CALIFORNIA CANNABIS TAXES EXPLAINED

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Taxes on cannabis range anywhere from 20%-35% depending on Medical or Recreational...

With the passage of Prop. 64 comes a step in the right direction for Cannabis however a step up in prices. A regular doctors recommendation does not qualify patients for tax exempt status as of 2018, you must obtain a County MMIC and pay the state and local cannabis business excise taxes of 15% and 5% respectfully.

 

Here are links in different counties throughout California to obtain information on getting your County Medical Marijuana Identification Card (MMIC).

 

Alameda County

http://www.acphd.org/mmicp.aspx

 

San Diego County

http://www.sandiegocounty.gov/content/sdc/hhsa/programs/phs/mmic/how_to_apply.html 

 

Riverside County

http://www.rivcommic.org/

 

Some cities have enacted measures requiring that cannabis businesses located in their jurisdictions pay a cannabis business tax. For medical patients a normal doctors recommendation only patients will pay the state excise tax of 15% + local cannabis excise tax of 5% + CA State Tax of 9.25% totaling 29.25%. 

For recreational Cannabis (which we do not offer yet), customers will pay the state excise tax of 15% + local cannabis excise tax of 10% + CA State Tax of 9.25% totaling 34.25%. 

Cali Care Collective, Inc. is based out of Alameda County and follows the law and regulations to the upmost extent. Below are examples of tax scenarios. 

 

Example 1 – Medicinal cannabis sold to a qualified patient who has a valid Medical Marijuana Identification Card (MMIC) issued by the California Department of Public Health and a valid government issued ID.

 

Since the customer has a valid MMIC and ID, the sale is exempt from sales tax. There is no exemption from the cannabis excise tax or local cannabis business tax. 

Sales tax calculation:Selling price of cannabis, including 15% ($50 + $7.50) $57.50

Cannabis business local tax 

(57.50 x 5%) $2.87   

Subtotal ($57.50 + $2.87) $60.37        

Total due $60.37 

Example 2 – Medicinal cannabis sold with a cannabis accessory.

 

You buy an eighth of an ounce of Cannabis for $57.50, which includes the cannabis excise tax, along with rolling papers to a customer who has a valid Medical Marijuana Identification Card (MMIC) issued by the California Department of Public Health and a valid government issued ID.

Since the patient has a valid MMIC and ID, the sale of cannabis is exempt from sales tax; however, sales tax does apply to the selling price of the rolling papers. There is no exemption from the cannabis excise tax or local cannabis business tax.

 

Sales tax calculation:

Selling price of cannabis, including 15% excise tax $57.50     

Rolling papers $10.00     

Subtotal $67.50

Sales tax ($10.00 × 8.5%) $0.85     

Total due ($67.50 + $0.85) $68.35   

 

Example 3 – Medicinal cannabis sold to a customer with only a physician's note.

 

You sell cannabis infused lotion for $46.00, which includes the 15% cannabis excise tax, to a customer that provides you with a physician's note prescribing the product for medicinal use. The sales tax applies to the selling price of the lotion, including the cannabis state and local excise tax. In order for the exemption from sales and use tax to apply, the customer must provide you with a valid Medical Marijuana Identification Card (MMIC) issued by the California Department of Public Health and a valid government issued ID. A physician's note is not sufficient to support the exemption from sales tax. 

Sales tax calculation:Selling price of cannabis lotion, including state excise tax $46

Local excise tax ($46 x 5%) $2.30

Sales tax ($48.30 × 9.25%) $4.47    

Total due ($48.30 + $3.40) 51.70 

 

Example 4 – Recreational cannabis sold to a customer.

In the example below, all taxes apply, 15% State excise tax, 10% local excise tax both multiplied by CA Sales Tax of 9.25%, totaling 34.25%.

Sales tax calculation: Selling price of cannabis, including 15% excise tax 

($50 + $7.50) $57.50

Cannabis business local tax 

(57.50 x 10%) $5.75   

Subtotal ($57.50 + $5.75) $63.25    

Sales tax ($63.25 x 9.25%) $5.85     

Total due ($63.25 + $5.85) $69.10

*We take great pride in protecting our patients and do everything possible to ensure you can navigate this ever changing industry safely.