California ~ Sales and Use and Miscellaneous Taxes: Counties May Impose Tax on Medical Marijuana

Pursuant to enactment of a law characterized as “declaratory of existing law,” California counties may impose tax—not a fee or special assessment—on the privilege of cultivating, dispensing, producing, processing, preparing, storing, providing, donating, selling, or distributing medical cannabis or medical cannabis products by a licensee. In addition, another enactment requires the Board of Equalization (BOE) to adopt a system for reporting the movement of commercial cannabis products throughout the distribution chain.

A county board of supervisors must specify in an ordinance subject to voter approval the activities subject to tax, the applicable rate or rates, the method of apportionment, and the manner of collection of the tax. They may provide for the collection of the tax in the same manner as for other charges and taxes fixed and collected by the counties. The tax may be imposed on any or all of the activities listed above regardless whether the activity either is undertaken individually, collectively, or cooperatively or is for compensation or is for compensation or gratuitous.

This law does not limit or prohibit the levy or collection of any other fee, charge, or tax, or a license or service fee or charge upon, or related to, the activities relating to medical marijuana tax. It also is not a limitation upon the taxing authority of a county as provided by law. However, the law does not authorize a county to impose a sales or use tax in addition to other authorized sales and use tax.

Monitoring Distribution Chain

The BOE monitoring system must employ secure packaging and be capable of providing information to the BOE. Specific information to be provided is, at a minimum:

amount of tax due;

name, address, and license number of the designated entity remitting the tax;

name, address, and license number of the succeeding entity receiving the product;

the transaction date; and

any other information deemed necessary by the board for the taxation and regulation of marijuana and marijuana products.

Ch. 689 (A.B. 266), Laws 2015, effective January 1, 2016; Ch. 719 (S.B. 643), Laws 2015, effective January 1, 2016

 

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Wolters Kluwer Tax and Accounting

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