Tax Guide for Cannabis Businesses

We will continue to update this page as we receive information about the taxation requirements for the cannabis industry.

Please note: This guide is intended to provide general information regarding issues relating to the Sales and Use Tax Laws, Cannabis Tax Law, and other programs administered by California Department of Tax and Fee Administration (CDTFA) that may affect cannabis businesses. It is not intended to provide advice or guidance related to other state and local statutes and regulations relating to the cannabis industry. Additionally, for the Federal Government's guidance regarding marijuana enforcement, refer to the U.S. Department of Justice website.

New Information

Are you calculating cannabis excise tax correctly? Find out now!

Please watch our new video on how to calculate cannabis excise tax on your gross receipts. Tax Help for Cannabis Retailers — Gross Receipts Subject to Excise Tax

Cannabis Gross Receipts. Include charges like these when calculating cannabis excise tax: cannabis product and selling price, local cannabis business tax, delivery fee, service fee, and packaging in your gross receipts when calculating cannabis excise tax.

Assembly Bill 1126 (Stats. 2023, ch. 563)

Beginning January 1, 2024, it is a violation of the Medicinal and Adult-Use Cannabis Regulation and Safety Act to use or possess the universal cannabis symbol in connection with commercial activity other than commercial cannabis activity licensed by Department of Cannabis Control, and any object bearing the symbol in violation is contraband. We may inspect any business that sells or stores objects of any kind bearing the universal cannabis symbol for commercial activity in violation and any objects deemed contraband may be seized by us.

Gross Receipts

On December 15, 2023, the Office of Administrative Law approved Regulation 3802, Gross Receipts from Sales of Cannabis and Cannabis Products, which clarifies that gross receipts generally include any amount the purchaser is required to pay to purchase the cannabis or cannabis products, including the packaging. You may access the full text of Regulation 3802 on our website.

For additional information regarding gross receipts, please see our Cannabis Tax Fact — Gross Receipts Subject to Cannabis Excise Tax.

Assembly Bill 195

Assembly Bill (AB) 195 (Stats. 2022, ch. 56) revised the Cannabis Tax Law. We will provide updates and additional information regarding your registration and return filing requirements in this guide along with future special notices.

The following notices include important information regarding the changes due to AB 195:

Cannabis Excise Tax – Cannabis retailers are now responsible for reporting and paying the cannabis excise tax to the California Department of Tax and Fee Administration (CDTFA) for retail sales of cannabis or cannabis products made beginning January 1, 2023. The first cannabis retailer excise tax return and payment of the cannabis excise tax are due by May 1, 2023.

Please see the Retailers section for additional information regarding the application of the cannabis excise tax and the requirements for cannabis retailers.

Vendor Compensation – Beginning January 1, 2023, cannabis retailers approved by the Department of Cannabis Control for a fee waiver applicable to the issuance or renewal of a retailer license may apply with us for approval to retain vendor compensation.

Please see Cannabis Vendor Compensation under the Retailers to tab for the requirements and additional information for how cannabis retailers can apply with us to be approved for vendor compensation.

Cultivation Tax – Beginning July 1, 2022, the cultivation tax no longer applies to harvested cannabis entering the commercial market. Please see the Distributors/Manufacturers/Cultivators section for additional information regarding the end to the cultivation tax.

How to Use This Guide

Each section of this guide contains important information relevant to cannabis businesses. The Getting Started section provides key resources related to registration, filing returns, account maintenance, and other information cannabis businesses may need.

The Retailers section covers topics related to the general application of the cannabis excise tax and sales and use tax on purchases and sales made by cannabis retailers and includes examples of how the cannabis excise tax is calculated. It also has information on the requirements cannabis retailers have with CDTFA like registration and reporting requirements.

The Distributors/Manufacturers/Cultivators section covers topics related to the general application of sales and use tax to purchases and sales by distributors, manufacturers, and cultivators.

The Videos section contains videos with important information for cannabis retailers.

The Tax Facts section provides information on specific topics important to the cannabis industry.

Lastly, the Resources section provides links to useful information, including special notices, publications, statutory and regulatory information, cannabis inspection information, and access to assistance from our Customer Service Representatives.

Please note that the general information provided is not intended to replace any law or regulation. This website summarizes the law and applicable regulations in effect when it was published. However, changes in the law or regulations may have occurred. If there is a conflict between this document and the law, decisions will be based on the law.

Get it in Writing

Our tax and fee laws can be complex and difficult to understand. If you have specific questions regarding this topic, we recommend that you get answers in writing from us. This will enable us to give you the best advice and will protect you from tax, penalties and interest in case we give you erroneous information.

Requests for written advice can be emailed to CDTFA or mailed directly to the CDTFA office nearest you.

For more details, please see publication 8, Get It in Writing!

If You Need Help

If at any time you need assistance with topics included in this guide – or with topics not included – feel free to contact us by telephone or email. Contact information and hours of operation are available in the Resources section.

If you have suggestions for improving this guide, please contact us via email.

Free Educational Consultations

If you are starting a new business, or have tax-related questions, CDTFA staff is available to meet with you at your business location to provide a personal consultation to help you correctly report and pay your sales and use taxes. To participate, or for more information, please contact your local office today to schedule an appointment.