On: December 27, 2019
With nearly two-thirds of the country having legal cannabis in the form of either medical or recreational programs, comes a series of conflicting and confusing taxes and regulations that are applied across the country. Every state has its own rules and California cannabis taxes are no different. Because there is no overarching federal regulations on cannabis, every state has their own taxes and rules that come with dealing with the legal cannabis business. California cannabis taxes are no different, with the state having some of the heftier taxes compared to other states. What are California’s cannabis taxes? California has three main taxes that are tacked on to customer’s bills at the end of their purchase. The sales and use tax that is added to the purchase depends on your location, as different cities and counties have different rules, but the base 6 percent state tax, plus another mandatory 1.25 percent tax will add at the very least a 7.25 percent cannabis tax that must be taken in California. Medical cannabis users do not have to pay the local sales and use tax if they have the correct medical card and up to date license. On top of that, a 15 percent excise tax is taken from customers on every cannabis purchase they make, however, that tax is usually rolled up into the cost of the product being sold. This tax is charged to the retailer by the distributor. On top of those California cannabis taxes, there is a cannabis business tax that is added by local city and county governments. This tax varies by the city and county but can be anywhere from a 5 to 15 percent tax and is charged at the point-of-sale on top of the product’s selling price. For cultivators, there is a tax added that is based on the amount of cannabis that is grown to be sold and 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. What about other states? California cannabis taxes are not cheap and are not based on other legal states’ taxes. If you are planning to expand your business into another state, it is important to research all their state and local laws regarding cannabis taxes, as no two states are the same. Looking at a state like Washington, which has a 37 percent excise medical tax and an 8 percent state tax, plus 37 percent excise tax for recreational purchases, Californians won’t be as upset about their cannabis bill. Most states don’t have taxes for their medical marijuana programs, and if they do it is usually lower than 10 percent of the total. Almost all states with recreational programs have an excise tax that is added on to their total cost, with only Alaska separating from the pack with a $50 dollar flat rate added for every ounce sold. California cannabis taxes are not the worst in the world, but knowing what they are and how they compare to other states will help you and your business in the long run. If you ever have any questions make sure to call
Leading Tax Group and don’t attempt to do it yourself.
800-900-4250
