TAX HELP FOR THE CANNABIS INDUSTRY An Overview of California Sales and Use Tax and Cannabis Tax Laws
| TAX HELP FOR THE CANNABIS INDUSTRY An Overview of California Sales and Use Tax and Cannabis Tax Laws |
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The California Department of
Tax and Fee Administration
(CDTFA) welcomes you and
your cannabis business.
Get Registered!
If you sell cannabis or cannabis products, you must:
Whether you are a cannabis cultivator, Register with us for a seller’s permit,
File returns, even if you made no sales and
manufacturer, distributor, or retailer,
Report and pay any sales or use tax due.
it is essential to understand how the Retailers of cannabis or cannabis products must
California Department of Tax and Fee also register for a cannabis retailer excise tax permit
to report and pay the cannabis excise tax to us. The
Administration (CDTFA) administers the cannabis retailer excise tax permit is separate from
your seller’s permit.
California sales and use tax and the
Cannabis businesses making sales are required to
cannabis tax. This publication provides a obtain and maintain a valid seller’s permit in addition to
applying for a license with the Department of Cannabis
general overview. Control (DCC). For more information on licensing
requirements, please visit the Department of Cannabis
Control’s website at https://cannabis.ca.gov/.
You can register for a permit online at
www.cdtfa.ca.gov. Click Register to get started. There
is no cost to register for a seller’s permit or a cannabis
retailer excise tax permit.
Filing Returns and Making Payments
After you register, we will notify you how often you must
file your returns and make your payments.
You must file your tax returns and pay any taxes due on
time. Otherwise, you may owe penalties and interest.
You must file your sales and use tax return by the
deadline even if you do not make taxable sales (for
example, all your sales are for resale). Additionally, if you
are a cannabis retailer, you must file your cannabis tax
return even if you have zero transactions to report.
Payments can be made online, by mail, or in person at
your local office. For information or questions regarding
acceptable in-person payment methods, contact your
local office.
For more information on how to register, file, and pay,
visit our Tax Guide for Cannabis Businesses at
www.cdtfa.ca.gov/industry/cannabis.htm.
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Cannabis Distributors, Tax Exemptions Are Available Cannabis excise tax does not apply to cannabis or
cannabis products designated as trade samples and
Manufacturers, and Cultivators Retail Sales to Qualified Patients Exemption: not sold to other licensees or consumers.
Medicinal cannabis or cannabis products sold at
If you are a cannabis distributor, manufacturer, or retail to qualified patients or their primary caregivers Vendor Compensation:
cultivator, you are required to: are exempt from the sales and use tax when the Cannabis retailers that have been approved by DCC
Register online with us for a seller’s permit patients or primary caregivers show the following to to receive an equity fee waiver for the issuance or
if you make sales. the retailer at the time of purchase: renewal of their cannabis retailer license can apply
File sales and use tax returns electronically with us to retain 20 percent of the cannabis excise
and pay any amount due to us. Their valid Medical Marijuana Identification Card tax due on their retail sales of cannabis or cannabis
issued by the California Department of Public products. A cannabis retailer must be approved by us
Sales and Use Tax Health (CDPH), and before they can retain the excise tax due as vendor
If you sell cannabis or cannabis products to Their valid government-issued identification card. compensation. The vendor compensation program
consumers, those sales are generally subject to sales This exemption does not apply to cannabis excise will end on December 31, 2025.
or use tax. This includes sales of cannabis flowers, tax. Equipment Exemptions:
hash, bud, vape pens, edibles (food products If you are a cannabis cultivator or manufacturer, you
containing cannabis), oils, and plants. may qualify for a partial sales or use tax exemption
The sales or use tax must be reported on your sales on equipment purchased to produce or manufacture
Cannabis Excise Tax and use tax return and paid to us. The cannabis your products.
