v3.26.1
INCOME TAXES
 6 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
INCOME TAXES

 

17. INCOME TAXES

 

The Company is a Canadian resident company, as defined in the Income Tax Act (Canada) (the “ITA”), for Canadian income tax purposes. However, it has subsidiaries that are treated as United States corporations for US federal income tax purposes per the Internal Revenue Code (US) (“IRC”) and are thereby subject to federal income tax on their worldwide income. As a result, the Company is subject to taxation both in Canada and the United States.

 

The Company has computed its provision for income taxes based on the actual effective tax rate for the quarter as management believes this is the best estimate for the annual effective tax rate. Significant judgment is required in evaluating the Company’s uncertain tax position and determining the provision for income taxes.

 

A summary of the Company’s income tax expense and effective tax rate is as follows:

 

                               
    Three months ended
June 30,		     Six months ended
June 30,		  
    2026     2025     2026     2025  
    $     $     $     $  
Income (loss) before income taxes and noncontrolling interest     (609,693 )     2,575,415       (2,306,213 )     3,949,595  
Income tax expense     (871,331 )     (920,037 )     (1,388,202 )     (1,551,347 )
Effective tax rate     143 %     (36 )%     60 %     (39 )%

 

As at June 30, 2026, the Company recorded an uncertain tax liability of $9,830,257 (December 31, 2025 - $8,383,888) for uncertain tax positions primarily related to the treatment of certain transactions and deductions under IRC Section 280E based on legal interpretations that challenge the Company’s tax liability under IRC Section 280E. These uncertain tax positions, inclusive of penalties and interest, are included in Other non-current liabilities on the condensed consolidated balance sheets, net of net operating loss carry-forwards.

 

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. There are no positions for which it is reasonably possible that the uncertain tax benefit will significantly increase or decrease within twelve months. The Company files income tax returns in the United States, including various state jurisdictions, and in Canada, which remain open to examination by the respective jurisdictions for the 2018 tax year to the present.