Almost Every Major Cannabis Company Could See Positive Cash Flow If 280E Is Removed In 2025
A recent analysis of 14 multi-state cannabis operators (MSOs) looks at how the potential removal of 280E in 2025 could impact their cash flows.
Section 280E of the U.S. tax code, which prevents cannabis companies from deducting normal business expenses due to federal prohibition, has long been a burden on the industry. If this tax provision were eliminated, cannabis companies would enjoy far better financial health.
Breakdown Of The Analysis
The chart provided by Viridian Capital Advisors shows the projected 2025 sources and uses of cash among the industry’s top MSOs, with an emphasis on how eliminating 280E could alter their financial standing.
EBITDAR (Earnings Before Interest, Taxes, Depreciation and Rent): This is a critical metric because it represents the companies’ operational cash flow, excluding fixed charges.
Additional Cash: Some companies are sitting on significant cash reserves, which serve as a buffer for covering operational needs. This is represented by the black line that shows EBITDAR …