Income taxes |
6 Months Ended |
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Jun. 30, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income taxes | Note 23 — Income taxes 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 23, 2026, reclassifying certain state-licensed medical marijuana products and FDA-approved marijuana products from Schedule I to Schedule III under the Rescheduling Order. 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 Section 280E relating to adult-use cannabis activities, qualifying medical cannabis activities occurring before April 23, 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 income tax benefit of approximately $65.1 million resulting from the reassessment of the realizability of certain deferred tax assets following the Rescheduling Order. The Rescheduling Order also established an expedited process for state-licensed medical cannabis entities, including medical marijuana dispensaries, to register with the 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. The Rescheduling Order 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 23, 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 Order and the facts and circumstances existing as of June 30, 2026, management concluded that, beginning April 23, 2026, Section 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 23, 2026. The Company continued to record uncertain tax positions for deductions attributable to adult-use cannabis activities, qualifying medical cannabis activities occurring before April 23, 2026, and tax positions relating to prior taxable years. For the three months ended June 30, 2026, the Company recorded income tax benefit of $38.8 million on pre-tax loss from continuing operations of $26.3 million. The tax rate was impacted by the release of valuation allowances on certain US deferred tax assets offset by non-deductible expenses due to Section 280E. The reassessment of the realizability of US deferred tax assets did not reflect retroactive application of the Rescheduling Order to qualifying state-licensed medical cannabis activities occurring before April 23, 2026. For the six months ended June 30, 2026, the Company recorded income tax benefit of $137.5 million on pre-tax loss from continuing operations of $54.9 million. The tax rate was impacted by the release of uncertain tax positions and valuation allowances on certain US deferred tax assets, offset by non-deductible expenses due to Section 280E. For the three months ended June 30, 2025, the Company recorded income tax expense of $31.8 million on pre-tax loss from continuing operations of $16.3 million. The tax rate was impacted by increased uncertain tax position liabilities and interest due the company's 280E position, and state income taxes in certain separate filing jurisdictions. For the six months ended June 30, 2025, the Company recorded income tax expense of $65.5 million on pre-tax loss from continuing operations of $32.7 million. The tax rate was impacted by increased uncertain tax position liabilities and interest due the company's 280E position, and state income taxes in certain separate filing jurisdictions. Management assesses all available positive and negative evidence to determine whether sufficient future taxable income will be generated to permit the use of existing deferred tax assets. During the second quarter of 2026, the reclassification of medical cannabis to Schedule III, effective April 23, 2026, constituted a change in circumstances that caused management to reassess the realizability of certain U.S. federal and state deferred tax assets. Based on that reassessment, management determined that it is more likely than not that a portion of those deferred tax assets will be realized due to reversing deferred tax liabilities resulting in sufficient future taxable income, and released the associated valuation allowance of $65.1 million in the period. A valuation allowance is retained against the remaining deferred tax assets for which realization does not meet the more-likely-than-not threshold. The Company files its income tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal, state and foreign taxing authorities, where applicable. As of June 30, 2026, the Company is under audit for years ranging from 2020 to 2024 by the IRS, a few U.S. states and in Canada. The statute of limitations for federal, state and foreign taxing jurisdictions are open from tax year 2020. Global Minimum Tax Rules - Pillar Two Numerous foreign jurisdictions have enacted or are in the process of enacting legislation to adopt a minimum effective tax rate, as described in the Global Anti-Base Erosion Model Rules (otherwise known as Pillar Two) issued by the Organization for Economic Co-operation and Development. Under Pillar Two, a minimum effective tax rate of 15% would apply to multinational companies with consolidated revenues above €750 million. Pillar Two became effective for fiscal years beginning on or after January 1, 2024, in several jurisdictions in which the Company operates. Upon enactment, Pillar Two did not have a material impact on the Company’s Consolidated Financial Statements, and there was no material impact to the Company’s consolidated financial position, results of operations or cash flows.
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