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Tax rates and responsibilities for cannabis business

Beginning January 1, 2018 the cannabis cultivation tax and excise tax will take effect.

Posted: Nov 17, 2017 6:14 PM

Beginning January 1, 2018 the cannabis cultivation tax and excise tax will take effect.

Cultivators are responsible for paying cultivation tax. The current cultivation tax rates are $9.25 per dry-weight ounce of cannabis flowers, and $2.75 per dry-weight ounce of cannabis leaves.

Both cannabis and cannabis products are subject to and excise tax. Retailers are responsible for collecting the cannabis excise tax at the time of the retail sale and for paying tax to the distributer, who reports and pays the cannabis excise tax to the California Department of Tax and Fee Administration (CDTFA). The current excise tax rate is 15 percent of the “average market price”.

Sales and use tax applies to retail sales of cannabis and cannabis products after the excise tax is added.

Cannabis retailers, cultivators, manufacturers, and distributers making sales must register with the CDTFA for a sellers permit.

Sales and use tax permit registration is available online beginning November 20, 2017. You can register for all the proper tax permits for your cannabis business at www.cdtfa.ca.gov

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