its April 28, 2026 effective date. The Company will reassess its conclusions and methodology upon the issuance of formal guidance or other relevant legal or regulatory developments.
Based on the Rescheduling Rule and the facts and circumstances existing as of June 30, 2026, management concluded that, beginning April 28, 2026, 280E does not limit deductions and credits attributable to the Company's qualifying state-licensed medical cannabis activities and that the related tax benefits meet the more-likely-than-not recognition threshold under ASC 740, Income Taxes. Accordingly, the Company did not record an uncertain tax position for deductions and credits attributable to qualifying state-licensed medical cannabis activities occurring on or after April 28, 2026. The Company continued to record uncertain tax positions for deductions attributable to adult-use cannabis activities, qualifying medical cannabis activities occurring before April 28, 2026, and tax positions relating to prior taxable years.
In connection with the preparation and filing of the fiscal 2022 income tax return, the Company changed its previous application of 280E to exclude certain parts of its business. In regards to fiscal years 2023 through 2026, the Company has taken the position that its deductions of ordinary and necessary business expenses are not limited by 280E. However, since the Company’s tax positions on 280E may be challenged by taxing authorities, the Company elected to treat the deductibility of these related expenses as an uncertain tax position except for the tax benefits attributable to qualifying state-licensed medical cannabis activities occurring on or after April 28, 2026 that were recognized based on the Rescheduling Rule. As of June 30, 2026 and December 31, 2025, the balances in income tax payable and unrecognized tax benefits on the consolidated balance sheets include the impact of the tax position on 280E, which decreased current liabilities with a corresponding increase in non-current liabilities. There was no material impact to the consolidated statement of operations.
During the three months ended June 30, 2026, the Company reassessed the unrecognized tax benefits associated with deferred tax balances existing as of January 1, 2026. The Company concluded that certain unrecognized tax benefits attributable to qualifying state-licensed medical cannabis activities should be reduced because the underlying temporary differences are expected to reverse on or after April 28, 2026, when 280E is no longer expected to limit the related deductions and credits. As a result of this reassessment, the Company recognized a net discrete income tax benefit of $6,397 during the three months ended June 30, 2026. The reassessment did not reflect retroactive application of the Rescheduling Rule to qualifying state-licensed medical cannabis activities occurring before April 28, 2026.
In February 2026, the IRS issued a Notice of Proposed Adjustment ("NOPA") in connection with its audit of the Company's tax year ended December 31, 2021. The Company submitted a response to the NOPA disputing the proposed adjustments. The response reflects substantive and procedural arguments that Jushi believes have merit, and the Company plans to defend its position vigorously. The proposed tax amounts were previously included in the Company's liability for unrecognized tax benefits.
The Company has a liability for unrecognized tax benefits of $193,946 and $177,242 as of June 30, 2026 and December 31, 2025, respectively, inclusive of interest and penalties of $45,233 and $38,342, respectively. The Company anticipates that it is reasonably possible that its new tax position on 280E may require changes to the balance of unrecognized tax benefits within the next 12 months. However, an estimate of such changes cannot reasonably be made.
The total amount of interest and penalties related to the liability for unrecognized tax benefits recorded in income tax expense during the three months ended June 30, 2026 and 2025 was $3,708 and $2,987, respectively. The total amount of interest and penalties related to the liability for unrecognized tax benefits recorded in income tax expense during the six months ended June 30, 2026 and 2025 was $6,891 and $6,036, respectively.