The Cannabis Tax Law imposes a 15 percent excise tax is included in gross receipts for purposes For information on these exemptions, vendor
cannabis excise tax upon purchasers of cannabis of the sales tax. compensation, and other exemptions available for
or cannabis products. This rate is subject to change If sales tax is included in the selling price of the the cannabis industry, see our online Tax Guide for
beginning July 1, 2025. Cannabis retailers are items, you must post a sign in a visible location at Cannabis Businesses at
responsible for collecting the cannabis excise tax your place of business stating “sales tax included,” www.cdtfa.ca.gov/industry/cannabis.htm.
from their purchasers at the retail sale of cannabis or or include this statement on your invoice or receipt.
cannabis products. Donated Medicinal Cannabis Exemptions: Cannabis Inspection Program
Cannabis excise tax is based on gross receipts from Resale Certificates Cannabis retailers may donate free medicinal We conduct routine inspections of cannabis
the retail sale of cannabis or cannabis products. The sale of cannabis or cannabis products for resale cannabis or cannabis products to medicinal cannabis businesses to ensure owners possess the required
Gross receipts include the sales price of the cannabis is not subject to sales tax. If you sell cannabis or patients, or cannabis licensees may donate free tax permits and/or licenses, understand their tax
or cannabis products and all charges related to the cannabis products for resale to other licensees, such medicinal cannabis or cannabis products to cannabis responsibilities as an owner or operator of a cannabis
sale, such as delivery fees or local business taxes as a distributor, make sure the purchaser gives you retailers for subsequent donation to medicinal business, and are in compliance with California’s
listed separately on the receipt to the purchaser. a timely and valid resale certificate. If you do not cannabis patients. cannabis tax laws. These inspections are authorized
by Revenue and Taxation Code § 34016.
Cannabis excise tax must be listed separately on receive a valid resale certificate, you may be liable A medicinal cannabis patient is a qualified
the receipt or invoice provided to the purchaser. for the sales tax. For the required elements of a patient who possesses a qualifying physician’s
Cannabis excise tax is included in gross receipts valid resale certificate, see publication 103, Sales for recommendation, or a qualified patient (or the For More Information
subject to sales and use tax. Resale, on our website at www.cdtfa.ca.gov. patient’s primary caregiver) with a valid Medical Visit our Tax Guide for Cannabis Businesses on our
Marijuana Identification Card issued by the CDPH. website for in-depth information to help you comply
Cannabis Retailers Keeping Records Use tax and the cannabis excise tax do not apply with your tax obligations.
If you are a cannabis retailer, you are required to: You must keep accurate and complete records. The when a cannabis retailer donates free medicinal www.cdtfa.ca.gov/industry/cannabis.htm.
Register online with us for a seller’s permit and a Medicinal and Adult Use Cannabis Regulation and cannabis to a medicinal cannabis patient, or For the Federal Government’s guidance regarding
cannabis retailer excise tax account. Safety Act requires you to keep accurate records of when another licensee, such as a distributor or marijuana enforcement, see the U.S. Department of
your commercial cannabis activity for a minimum of manufacturer, donates free medicinal cannabis to Justice website at www.justice.gov.
Collect cannabis excise tax from your purchasers.
seven years. We understand the challenges facing a retailer for subsequent donation to a medicinal
File sales and use tax returns and cannabis the cannabis industry, but California law requires cannabis patient.
retailer excise tax returns online and pay sales that you keep sales and purchase records, receipts, Trade Samples:
and use tax and cannabis excise tax due to us. resale certificates, and normal books of account. Certain cannabis licensees may provide cannabis
Read our Tax Guide for Cannabis Businesses trade samples to other licensees for targeted
www.cdtfa.ca.gov/industry/cannabis.htm advertising of cannabis or cannabis products.
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Need Assistance?
Free in-person sales and use tax educational
consultations are available for your business. Contact
your local office to schedule an appointment. Find a
listing of offices online at
www.cdtfa.ca.gov/office-locations.htm.
Do you need help filing your return or have a
general tax question?
Call our Customer Service Center at 1-800-400-7115
(CRS:711) Monday through Friday 7:30 a.m. to
5:00 p.m. (Pacific time), except state holidays.
Get It in Writing
Tax laws can be complex. We encourage you to send
your tax questions to us in writing. Provide the specific
facts and circumstances of your planned sales or
purchases and ask how tax applies to your transaction.
Requests for written advice can be emailed or mailed
directly to a CDTFA office nearest you.
Find our contact information at
www.cdtfa.ca.gov/contact.htm.
Taxpayers’ Rights Advocate
Call 1-888-324-2798 for help with problems you have
not been able to resolve through normal channels (for
example, by speaking to a supervisor).
This publication summarizes the law and applicable regulations
in effect when it was written. However, changes in the law or in
regulations may have occurred since that time. If there is a conflict
between the text in this publication and the law, decisions will be
based on the law and not on this publication.
www.cdtfa.ca.gov
Publication 557 (1-23)
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