1933 Industries Inc. (CSE: TGIF)(OTCQB: TGIFF) said in a corporate update that it stands to gain from changing tax laws in Nevada at the beginning of 2024. The Nevada Wholesale Marijuana Tax (WMT) will go into effect on January 1 and it changes how companies are taxed under the fair market value calculation.
Under existing law, the Department of Taxation determines the fair market value of wholesale cannabis. It establishes a per-pound rate, irrespective of the actual price of the product sold to dispensaries. 1933 said the change meant that a 15% tax would be calculated based on the actual sales price, resulting in significant cost savings for cultivators.
“We are pleased that the Nevada Department of Taxation has taken meaningful steps towards relieving some of the tax burden that operators like 1933 Industries face. We are also encouraged by the ongoing discussion of rescheduling cannabis to Schedule III”, said Mr. Paul Rosen, 1933 Industries’ CEO and Chairman of the Board. “Tax relief for the cannabis industry is a necessary step towards leveling the playing field and discouraging the illicit market from continuing to operate.” Mr. Rosen added, “We continue to focus on efficient practices to operate a lean and sustainable company and streamline our business units to significantly improve operational efficiencies and reduce corporate overhead.”
1933 also told investors that the upgrades and improvements to its cultivation facility in Las Vegas had been completed and that the renovations had already demonstrated significant improvements in flower production and yields. In a statement, 1933 said, “The company also added an additional bloom room with 65 lights, thus increasing the total number of lights in the facility’s 17 bloom rooms to 806.”
The company believes that its fourth-quarter earnings report will demonstrate revenue growth as a result of these improvements, with both the cultivation and production business units contributing to this strong performance. 1933 will release its fourth-quarter financial report, as well as its year-end financial results on November 28, 2023.
Prior to the earnings call, the company is asking its shareholders to approve a change to its debentures that mature at the end of December 2023. Shareholders will be given two options:
Let the debentures mature, but give those holders a new unit that would be exercisable in five years.
Let the debentures mature, but give the holders a new debenture with a two-year maturity.
Third Quarter Earnings
The company owns 91% of the Alternative Medicine Association (AMA) and 100% of consumer-packaged goods manufacturer Infused MFG LLC (Infused). The company’s revenue is derived from wholesale cannabis sales in Nevada (AMA), and from the sale of hemp-derived wellness products (Infused) under the Canna Hemp brand sold across the US via e-commerce at cannahemp.com.
1933 last reported earnings in June 2023 when its third quarter delivered revenues of $4.1 million and $13.3 million YTD 2023, compared to $4.3 million for the third quarter of 2022 and $9.9 million YTD 2022. The company also delivered a net loss of $3.4 million for the third quarter, of which $2.5 million were non-cash charges from a net realizable value adjustment related to certain AMA inventories due to the renovation and upgrading of the cultivation facility.
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