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A Guide to Understanding Cannabis Taxes in California –

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Like all marketable goods and services, cannabis sales are taxed in California. But cannabis appears to have a disproportionate tax rate to other products. Why is hemp taxed so high in California? The California cannabis industry has a unique tax structure that can be very confusing for consumers. Below we are going to break it down for you in the most straightforward way possible to alleviate some of the confusion.

How is cannabis taxed in California?

Cannabis in California is taxed in three or four different stages, depending on the local government, creating a total tax aggregate for the consumer.

agriculture tax

The planting tax is calculated using the weight of the lawn that the farmer sells to the distributor. This tax rate varies based on the type of cannabis being sold, which could be the cannabis plant itself, the leaves, or the marijuana flower, with the tax rate increasing respectively. This level of tax is levied on the farmer and collected by the distributor upon exchange between these two parties.

Tax

An excise tax is a type of business tax that represents 15% of the market value of cannabis sold in California. Excise tax is imposed on the consumer, but it is usually included in the price quoted before purchase. However, some businesses can add this tax to the receipt when buying, depending on the seller’s supplier relationship. All selective tax money goes to the state for use in various state programs.

sales tax

We are all familiar with the sales tax as consumers of anything. We pay tax on almost every purchase; New clothes, household products, hemp, etc. They are all subject to the same sales tax in any city. Sales tax is added to any cannabis purchase. Of course, the tax is imposed on the consumer. However, in California, medical marijuana purchases are exempt from sales tax. In addition, many dispensaries and delivery services try to remain competitive by offering deals to help lower the overall cost. some weed sellers It will even offer “No Tax Tuesday” deals.

local business tax

Additional taxes may be levied on marijuana consumers at the discretion of the local government. Most city governments in California have chosen to tax the cannabis business; Whether it is relatively low or very high depends on the city. And this tax, of course, is passed on to the consumer. Whatever percentage the city government decides to tax cannabis sales, it is applied to the subtotal after the excise tax but before the sales tax.

How do cannabis tax rates vary locally?

Local sales tax and business tax can vary between cities and regions in California. For example, in San Francisco, business taxes are imposed on the cannabis business of 5% plus a local sales tax of 8.625%. In comparison, Los Angeles cannabis businesses are subject to a 10% business tax with a 9.5% sales tax, and Fresno has a negligible local business tax rate of 4%, with a sales tax of 8.35%. By comparison, San Diego has a higher local business tax rate of 8%, with a lower sales tax of 7.75%. The basic sales tax rate in California is 7.25%, and increases there based on local government. The local business tax levied on a cannabis business can range anywhere from 0% to 15%, but most cities lie somewhere in the middle.



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