California cannabis tax relief is a big deal. And a real thing. What’s important now is how the California Department of Tax and Fee Administration (“CDTFA”) interprets Assembly Bill 195.
As I previously blogged, California is finally on board with a modicum of cannabis tax relief for cannabis licensees (mainly for the benefit of cultivators). As of July 1, 2022, there is no more cultivation tax. The excise tax will stay at 15%, while the mark-up rate for arm’s-length transactions will drop from 80% to 75% (before recalculation on January 1 of next year).
There is a lot of hoopla and self-congratulating from the state on the passage of AB-195. Arguably, all it really does is move the tax headache and collection burden around between licensees. Still, it shows that the state is somewhat listening to the gripes of the industry. In any event, what matters now is how CDTFA interprets AB-195.
On July 7, 2022, CDTFA published the following PSA for all California cannabis licensees:
Cultivation Tax No Longer Applies
Beginning July 1, 2022, the cultivation tax no longer applies to cannabis or cannabis products that enter the commercial market. Additionally, distributors and manufacturers are no longer required to
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