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Super Bowl and cannabis go hand-in-hand

Cannabis goes 4-for-4

Good morning.

Yesterday was the Super Bowl — and it’s worth noting that of the final four teams in the playoffs were from legal cannabis states: Detroit Lions (Michigan), Baltimore Ravens (Maryland), San Francisco 49ers (California), and the Kansas City Chiefs (Missouri). 

Beyond that, cannabis tech firm Dutchie was an official sponsor of The Players Tailgate party on Super Bowl Sunday

All this proves that the Super Bowl and cannabis go together like Taylor Swift and Travis Kelce.

A 7.5-minute read from JB and JR

💡What’s the big deal?

What Trulieve’s IRS filing means for your business

What happened: In October of last year, Trulieve announced that it was seeking a refund of 280E taxes for three recent tax years, totaling $143 million dollars. 

There weren’t a ton of details about how and why Trulieve thought they were entitled to the refund, but it’s an issue that many cannabis companies are closely watching. 

As a reminder, the IRS’s 280E rule dictates that cannabis companies can’t deduct regular business expenses as they sell a Schedule I controlled substance. That forces cannabis companies to pay a lot of taxes — with some estimates of up to 80%

What’s new: While we still don’t know the full details of what Trulieve’s rationale is, two tax attorneys at Holland & Hart wrote their opinions and insights about Trulieve’s actions for MJ Biz Daily. 

What’d they say: It’s hard to say how successful Trulieve will be, here. 

But the tax attorneys laid out what might happen now — and how it might be instructive for the industry, no matter what happens with Trulieve and the IRS. 

But also: As the attorneys say in the op-ed: “The bottom line: Look before you leap, and work closely with your tax professionals.” 

Amen to that.

🥊 Quick hits

The New York State Cannabis Control Board has announced on Friday that they will hold their next meeting this coming Friday in Troy. Word on the street is they’ll announce the next batch of microbusiness licenses, but we’ll keep an eye on it.

A recent poll conducted in North Carolina suggests that ~80 percent of voters support legalizing medical cannabis. Perhaps this level of support could get both the House and Senate in North Carolina to take up legalization this year. 

Legendary Toronto head shop THC is closing its doors after 30 years in business.

Cannabis taxes put to use in Arizona

Driving the news: Last week, the governor of Pennsylvania delivered his budget message for the coming year and included tax funds from (potential) legalization in the state. His message will be bolstered this week when he reads what’s up in Arizona.

How AZ spends: Arizona set up a fund for “justice reinvestment,” when the state legalized cannabis.  So far, strong cannabis sales have meant that more than $26 million have gone into the fund. 

Our take: The cannabis industry often laments the high taxation that often comes with legalization. 

That’s fair enough. But when reports show how cannabis tax funds are helping communities, it goes a long way towards normalizing legalization and blunting cannabis opponents.

Republicans presenting a poison cannabis pill?

The backdrop: Wisconsin’s Democratic governor, Tony Evers, wants to legalize cannabis.

It aligns with what Wisconsin voters appear to want as well. And with Wisconsin’s neighbors legalizing cannabis as well, the clock’s ticking to capture those sweet, green tax revenues.

Evers acknowledged that he might need to get behind something less than he’d like when it comes to a medical cannabis program, but…

What’s being proposed: A few weeks back, some Wisconsin Republicans talked about a medical cannabis program that restricted access to medical cannabis to all but a few medical conditions, limited the number of medical cannabis dispensaries (five, all government owned/operated), and failed to include smokable products. 

What’s next: While Wisconsin’s neighbors continue to push forward with legalization (Minnesota), or are already there (Michigan, Illinois), Wisconsin will debate this highly-restrictive medical program. This proposal has opponents on both sides of the aisle. 

Democrats, including the governor, want a less restrictive medical program and want to lay the groundwork for full-scale legalization. Republicans don’t love increasing the size of government to run state-owned and operated dispensaries. 

What we do know is that Wisconsinites will continue to buy and consume cannabis from both legal (other states) and non-legal (in-state) sources. 

📢 People moves

John Pérez is stepping down from the board of Glass House Brands.

🎒 What we’re reading

🚀 Launches

Method Man’s Tical Brand is re-launching in Nevada.

📈 📉 Earnings

Canopy Growth reported a $217 million (CAD) net loss on $90 million of revenue for the third quarter of FY24.

📊 Chart of the day

Trulieve, High Tide, and Curaleaf are North America’s three largest retail cannabis companies by footprint:

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