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What You Need to Know About the New Cannabis Taxes This 2018

3 May 2018 / Category: Blog

Cannabis cultivators, processors, manufacturers and retailers should be aware that in 2018, new cannabis taxes will take effect. A couple of highlights on how these new tax changes can affect your business.

New Tax Rates

According to California Department of Tax and Fee Administration (CDTFA), beginning January 1, 2018, these will be the new tax policies:

  • A 15 percent excise tax is imposed upon purchasers of cannabis and cannabis products. Retailers are required to collect the excise tax from the purchaser and pay it to the cannabis distributor.
  • A tax on the cultivation of cannabis that enters the commercial market is imposed upon cultivators. Cultivators are required to pay the cultivation tax to either a distributor or a 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.

Cannabis Retailers

All cannabis retailers need to collect cannabis excise tax from customers who purchase cannabis or cannabis products. You need to pay the excise tax that is due to your distributor. Provide your customer with an invoice, receipt, or other document which includes the statement “the cannabis excise taxes are included in the total amount of this invoice.” And finally, electronically file your sales and use tax returns and pay the sales and/or use tax to the CDTFA.

There is additional information you can find at the California Department of Tax and Fee Administration website regarding retailers.

Cannabis Distributors

If you are a cannabis distributor, you should register online with the CDTFA for a cannabis tax permit. Starting January 1, 2018, distributors should collect excise tax from retailers you supply as well as collect the cultivation tax from cultivators or manufacturers that send or transfer cannabis and cannabis products with you.

Distributors should also file both cannabis tax and sales and use tax returns electronically to pay any tax amounts due to the CDTFA.

These are just some of the highlights of the new tax guide for cannabis businesses. We will continue to break down the information, however If you want more details or to go through the guide yourself, you can find at the California Department of Tax and Fee Administration website.

On the other hand, if you have questions on how these tax changes can affect your insurance coverage, call us at (833) 819-5010 or email us at