CDTFA Cultivation and Excise Regulations Approved
The following is the text of an announcement about CDTFA Cultivation and Excise Regulations Approved.
The California Department of Tax and Fee Administration would like to announce that recently adopted Cannabis Tax
Regulation 3700, Cannabis Excise and Cultivation Taxes, was approved by the Office of Administrative Law and filed with the Secretary of State on December 21, 2017. The effective date of the regulation is December 21, 2017. The regulation clarifies the provisions of the cannabis cultivation and excise taxes that were effective January 1, 2018.
The California Department of Tax and Fee Administration would also like to announce that recently adopted Cannabis Tax Regulation 3701, Collection and Remittance of the Cannabis Excise Tax, was approved by the Office of Administrative Law and filed with the Secretary of State on December 28, 2017. The effective date of the regulation is December 28, 2017. The regulation further clarifies the imposition, collection, reporting, and remittance of the cannabis excise tax.
CDTFA has provided additional guidance on the provisions concerning Cultivation and Excise Regulations stating:
New proposed category and rate for the cannabis cultivation tax
Proposition 64, which was approved by voters on November 8, 2016, established a cultivation tax based on the dryweight ounce of cannabis flowers and leaves. The CDTFA has proposed a new cannabis cultivation tax category for fresh cannabis plants at a rate of $1.29 per ounce. The cultivation tax rates are:
• $9.25 per dry-weight ounce of cannabis flowers,
• $2.75 per dry-weight ounce of cannabis leaves, and
• $1.29 per ounce of a fresh cannabis plant. All fresh cannabis plants must be weighed within two hours of harvesting.
The excise tax applies to all retail sales of cannabis and cannabis products starting January 1, 2018.
The cannabis excise tax applies to all retail sales of cannabis and cannabis products starting January 1, 2018, including sales of cannabis and cannabis products retailers may have purchased prior to January 1, 2018.If you are a cannabis retailer, you are required to collect the cannabis excise tax from your customers on each retail sale of cannabis or cannabis products starting January 1, 2018, and pay the excise tax to a distributor. More information on how to remit the cannabis excise tax on your inventory purchased prior to January 1, 2018, is coming soon.
Every sale or transport of cannabis or cannabis products must be recorded on an invoice or receipt.
Cannabis licensees are required to keep invoices for a minimum of seven years.
Distributors (or in some cases manufacturers) are responsible for collecting the cannabis cultivation and excise taxes, and the invoices they provide must include, among other specified requirements, the amount of tax collected. Retailers, cultivators, and manufacturers must keep these invoices as verification that the appropriate tax was paid. Distributors are liable for paying the cannabis taxes to the CDTFA.
Retailers are required to provide purchasers with a receipt or other similar document that includes the following statement, “The cannabis excise taxes are included in the total amount of this invoice.” See our Tax Guide for Cannabis Businesses at www.cdtfa.ca.gov/industry/cannabis.htm for more information on invoicing and recordkeeping requirements.
If you have questions, we can provide answers here.