New Information – On November 8, 2016, California voters approved Proposition 64, Control, Regulate and Tax Adult Use of Marijuana Act, which provides:
Effective November 9, 2016, certain sales of medical marijuana are exempt from sales and use tax. (see the Dispensaries tab, under the heading, Proposition 64 Exempts Certain Medical Marijuana Sales)
Effective January 1, 2018, a 15 percent excise tax is imposed upon purchasers of all marijuana and marijuana products. Additionally, a tax on cultivators of marijuana is imposed as follows:
- $9.25 per dry-weight ounce of marijuana flowers
- $2.75 per dry-weight ounce of marijuana leaves
We will update this guide with additional information on the excise tax and cultivation tax as it becomes available – please check back.
Helping your business succeed is important to the Board of Equalization (BOE). To help you better understand the tax obligations specific to your medical cannabis business, we have created this guide detailing the tax issues and important information relevant to your industry.
Please note: This guide is intended to provide general information regarding issues relating to the sales and use tax laws and other programs administered by BOE which may affect medical cannabis businesses. It is not intended to provide advice or guidance related to other state and local statutes and regulations relating to the cannabis industry. Additionally, for the Federal Government’s guidance regarding marijuana enforcement, refer to the U.S. Department of Justice website.
The Growers section covers topics related to the general application of tax to growers, the available exemptions and the exemption certificates required.
Please note that the general information provided is not intended to replace any law or regulation.
Growers and Processors
Please note: This guide is intended to provide general information regarding issues relating to the sales and use tax laws and other programs administered by BOE which may affect the medical cannabis industry. It is not intended to provide advice or guidance in relation to other state and local statutes and regulations relating to the cannabis industry. Additionally, for the Federal Government’s guidance regarding marijuana enforcement, see the U.S. Department of Justice website.
If you sell medical cannabis, you are required to hold a seller’s permit and report sales and pay taxes. For more information, see the Registration section on the Getting Started tab.
Free Educational Consultations
If you are starting a new business, or have tax-related questions, BOE staff is available to meet with you at your business location to provide a personal consultation to help you correctly report and pay your sales and use taxes. For more information on Free Educational Consultations see the Getting Started section.
When growers and processors sell their product to a customer, such as a dispensary, and the customer provides the grower or processor with a valid and timely resale certificate, the sale is not subject to sales tax.
Generally, most of the items you purchase for use in your business are subject to sales or use tax. However, purchases of certain supplies may not be taxable, whereas purchases of other items may qualify for a partial exemption.
Partial Exemption for Farm Equipment and Machinery
In general, the sale of farm equipment and machinery is taxable. However, certain sales and purchases of farm equipment and machinery are partially exempt from sales and use tax. As a grower, you may be able to take advantage of this partial exemption.