Sales and Use Taxes
In California, all retail sales of tangible personal property are taxable unless the law provides a specific exemption. The law defines tangible personal property as an item that can be seen, weighed, measured, felt, or touched. Cannabis and cannabis products are generally considered tangible personal property and without a specific exemption, sales of such property are subject to sales and use tax.
Please note, on November 8, 2016, California voters approved Proposition 64, Control, Regulate and Tax Adult Use of Marijuana Act. Proposition 64, among other things, provides that effective November 9, 2016, certain sales of medicinal cannabis are exempt from sales and use tax. For more information on how Proposition 64 affects your medicinal cannabis sales, please see the Retailers tab, under the heading, Proposition 64 Exempts Certain Medicinal Cannabis Sales.
Use tax may be due when you purchase taxable items without payment of California tax from an out-of-state vendor for use in California. You may owe use tax on items that you remove from your inventory and use in California if you did not pay tax when you purchased the items.
To find out more about use tax, please visit our use tax webpage.
Cannabis Excise Tax and Cultivation Tax
Effective January 1, 2018, a 15 percent excise tax is imposed upon purchasers of cannabis and cannabis products. The 15 percent excise tax is calculated based on the average market price of the retail sale.
In addition, a tax on cultivation of cannabis is imposed on cultivators at a rate of:
- $9.25 per dry-weight ounce of cannabis flowers that enter the commercial market, and
- $2.75 per dry-weight ounce of cannabis leaves that enter the commercial market.
Beginning January 1, 2020, the CDTFA is required to annually adjust the cultivation tax rates to account for inflation.
Online Registration — Register with us for your seller’s permit and a cannabis tax permit (available November 2017) if applicable to your type of business. Our registration system will prompt you when you select Register a business activity with CDTFA from Registration – Main Menu.
In addition to registering with the CDTFA for the required tax permit(s), you will also need to obtain the appropriate cannabis license(s) for your business. The California Department of Food and Agriculture is responsible for licensing cannabis cultivators. The California Department of Public Health is responsible for licensing cannabis manufacturers. The Bureau of Cannabis Control within the California Department of Consumer Affairs is responsible for licensing cannabis distributors, testing facilities, and retailers.
If you sell cannabis or cannabis products in California, you must register with the CDTFA for a seller’s permit and file sales and use tax returns.
Cannabis Tax Permit
If you are a distributor of cannabis and/or cannabis products in California, you must register with the CDTFA for a cannabis tax permit. This permit is in addition to your seller’s permit.
Online registration for cannabis tax permits will be available November 2017.
Filing and Payments
Sales & Use Tax Return
As a cannabis seller, you are required to file regular sales and use tax returns to report your sales. Whether you are new to operating a cannabis business or growing your existing business, you’ll find these tools helpful in maintaining your account with us.
- Tax Return Filing Deadlines—Find your filing due dates.
- File a Tax Return Online – CDTFA’s online filing service is easy, fast, and free!
- Online Payment Options – Make payments online for tax and fee programs.
- Notice of Business Change – Keep your information current by using this form to notify us of any business changes.
Cannabis Tax Return
As a distributor of cannabis and cannabis products, you are required to electronically file quarterly returns with the CDTFA. The quarterly cannabis tax return is due on the last day of the month following the quarterly reporting period. The cannabis tax account is separate from other accounts you may have with the CDTFA.
If you are paying your sales and use tax or cannabis tax in cash person, please contact one of our offices to make arrangements and explain that you need an exemption from the No Cash policy.
We may grant an exemption if paying in cash is necessary to avoid an undue hardship. On this form you will need to describe the nature of your business and why you are unable to establish a bank account or pay by cashier’s check or money order. You will be notified in writing when your request has been approved or denied and you will be provided with additional information on how to proceed.