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.
All retail establishments that sell medical cannabis and cannabis-related items in California must register with the BOE for a seller’s permit, including itinerant or mobile dispensaries. You are not required to disclose what you sell.
You are responsible for obtaining a seller’s permit and reporting and paying the sales tax on the retail selling price of consignment sales.
When you have possession or control of the item you are selling, and can transfer ownership or use of the item to the buyer without further action on the part of the owner, you are considered the retailer of the item.
For example, your dispensary accepts pipes and accessories to sell on consignment. You agree to sell the products, but will not pay for the product unless it sells. Your agreement authorizes you to sell the products and transfer ownership to the buyer. You are considered the retailer of the accessories you sell in this way and must pay sales tax based on your retail selling price.
Instead of making direct sales, individuals and businesses often place goods with others who make sales for them. These types of transactions are commonly called consignment sales. In most cases, the owner of the item (the consignor), and the seller (the consignee), need to register with us to obtain a seller’s permit, and report and pay sales on their returns. However, if you make no more than two qualifying sales or consignments in any twelve—month period, your sales are generally considered “occasional sales”, and you do not have to register for a seller’s permit or report those two sales or consignments.
I sell items placed with me on consignment. When is my consignment sale considered a retail sale?
You are responsible for obtaining a seller’s permit and paying the sales tax on the retail selling price of consignment sales when you:
Have possession or control of the item you are selling, and
Can transfer ownership or use of the item to the buyer without further action on the part of the owner.
For example, you may own a jewelry store where you sell jewelry on consignment. Typically, the owner of the jewelry will bring it to you and sign an agreement that authorizes you to sell the item and transfer ownership to the buyer. You are considered the retailer of jewelry you sell in this way and must pay sales tax based on your retail selling price.
If you make sales on behalf of others, and those sales do not meet the two conditions described above, please read see Broker Sales.
Note: This publication summarizes the law and applicable regulations in effect when the publication was written, as noted above. However, changes in the law or in regulations may have occurred since that time. If there is a conflict between the text in this publication and the law, decisions will be based on the law and not on this publication.