New Cannabis Taxes Begin January 1, 2018

As we near the GO date of January 2nd, 2018 there are many facets of doing canna-biz that will all have to pull together in somekind of organized fashion.  One of those aspects is taxation.  Instead of writing a summary of the e-mail I received this morning from The Bureau, I'll share it with you in it's entirety.

 

October 3, 2017-

If you sell cannabis or cannabis products, you must register with the California Department of Tax and Fee Administration (CDTFA) for a seller’s permit. Cannabis cultivators, processors, manufacturers, retailers, microbusinesses, and distributors making sales are required to obtain and maintain a seller’s permit as a prerequisite for applying for a license with the California Department of Food and Agriculture, the California Department of Consumer Affairs, or the California Department of Public Health.

Distributors of cannabis and cannabis products must also register with the CDTFA for a cannabis tax permit to report and pay the two new cannabis taxes to the CDTFA. The cannabis tax permit is in addition to your seller’s permit.

Beginning January 1, 2018, two new cannabis taxes are in effect:
• A 15 percent excise tax is imposed upon purchasers of cannabis and cannabis products. Retailers are required to collect the excise tax from the purchaser and pay it to the cannabis distributor.
• A tax on the cultivation of cannabis that enters the commercial market is imposed upon cultivators. Cultivators are required to pay the cultivation tax to either a distributor or a manufacturer depending upon the nature of the transaction. The cultivation tax rates are:

o $9.25 per dry-weight ounce of cannabis flowers, and

o $2.75 per dry-weight ounce of cannabis leaves.

All cannabis businesses making sales are required to:
• Register online with the CDTFA for a seller’s permit.
• File sales and use tax returns electronically and pay any sales and use tax to the CDTFA. Even if none of your sales are subject to sales tax, you are still required to file a return and report your activities on your return to the CDTFA.

In addition, if you are a cannabis distributor, the following requirements apply to you:
• Prior to January 1, 2018, register online with the CDTFA for a cannabis tax permit. (Registration will be available in November 2017.)
• Beginning January 1, 2018, collect the excise tax from retailers you supply.
• Beginning January 1, 2018, collect the cultivation tax from cultivators or manufacturers that send or transfer cannabis and cannabis products to you.
• File both your cannabis tax and sales and use tax returns electronically and pay any tax amounts due to the CDTFA.

For additional information about the Bureau of Cannabis Control, or to subscribe to email alerts to hear about updates as they become available, please visit our website - http://www.bcc.ca.gov/. For information on all three licensing authorities, please visit the state’s cannabis web portal – cannabis.ca.gov. Follow the Bureau on Facebook, Twitter and Instagram for daily news and updates.

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Happy trails, until next time!

Marie

Policy Makers & Cannabis Regulation

Message to policy makers,

If I’ve sensed one thing in my time studying the people of cannabis history it's that regulation cannot stop the insatiable and inherent desire to cultivate this plant. Some of us love to grow roses, or tend to our fruit trees, many of us carefully plot the time to plant our summer gardens and wait with anticipation the fruits of that labor. The cannabis cultivator is no different.  Much like the vintner who tends to the vines as well as sees through to the production of wine, the cannabis cultivator is a way of life!

The regulated market will not allow for privately grown cannabis to enter into the market place therefore making unnecessary the need to "regulate" personal grows.   Conversely, I believe that all commercial cannabis endeavors who do have the means to become fully licensed should be considered. This would encourage a healthy relationship between policy makers, the industry participants, (otherwise known as entrepreneurs) and the consumer, yea, let's not forget why we're doing all of this.

What policy makers ought to strive to avoid as an unintended consequence of limiting business from operating, are that people will do it anyway.  It's what they're accustomed to (and have a thriving customer base) and still don't trust the government to regulate an industry they do not comprehend with, pardon me, stupid rules.  For example, consider that if a delivery business is already doing business that means they are serving a client base that is accustomed to receiving their products.  If the delivery service is interrupted by being unable to become licensed then the legitimate consumer base will be adversely effected, quite possibly causing those consumers to seek unregulated products from those people who are "doing it anyway".  It's one thing to control the industry....what's going to control the consumer?

Might I suggest serving the consumer (otherwise known as a constituent)?  When policy makers consider regulation, they ought to consider how it will effect the consumer and will the consumer be motivated to buy into the idea of regulation.  Because they don't have to.  Remember, many are already buying the product through ways they've become accustomed and many more are waiting to purchase the products legally as an alternative to prescription medications.  Did you know the fastest growing segment of the population using cannabis for the first time are those 55+?  They're sick of prescription meds and want alternatives.  Also remember, cannabis consumers are not criminals, they're voters.

So, to sum all this up, I guess my message to policy makers would be to cultivate relationships with the people who are doing business in the California cannabis industry already.  These businesses are like precocious children, they've planned this out way ahead; learn to trust the people of the existing cannabis industry.  While you're at it consider meeting someone who uses cannabis or has used it to get through an illness.  Find out how they would have liked to purchase their products.  Everybody's got a little different perspective, some folks like the convenience of delivery while some would rather paruse products on the shelf in a store. It's only judgement or fear that will prevent these discussions from happening.

SLOCCBA is here to help put you in contact with the people who can fill in any gaps of understanding.

M~