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Cannabis Tax Changes Could Trigger 504% Cash Flow Leap
Which Industry Players Will Benefit?
by
Nicolás Jose Rodriguez, Benzinga Staff Writer
August 31, 2023 4:34 PM | 2 min read

The Department of Health and Human Services' recommendation to reclassify marijuana as a Schedule III drug under the Controlled Substances Act set off ripples across the cannabis market.

One day following Wednesday's news, MSOS ETF
MSOS
surged by 21%. Notable companies also experienced remarkable gains, with State House Holdings Inc.
STHZF
skyrocketing by 74%, Columbia Care
CCHWF
witnessing a 38% boost, Jushi
JUSH
rising by 32%, and Ayr Wellness
AYRWF
showing a 29% increase.

This proposal holds crucial implications for taxation and cannabis businesses, particularly regarding Section 280E.

According to analysis firm Zuanic & Associates (Z&A) the removal of 280E, irrespective of federal legalization, stands to significantly bolster company cash flows.

Cannabis Companies Primed For Cash Flow Surge
Pablo Zuanic, chief analyst at Z&A noted that current calculations show companies with positive operating cash flow and profit before tax could reduce their income tax rates to 70% of PBT, as opposed to the standard 21% rate sans 280E.