Jushi Holdings Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

INCOME TAXES (Tables)

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2023

Schedule of Components of Income Tax Expense (Benefit)

Details of the Company’s income tax expense are as follows:


	Year Ended December 31,
	2023		2022		2021
Current tax expense:
Federal	$	27,303	$	26,738	$	25,501
State	3,608		7,783		9,234

	30,911		34,521		34,735

Deferred tax benefit:
Federal	2,281		(17,780)		(5,477)
State	(1,386)		(8,332)		(1,724)
Foreign	(5,554)		(5,969)		(3,874)
	(4,659)		(32,081)		(11,075)

Change in valuation allowance	5,554		6,008		5,965

Total income tax expense	$	31,806	$	8,448	$	29,625

Schedule of Income (Loss), Income Tax (Expense), and Effective Tax Rate

The differences between the income tax expense and the expected income taxes based on the statutory tax rate applied to pre-tax earnings (loss) are as follows:


	Year Ended December 31,
	2023			2022			2021
Income (loss) before income taxes	$	(33,296)		$	(193,876)		$	47,104
Statutory tax rate	21.00		%	21.00		%	21.00		%
Tax expense (benefit) based on statutory rates	(6,992)			(40,714)			9,892
Difference in tax rates	(4,463)			2,500			16,753
Gain on fair value of derivative	(4,564)			(44,106)			(50,482)
IRC Section 280E disallowed expenses	10,862			43,272			12,520
Share-based compensation	173			10,509			2,361
Interest expense and debt costs	458			13,718			3,616
Deemed interest income	842			—			—
Tax interest and penalties	383			—			—
Change in valuation allowance	5,554			6,008			5,965
State taxes, net	33			1,698			1,249
Change in uncertain tax positions	24,888			8,618			26,823
Change in state tax rates	(474)			(2,557)			—
Impairment expense	1,539			8,289			—
Return to provision	2,786			—			—
Difference in foreign deferred and statutory tax rate	348			—			—
Contingent consideration	311			—			—
Other differences	122			1,213			928
Total income tax expense	$	31,806		$	8,448		$	29,625
Effective tax rate	(95.5)		%	(4.4)		%	62.9		%

Schedule of Deferred Tax Assets and Liabilities

Year-end deferred tax assets and liabilities were due to the following:


	Year Ended December 31,
	2023		2022
Deferred tax assets:
Lease liability	$	17,760	$	24,328
Net operating losses	22,661		16,819
Financing fees	830		1,487
Start-up costs	603		661
Share-based compensation	817		—
Interest carryforward	563		—
Inventory	419		1,555
Property and equipment	1,149		—
Other deferred tax assets	1,314		619
Valuation allowance	(22,951)		(17,397)
	$	23,165	$	28,072
Deferred tax liabilities:
Right-of-use assets	$	(18,414)	$	(21,865)
Intangible assets	(5,211)		(5,235)
Property and equipment	—		(693)
Other deferred tax liabilities	(235)		(80)
	$	(23,860)	$	(27,873)
Net deferred tax asset (liabilities) (1)	$	(695)	$	199

(1) Net deferred tax assets are included in other non-current assets while net deferred tax liabilities are included in other non-current liabilities in the consolidated balance sheets.

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits (exclusive of interest and penalties) are as follows:


Balance at January 1, 2022	$	41,503
Reductions based on lapse of statute of limitations	(552)
Additions based on tax positions related to the current year	1,452
Reductions based on tax positions related to the prior year	(127)
Additions for tax positions of prior years recorded to goodwill	5,982
Balance at December 31, 2022	$	48,258
Reductions based on lapse of statute of limitations	(1,946)
Additions based on tax positions related to the current year	19,843
Additions based on tax positions related to the prior year	38,470

Balance at December 31, 2023	$	104,625