Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

v3.23.4
Income Taxes (Tables)
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Schedule of Income before Income Tax, Domestic and Foreign
For the year ended December 31,
(in thousands) 2022 2021
United States $ (172,997) $ (51,109)
Foreign $ (9,242) $ (2,304)
Total $ (182,239) $ (53,413)
Schedule of Components of Income Tax Expense (Benefit)
The income tax (benefit) expense for the years ended December 31, 2022 and 2021 consisted of the following:
For the year ended December 31, 2022 For the year ended December 31, 2021
(in thousands) Federal Foreign State Total Federal Foreign State Total
Current tax (benefit) expense
Current year $ —  $ (13) $ —  $ (13) $ —  $ (10) $ 20  $ 10 
Total current year —  (13) —  (13) —  (10) 20  10 
Deferred tax (benefit) expense
Current year (31,475) (2,311) (10,368) (44,154) (6,624) (636) (2,211) (9,471)
Change in valuation allowance 36,867  2,311  13,523  52,701  30,255  636  12,095  42,986 
Change in tax rate 72  —  (344) (272) 101  —  (479) (378)
Tax conversion of Operating Company 2,990  —  1,022  4,012  —  —  —  — 
Up-C consolidation (10,097) —  (3,440) (13,537) (5,733) —  (1,901) (7,634)
KushCo merger 1,643  —  (393) 1,250  (17,999) —  (7,504) (25,503)
Total deferred tax (benefit) expense —  —  —  —  —  —  —  — 
Income tax (benefit) expense $ —  $ (13) $ —  $ (13) $ —  $ (10) $ 20  $ 10 
Schedule of Effective Income Tax Rate Reconciliation
A reconciliation of the income tax (benefit) expense computed at the U.S. federal statutory income tax rate to the income tax expense recognized is as follows:
For the year ended December 31,
(in thousands) 2022 2021
Expected federal income tax (benefit) expense at statutory rate $ (38,270) $ (11,216)
State tax expense, net of federal benefit (8,688) (2,125)
Loss attributable to non-controlling interests 2,121  3,475 
Change in valuation allowance 52,701  42,986 
Tax conversion of Operating Company 4,012  — 
Up-C consolidation (13,537) (7,634)
KushCo merger 1,250  (25,503)
Other, net 398  27 
Income tax (benefit) expense $ (13) $ 10 
Schedule of Deferred Tax Assets and Liabilities
The components of deferred tax assets and liabilities were as follows:
As of December 31,
(in thousands) 2022 2021
Deferred tax assets:
As Restated
Goodwill and other intangible assets $ 36,841  $ 16,285 
Fixed assets
 1,590  — 
Inventory 5,858  — 
Allowance for doubtful accounts 833  — 
Operating lease liability 862  — 
Equity-based compensation 2,576  — 
Business interest carryforward 5,342  — 
Net operating loss carryforwards 57,136  44,424 
Other 576  4,351 
Total deferred tax assets 111,614  65,060 
Valuation allowance (110,799) (58,098)
Net deferred tax assets 815  6,962 
Deferred tax liability:
Fixed assets —  — 
Right of use assets (815) — 
Basis difference in investment in the Operating Company —  (6,962)
Total deferred tax liabilities (815) (6,962)
Net deferred tax assets and liabilities $ —  $ —