California ~ Sales and Use Tax: Guidance Provided on Marijuana

CCH Tax Day Report

The California State Board of Equalization (BOE) provides guidance regarding certain sales of medical marijuana that are exempt from sales and use tax. With the passage of Proposition 64, retail sales of medical marijuana to persons who have a valid Medical Marijuana Identification Card (MMIC) issued by the California Department of Public Health (CDPH) and a valid government-issued identification card (ID) are exempt from sales and use tax effective November 9, 2016. To obtain the exemption, qualified patients or their primary caregivers must show their valid MMIC and valid ID to the retailer at the time of purchase. Moreover, beginning January 1, 2018, a 15% excise tax is imposed upon purchasers of all marijuana and marijuana products, including medical marijuana, based on the gross receipts from the retail sale. Retailers, such as dispensaries or other persons required to be licensed to sell marijuana, will be required to collect the excise tax from the purchaser and pay it to the BOE. Also beginning January 1, 2018, a tax on cultivators of marijuana will be imposed as follows: (1) $9.25 per dry-weight ounce of marijuana flowers; and (2) $2.75 per dry-weight ounce of marijuana leaves.

BOE Publication 557-I, Certain Sales of Medical Marijuana are Exempt from Sales and Use Tax, California State Board of Equalization, April 2017, ¶406-671

 

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