CHAPTER 2. Cannabis Taxes [34011. - 34012.5.]

Cal. Revenue and Taxation Code - RTC 2.

in effect

Cal. Revenue and Taxation Code - RTC § 34011. Section 34011.

(a) (1) Effective on and after January 1, 2018, and before January 1, 2023, a cannabis excise tax shall be imposed upon purchasers of cannabis or cannabis products sold in this state at the rate of 15 percent of the average market price of any retail sale by a cannabis retailer. 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 subdivision is sufficient to relieve the purchaser from further liability for the tax to which the invoice, receipt, or other document refers. (2) Each cannabis retailer shall provide a purchaser with an invoice, receipt, or other document that includes a statement that reads: “The cannabis excise taxes are included in the total amount of this invoice.” (3) The department may prescribe other means to display the cannabis excise tax on an invoice, receipt, or other document from a cannabis retailer given to the purchaser. (b) (1) A distributor in an arm’s length transaction shall collect the cannabis excise tax imposed by this section from the cannabis retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the cannabis retailer. A distributor in a nonarm’s length transaction shall collect the cannabis excise tax from the cannabis retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the cannabis retailer, or at the time of retail sale by the cannabis retailer, whichever is earlier. A distributor shall report and remit the cannabis excise tax to the department pursuant to Section 34015. A cannabis retailer shall be responsible for collecting the cannabis excise tax from the purchaser and remitting the cannabis excise tax to the distributor in accordance with rules and procedures established under law and any regulations adopted by the department. (2) A distributor shall provide an invoice, receipt, or other similar document to the cannabis retailer that identifies the licensee receiving the product, the distributor from which the product originates, including the associated unique identifier, the amount of cannabis excise tax, and any other information deemed necessary by the department. The department may authorize other forms of documentation under this paragraph. (c) 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. (d) 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. (e) 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. (f) 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. (g) (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. (h) This section shall be inoperative on April 1, 2023.

Cal. Revenue and Taxation Code - RTC § 34011.1. Section 34011.1.

(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.

Cal. Revenue and Taxation Code - RTC § 34011.01. Section 34011.01.

(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.

Cal. Revenue and Taxation Code - RTC § 34011.2. Section 34011.2.

(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.

Cal. Revenue and Taxation Code - RTC § 34012. Section 34012.

