Sacramento – Individuals planning to sell cannabis or cannabis products beginning January 1, 2018, must register with the California Department of Tax and Fee Administration (CDTFA) for a seller’s permit. Cannabis cultivators, processors, manufacturers, retailers, microbusinesses and distributors who make sales are required to obtain and maintain a seller’s permit as a prerequisite for applying for a license with the Bureau of Cannabis Control, the Department of Food and Agriculture, or the Department of Public Health. It is easy and convenient to register online with the CDTFA. Individuals who already have a seller’s permit (including a permit previously issued by the Board of Equalization) do not need to register for a new one.
In addition, distributors of cannabis and cannabis products must also register with the CDTFA for a cannabis tax permit – which is separate from a seller’s permit – in order to report and pay the two new cannabis taxes to the CDTFA starting in January 2018. Registration for the cannabis tax permit will be available on November 20, 2017.
Beginning January 1, 2018, two new cannabis taxes will be in effect:
[if !supportLists]· [endif]A 15 percent excise tax is imposed on purchasers of cannabis and cannabis products. Retailers are required to collect the excise tax from the purchaser and pay it to the cannabis distributor.
[if !supportLists]· [endif]A tax on the cultivation of cannabis that enters the commercial market is imposed on cultivators, who are required to pay the cultivation tax to either a distributor or manufacturer depending upon the nature of the transaction. The cultivation tax rates are $9.25 per dry weight ounce of cannabis flowers, and $2.75 per dry-weight ounce of cannabis leaves.
Individuals who operate a cannabis business that does not make taxable sales will need to obtain a certification letter from the CDTFA indicating that their business does not require a seller’s permit. The certification letter will be available through the CDTFA online registration system beginning November 20, 2017. Individuals may also sign up for CDTFA Cannabis ListServ notifications for the latest information on how to comply with the new laws related to cannabis businesses.
More information about the permits necessary to collect these new taxes is available in this special notice and in the Tax Guide for Cannabis Businesses.
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Important Notice: Recent legislation created the California Department of Tax and Fee Administration (CDTFA) to administer the taxes and fees previously collected by the Board of Equalization, with the exception of Property Tax, Alcoholic Beverage Tax and Insurance Tax. Additional information concerning this recent change can be found at www.boe.ca.gov and at www.cdtfa.ca.gov. For more information on other taxes and fees in California, visit the California Tax Service Center.
Note: This news release may discuss complex tax laws and concepts. It may not address every situation, and is not considered written advice under Revenue and Taxation Code section 6596 or 55045. Changes in law or regulations may have occurred since the time this news release was written. If there is a conflict between the text of this news release and the law, decisions will be based upon the law and not this news release. For specific help, please contact the CDTFA at 1-800-400-7115.
California Department of Tax and Fee Administration • 450 N Street, Sacramento, CA 95814 • 1-800-400-7115