We will update this page as we receive information about the taxation requirements for the cannabis industry – please check back.
Please note: This guide is intended to provide general information regarding issues relating to the sales and use tax laws, cannabis tax law, and other programs administered by the California Department of Tax and Fee Administration (CDTFA) (formerly BOE) which may affect 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.New Information – On November 8, 2016, California voters approved Proposition 64, Control, Regulate and Tax Adult Use of Marijuana Act. To align the requirements for licensing and regulation of medicinal and adult-use of commercial cannabis, Proposition 64 has been recently amended by Senate Bill (SB) 94. Among other changes, SB 94 repealed the Medical Cannabis Regulation and Safety Act (MCRSA) and included certain provisions of the MCRSA in the licensing provisions of Proposition 64. The consolidated provisions are now known as the Medicinal and Adult-Use of Cannabis Regulation and Safety Act (MAUCRSA), and the term marijuana was changed throughout the law to the term cannabis.
Effective November 9, 2016, certain sales of medicinal cannabis are exempt from sales and use tax. (See the Retailers section, under the heading, Proposition 64 Exempts Certain Medical Cannabis Sales from Sales and Use Tax)
Beginning January 1, 2018, two new cannabis taxes apply as follow:
- A 15 percent excise tax is imposed upon purchasers of cannabis and cannabis products. Retailers of cannabis and cannabis products are required to collect the 15 percent excise tax from the purchaser based on the average market price of any retail sale and pay it to their cannabis distributor.
- A cultivation tax is imposed upon cannabis cultivators on all harvested cannabis that enters the commercial market. Cannabis cultivators are required to pay the cultivation tax to either their distributor or their manufacturer. The rate of the cultivation tax is:
- $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.
Senate Bill (SB) 94, which was approved by the Governor on June 27, 2017, amended several provisions in the cannabis tax law as enacted by Proposition 64. SB 94 provides that:
- Distributors must collect the cannabis excise tax from retailers and the cultivation tax from cultivators or manufacturers.
- Distributors must report and pay the cannabis excise tax and the cultivation tax to the CDTFA.
Sign up for the CDTFA Cannabis Outreach email listserv to receive the latest news on cannabis tax compliance and related issues like CDTFA-issued special notices and news releases.
The CDTFA may adopt emergency regulations to implement and enforce the cannabis tax law. The emergency regulation process has begun. Visit http://www.boe.ca.gov/meetings/pdf/2017BTCcalendar.pdf for specific dates and register online to receive announcement of proposed regulatory change.
Helping your business succeed is important to the CDTFA. To help you better understand the tax obligations specific to your cannabis business, we have created this guide detailing the tax issues and important information relevant to your industry.
How to Use This Guide
Each section of this guide contains important information relevant to cannabis businesses. The Getting Started section provides key resources related to registration, filing returns, account maintenance, and other information cannabis business may need.
The Distributors section covers topics related to the general application of tax to purchases and sales by distributors.
The Retailers section covers topics related to the general application of tax to purchases and sales by retailers. It also has information on exemptions that retailers may qualify for and the exemption certificates required.
The Cultivators section covers topics related to the general application of tax to cultivators and processors, the available exemptions and the exemption certificates required.
The Manufacturers section covers topics related to the general application of tax to purchases and sales by manufacturers.
Lastly, the Resources section provides links to useful information, including special notices web-based seminars, publications, statutory and regulatory information, and access to assistance from our Customer Service Representatives.
Please note that the general information provided is not intended to replace any law or regulation. This website summarizes the law and applicable regulations in effect when it was published. However, changes in the law or regulations may have occurred. If there is a conflict between this document and the law, decisions will be based on the law.
Get it in Writing
Our tax and fee laws can be complex and difficult to understand. If you have specific questions about this exemption and who or what qualifies, we recommend that you get answers in writing from us. This will enable us to give you the best advice and will protect you from tax, penalties and interest in case we give you erroneous information.
Requests for written advice can be emailed to CDTFA or mailed directly to the CDTFA office nearest you.
For more details, please see publication 8,Get It in Writing!
If You Need Help
If you have questions, please feel free to contact us by telephone or email. Our contact information and hours of operation are available in the Resources section.
Free Educational Consultations
If you are starting a new business, or have tax-related questions, CDTFA 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.
Information regarding our free consultation program can be found in publication 176-1, Free Educational Consultation.
If you have suggestions for improving this guide, please contact us via email.