California Taxes for Medical Marijuana Sales

Mar 26, 2018

In California, the end of prohibition (i.e., the legalization of recreational marijuana) has brought with it a great many changes, including substantial taxes to be imposed on the sale of marijuana. Dispensaries in the state must take care to ensure that they are in compliance with the necessary regulations so as to avoid potential criminal and civil liability, and in some cases, to avoid a suspension of their state license to engage in cannabis and cannabis-related sales activity.

California Cannabis Sales Taxes

Pursuant to Proposition 64, both recreational and medical marijuana will now be subject to substantial taxes that can influence sales pricing. These taxes include:

A cultivation tax of $9.25 per ounce of dried marijuana flowers, and $2.75 per ounce of dried marijuana leaves;
A retail excise tax equivalent to 15 percent of the total retail price; and
State and local sales taxes that can vary depending on the municipality (currently, rates vary but average around 8 percent of the total retail price).

Local jurisdictions are empowered to impose their own sales taxes as they see fit. In the city of Oakland, for example, the government imposes a 10 percent tax on marijuana sales that is tacked-on in addition to other applicable taxes. The cultivation tax is not directly imposed on consumers, but industry observers believe that it may have an upward pricing effect.

Medical Marijuana Tax Advantages

Under the new regulations, dispensaries may be licensed to sell both medical and recreational marijuana under the same roof. Still, there is good reason for those with an existing medical marijuana card will want to continue to use it — medical marijuana is not subject to state or local sales tax (though the sale will still be subject to an excise tax). As such, patients may purchase medical marijuana for a substantial discount that will vary from municipality to municipality.

It’s worth noting that the tax scheme for both medical marijuana and recreational marijuana in California is currently seen as a placeholder, and as a testing ground. Industry observers believe that there may be a correction in the tax scheme as more data is collected and as the market in California expands.

Contact an Experienced Medical Marijuana Dispensary Lawyer for Guidance

Here at Greenspoon Marder, our attorneys boast decades of experience representing a range of clients — from small cannabis businesses to titans of the industry — in a variety of situations relating to the cannabis industry, including but not limited to intellectual property protections, tax issues, licensing, and regulatory compliance. We are committed to the cannabis industry and have over 200 attorneys who have specialized subject-matter expertise in the industry, with the background and training to effectively tackle issues at both the state and federal level.

If you are concerned about marijuana sales taxes and similar compliance-related issues, make sure to get in contact with an experienced medical marijuana dispensary lawyer here at Greenspoon Marder as soon as possible. Call (888) 491-1120 to speak with one of our attorneys today.

About Greenspoon Marder

Greenspoon Marder LLP is a full-service law firm with over 240 attorneys and more than 20 office locations across the United States. With operations from Miami to New York and from Denver to Los Angeles, our firm attracts some of the nation’s top talent in key markets and innovation hubs. Our core practice areas include Real Estate, Litigation, and Transactional Services, complemented by the capabilities of a full-service firm. Greenspoon Marder has upheld a spot on The American Lawyer’s Am Law 200 as one of the top law firms in the U.S. since 2015, and our goal is to provide exceptional client service by developing a thorough understanding of each client’s business needs and objectives in order to provide strategic, cost-effective solutions.

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This Greenspoon Marder LLP Client Alert is issued for informational purposes only and is not intended to be construed or used as general legal advice nor a solicitation of any type. Please contact the author(s) or your Greenspoon Marder LLP contact if you have any questions regarding the currency of this information. The hiring of a lawyer is an important decision. Before you decide, ask for written information about the lawyer’s legal qualifications and experience.

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