The California Department of Tax and Fee Administration (“CDTFA”) recently released new tax guidance concerning cannabis.

In one release, CDTFA provided an explanation concerning the excise tax and its application to products that were in retailers’ inventories as of January 1, 2018. Retailers must collect the 15% excise tax from their customers and pay the tax on those sales by the 15th of the month following sale to a licensed distributor with whom they have a business relationship. The CDTFA also provided clarification regarding the cultivation tax. That tax does not apply to cannabis transferred or sold to distributors or manufacturers prior to January 12, 2018, regardless of when the cannabis enters the commercial market.

In another release, the CDTFA announced that it has added a new category and rate for the cultivation tax. The new category covers “fresh cannabis plant” weighed within two hours of harvesting. This offers cultivators a lower tax rate for cannabis transferred to a distributor before the drying and curing process.

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