James Mann
Close readers of cannabis company financial statements have realized that many marijuana enterprises are financing themselves through nonpayment of federal taxes.
Caught in the perfect storm of collapsing margins, oppressive taxes and vanishing access to debt and equity capital, they are buying time by not making estimated tax payments in hopes of a brighter future.
Some observers try to put a positive spin on nonpayment as “cheap financing,” claiming that the interest charged on federal unpaid taxes is lower than interest that would be charged on other kinds of debt.
This is folly, of course: Interest rates on underpayments when added to penalties that might apply result in costly financing, especially for large corporations that could be subject to higher underpayment interest rates (and underpayment interest isn’t deductible).
ADVERTISEMENT
‘Grim reality’
John Yaeger
More to the point, it’s a bargain with the devil because, when the IRS
Read full article on Marijuana Business Daily
