Check Out Leading Tax Group Featured On Major News Outlets As Top Tax Experts!

What is a cannabis sales tax?

On: December 20, 2019

Facebook
Twitter
LinkedIn
Share
With the many taxes that you have to pay in California, the cannabis sales tax is one that you’ll no doubt encounter, making it important to know what it’s all about. What do I need to know about cannabis sales tax? A cannabis sales tax is imposed on all sales of marijuana and in California has two categories for distributors and cultivators. For cultivators, this tax is based on the amount of cannabis that is grown to be sold and based on weight. Currently, the rate is $9.25 per ounce of marijuana flowers, $2.75 per ounce of leaves, and $1.29 per ounce of fresh cannabis plant, which is unprocessed marijuana that is weighed within two hours of harvesting. For distributors or retailers, the cannabis sales tax is mostly from the excise tax, which is a tax imposed on a specific good, such as gas or tobacco. Most customers would see on their receipt their local base tax (which is the state tax of 7.25 percent plus local rates), a 15 percent excise tax (on the average item), and a varying cannabis business tax which can be anywhere from 5 to 15 percent. This tax is paid by the retailer to the distributor. Most of the time, the excise tax is found in the total retail purchase and is required to be put on the invoice or receipt. It is one of the taxes that must be paid by all parties regarding cannabis. What are the cannabis sales tax regulations? In California, both growers and distributors are required to pay taxes on cannabis. Recreational users will be required to also pay this tax, while medical users with the correct registration and state-issued cards are not subject to paying. However, medical patients are still required to pay the excise tax. To make sure you stay compliant, you’ll need to make sure you have the proper business permits and licenses. The most common and one of the first permits you should get is a seller’s permit, which legally allows you to operate a business in California. This allows you to not only sell at wholesale or retail level, but it also can allow you to use a resale certificate to not have a hefty tax bill at the end of the day. The sellers permit is required for almost every aspect of the cannabis industry, while a cannabis tax permit is required for all cannabis-related businesses.  When it comes to collecting a cannabis sales tax, making sure you have the records sufficiently collected will not only keep you from getting any permits revoked or fined by the government, but is probably just a good business practice to have. While it can be a lot to keep track of all the taxes collected, it is crucial to keeping your business up and running and free of penalties. Always make sure to call Leading Tax Group and don’t attempt to do it yourself.
Call Us Now