Chapter 2 - Cannabis Taxes
California Revenue and Taxation Code — §§ 34011-34012.5
Sections (9)
Added by Stats. 2022, Ch. 56, Sec. 20. (AB 195) Effective June 30, 2022.
(a)Any amount owed by a cannabis retailer to a distributor in connection with the collection of cannabis excise tax owed prior to January 1, 2023, shall be paid by the retailer to the distributor on or before April 1, 2023. This section shall not be construed to require the department to enforce this obligation.
(b)A cannabis retailer may claim a credit on the cannabis excise tax return for cannabis excise tax amounts paid to a distributor, pursuant to Section 34011, before January 1, 2023, on cannabis or cannabis products sold to a purchaser on or after January 1, 2023, for which the cannabis retailer is responsible for remitting to the department.
Added by Stats. 2022, Ch. 56, Sec. 21. (AB 195) Effective June 30, 2022. Conditionally inoperative as prescribed by Stats. 2022, Ch. 56, Sec. 41. Repealed conditionally as prescribed by Stats. 2022, Ch. 56, Sec. 41.
(a)(1) Until December 31, 2025, a licensed cannabis retailer that has received approval from the Department of Cannabis Control for a fee waiver under Section 26249 of the Business and Professions Code may retain vender compensation in an amount equal to 20 percent of the cannabis excise tax. For purposes of this paragraph, approval for a fee waiver under Section 26249 includes approval for a fee waiver that is contingent upon the availability of funds.
(2)To apply to retain vendor compensation pursuant to this section, a cannabis retailer shall complete a one-page application in a form and manner prescribed by the department that sets forth the name under which they transact or intend to transact business, the location of their place or
places of business, and any other information the department may require. The cannabis retailer shall also include with the application their seller’s permit number and cannabis tax permit number and a copy of their cannabis license and Department of Cannabis Control approved fee waiver. An application for a permit shall be authenticated in a form or pursuant to methods as may be prescribed by the department.
(3)Upon verification that a licensed cannabis retailer meets the requirements of this subdivision, the department shall issue the cannabis retailer a notice approving vendor compensation under this section.
(4)To maintain eligibility for vendor compensation under this section, a licensed cannabis retailer shall maintain eligibility for a fee waiver under Section 26249 of the Business and Professions Code and any relevant implementing regulations. An approval for vendor
compensation under this section shall expire on the last day of the calendar quarter following notification to the department pursuant to paragraph (5) that a cannabis retailer is no longer eligible for a fee waiver. If a cannabis retailer maintains eligibility for a fee waiver, an approval for vendor compensation under this subdivision shall remain valid for one year commencing on the first day of the calendar quarter following the date the department issues the notice, and may be renewed pursuant to paragraph (2) or other procedures as may be prescribed by the department.
(5)To notify the department of a cannabis retailer’s eligibility for vendor compensation under this section, the Department of Cannabis Control shall do either of the following:
(A)Maintain a database accessible to the department reflecting whether a cannabis retailer is eligible or has become ineligible for
a fee waiver under Section 26249 of the Business and Professions Code and implementing regulations.
(B)Otherwise provide information upon request of the department for purposes of verifying a cannabis retailer’s eligibility under this section.
(b)This section shall become operative on January 1, 2023.
Amended by Stats. 2025, Ch. 127, Sec. 1. (AB 564) Effective September 22, 2025. Conditionally inoperative as prescribed by Stats. 2022, Ch. 56, Sec. 41. Repealed conditionally as prescribed by Stats. 2022, Ch. 56, Sec. 41.
(a)(1) Effective on and after January 1, 2023, a cannabis excise tax shall be imposed upon purchasers of cannabis or cannabis products sold in this state at 15 percent of the gross receipts of any retail sale by a cannabis retailer.
(2)Notwithstanding paragraph (1), on and after July 1, 2025, and before October 1, 2025, the cannabis excise tax rate imposed in paragraph (1) shall be 19 percent of the gross receipts of any retail sale by a cannabis retailer as determined by the department, in consultation with the Department of Finance, pursuant to this section, as added by Section 22 of Chapter 56 of the Statutes of 2022.
