Florida-based Trulieve Cannabis Corp. (OTCQX: TCNNF) exceeded revenue expectations for the first quarter ending March 31, as it continues collecting federal tax refunds related to 280E from the Internal Revenue Service.
Trulieve posted first-quarter revenue of $298 million, beating Yahoo Finance analysts’ projections by $12 million and rising 4% from both the prior quarter and year-ago period. The results were buoyed by robust sales growth in core markets like Florida and Arizona.
The multistate operator also recorded net income of $23 million for the January-March period, versus losses in the previous two quarters. Earnings got a lift from $50 million in refunds Trulieve received during the first quarter as part of its ongoing challenge to the IRS.
For context, the 280E provision prohibits cannabis companies from taking standard business deductions on federal taxes since marijuana remains illegal at the federal level. Trulieve and others have been disputing 280E through Tax Court petitions and other legal actions.
Trulieve said its adjusted EBITDA jumped 21% sequentially to $106 million, representing a 36% adjusted EBITDA margin. CEO Kim Rivers cited the company’s “strong performance” across its core cannabis operations.
“The outlook has never been better,” Rivers said in a statement.
In its home state of Florida, where Trulieve operated nearly 70% of its nationwide 196 dispensaries as of March 31, a ballot measure to legalize recreational marijuana for adults will go before voters in November. Passage would be a huge catalyst for the company and could unlock further growth potential beginning in May 2025.
Trulieve is also monitoring federal efforts to reschedule cannabis from its current Schedule I prohibited status, which would remove the 280E deduction barriers. The Department of Justice began moving the issue forward, though it’s not entirely clear when it will actually happen. A reclassification to Schedule III would allow businesses to claim those standard deductions and potentially allow for retroactive claims.
The company said it held $327 million in cash at the end of March, including the tax refunds. It generated $139 million in operating cash flow and $124 million in free cash flow during the period while opening three new Florida dispensaries.
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