Tax Guide for Medical Cannabis Businesses, Part 2 (Sales)

Dispensaries

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.

Seller’s Permit

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.

Sales

Your sales of medical cannabis and cannabis-related items are generally subject to tax, unless your customer provides you with a valid Medical Marijuana Identification Card indicating they are a qualified patient or the primary caregiver for a qualified patient that possesses a valid physician’s recommendation to use medical cannabis, along with a valid government-issued identification card. Please refer to the heading, Proposition 64 Exempts Certain Medical Marijuana Sales, above for more information.

Generally, the retail sales of the following products are taxable:

Hash
Pre-rolls
Pipes
Rolling Machines
Capsules
Tinctures
Tonics
Lotions
Teas
Edibles (cookies, butters, honey, chocolates, candies, sodas, bars)
Waxes
Buds and Flowers
Vape Pens
Rolling Papers
Oils
Balms
Extracts
Gum
Topicals
Plants and Clones
Shirts, Hats, Books, Magazines

The above list is not comprehensive. If you have questions about a product that is not included here, you may contact our Customer Service Center at 1-800-400-7115.

Delivery charges are generally taxable when dispensaries make deliveries with their own vehicles. However, delivery–related charges may be nontaxable, or partially taxable, when you ship using a common or contract carrier. For more information on shipping or delivery charges, see publication 100, Shipping and Delivery Charges.

Sales Tax Reimbursement

A retailer has the option to collect sales tax reimbursement from its customers. It is not mandatory. Regardless of whether or not you collected sales tax reimbursement from your customers, you as the retailer are liable for the sales tax on sales of taxable items. If sales tax is included in the sales price, you must post a sign notifying your customers that the sales tax is included in the sales price. If signage is not posted, then sales tax will be based on the sales price.

 

 

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