California Eases Tax Laws for Medical Marijuana Dispensaries & Users

Before the voters approved Proposition 64 last week, the California Legislature had already paved the way in late September for medical marijuana dispensaries to more easily remit their collected sales taxes to the State of California. Then with the passage of Proposition 64, medical marijuana sales are now largely exempt from California sales and use taxes.

 

Remitting Sales Taxes to the State

The Sales and Use Tax Law, which is administered by the State Board of Equalization (BOE), requires any person whose estimated tax liability averages $10,000 or more per month to remit amounts owing by an electronic funds transfer (EFT) in Rev & Tax C §6479.3(a). But in late September, Governor Brown signed a bill adding a provision to that law. Under Rev & Tax C §6479.3(k), for the period between January 1, 2017 and January 1, 2022, any person who has been issued a seller's permit for a place of business that is a medical marijuana dispensary, as defined in Bus & Prof C §19300.5(n), may remit amounts due to the BOE for retail sales at the dispensary by any means other than an EFT.  This law greatly relieves the barriers to making tax payments created by the financial institutions that have refused to provide bank accounts for medical marijuana businesses. The BOE has more information on its website, in a description of the bill before its passage in September.

 

Exemption for Medical Marijuana Sales

On November 8, 2016, California voters approved Proposition 64, (called AUMA), which provides a new exemption for medical marijuana users. The sales and use tax exemption, effective November 9, 2016, applies to the retail sales of medical cannabis, medical cannabis concentrate, edible medical cannabis products, or topical cannabis as defined in Bus & Prof C §19300.5. To obtain the exemption, qualified patients or their primary caregivers must furnish their valid Medical Marijuana Identification Card, issued by the California Department of Public Health, and a valid government issued identification card at the time of purchase. The BOE has more information on its website.

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