Cannabis MSO Jushi benefiting from little-used IRS tax-credit program

The IRS owes Jushi Holdings about $6 million in Employee Retention Credit (ERC) claims, but the cannabis multistate operator didn’t want to wait for it.Instead, Jushi sold its ERC claims to a third party for about $5.1 million in cash.

ADVERTISEMENT The ERC is a refundable tax credit for eligible businesses and tax-exempt organizations whose employees were affected during the COVID-19 pandemic.It’s a program that few cannabis businesses have taken advantage of.

“If a business is eligible, it can be a particularly lucrative tax credit,” Glen Frost, managing partner of Annapolis, Maryland-based Frost Law, told MJBizDaily.“It’s a big opportunity, and a lot of cannabis businesses have missed out on this credit.” It’s not too late for cannabis businesses to take advantage of the program, but time is running out.

ERC claims still can be submitted for the 2021 tax year, but it must be done by April 15.Why Jushi sold its ERC claims Trent Woloveck, Jushi’s chief strategy officer, said selling the ERC claims to a third party is like invoice factoring, a form of alternative financing that involves selling your outstanding invoices to a third party in exchange for cash up front.

“IRS has been slow in getting refunds to many different industries for the ERC program,” Woloveck told MJBizDaily.“For us to receive cash today, it helps for liquidity on our balance sheet.” Jushi, which received a $1.3 million check from the IRS for various claims it filed previously, has another $3 million in ERC claims outstanding.

The Boca Raton, Florida-based MSO expects those claims to be paid by the IRS “in due course,” Woloveck said.Jushi had to file more than 40 claims to account for each entity it operates.

ADVERTISEMENT The evolution of the ERC The ERC was enacted in March 2020 as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act to encoura...