Cannabis Retailers: Excise Tax Does Not Apply to Free Medicinal Cannabis

Cannabis Retailers: Excise Tax Does Not Apply to
Free Medicinal Cannabis
Use Tax is Due on Cost of Medicinal
Cannabis Given Away for Free

As a cannabis retailer, you are prohibited from giving away any amount of cannabis or cannabis products unless authorized to do so by the Bureau of Cannabis Control (BCC), the agency that administers the cannabis licensing activities for retailers and distributors. If you are authorized to give cannabis or cannabis products away free of charge, the cannabis excise tax does not apply; but you do owe use tax on your purchase price of the cannabis or cannabis products. The following explains:

Cannabis Excise Tax
The BCC provides that free cannabis or cannabis products can be provided to medicinal cannabis patients or primary caregivers in possession of valid Medical Marijuana Identification Cards issued by the California Department of Public Health. The cannabis excise tax does not apply to medicinal cannabis provided for free to qualified patients. If you already paid the excise tax to a cannabis distributor, you may request a return of the tax from the distributor who supplied you with the cannabis or cannabis product. For additional information on what can and cannot be given away for free, please contact the BCC.

Sales and Use Tax
You owe use tax based on your purchase price of the cannabis or cannabis products you provide to medicinal cannabis patients or primary caregivers free of charge. Or, if you are also a licensed manufacturer, you owe tax on the cost of the taxable items used to manufacture the cannabis products. To pay use tax, report your purchase price of the cannabis as “Purchases Subject to Use Tax”on your sales and use tax return. Those purchases become part of the total amount that is subject to tax.

This email is intended to give you an overview of the tax application of free medicinal cannabis and does not address all requirements for the cannabis industry. We encourage you to read our online Tax Guide for Cannabis Businesses, or contact us.

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“If you can't figure it out, figure out a "work-around!" The NestEggg Group was founded with a firm belief that working exclusively with professional firms to help them see past their history into the potential of their futures. Your potential is limited only by your creativity. Jeff's business purpose— “why”—centers on changing results through viewing things in new ways. He expounds: “Changing our results requires changing our actions. Because what we do proves what we believe, only when we change our beliefs can we progress. New insights are what cause us to shift our beliefs.” So what results do you want to attain? Call Jeffrey (1-888-987-NEST) when it’s time for progress. About Robert "Jeffrey" Wolter, President The NestEggg Group, Inc & EgggsAct Tax, Inc. & Managing Member NestEggg Investment Advisors Jeffrey is a common sense and productivity strategist. He facilitates and teaches about growth, positioning, and pricing strategies; leadership; operations; business communications and philanthropy. What he does best—differently from others—is energize people while he shows them how to solve business effectiveness. He clarifies the intricate, huts new light. He encourages hope. He sets you up to make development possible. Jeffrey is recognized for his original ideas and success with practical implementation, even as he challenges the "norm". Jeffery is a skilled facilitator. His deep knowledge of his firm(s) operations and ability to understand the intricacies of All of his clients, gives way to sharp observation skills allow his grasp a firm’s nuances quickly. He then guides firm owners and their teams on their unique paths toward improved profitability, smoother operations, stronger cultures and how and when to give back. Since 1998, he's helped more than 5,024 QuickBooks users and business owners achieve results such as: expanding revenues, attracting and inspiring talent, aligning operations with long-term objectives, discovering and leveraging their differentiation, substantially increasing sales and proposal results, strengthening relationships with their clients, and finding more joy in their work. His 25+ year career background includes roles as entrepreneur, finance director, board of director for several nonprofit, creative business development, insurances agency owner, Wealth Management Firm owner, editor, Tax Specialist, Accounting Director, Mediator and more. Before creating his firm in 2007, Jeffrey was an accountant for several well know local firms and individuals. After building a successful accounting practice, he became intrigued and inspired by the uniqueness of how Insurance, Investment's/Wealth Management, Taxes and Accounting/Bookkeeping all tend to work together, he branched out and created his list of Affiliate Companies in 2012 & 2013 In 2013, joined the Intuit Accountants Council and has assisted in the continued enhancement of the popular QuickBooks (Desktop and Online versions) and did so until late 2015. In 2014 with the legalization of Marijuana, Jeff and his team have committed themselves to knowing as much about the industry and being there to offer Cannabis Compliant, Accounting, Tax & Insurance to business owners that have or need help in keeping in with the Federal government's "280E"
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