State Cultivation Tax starting January 1, 2018

Imposition of Cultivation Tax starting January 1, 2018

Revenue and Taxation Code § 34012 provides that effective January 1, 2018, a state cultivation tax will be imposed upon all Cultivators on all harvested cannabis that enters the commercial market upon all cultivators. The tax will be due after the cannabis is harvested and enters the commercial market.

(1) The tax for cannabis flowers shall be nine dollars and twenty-five cents ($9.25) per dry-weight ounce. “Cannabis flowers” mean the dried flowers of the cannabis plant.  “Cannabis leaves” mean all parts of the cannabis plant other than cannabis flowers that are sold or consumed.

(2) The tax for cannabis leaves shall be set at two dollars and seventy-five cents ($2.75) per dry-weight ounce.  “Cannabis leaves” mean all parts of the cannabis plant other than cannabis flowers that are sold or consumed.

The State Board of Equalization California renamed the Department of Tax and Fee Administration may adjust the tax rate for cannabis leaves annually to reflect fluctuations in the relative price of cannabis flowers to cannabis leaves.

Tax stamps or state-issued product bags will be issued that indicate that all required tax has been paid on the product to which the tax stamp is affixed or in which the cannabis is packaged.   The tax stamps and product bags are required to be read by a scanning or similar device to be traceable utilizing the track and trace system.  Cannabis shall not be sold unless the tax has been paid as provided in this part.

Collection of Cultivation Tax

The Distributor is required to collect the cultivation tax from a cultivator upon entry into the commercial market.  The Distributor is required to pay the tax collected to the taxing authority.

A Manufacturer is required to collect the cultivation tax from a cultivator on the first sale or transfer of unprocessed cannabis by a Cultivator to a Manufacturer. The Manufacturer shall remit the cultivation tax collected from the Cultivator on the cannabis product sold or transferred to the Distributor.

All cannabis removed from a cultivator’s premises, except for plant waste, shall be presumed to be sold and thereby taxable.

 

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