California Taxes Explained
If you live in California and use cannabis, you’re probably wondering why you’re paying so much in taxes. There’s a lot of misinformation about how California cannabis taxes work, so we turned to our compliance team to break through the clutter and to explain precisely how much you, the consumer, are paying in taxes.
Effective January 1, 2018, the state began imposing a 15 percent excise tax on all retail purchases of cannabis and cannabis products, including medicinal cannabis. The state and local municipalities also collect sales taxes on most products sold in California, including cannabis and cannabis products. Local tax rates vary by city and county. Legally licensed cannabis businesses are required by law to collect these taxes.
Excise Tax – 15% collected at the point of sale and remitted to the State.
Sales Tax – Rates vary from 7.25% to 10.25%, depending on the city or county. They are calculated on the total inclusive of excise taxes.
To figure out a product’s cost after tax, follow this formula…
Retail Price + 15% Excise Tax = Subtotal Subtotal + Sales Tax = Cost
*Medical Marijuana Identification Card (MMIC) holders are exempt from paying sales tax on medical products.
The Food and Drug Administration has not evaluated these statements. Products are not intended to diagnose, treat, cure, or prevent disease.