(3)For the 2028–29 fiscal year and every two years thereafter, the department, in consultation with the Department of Finance, shall, on or before May 1 of the fiscal year immediately preceding the applicable fiscal year, adjust the cannabis excise tax rate upon purchasers of cannabis or cannabis products imposed in paragraph (1) by the additional percentage of the gross receipts of any retail sale by a cannabis retailer that the department estimates will generate an amount of revenue equivalent to the amount that would have been collected in the previous fiscal year pursuant to the weight-based cultivation tax imposed under Section 34012 as it read on June 29, 2022. In no case shall the cannabis excise tax exceed 19 percent of the gross receipts of retail sale. The department shall round the rate calculated under this subdivision to the nearest one-quarter of 1 percent. The adjusted rate
shall become operative the following July 1.
(4)On or before May 1, 2028, and each May 1 every two years thereafter, the department, in consultation with the Department of Finance, shall estimate the amount of revenue that would have been collected in the previous fiscal year pursuant to the weight-based cultivation tax imposed under Section 34012 as it read on June 29, 2022. The department shall estimate this amount by projecting the revenue from weight-based cultivation taxes that would have been collected in the previous calendar year based on information available to the department, including, but not limited to, information in the track and trace system required pursuant to Chapter 6.5 (commencing with Section 26067) of Division 10 of the Business and Professions Code,
or any implementing regulations, as a percentage of gross receipts from the retail sale of cannabis and cannabis products by cannabis retailers in the previous calendar year.
(b)A purchaser’s liability for the cannabis excise tax is not extinguished until the cannabis excise tax has been paid to this state, except that an invoice, receipt, or other document from a cannabis retailer given to the purchaser pursuant to this section is sufficient to relieve the purchaser from further liability for the tax to which the invoice, receipt, or other document refers.
(c)A cannabis retailer shall be responsible for collecting the cannabis excise tax from the purchaser and remitting that tax to the department in accordance with this
division.
(d)The cannabis retailer shall provide each purchaser with an invoice, receipt, or other document that separately states the cannabis excise tax.
(e)The cannabis excise tax imposed by this section shall be in addition to the sales and use tax imposed by the state and local governments.
(f)Gross receipts from the sale of cannabis or cannabis products for purposes of assessing the sales and use taxes under Part 1 (commencing with Section 6001) shall include the tax levied pursuant to this section.
(g)Cannabis or cannabis products shall not be sold to a purchaser unless the cannabis excise tax imposed by this section has been paid by the
purchaser at the time of sale.
(h)This section shall not be construed to impose a cannabis excise tax upon medicinal cannabis, or medicinal cannabis product, donated for no consideration to a medicinal cannabis patient pursuant to Section 26071 of the Business and Professions Code.
(i)(1) This section shall not be construed to impose a cannabis excise tax upon cannabis or cannabis products designated as a trade sample pursuant to Section 26153.1 of the Business and Professions Code.
(2)A person licensed under Division 10 (commencing with Section 26000) of the Business and Professions Code that sells cannabis or cannabis products designated as a trade sample pursuant to Section 26153.1 of the
Business and Professions Code shall be liable for the cannabis excise tax imposed by this section as if the person were a cannabis retailer at the time of sale.
Added by Stats. 2019, Ch. 837, Sec. 12. (SB 34) Effective January 1, 2020. Operative on or before March 1, 2020, as prescribed by its own conditions. Repealed on the date prescribed by its own conditions.
(a)Notwithstanding Section 34012, on and after the operative date of the act adding this section, the cultivation tax shall not be imposed on medicinal cannabis designated for donation by a cultivator in the track and trace system.
(b)A person licensed under Division 10 (commencing with Section 26000) of the Business and Professions Code that certifies in writing that medicinal cannabis or a medicinal cannabis
product will be donated to a medicinal cannabis patient and sells or uses the medicinal cannabis or medicinal cannabis product in some manner or for some purpose other than donation, shall be liable for the taxes under this part. The certification in writing shall relieve the cultivator that donates the medicinal cannabis from liability for the taxes imposed and shall relieve the distributor from liability for the taxes required to be collected under this part, only if the certification is taken in good faith.
