On: January 17, 2020
With the legalization of cannabis in California, a new booming industry full of potential and prosperity has arrived with lots and lots of cannabis taxes. Cannabis taxes are an unavoidable part of being a user in the state, however, how many of them you have to pay is all up to whether or not there is a doctor’s note. Is there a medical cannabis tax? For those who have a prescription from their doctor or have a Medical Marijuana Identification (MMID) card, there are less taxes, but they are not gone. For medical cardholders willing to go through some extra steps, they are eligible to become exempt from the “sales and use” tax for one year, which depending on your location can be anywhere from 7 percent to 10 percent of the total order. While they will still have to pay the other taxes, it is important to note that if the customer only has a doctor’s recommendation, they will still have to pay the sales and use tax. The sales and use tax generally takes up a pretty chunk of the costs when it comes to cannabis taxes, usually being the second-costliest one on the bill. While the other taxes must be paid, there is no extra tax added on for medical users. What cannabis taxes do medical cardholders pay? For customers shopping for cannabis, there are some unavoidable taxes that they will be subject to regardless of their medical status. In California, the dispensary sales tax is varied by location but usually goes from 7.25 percent to anywhere as high as 10.25 percent. Local districts may choose to add on additional taxes for services, but the base 6 percent state tax and another mandatory 1.25 percent local tax will always be the bare minimum that customers will have to pay. Breaking down the California cannabis tax, there are some taxes that are rolled into the overall cost of the products that will show up on the receipt. The excise tax, which is a business tax charged to the retailer and paid to the distributor, applies to all cannabis sales, medical and recreational, in the state. While it does not exactly have to be put into the retail price, this is the standard practice. This is the heftiest of all the cannabis taxes coming in at 15 percent, however, it usually goes toward local services like drug prevention programs, roads and highways, environmental programs and more. Another tax that is usually added on is the cannabis business tax, which comes from local city and county governments. This tax varies by location but is anywhere from 5 to 15 percent and are charged at the point-of-sale on top of the product’s selling price. While recreational customers will also have to pay the sales and use tax, which can add another 7 to 10 percent to the total cost, medical users with the correct identification will be exempt. Local jurisdictions may also choose to levy certain taxes on medical patients, making it important to look up all local laws before operating. Always make sure to call
Leading Tax Group and don’t attempt to do it yourself.
800-900-4250
