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Business Taxes Law Guide—Revision 2024

Cannabis Tax Law

Revenue and Taxation Code

Division 2. Other Taxes
Part 14.5. Cannabis Tax
Chapter 2. Cannabis Taxes

Section 34011


34011. Cannabis excise tax. (a) (1) Effective on and after January 1, 2018, and before January 1, 2023, a cannabis excise tax shall be imposed upon purchasers of cannabis or cannabis products sold in this state at the rate of 15 percent of the average market price of any retail sale by a cannabis retailer.

A purchaser's liability for the cannabis excise tax is not extinguished until the cannabis excise tax has been paid to this state except that an invoice, receipt, or other document from a cannabis retailer given to the purchaser pursuant to this subdivision is sufficient to relieve the purchaser from further liability for the tax to which the invoice, receipt, or other document refers..

(2) Each cannabis retailer shall provide a purchaser with an invoice, receipt, or other document that includes a statement that reads: "The cannabis excise taxes are included in the total amount of this invoice."

(3) The department may prescribe other means to display the cannabis excise tax on an invoice, receipt, or other document from a cannabis retailer given to the purchaser.

(b) (1) A distributor in an arm's length transaction shall collect the cannabis excise tax imposed by this section from the cannabis retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the cannabis retailer. A distributor in a nonarm's length transaction shall collect the cannabis excise tax from the cannabis retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the cannabis retailer, or at the time of retail sale by the cannabis retailer, whichever is earlier. A distributor shall report and remit the cannabis excise tax to the department pursuant to Section 34015. A cannabis retailer shall be responsible for collecting the cannabis excise tax from the purchaser and remitting the cannabis excise tax to the distributor in accordance with rules and procedures established under law and any regulations adopted by the department.

(2) A distributor shall provide an invoice, receipt, or other similar document to the cannabis retailer that identifies the licensee receiving the product, the distributor from which the product originates, including the associated unique identifier, the amount of cannabis excise tax, and any other information deemed necessary by the department. The department may authorize other forms of documentation under this paragraph.

(c) The cannabis excise tax imposed by this section shall be in addition to the sales and use tax imposed by the state and local governments.

(d) Gross receipts from the sale of cannabis or cannabis products for purposes of assessing the sales and use taxes under Part 1 (commencing with Section 6001) shall include the tax levied pursuant to this section.

(e) Cannabis or cannabis products shall not be sold to a purchaser unless the cannabis excise tax imposed by this section has been paid by the purchaser at the time of sale.

(f) This section shall not be construed to impose a cannabis excise tax upon medicinal cannabis, or medicinal cannabis product, donated for no consideration to a medicinal cannabis patient pursuant to Section 26071 of the Business and Professions Code.

(g) (1) This section shall not be construed to impose a cannabis excise tax upon cannabis or cannabis products designated as a trade sample pursuant to Section 26153.1 of the Business and Professions Code.

(2) A person licensed under Division 10 (commencing with Section 26000) of the Business and Professions Code that sells cannabis or cannabis products designated as a trade sample pursuant to Section 26153.1 of the Business and Professions Code shall be liable for the cannabis excise tax imposed by this section as if the person were a cannabis retailer at the time of sale.

(h) This section shall be inoperative on April 1, 2023.

History—Added by Proposition 64, approved by voters at the November 8, 2016 election, in effect November 9, 2016. Stats. 2017, Ch. 27 (SB 94), in effect June 27, 2017, substituted "cannabis" for "marijuana" throughout; substituted "average market price" for "gross receipts" after "upon purchasers of", substituted "a cannabis retailer" for "a dispensary or other person required to be licensed pursuant to Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code or a retailer, microbusiness, nonprofit, or other person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code to sell marijuana and marijuana products directly to a purchaser" in the first sentence, and added the second and third sentences, to subdivision (a); deleted former subdivisions (b) and (c); added subdivision (b); relettered former subdivisions (d), (e), (f), and (g) to (c), (d), (e), and (f); substituted "(commencing with Section 6001)" for "of this division" after "the sales and use tax under Part 1" in subdivision (d); substituted "shall not" for "may" after "Cannabis or cannabis products" in subdivision (e); substituted "taxes" for "tax" after "The sales and use", substituted "medicinal" for "medical" throughout, and substituted "Division 10 (commencing with Section 26000)" for "Chapter 3.5 (commencing with Section 19300) of Division 8" after "terms are defined in", in subdivision (f). Stats. 2017, Ch. 253 (AB 133), in effect September 16, 2017, substituted "department" for "board" throughout; added paragraph designation (1) to former sole paragraph, deleted the last sentence which read "Each cannabis retailer shall provide … are included in the total amount of this invoice.", and added paragraphs (2) and (3), to subdivision (a). Stats. 2018, Ch. 92 (SB 1289), in effect January 1, 2019, substituted "taxes" for "tax" after "sales and use" in subdivision (d). Stats. 2019, Ch. 837 (SB 34), in effect January 1, 2020, substituted "their" for "his or her" after "qualified patient provides" in subdivision (f); and added subdivision (g). Stats. 2021, Ch. 70 (AB 141), in effect July 12, 2021, added subdivision (h). Stats. 2022, Ch. 56 (AB 195), in effect June 30, 2022, added "on and after" after "Effective" and added ", and before January 1, 2023," after "January 1, 2018," in paragraph (1) of subdivision (a); added "imposed by this section" after "collect the cannabis excise tax" in the first sentence of paragraph (1) of subdivision (b); added "cannabis" after "The" in subdivision (c); added "cannabis" after "unless the", substituted "imposed by this section" for "required by law" after "excise tax" in subdivision (e); deleted subdivision (f); relettered former subdivisions (g) and (h) as subdivisions (f) and (g), respectively; substituted "This" for "Nothing in this" before "section shall", added "not" after "section shall", and substituted "a cannabis" for "an" after "construed to impose" in subdivisions (f) and (g); added "cannabis" after "liable for the" in paragraph (2) of subdivision (g); and added subdivision (h).