Cannabis tax revenue increases in 2nd quarter of 2018
■ California Dept. of Tax and Fee Administration
The California Department of Tax and Fee Administration (CDTFA) released revenue numbers for cannabis sales for the 2nd quarter of 2018. Tax revenue from the cannabis industry totaled $74,240,257 from April 1, 2018, through June 30, 2018, which includes state cultivation, excise and sales taxes. It does not include tax revenue collected by each jurisdiction.
California’s excise tax on cannabis generated $43,490,668 in revenue during the second quarter of calendar year 2018. The cultivation tax generated $4,482,119 and the sales tax generated $26,267,470 million in revenue. Medicinal cannabis is exempt from sales tax if the purchaser holds a valid Medical Marijuana Identification card.
The revenue from the 1st quarter of 2018 was $60.9 million, which included $32 million in excise tax, $1.6 million cultivation tax, and $27.3 million in sales tax.
To better serve taxpayers, CDTFA has opened a new satellite location to accommodate tax and fee payers in and around Humboldt County, created a cannabis external tax advisory group, introduced a new pilot project in which the Statewide Compliance and Outreach Program (SCOP) teams visit known cannabis retailers to educate and assist them in complying with their tax obligations, and implemented improved procedures and security measures for financial transactions.
In November 2016, California voters approved Proposition 64, the Control, Regulate and Tax Adult Use of Marijuana Act. Beginning on Jan 1, 2018, two new cannabis taxes went into effect: a cultivation tax on all harvested cannabis that enters the commercial market and a 15 percent excise tax on the purchase of cannabis and cannabis products. In addition, cannabis and cannabis products are subject to state and local sales tax at the time of retail sale.
If the City of Hemet decides to implement tax regulations on local cannabis businesses they will be subject to the two new cannabis taxes. Voters will have to consider the pros and cons to adding this controversial new form of revenue to the city’s budget during November elections.
To learn more, visit the Tax Guide for Cannabis Businesses on the CDTFA website.