(a) (1) Effective January 1, 2018, and before July 1, 2022, there is hereby imposed a cultivation tax on all harvested cannabis that enters the commercial market upon all cultivators. The tax shall be due after the cannabis is harvested and enters the commercial market. (A) The tax for cannabis flowers shall be nine dollars and twenty-five cents ($9.25) per dry-weight ounce. (B) The tax for cannabis leaves shall be set at two dollars and seventy-five cents ($2.75) per dry-weight ounce. (2) Notwithstanding paragraph (1), the cultivation tax imposed by this subdivision shall not apply to harvested cannabis that enters the commercial market and no tax collection is required pursuant to subdivision (h) if any of the following apply: (A) The harvested cannabis was first sold or transferred by a cultivator to a manufacturer on or after July 1, 2022. (B) The harvested cannabis was first sold or transferred by a cultivator to a distributor on or after July 1, 2022. (C) The harvested cannabis, or cannabis products containing that harvested cannabis, was first sold or transferred by a microbusiness to a distributor or manufacturer that arranges for laboratory testing pursuant to subdivision (a) of Section 26110 of the Business and Professions Code on or after July 1, 2022. (3) It is the intent of the Legislature that the suspension of the cultivation tax imposed by paragraph (2) apply only to cannabis that is ultimately subject, at retail sale as either cannabis or as cannabis products containing the harvested cannabis, to the cannabis excise tax imposed pursuant to Section 34011.2. (b) The department may adjust the tax rate for cannabis leaves annually to reflect fluctuations in the relative price of cannabis flowers to cannabis leaves. (c) The department may from time to time establish other categories of harvested cannabis, categories for unprocessed or frozen cannabis or immature plants, or cannabis that is shipped directly to manufacturers. These categories shall be taxed at their relative value compared with cannabis flowers. (d) The department may prescribe by regulation a method and manner for payment of the cultivation tax that utilizes tax stamps or state-issued product bags that indicate that all required tax has been paid on the product to which the tax stamp is affixed or in which the cannabis is packaged. (e) The tax stamps and product bags shall be of the designs, specifications, and denominations as may be prescribed by the department and may be purchased by any licensee under Division 10 (commencing with Section 26000) of the Business and Professions Code. (f) Subsequent to the establishment of a tax stamp program, the department may by regulation provide that cannabis shall not be removed from a licensed cultivation facility or transported on a public highway unless in a state-issued product bag bearing a tax stamp in the proper denomination. (g) The tax stamps and product bags shall be capable of being read by a scanning or similar device and must be traceable utilizing the track and trace system pursuant to Section 26068 of the Business and Professions Code. (h) Cultivators shall be responsible for payment of the tax pursuant to regulations adopted by the department. A cultivator’s liability for the tax is not extinguished until the tax has been paid to this state except that an invoice, receipt, or other document from a distributor or manufacturer given to the cultivator pursuant to paragraph (3) is sufficient to relieve the cultivator from further liability for the tax to which the invoice, receipt, or other document refers. Cannabis shall not be sold unless the tax has been paid as provided in this part. (1) A distributor shall collect the cultivation tax from a cultivator on all harvested cannabis that enters the commercial market. This paragraph shall not apply where a cultivator is not required to send, and does not send, the harvested cannabis to a distributor. (2) (A) A manufacturer shall collect the cultivation tax from a cultivator on the first sale or transfer of unprocessed cannabis by a cultivator to a manufacturer. The manufacturer shall remit the cultivation tax collected on the cannabis product sold or transferred to a distributor for quality assurance, inspection, and testing, as described in Section 26110 of the Business and Professions Code. This paragraph shall not apply where a distributor collects the cultivation tax from a cultivator pursuant to paragraph (1). (B) Notwithstanding subparagraph (A), the department may prescribe a substitute method and manner for collection and remittance of the cultivation tax under this paragraph, including a method and manner for collection of the cultivation tax by a distributor. (3) A distributor or manufacturer shall provide to the cultivator, and a distributor that collects the cultivation tax from a manufacturer pursuant to paragraph (2) shall provide to the manufacturer, an invoice, receipt, or other similar document that identifies the licensee receiving the product, the cultivator from which the product originates, including the associated unique identifier, the amount of cultivation tax, and any other information deemed necessary by the department. The department may authorize other forms of documentation under this paragraph. (4) The department may adopt regulations prescribing procedures for the refund of cultivation tax collected on cannabis or cannabis product that fails quality assurance, inspection, and testing as described in Section 26110 of the Business and Professions Code. (i) All cannabis removed from a cultivator’s premises, except for plant waste or medicinal cannabis or medicinal cannabis products designated for donation, shall be presumed to be sold and thereby taxable under this section, except as otherwise exempt pursuant to Section 34012.2. (j) The tax imposed by this section shall be imposed on all cannabis cultivated in the state pursuant to rules and regulations promulgated by the department, but shall not apply to cannabis cultivated for personal use under Section 11362.1 of the Health and Safety Code or cultivated by a qualified patient or primary caregiver in accordance with the Compassionate Use Act of 1996 (Proposition 215), found in Section 11362.5 of the Health and Safety Code. (k) (1) For the 2020 calendar year, the rates set forth in subdivisions (a), (b), and (c) shall be adjusted by the department for inflation. (2) For the 2021 calendar year, the rates shall be those imposed for the 2020 calendar year in paragraph (1) and shall not be adjusted for inflation unless the adjustment is for an inflation rate that is less than zero. (3) For the 2022 calendar year, until July 1, 2022, the rates shall be those imposed for the 2021 calendar year in paragraph (2) and shall be adjusted by the department for inflation. ( l ) The Department of Cannabis Control is not responsible for enforcing any provisions of the cultivation tax.

Cal. Revenue and Taxation Code - RTC § 34012.1. Section 34012.1.

(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.

Cal. Revenue and Taxation Code - RTC § 34012.2. Section 34012.2.

(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.

Cal. Revenue and Taxation Code - RTC § 34012.3. Section 34012.3.

(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.

Cal. Revenue and Taxation Code - RTC § 34012.5. Section 34012.5.

(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.

Source: CA Legislative Counsel Bulk DataURL: https://downloads.leginfo.legislature.ca.gov/pubinfo_2025.zipFetched: 6/27/2026