Income Tax Expense

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Tax Expense

10. INCOME TAX EXPENSE

The following table summarizes the Company’s income tax expense and effective tax rates for the three and nine months ended September 30, 2023 and 2022:

		Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022
Income before Income Taxes	$	45,333	$	43,117	$	127,829	$	167,005
Income Tax Expense		34,526		32,969		93,927		102,440
Effective Tax Rate		76.2%		76.5%		73.5%		61.3%

The effective tax rates for the three and nine months ended September 30, 2023 and 2022 were based on the Company’s forecasted annualized effective tax rates and were adjusted for discrete items that occurred within the periods presented.

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, 2023 and 2022 were $80,398 thousand and $95,307 thousand, respectively.