(c)A distributor or manufacturer shall not collect or remit the cultivation tax for medicinal cannabis or medicinal cannabis products designated for donation by a cultivator.
(d)A cultivator shall keep records of any medicinal cannabis or medicinal cannabis products designated for donation.
(e)Nothing in
this part shall be construed to impose a cultivation tax upon medicinal cannabis or medicinal cannabis products designated for donation.
(f)For purposes of this section, “medicinal cannabis” and “medicinal cannabis product” shall mean cannabis and cannabis product, as defined in Section 26001 of the Business and Professions Code, intended for use pursuant to the Compassionate Use Act of 1996 (Proposition 215), found in Section 11362.5 of the Health and Safety Code, by a medicinal cannabis patient.
(g)(1) This section shall become operative upon completion of the necessary changes to the track and trace program in order to implement the act adding this section, as determined by the Department of Food and Agriculture, or on March 1, 2020, whichever occurs first.
(2)This section
shall remain in effect only until five years after it becomes operative, and as of that date is repealed.
Added by Stats. 2021, Ch. 70, Sec. 114. (AB 141) Effective July 12, 2021.
(a)On and after January 1, 2022, there is exempt from the cultivation tax imposed pursuant to Section 34012 the cultivation of all harvested cannabis that will be, or has been, designated a trade sample pursuant to Section 26153.1 of the Business and Professions Code and all harvested cannabis that is used to manufacture a cannabis product that is designated a trade sample pursuant to Section 26153.1 of the Business and Professions Code.
(b)The department shall adopt regulations prescribing the procedures for how the exemption provided in subdivision (a) shall be implemented.
(c)A person licensed under Division 10 (commencing with Section 26000) of the Business and
Professions Code that sells cannabis exempt from the cultivation tax pursuant to subdivision (a) or sells any cannabis product that is manufactured with cannabis exempt from the cultivation tax pursuant to subdivision (a) shall be liable for the cultivation tax imposed by Section 34012 as if the person were a cultivator of the cannabis at the time of sale.
(d)Notwithstanding any other law, the department may adopt and readopt emergency regulations to implement this section. The provisions of this section shall be applicable to emergency regulations adopted or readopted pursuant to this section. The emergency regulations authorized by this section shall be deemed an emergency and necessary for the immediate preservation of public peace, health, safety or general welfare.
Added by Stats. 2022, Ch. 56, Sec. 24. (AB 195) Effective June 30, 2022. Operative January 1, 2023, by its own provisions.
(a)The cannabis excise tax required to be collected by a cannabis retailer, and any amount not returned to the purchaser that is not tax but was collected from the purchaser under the representation by the cannabis retailer that it was tax, constitutes debt owed by the cannabis retailer to this state.
(b)This section shall become operative on January 1, 2023.
Amended by Stats. 2022, Ch. 56, Sec. 25. (AB 195) Effective June 30, 2022.
(a)The cultivation tax and cannabis excise tax imposed pursuant to Section 34011 required to be collected by the distributor, or required to be collected by the manufacturer pursuant to paragraph (2) of subdivision (h) of Section 34012, and any amount unreturned to the cultivator or cannabis retailer that is not tax but was collected from the cultivator or cannabis retailer under the representation by the distributor or the manufacturer that it was tax constitute debts owed by the distributor or the manufacturer to this state.
(b)A distributor or manufacturer that has collected any amount of tax in excess of the amount of tax imposed by this part and
actually due from a cultivator or cannabis retailer, may refund such amount to the cultivator or cannabis retailer, even though such tax amount has already been paid over to the department and no corresponding credit or refund has yet been secured. The distributor or manufacturer may claim credit for that overpayment against the amount of tax imposed by this part that is due upon any other quarterly return, providing that credit is claimed in a return dated no later than three years from the date of overpayment.
(c)Any tax collected from a cultivator, cannabis
retailer, or purchaser that has not been remitted to the department shall be deemed a debt owed to the State of California by the person required to collect and remit the tax.