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Business Taxes Law Guide – Revision 2019
 

Cannabis Tax Regulations

Title 18 of the California Code of Regulations

Article 1. General Provisions and Definitions

Regulation 3701


Regulation 3701. Collection and Remittance of the Cannabis Excise Tax.

Reference: Sections 34011 and 34015, Revenue and Taxation Code.

(a) IN GENERAL. On and after January 1, 2018, a cannabis retailer shall not make a retail sale of cannabis or a cannabis product, unless the purchaser has paid the cannabis excise tax to the retailer at the time of the sale.

(b) CANNABIS RETAILER’S REMITTANCE TO A DISTRIBUTOR – GENERAL. If a distributor sells or transfers cannabis or cannabis product to a cannabis retailer on or after January 1, 2018, then the retailer shall remit the cannabis excise tax due on the cannabis or cannabis product based on the average market price to the distributor that sold or transferred the cannabis or cannabis product to the retailer.

(c) CANNABIS RETAILER’S REMITTANCE TO A DISTRIBUTOR – EXCEPTION.

(1) A cannabis retailer that possesses or controls cannabis or a cannabis product at 12:01 a.m. on January 1, 2018, and makes a retail sale of that cannabis or cannabis product on or after January 1, 2018, shall remit the cannabis excise tax due based on the average market price to a distributor licensed pursuant to division 10 (commencing with Section 26000) of the Business and Professions Code that the retailer purchased or acquired cannabis or cannabis product from on or after January 1, 2018. The cannabis excise tax shall be remitted by the cannabis retailer to the licensed distributor on or before the fifteenth day of the calendar month following the close of the calendar month in which the tax was collected.

(2) Upon collecting the cannabis excise tax from a cannabis retailer as set forth in subdivision (c)(1), a distributor shall provide the cannabis retailer with an invoice, receipt, or other similar document that contains all of the following:

(A) Date of execution of the invoice, receipt, or other similar document,

(B) Name of the distributor,

(C) Name of the cannabis retailer,

(D) The amount of cannabis excise tax,

(E) The number of the seller’s permit held by the cannabis retailer, and

(F) The number of the seller’s permit held by the distributor. If the distributor is not required to hold a seller’s permit because the distributor makes no sales, the distributor must include a statement to that effect on the receipt in lieu of a seller’s permit number.

(d) DISTRIBUTOR’S REPORTING AND REMITTANCE – GENERAL. Unless as otherwise provided in subdivision (e), a distributor shall report and remit the cannabis excise tax due in accordance with subdivision (e) of section 3700 of this chapter.

(e) DISTRIBUTOR’S REPORTING AND REMITTANCE – EXCEPTION. A distributor shall report and remit the cannabis excise tax collected from the cannabis retailer pursuant to subdivision (c) with the distributor’s first return subsequent to receiving the cannabis excise tax from the cannabis retailer.

History: New regulation filed December 28, 2017, as an emergency; effective and operative December 28, 2017. A Certificate of Compliance must be transmitted to the Office of Administrative Law by December 30, 2019, or the regulation will be repealed by operation of law on the following day.