INCOME TAXES

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

11.INCOME TAXES

The following table summarizes the Company’s income tax expense and effective tax rates for the three and nine months ended September 30, 2022 and 2021:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Income before Income Taxes	$	26,388		$	15,124		$	53,235		$	18,767
Income Tax Expense	(69,381)			(27,086)			(105,998)			(66,939)
Effective Tax Rate	263		%	179		%	199		%	357		%

The effective tax rates for the three and nine months ended September 30, 2022 were based on the Company’s forecasted annualized effective tax rates. Additionally, net discrete tax items of $3,840 were recorded during the three months ended September 30, 2022, increasing the year to date discrete tax items to $8,578, as of September 30, 2022. Discrete items recorded to date primarily relate to penalties and interest on unpaid tax liabilities, the permanent impacts of stock compensation, and adjustments to December 31, 2021 year-ended tax return positions. The three and nine months ended September 30, 2021 tax provision were recorded discretely due to the lack of a reliable interim, full year U.S GAAP forecast that is necessary for utilization of the annual effective tax rate method.

Due to its cannabis operations, the Company is subject to the limitations of the U.S. Internal Revenue Code of 1986, as amended (“IRC”) Section 280E under which the Company is only allowed to deduct expenses directly related to sales of product. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E. Therefore, the effective tax rate can be highly variable and may not necessarily correlate with pre-tax income and provides for effective tax rates that are well in excess of statutory tax rates.

Taxes paid during the nine months ended September 30, 2022 and 2021 were $57,887 and $16,385, respectively.