Company: VREOF
Filing Date: 2025-03-07
Form Type: PRE 14C
Source: 0001140361-25-007601
Chunk: 369

Company: Vireo Growth Inc.
Filing Date: 2025-03-07
Form: PRE 14C
Chunk 369
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 has a significant impact on the retail operations of cannabis and a lesser impact on cultivation and manufacturing operations. Section 280E was originally intended to penalize criminal market operators; however, since cannabis remains a Schedule I controlled substance for U.S. Federal purposes, the Internal Revenue Service (IRS) has applied Section 280E to state-legal cannabis businesses. The effective tax rate on a cannabis business depends on how large its ratio of non-deductible expenses is to its gross profit.

In addition, for states, within which the Company operates, that align their tax codes with Section 280E, the Company is also unable to deduct normal business expenses for state tax purposes. This results in permanent differences between ordinary and necessary business expenses that have been deemed non-allowable as well as a higher effective tax rate than in most industries. The non-deductible expenses shown in the above effective tax rate reconciliation are generated primarily by the impact of applying Section 280E to the Company’s cannabis operations.

The IRS has invoked Section 280E in tax audits against various state-legal cannabis businesses in the U.S. Although the IRS has issued a clarification allowing the deduction of certain expenses, the scope of this allowance is interpreted very narrowly, resulting in the non-deductibility of certain customary operating and general administrative costs. While there are currently several pending cases before various administrative and federal courts challenging the restrictions of Section 280E, there is no guarantee that these administrative and/or federal courts will issue an interpretation of Section 280E favorable to the cannabis industry.

<div align='center'>B-40</div>

TABLE OF CONTENTS

Proper Holdings, LLC, Subsidiaries and Affiliates

| (i) | CONSOLIDATED FINANCIAL STATEMENTS |

| (ii) | For the Years Ended |

B-41

TABLE OF CONTENTS

Proper Holdings, LLC, Subsidiaries and Affiliates Table of Contents For the Years Ended December 31, 2024 and 2023

| INDEPENDENT AUDITORS’ REPORT                           |     | B-43 |
| CONSOLIDATED BALANCE SHEET                             |     | B-46 |
| CONSOLIDATED STATEMENT OF OPERATIONS                   |     | B-47 |
| CONSOLIDATED STATEMENT OF CHANGES IN MEMBERS’ INTEREST |     | B-48 |
| CONSOLIDATED STATEMENT OF CASH FLOWS                   |     | B-49 |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS