Tax Guide for Cannabis Businesses http://www.cdtfa.ca.gov/industry/cannabis.htm

• Overview (Each of these titles are hyperlinks to the State’s

• Getting Started website for Cannabis )

• Distributors

• Retailers

• Cultivators

• Manufacturers

• Resources

We will update this page as we receive information about the taxation requirements for the cannabis industry – please check back.

Please note: This guide is intended to provide general information regarding issues relating to the sales and use tax laws, cannabis tax law, and other programs administered by the California Department of Tax and Fee Administration (CDTFA) (formerly BOE) which may affect cannabis businesses. It is not intended to provide advice or guidance related to other state and local statutes and regulations relating to the cannabis industry. Additionally, for the Federal Government's guidance regarding marijuana enforcement, refer to the U.S. Department of Justice website. New Information – On November 8, 2016, California voters approved Proposition 64, Control, Regulate and Tax Adult Use of Marijuana Act. To align the requirements for licensing and regulation of medicinal and adult-use of commercial cannabis, Proposition 64 has been recently amended by Senate Bill (SB) 94. Among other changes, SB 94 repealed the Medical Cannabis Regulation and Safety Act (MCRSA) and included certain provisions of the MCRSA in the licensing provisions of Proposition 64. The consolidated

provisions are now known as the Medicinal and Adult-Use of Cannabis Regulation and Safety Act (MAUCRSA), and the term marijuana was changed throughout the law to the term cannabis.

Effective November 9, 2016, certain sales of medicinal cannabis are exempt from sales and use tax. (See the Retailers section, under the heading, Proposition 64 Exempts Certain Medical Cannabis Sales from Sales and Use Tax)

Beginning January 1, 2018, two new cannabis taxes apply as follow:

1. A 15 percent excise tax is imposed upon purchasers of cannabis and cannabis products. Retailers of cannabis and cannabis products are required to collect the 15 percent excise tax from the purchaser based on the average market price of any retail sale and pay it to their cannabis distributor.

2. A cultivation tax is imposed upon cannabis cultivators on all harvested cannabis that enters the commercial market. Cannabis cultivators are required to pay the cultivation tax to either their distributor or their manufacturer. The rate of the cultivation tax is:

o $9.25 per dry-weight ounce of cannabis flowers that enter the commercial market, and

o $2.75 per dry-weight ounce of cannabis leaves that enter the commercial market.

Senate Bill (SB) 94, which was approved by the Governor on June 27, 2017, amended several provisions in the cannabis tax law as enacted by Proposition 64. SB 94 provides that:

• Distributors must collect the cannabis excise tax from retailers and the cultivation tax from cultivators or manufacturers.

• Distributors must report and pay the cannabis excise tax and the cultivation tax to the CDTFA.

Sign up for the CDTFA Cannabis Outreach email listserv to receive the latest news on cannabis tax compliance and related issues like CDTFA-issued special notices and news releases.

The CDTFA may adopt emergency regulations to implement and enforce the cannabis tax law. The emergency regulation process has begun. Visit http://www.boe.ca.gov/meetings/pdf/2017BTCcalendar.pdf for specific dates and register online to receive announcement of proposed regulatory change.

Helping your business succeed is important to the CDTFA. To help you better understand the tax obligations specific to your cannabis business, we have created this guide detailing the tax issues and important information relevant to your industry.

How to Use This Guide

Each section of this guide contains important information relevant to cannabis businesses. The Getting Started section provides key resources related to registration, filing returns, account maintenance, and other information cannabis business may need.

The Distributors section covers topics related to the general application of tax to purchases and sales by distributors.

The Retailers section covers topics related to the general application of tax to purchases and sales by retailers. It also has information on exemptions that retailers may qualify for and the exemption certificates required.

The Cultivators section covers topics related to the general application of tax to cultivators and processors, the available exemptions and the exemption certificates required.

The Manufacturers section covers topics related to the general application of tax to purchases and sales by manufacturers.

Lastly, the Resources section provides links to useful information, including special notices web-based seminars, publications, statutory and regulatory information, and access to assistance from our Customer Service Representatives.

Please note that the general information provided is not intended to replace any law or regulation. This website summarizes the law and applicable regulations in effect when it was published. However, changes in the law or regulations may have occurred. If there is a conflict between this document and the law, decisions will be based on the law.

Get it in Writing

Our tax and fee laws can be complex and difficult to understand. If you have specific questions about this exemption and who or what qualifies, we

recommend that you get answers in writing from us. This will enable us to give you the best advice and will protect you from tax, penalties and interest in case we give you erroneous information.

Requests for written advice can be emailed to CDTFA or mailed directly to the CDTFA office nearest you.

For more details, please see publication 8,Get It in Writing!

If You Need Help

If you have questions, please feel free to contact us by telephone or email. Our contact information and hours of operation are available in the Resources section.

Free Educational Consultations

If you are starting a new business, or have tax-related questions, CDTFA staff is available to meet with you at your business location to provide a personal consultation to help you correctly report and pay your sales and use taxes.

Information regarding our free consultation program can be found in publication 176-1, Free Educational Consultation.

If you have suggestions for improving this guide, please contact us via email.

We will update this page as we receive information about the taxation requirements for the cannabis industry – please check back.

Please note: This guide is intended to provide general information regarding issues relating to the sales and use tax laws, cannabis tax law, and other programs administered by the California Department of Tax and Fee Administration (CDTFA) (formerly BOE) which may affect the cannabis industry. It is not intended to provide advice or guidance in relation to other state and local statutes and regulations relating to the cannabis industry. Additionally, for the Federal Government's guidance regarding marijuana enforcement, see the U.S. Department of Justice website.

Getting Started

If you own a business in California that sells cannabis and/or cannabis products, you must register with the CDTFA for a seller's permit and regularly file sales and use tax returns. In addition to a seller's permit, if you are a distributor of cannabis and/or cannabis products, you must register with the CDTFA for a cannabis tax permit and regularly file cannabis tax returns.

Sales and Use Taxes

In California, all retail sales of tangible personal property are taxable unless the law provides a specific exemption. The law defines tangible personal property as an item that can be seen, weighed, measured, felt, or touched. Cannabis and cannabis products are generally considered tangible personal property and without a specific exemption, sales of such property are subject to sales and use tax.

Please note, on November 8, 2016, California voters approved Proposition 64, Control, Regulate and Tax Adult Use of Marijuana Act. Proposition 64, among other things, provides that effective November 9, 2016, certain sales of medicinal cannabis are exempt from sales and use tax. For more information on how Proposition 64 affects your medicinal cannabis sales, please see the Retailers tab, under the heading, Proposition 64 Exempts Certain Medicinal Cannabis Sales.

Use tax may be due when you purchase taxable items without payment of California tax from an out-of-state vendor for use in California. You may owe use tax on items that you remove from your inventory and use in California if you did not pay tax when you purchased the items.

To find out more about use tax, please visit our use tax webpage.

Cannabis Excise Tax and Cultivation Tax

Effective January 1, 2018, a 15 percent excise tax is imposed upon purchasers of cannabis and cannabis products. The 15 percent excise tax is calculated based on the average market price of the retail sale.

In addition, a tax on cultivation of cannabis is imposed on cultivators at a rate of:

• $9.25 per dry-weight ounce of cannabis flowers that enter the commercial market, and

• $2.75 per dry-weight ounce of cannabis leaves that enter the commercial market.

Beginning January 1, 2020, the CDTFA is required to annually adjust the cultivation tax rates to account for inflation.

Registration

Online Registration — Register with us for your seller's permit and a cannabis tax permit (available November 2017) if applicable to your type of business. Our registration system will prompt you when you select Register a business activity with CDTFA from Registration – Main Menu.

In addition to registering with the CDTFA for the required tax permit(s), you will also need to obtain the appropriate cannabis license(s) for your business. The California Department of Food and Agriculture is responsible for licensing cannabis cultivators. The California Department of Public Health is responsible for licensing cannabis manufacturers. The Bureau of Cannabis Control within the California Department of Consumer Affairs is responsible for licensing cannabis distributors, testing facilities, and retailers.

Seller's Permit

If you sell cannabis or cannabis products in California, you must register with the CDTFA for a seller's permit and file sales and use tax returns.

Cannabis Tax Permit If you are a distributor of cannabis and/or cannabis products in California, you must register with the CDTFA for a cannabis tax permit. This permit is in addition to your seller’s permit.

Online registration for cannabis tax permits will be available November 2017.

Filing and Payments Sales & Use Tax Return As a cannabis seller, you are required to file regular sales and use tax returns to report your sales. Whether you are new to operating a cannabis business or growing your existing business, you'll find these tools helpful in maintaining your account with us.

• Tax Return Filing Deadlines—Find your filing due dates. • File a Tax Return Online – CDTFA's online filing service is easy, fast, and

free! • Online Payment Options – Make payments online for tax and fee

programs. • Notice of Business Change – Keep your information current by using this

form to notify us of any business changes. Cannabis Tax Return As a distributor of cannabis and cannabis products, you are required to electronically file quarterly returns with the CDTFA. The quarterly cannabis tax return is due on the last day of the month following the quarterly reporting period. The cannabis tax account is separate from other accounts you may have with the CDTFA.

Cash Payments If you are paying your sales and use tax or cannabis tax in cash person, please contact one of our offices to make arrangements and explain that you need an exemption from the No Cash policy.

We may grant an exemption if paying in cash is necessary to avoid an undue hardship. On this form you will need to describe the nature of your business and why you are unable to establish a bank account or pay by cashier's check or money order. You will be notified in writing when your request has been approved or denied and you will be provided with additional information on how to proceed.

Distributor

A cannabis distributor is a person who procures, sells, and/or transports cannabis between licensed cannabis businesses, such as a cultivator, manufacturer, or retailer. If you are a cannabis distributor, the CDTFA requires that you:

• Register with the CDTFA for a seller's permit, if you make sales of products in California.

• Register with the CDTFA for a cannabis tax permit (this is separate from your seller's permit).

• Collect the cannabis cultivation tax from cultivators and manufacturers from which you receive cannabis and/or cannabis products.

• Collect the cannabis excise tax from cannabis retailers you supply (sell and/or transport) with cannabis and/or cannabis products.

• Provide an invoice or receipt to the businesses from which you collect the cultivation tax and the cannabis excise tax.

• Electronically file both your sales and use tax and cannabis tax returns and pay the amounts due to the CDTFA.

In addition, you should also:

• Obtain a distributor license issued by the Bureau of Cannabis Control with the California Department of Consumer Affairs.

• Contact your city and/or county government office for information on local licenses you may be required to obtain.

Cannabis Excise Tax and Cultivation Tax Effective January 1, 2018, two new cannabis taxes apply as follows:

• A 15 percent excise tax is imposed upon all purchasers of cannabis and cannabis products, including medicinal cannabis and adult-use cannabis.

• A tax on cultivation of cannabis is imposed on cultivators at a rate of: o $9.25 per dry-weight ounce of cannabis flowers, and o $2.75 per dry-weight ounce of cannabis leaves.

The cultivation tax applies to all harvested cannabis that enters the commercial market. Cannabis has "entered the commercial market" when the cannabis or cannabis product have completed and comply with all quality assurance, inspection, and testing requirements.

Beginning January 1, 2020, the CDTFA is required to annually adjust the cultivation tax rates to account for inflation.

The cannabis excise tax is based on the "average market price." The average market price is determined by the type of transaction that occurred when the seller (cultivator, manufacturer or distributor) sold the product to the retailer.

An "arm's length transaction" is a sale that reflects the fair market price in the open market between two informed and willing parties.

In an arm's length transaction, the average market price means the average retail price determined by the wholesale cost of the cannabis or cannabis products sold or transferred to a cannabis retailer, plus a mark-up.

The mark-up is to be determined by the CDTFA on a biannual basis in six month intervals.

In a nonarm's length transaction, the average market price means the cannabis retailer's gross receipts from the retail sale of the cannabis or cannabis products.

A special notice will be mailed to cannabis businesses informing them of the mark-up rate. The cultivation tax rates and mark-up rate will also be posted on the Special Taxes and Fees Rate Page.

Cannabis Excise Tax Collection

As a cannabis distributor, you are responsible for collecting the cannabis excise tax from the cannabis retailers that you supply (sell and/or transport) with cannabis and/or cannabis products. You must collect the cannabis excise tax from the retailer on or before 90 days after you sell or transfer the cannabis or cannabis product to the retailer in an arm's length transaction.

In a nonarm's length transaction, you must collect the cannabis excise tax from the retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the retailer, or at the time of the retail sale by the cannabis retailer, whichever is earlier.

You must 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.

Cannabis Cultivation Tax Collection

As a cannabis distributor, you are responsible for collecting the cannabis cultivation tax from cultivators and manufacturers from whom you receive cannabis and/or cannabis products. You must collect the cannabis cultivation tax from cultivators when the cannabis has entered the commercial market. Cannabis has "entered the commercial market" when the cannabis or cannabis products have completed and comply with all quality assurance, inspection, and testing.

You must also collect the cannabis cultivation tax from manufacturers when cannabis product is first sold or transferred to you for quality assurance, inspection, and testing.

You must provide an invoice, receipt, or other similar document to the cultivator or manufacturer that identifies:

• The licensee receiving the product. • The cultivator from which the product originates, including the associated

unique identifier. • The amount of cannabis cultivation tax.

Sales Tax Collection

As a cannabis distributor, you are responsible for transporting cannabis and cannabis products between licensed cannabis businesses. Even if all your sales or transports of cannabis and cannabis products are not subject to sales tax, you are still required to file a return and report your activities to the CDTFA. When you sell cannabis or cannabis products to a customer, such as a cannabis retailer, and the customer provides you with a valid and timely resale certificate, the sale is not subject to sales tax.

It is important that you obtain timely valid resale certificates to support your sales for resale. If no timely valid resale certificate is provided, it will be presumed that sales tax also applies to the sale and you must report and pay the sales tax to the CDTFA. Even if all your sales are not subject to sales tax and you collect the proper resale certificates, you are still required to file a return and report your activities to the CDTFA. Simply provide your total sales on line 1 of your sales and use tax return you're your total nontaxable sales, which indicate that you made no taxable sales if this is the case.

See publication 103, Sales for Resale for more information regarding resale certificates for sales tax purposes.

When a cannabis retailer contracts directly with a cultivator or manufacturer to purchase cannabis and cannabis products which you transport, you are not

making a sale of cannabis and your transport of the cannabis and cannabis products is not subject to sales tax.

Every sale or transport of cannabis or cannabis products from one licensee to another licensee must be recorded on a sales invoice or receipt. Maintaining good books and records will help you keep track of your sales and purchases and assist you when preparing to file your sales and use tax return. See the Record Keeping heading below for more information.

Purchases

When you purchase a product that will be resold, you can purchase it without paying sales or use tax by providing the seller a valid and timely resale certificate. Sales tax will apply if you sell the product at retail. However, when you purchase a product for resale without paying sales tax but, instead of selling it, you consume or use the product, then you owe use tax based on the purchase price. For example, if you issue a resale certificate when purchasing a pipe but instead gift it to someone, you owe the use tax based on its purchase price.

The use tax rate is the same as the sales tax rate in effect at the location of use.

To pay the use tax, report the purchase price of the taxable products as "Purchases Subject to Use Tax" on your sales and use tax return. Those purchases become part of the total amount that is subject to tax.

For more information about issuing resale certificates, see publication 103, Sales for Resale.

For more information on use tax, visit our use tax webpage.

Supplies, Equipment, and other Business Expenses Products you purchase for use in your business (signs, fire extinguishers, display cases, weight and measure equipment, computers, etc.) are subject to sales tax at the time of purchase. Your supplier will normally collect and report the sales tax. However, if you purchase equipment or supplies for use in your business online or from an out-of-state seller, the sale may be subject to use tax.

If the out-of-state seller does not charge California use tax, you should report the purchase price on your sales and use tax return. To pay use tax, report the purchase price of the taxable products under Purchases Subject to Use Tax on your sales and use tax return. Those purchases become part of the total amount subject to tax.

Please note: In general, wrapping and packaging supplies, used to wrap merchandise or bags in which you place products sold to your customers, may

be purchased for resale. All other purchases of supplies are generally subject to tax.

To find out more about use tax, please visit our use tax webpage.

Record Keeping

You are required by law to keep business records so that we may verify the accuracy of your sales and use tax and cannabis tax returns and determine how much tax is due. Additionally, maintaining good books and records will help you keep track of your sales and purchases and assist you when preparing to file your sales and use tax and cannabis tax returns. Records must be kept for at least four (4) years, unless otherwise directed by the CDTFA. If you do not maintain records, it may be considered evidence of negligence or intent to evade the tax and may result in penalties.

Examples of records you must keep include:

• Sales Invoices • Cash Register Tapes • Sales Journals • Resale Certificates • Shipping Documents • Purchase Invoices • Bank Records • Purchase Orders • Purchase Journals • Tax Returns

For more detailed information on sales and use tax record keeping, please see our Keeping Records webpage.

Please note, the Medicinal and Adult-Use Cannabis Regulation and Safety Act requires a licensee to keep accurate records of commercial cannabis activity for a minimum of seven years. For example, every sale or transport of cannabis or cannabis products from one licensee to another must be recorded on a sales invoice or receipt. Sales invoices and receipts may be maintained electronically and must be available for review. Each sales invoice or receipt must include:

• Name and address of the seller. • Name and address of the purchaser.

• Date of sale and invoice number. • Kind, quantity, size, and capacity of packages of cannabis or cannabis

products sold. • The cost to the purchaser, including any discount applied to the price

shown on the invoice. • The location of transport of the cannabis or cannabis product unless the

transport was from the licensee's location. • Any other information specified by the licensing authority.

Retailer

A cannabis retailer is a person who sells cannabis and/or cannabis products directly to a consumer.

If you are a cannabis retailer, the CDTFA requires that you:

• Register with the CDTFA for a seller's permit. • Charge and collect sales tax on your taxable retail sales of cannabis

and/or cannabis products, and other products. • Electronically file your sales and use tax returns and pay the sales and/or

use tax to the CDTFA. • Charge and collect the cannabis excise tax from your customers who

purchase cannabis and/or cannabis products (effective January 1, 2018). • Pay to your distributor the cannabis excise tax you collected. DO NOT

remit cannabis excise tax on your sales and use tax return. • Provide your customer with an invoice, receipt, or other document that

displays the cannabis excise tax separately from the list price, the price advertised on the premises, the marked price, or other price.

• Include on your invoice, receipt, or other document you provide to your customer the statement "The cannabis cultivation tax and excise taxes are included in the total amount of this invoice."

In addition, you should also:

• Obtain a retail license issued by the Bureau of Cannabis Control within the Department of Consumer Affairs.

• Contact your city and/or county government office for information on local licenses you may be required to obtain.

Cannabis Excise Tax

Effective January 1, 2018, a 15 percent excise tax is imposed upon purchasers of all cannabis and cannabis products, including medicinal cannabis. The 15 percent excise tax is calculated based on the average market price from the retail sale. Please refer to the heading, Average Market Price, below for more information. As a retailer, you are required to collect the excise tax from your customers and pay the excise tax to your distributor. No cannabis and/or cannabis products may be sold unless the cannabis excise tax is paid by the purchasers at the time of sale.

Sales

Your sales of cannabis and cannabis products are generally subject to sales tax, unless your customer provides you with a valid Medical Marijuana Identification Card indicating they are a qualified patient or the primary caregiver for a qualified patient, along with a valid government-issued identification card. Please refer to the heading, Proposition 64 Exempts Certain Medicinal Cannabis Sales from Sales and Use Tax, below for more information. Beginning January 1, 2018, your sales of all cannabis and cannabis products, including medicinal cannabis, will also be subject to the 15 percent excise tax. The 15 percent excise tax amount should be included in the calculation of the total amount subject to sales tax.

Generally, the retail sales of the following cannabis and cannabis products are subject to both the sales tax and the 15 percent excise tax:

• Balms • Buds and Flowers • Capsules • Edibles (cookies, butters, honey, chocolates, candies, sodas, bars) • Extracts • Gum • Hash • Infused feminine hygiene products • Lotions • Oils • Plants and Clones • Pre-rolls • Teas • Tinctures • Tonics • Topicals • Waxes

The retail sale of cannabis accessories, such as pipes, rolling machines, vape pens (without cannabis), rolling papers, shirts, hats, books, and magazines are subject to sales tax, but not the 15 percent excise tax.

The above list is not comprehensive. If you have questions about a product that is not included here, you may contact our Customer Service Center at 1-800-400-7115.

Delivery charges are generally taxable when retailers make deliveries with their own vehicles. However, delivery–related charges may be nontaxable, or partially taxable, when you ship using a common or contract carrier. For more information on shipping or delivery charges, see publication 100, Shipping and Delivery Charges.

Sales Tax Reimbursement A retailer has the option to collect sales tax reimbursement from its customers. It is not mandatory. Regardless of whether or not you collected sales tax reimbursement from your customers, you as the retailer are liable for the sales tax on taxable sales, and you must report and pay the tax to the CDTFA on your sales and use tax return. If sales tax is included in the sales price, you must post a sign notifying your customers that the sales tax is included in the sales price. If signage is not posted on the premises visible to the customer, then sales tax will be based on the sales price and added to the receipt.

You may look up the current sales and use tax rate by visiting the Find a Sales and Use Tax Rate webpage.

Cannabis Excise Tax Collection The cannabis excise tax is imposed on the purchaser of cannabis and/or cannabis products. As a retailer, you are required to collect the cannabis excise tax from your customers and pay the tax to your distributor. Cannabis and/or cannabis products may not be sold unless the cannabis excise tax is paid by the purchaser at the time of sale.

Average Market Price

Effective January 1, 2018, a 15 percent excise tax applies to the average market price of the retail sale. The average market price is determined by the type of transaction that occurred when the seller (cultivator, manufacturer or distributor) sold the product to you. An "arm's length transaction" is a sale that reflects the fair market price in the open market between two informed and willing parties.

In an arm's length transaction, the average market price means the average retail price determined by the wholesale cost of the cannabis or cannabis products sold or transferred to a cannabis retailer, plus a mark-up. The mark-up will be determined by the CDTFA on a biannual basis in six month intervals. A special notice will be mailed to cannabis businesses informing them of the mark-up rate when it is set. The mark-up rate will also be posted on the Special Taxes and Fees Rate Page.

In a non-arm's length transaction, the average market price means the cannabis retailer's gross receipts from the retail sale of the cannabis or cannabis products.

Proposition 64 Exempts Certain Medicinal Cannabis Sales from Sales and Use Tax

Effective November 9, 2016, certain sales of medicinal cannabis are exempt from sales and use tax. The sales and use tax exemption applies to the retail sales of medicinal cannabis, medicinal cannabis concentrate, edible medicinal cannabis products, or topical cannabis as those terms are defined in the Business and Professions code section 26001. To obtain the exemption, qualified patients or their primary caregiver must furnish their valid Medical Marijuana Identification Card (MMIC) issued by the California Department of Public Health and a valid government issued identification card (ID) at the time of purchase.

To properly claim the sales and use tax exemption, you should not collect sales tax reimbursement on the qualifying exempt sales of medicinal cannabis. In addition, you should claim a deduction on your sales and use tax return for the qualifying exempt medicinal cannabis sales. To claim the exempt sales, you must verify that purchasers have the proper identification (a valid MMIC and a valid government issued ID) and maintain specific information for your records as explained below under the Record Keeping section.

Record Keeping Medicinal cannabis retailers that make qualifying exempt sales and claim the deduction on their sales and use tax return, should maintain the following records (either physical or electronic) for each transaction:

• The purchaser's nine-digit ID number and expiration date, as shown on the qualified patient's or primary caregiver's unexpired Medical Marijuana Identification Card (MMIC) (see below for example of a patient MMIC); and

• The related sales invoice or other original record of sale. A valid MMIC is issued by the California Department of Public Health (CDPH). The card (sample pictured below) includes the following:

• Issued by the "State of California" with the state seal • States either "Patient" or "Caregiver" • Patient's or primary caregiver's photo • Nine-digit ID number • CDPH website to verify ID number • Expiration date • County that issued card with phone number

Retailers may verify the validity of the nine-digit ID number on the CDPH website.

Consignment Sales

You are responsible for obtaining a seller's permit and reporting and paying the sales tax on the retail selling price of consignment sales. When you have possession or control of the item you are selling, and can transfer ownership or use of the item to the buyer without further action on the part of the owner, you are considered the retailer of the item.

For example, your store accepts pipes and accessories to sell on consignment. You agree to sell the products, but will not pay for the product unless it sells. Your agreement authorizes you to sell the products and transfer ownership to the buyer. You are considered the retailer of the accessories you sell in this way and must pay sales tax based on your retail selling price.

For more information, please see publication 114, Consignment Sales.

Purchases

When you purchase a product that will be resold, you can purchase it without paying sales or use tax by providing the seller a valid and timely resale certificate. Sales tax will apply when you sell the product at retail. However, when you purchase a product for resale without paying sales tax but, instead of selling it, you consume or use the product, then you owe the use tax based upon the amount of the purchase price. For example, if you issue a resale certificate when purchasing a pipe but instead gift it to someone, you owe use tax based upon its purchase price.

The use tax rate is the same as the sales tax rate in effect at the location of use.

To pay use tax, report the purchase price of the taxable items as "Purchases Subject to Use Tax" on your sales and use tax return. Those purchases become part of the total amount that is subject to tax.

For more information about issuing resale certificates, see publication 103, Sales for Resale.

For more information on use tax, visit our use tax webpage.

Supplies, Equipment, and other Business Expenses Products you purchase for use in your business (signs, fire extinguishers, display cases, weight and measure equipment, computers, etc.) are subject to sales tax at the time of purchase. Your supplier will normally collect and report the sales tax. However, if you purchase equipment or supplies for use in your business online or from an out-of-state seller, the sale may be subject to use tax.

If the out-of-state seller does not charge California use tax, you should report the purchase price on your sales and use tax return. To pay the use tax, report the purchase price of the taxable products under Purchases Subject to Use Tax on your sales and use tax return. Those purchases become part of the total amount subject to tax.

Please note: In general, wrapping and packaging supplies, used to wrap merchandise or bags in which you place products sold to your customers, may be purchased for resale (see Regulation 1589 for more details). All other purchases of supplies are generally subject to tax.

To find out more about use tax, please visit our use tax webpage.

Record Keeping

You are required by law to keep business records so that we may verify the accuracy of your sales and use tax return and determine how much tax is due, when a return has not been filed. Additionally, maintaining good books and records will help you keep track of your sales and purchases and assist you when preparing your sales and use tax return. Records must be kept for at least four (4) years, unless otherwise directed by the CDTFA. If you do not maintain records, it may be considered evidence of negligence or intent to evade the tax and may result in penalties.

Examples of records you must keep include:

• Sales Invoices • Cash Register Tapes • Sales Journals • Resale Certificates • Shipping Documents • Purchase Invoices

• Bank Records • Purchase Orders • Purchase Journals • Tax Returns

For more detailed information on sales and use tax recordkeeping, please see our Keeping Records webpage.

Please note, the Medicinal and Adult-Use Cannabis Regulation and Safety Act requires a licensee to keep accurate records of commercial cannabis activity for a minimum of seven years. For example, every sale or transport of cannabis or cannabis products from one licensee to another must be recorded on a sales invoice or receipt. Sales invoices and receipts may be maintained electronically and must be available for review. Each sales invoice or receipt must include:

• Name and address of the seller. • Name and address of the purchaser. • Date of sale and invoice number. • Kind, quantity, size, and capacity of packages of cannabis or cannabis

products sold. • The cost to the purchaser, including any discount applied to the price

shown on the invoice. • The location of transport of the cannabis or cannabis product unless the

transport was from the licensee's location. • Any other information specified by the licensing authority.

Cultivator

A cannabis cultivator is a person who is in engaged in the business of planting, growing, harvesting, drying, curing, grading or trimming cannabis.

If you are a cannabis cultivator, the CDTFA requires that you:

• Register with the CDTFA for a seller's permit. • Pay the cultivation tax to your distributor or manufacturer. • Electronically file your sales and use tax returns and pay the tax due, if

any, to the CDTFA. Even if you do not make taxable sales of cannabis, you are still required to file a return indicating your total sales with your claimed nontaxable or exempt sales during that particular reporting period.

In addition, you should also:

• Obtain a cultivation license issued by the California Department of Food and Agriculture.

• Contact your city and/or county government office for information on local licenses you may be required to obtain.

Cannabis Cultivation Tax

Effective January 1, 2018, a tax on cultivation of cannabis (including medicinal cannabis and adult-use cannabis) is imposed on cultivators at a rate of:

• $9.25 per dry-weight ounce of cannabis flowers, and • $2.75 per dry-weight ounce of cannabis leaves.

The cultivation tax applies to all harvested cannabis that enters the commercial market. Cannabis has "entered the commercial market" when the cannabis or cannabis product has completed and complies with all quality assurance, inspection, and testing requirements.

Distributors are required to collect the cultivation tax from you upon entry into the commercial market.

As a cultivator, if the first transfer or sale of unprocessed cannabis is to a manufacturer, and not a distributor, the manufacturer is required to collect the cultivation tax from you at the time of the first sale or transfer of the unprocessed cannabis. The cultivation tax you pay to a manufacturer will be passed on to a distributor for payment to the CDTFA.

Beginning January 1, 2020, the CDTFA is required to annually adjust the cultivation tax rates to account for inflation.

Cannabis Cultivation Tax Imposition The cannabis cultivation tax is imposed on the cultivator. As a cannabis cultivator, you are responsible for the payment of the cannabis cultivation tax to your distributor or manufacturer. The tax is due on all harvested cannabis that enters the commercial market. No cannabis may be sold unless the cannabis cultivation tax has first been paid.

Sales

When you sell cannabis to a customer, such as a distributor, manufacturer, or retailer who provides you with a valid and timely resale certificate, the sale is not subject to sales tax; however it is subject to the cannabis cultivation tax. It is important that you obtain timely valid resale certificates to support your sales for resale. If no timely valid resale certificate is provided, it will be presumed that sales tax also applies to the sale and you must report and pay the tax to the CDTFA. Even if all your sales are not subject to sales tax and you collect the proper resale certificates, you are still required to file a return and report your activities to the CDTFA. Simply indicate on the return that you made no taxable sales if this is the case.

See publication 103, Sales for Resale for more information regarding resale certificates for sales tax purposes.

Purchases

Generally, most of the products you purchase for use in your business are subject to sales or use tax. However, purchases of certain supplies may not be taxable, whereas purchases of other products may qualify for a partial exemption. Supplies, Equipment, and other Business Expenses Purchases of products for use in your business (computers, pesticides, work gloves, etc.) are subject to sales or use tax at the time of purchase.

Normally, your vendor is responsible for collection of sales tax on taxable sales. However, if you purchase from an out-of-state seller that does not collect the California sales tax, the sale is generally subject to use tax and you must report the purchase price on your sales and use tax return (under "Purchases Subject to Use Tax") and pay the use tax due when you file your return.

To find out more about use tax, please visit our use tax webpage.

Seeds, Plants, and Clones Purchases of seeds and ornamental flower and landscaping plants are generally subject to sales and use tax.

However, sales and use tax does not apply to your purchases of seeds, plants, and clones when the products grown from them will be resold as part of your regular business activities.

For more information, see Regulation 1588, Seeds, Plants and Fertilizer.

Fertilizers Sales tax does not apply to the sale of specified fertilizer to be applied to land or in foliar applications, provided the fertilizer is used to produce products for sale. All other sales of fertilizer are taxable.

For more information, see Regulation 1588,Seeds, Plants and Fertilizer and publication 66, Agricultural Industry.

Partial Exemption for Farm Equipment and Machinery

In general, the sale of farm equipment and machinery is subject to sales and use tax. However, certain sales and purchases of farm equipment and machinery are partially exempt from sales and use tax. As a cultivator, you may be able to take advantage of this partial exemption. The partial exemption applies only to the state general fund portion of the sales tax, currently 5.00 percent.

To calculate the sales tax rate for qualifying transactions, subtract 5.00 percent from the sales tax rate that would normally apply at the location where the purchase is made. For example, if the current sales tax rate in your area is 9.00 percent, the sales tax rate for a qualifying transaction would be 4.00 percent.

Note: The rate for the state general and fiscal recovery funds portion of the sales tax is subject to change. The rates used in this example are for demonstrative purposes only. You must use the rate in effect at the time of the sale. Current sales tax rates can be found on our website.

Three requirements must be met for the partial exemption from sales and use tax to apply. The item must be:

1. Sold to a qualified person. 2. Used exclusively or primarily (depending on the type of item) in producing

and harvesting agricultural products. Primarily means 50 percent or more of the time.

3. Defined as farm equipment and machinery which includes, but is not limited to, any tool, machine, equipment, appliance, device or apparatus used in the conduct of agricultural operations.

If any of these three requirements is not met, the partial exemption from sales and use tax will not apply. Examples of equipment and machinery that may qualify:

• Planting equipment • Trimming tools • Drying racks and trays • Grow tents and lights • Environmental controls • Greenhouses • Hydroponic equipment • Solar equipment (see below for more information) • Irrigation equipment

If you lease, rather than purchase, you may still qualify for the partial sales and use tax exemption. For more information about leases, please see publication 46, Leasing Tangible Personal Property.

Mobile transportation equipment generally does not qualify for the partial exemption from sales and use tax.

For more detailed information about equipment and machinery used in farming, see Regulation 1533.1, Farm Equipment and Machinery and publication 66, Agricultural Industry.

Buildings for Raising Plants

Certain buildings may meet the definition of farm equipment for purposes of qualifying for the partial exemption from sales and use tax for farm equipment. The building must be a single-purpose building to house plants, such as a greenhouse. To be considered farm equipment, a horticulture building must meet these two requirements:

• Specifically designed for commercially raising plants. • Used exclusively for that purpose.

You should issue a farm equipment and machinery partial farm exemption certificate to your vendor when you purchase qualifying items.

For more detailed information on this partial exemption from sales and use tax, see Regulation 1533.1, Farm Equipment and Machinery.

Solar Power Facilities

If you qualify for the partial exemption from sales and use tax for farm equipment, your purchase of a solar power facility may also qualify. How does a system qualify?

• Solar Power Facility Directly Attached to Farm Equipment and Machinery When a solar power facility is directly attached to, and primarily provides power to qualifying farm equipment and machinery, the solar power facility generally qualifies as farm equipment and machinery. As such, the purchase of this type of solar power facility generally qualifies for the partial exemption as long as the other requirements for the partial exemption are met.

• Solar Power Facility Not Directly Attached to Farm Equipment and Machinery A solar power facility may also qualify as farm equipment and machinery when the solar power facility is not directly attached to qualifying farm equipment and machinery but is instead tied to the regional power grid and subject to a net metering agreement between the taxpayer and the electric cooperative. In such cases, you need to demonstrate that the solar facility is specifically purchased to provide power primarily to qualifying farm equipment and machinery.

For more information, see our November 2012 Special Notice, Solar Power Facilities May Qualify as Farm Equipment.

Exemptions for Diesel Fuel Used in Farming Activities

Most sales and/or purchases of diesel fuel are subject to sales and use tax and diesel fuel tax. However, a partial sales and use tax exemption exists for certain sales and purchases of diesel fuel used in farming activities. The partial exemption from sales and use tax applies to the sale or purchase of diesel fuel only if the diesel meets these two requirements:

• Be a type of diesel that qualifies for the exemption, and • Be used in qualifying farming activities or related contract hauling.

Your purchases of diesel from fuel suppliers will qualify for the partial sales and use tax exemption when you use the fuel to:

• Prepare land for planting. • Plant, protect, or grow crops. • Harvest crops.

The sale of diesel fuel to a cultivator may qualify for the partial exemption from sales and use tax in the following situations:

1. A grower uses diesel in their tractor to cultivate the land in preparation for planting the cannabis.

Diesel used to move the cannabis after processing is completed does not qualify for the exemption.

For more detailed information about diesel fuel used in farming, see Regulation 1533.2 , Diesel Fuel Used in Farming Activities or Food Processing.

For diesel fuel tax purposes, a farmer may purchase diesel fuel without paying the diesel fuel tax by issuing an exemption certificate to his/her vendor, or by purchasing dyed diesel fuel.

Dyed diesel fuel may not be used to operate a vehicle on any public highway in this state. There are severe penalties for using dyed diesel fuel on the highway, (Either $10 for every gallon of diesel involved or $1,000, whichever is greater.)

To claim the exemption for the diesel fuel tax, the diesel fuel must be used:

• In carrying on a trade or business of farming, • On a farm in California, and • For farming purposes, by the owner, tenant, or operator of the farm.

Please note that only the diesel fuel used on a farm for farming purposes is exempt. Diesel fuel used in your on-road vehicles on public highways, for example when transporting/hauling agriculture products from the farm/ranch to buyers, is subject to tax. You must pay the tax when you purchase diesel fuel for on-road use.

Your diesel fuel vendor may provide you with a BOE-608, Certificate of Farming Use, that you must complete to purchase diesel fuel for farming activities without paying the excise tax. The farmer exemption certificate meets criteria established by the Internal Revenue Service. To be valid, all requested information on the certificate must be provided. You will need to note on the certificate if it covers a particular purchase, all purchases, or a percentage of your purchases. You must annually renew your exemption certificate.

For further information, see Diesel Fuel Tax Regulation 1431, Diesel Fuel Used on a Farm for Farming Purposes.

Types of diesel fuel For purposes of the exemptions, "diesel fuel" means:

• Any liquid that is commonly or commercially known or sold as a fuel that is suitable for use in a diesel-powered highway vehicle. A liquid meets this requirement if, without further processing or blending, the liquid has practical and commercial fitness for use in the engine of a diesel-powered highway vehicle.

A liquid does not possess this practical and commercial fitness solely by reason of its possible or rare use as a fuel in the engine of a diesel-powered vehicle.

As a cultivator, you should provide a timely exemption certificate(s) to your fuel supplier when you purchase diesel for a qualifying use.

Exemption for Liquefied Petroleum Gas (LPG) Used in Farming Activities

Sales of LPG for agricultural use are not subject to sales and use tax or use fuel tax when purchased by a qualified buyer. The exemption from sales and use tax applies to the sale or purchase of LPG only if it is used in commercial crop production or harvesting. You should provide a timely LPG exemption certificate to your vendor.

Nonagricultural use does not qualify for the exemption, even if it is used on a ranch or farm.

The exemption from use fuel tax applies to the sale or purchase of use fuels when it is used in agricultural equipment. For more information, see Use Fuel Tax Regulation 1316, Exempt Uses of Fuel in a Motor Vehicle.

For further information, see Regulation 1533, Liquefied Petroleum Gas.

Exemption Certificates

When you make a purchase that qualifies for an exemption, you must provide an exemption certificate to your supplier. In order for the certificate to be valid, you must:

• Furnish the certificate timely to the seller. • Provide all relevant information:

Your name and address. The type of property being purchased.

You or your company's name, title, telephone number, address, and the seller's permit number.

• Sign and date the document. An exemption certificate will be considered timely if it is given at any time before the seller bills the purchaser for the property, or any time within the seller's normal billing and payment cycle, or any time at or prior to delivery of the property to the purchaser.

Listed below are the types of exemption certificates you may need:

• Qualified Sales and Purchases of Farm Equipment and Machinery • Qualified Sales and Purchases of Diesel • Certificate of Farming Use • LPG Exemption Certificate

Record Keeping

You are required by law to keep business records so that we may verify the accuracy of your sales and use tax and cannabis tax returns and determine how much tax is due, if any. Additionally, maintaining good books and records will help you keep track of your sales and purchases and assist you when preparing your sales and use tax and cannabis tax returns. Records must be kept for at least four (4) years, unless otherwise directed by the CDTFA. If you do not maintain records, it may be considered evidence of negligence or intent to evade the tax and may result in penalties.

Examples of records you must keep include:

• Sales Invoices • Cash Register Tapes • Sales Journals • Resale Certificates • Shipping Documents • Purchase Invoices • Bank Records • Purchase Orders • Purchase Journals • Tax Returns

For more detailed information on sales and use tax record keeping, please see our Keeping Records webpage.

Please note, the Medicinal and Adult-Use Cannabis Regulation and Safety Act requires a licensee to keep accurate records of commercial cannabis activity for a minimum of seven years. For example, every sale or transport of cannabis or cannabis products from one licensee to another must be recorded on a sales invoice or receipt. Sales invoices and receipts may be maintained electronically and must be available for review. Each sales invoice must include:

• Name and address of the seller. • Name and address of the purchaser. • Date of sale and invoice number. • Kind, quantity, size, and capacity of packages of cannabis or cannabis

products sold. • The cost to the purchaser, including any discount applied to the price

shown on the invoice. • The location of transport of the cannabis or cannabis product unless the

transport was from the licensee's location. • Any other information specified by the licensing authority.

Manufacturer

A cannabis manufacturer is a person who produces or prepares cannabis or cannabis products at a fixed location, that packages or repackages cannabis or cannabis products, or labels or relabels its container.

If you are a cannabis manufacturer, the CDTFA requires that you:

• Register with the CDTFA for a seller's permit. • Collect the cannabis cultivation tax from cultivators from which you receive

unprocessed cannabis and provide the cultivator with a receipt. • Pay the cultivation tax collected from cultivators to your distributor. • Electronically file your sales and use tax returns and pay any sales and/or

use tax owed to the CDTFA. Even if you do not make taxable sales of cannabis, you are still required to file a return indicating your total sales with your claimed nontaxable or exempt sales during that particular reporting period.

In addition, you should also:

• Obtain a manufacturer license issued by the California Department of Public Health.

• Contact your city and/or county government office for information on local licenses you may be required to obtain.

Cannabis Cultivation Tax As a cannabis manufacturer, you are required to collect the cannabis cultivation tax from cultivators when the unprocessed cannabis is first sold or transferred to you. You must then pay the cultivation tax collected to your distributor when the cannabis or cannabis products are transported for distribution.

You must provide an invoice, receipt, or other similar document to the cultivator that identifies:

• The licensee receiving the product. • The cultivator from which the product originates, including the associated

unique identifier. • The amount of cannabis cultivation tax.

Effective January 1, 2018, a cultivation tax on all harvested-cannabis (including medicinal cannabis and adult-use cannabis) that enters the commercial market is imposed on cultivators at a rate of:

• $9.25 per dry-weight ounce of cannabis flowers, and

• $2.75 per dry-weight ounce of cannabis leaves. Beginning January 1, 2020, the CDTFA is required to annually adjust the cultivation tax rates to account for inflation.

Sales

When you sell your product to a customer, such as a distributor or retailer, and the customer provides you with a valid and timely resale certificate, the sale is not subject to sales tax. It is important that you obtain timely valid resale certificates to support your sales for resale. If no timely valid resale certificate is provided, it will be presumed that sales tax also applies to the sale and you must report and pay the sales tax to the CDTFA. Even if all your sales are not subject to sales tax and you collect the proper resale certificates, you are still required to file a return and report your activities to the CDTFA. Simply indicate on the return that you made no taxable sales if this is the case.

See publication 103, Sales for Resale for more information regarding resale certificates for sales tax purposes.

Purchases

When you purchase a product that will be resold, you can purchase it without paying sales and use tax by timely providing the seller with a valid resale certificate. Sales tax will apply if you sell the product at retail. However, when you purchase a product for resale without paying sales tax but, instead of selling it, you consume or use the product, then you owe the use tax based upon the amount of the purchase price. For example, if you issue a resale certificate when purchasing a pipe but instead gift it to someone, you owe use tax based upon its purchase price.

The use tax rate is the same as the sales tax rate in effect at the location of use.

To pay use tax, report the purchase price of the taxable product as "Purchases Subject to Use Tax" on your sales and use tax return. Those purchases become part of the total amount that is subject to tax.

For more information about issuing resale certificates, see publication 103, Sales for Resale.

For more information on use tax, visit our use tax webpage.

Supplies, Equipment, and other Business Expenses Products you purchase for use in your business (signs, fire extinguishers, display cases, weight and measure equipment, computers, etc.) are subject to sales tax

at the time of purchase. Your supplier will normally collect and report the sales tax. However, if you purchase equipment or supplies for use in your business online or from an out-of-state seller, the sale may be subject to use tax.

If the out-of-state seller does not charge California use tax, you should report the purchase price on your sales and use tax return. To pay use tax, report the purchase price of the taxable products under Purchases Subject to Use Tax on your sales and use tax return. Those purchases become part of the total amount subject to tax.

Please note: In general, wrapping and packaging supplies, used to wrap merchandise or bags in which you place products sold to your customers, may be purchased for resale (see Regulation 1589 for more details). All other purchases of supplies are generally subject to tax.

To find out more about use tax, please visit our use tax webpage.

Record Keeping

You are required by law to keep business records so that we may verify the accuracy of your sales and use tax return and determine how much tax is due, if any. Additionally, maintaining good books and records will help you keep track of your sales and purchases and assist you when preparing your sales and use tax return. Records must be kept for at least four (4) years, unless otherwise directed by the CDTFA. If you do not maintain records, it may be considered evidence of negligence or intent to evade the tax and may result in penalties.

Examples of records you must keep include:

• Sales Invoices • Cash Register Tapes • Sales Journals • Resale Certificates • Shipping Documents • Purchase Invoices • Bank Records • Purchase Orders • Purchase Journals • Tax Returns

For more detailed information on sales and use tax record keeping, please see our Keeping Records webpage.

Please note, the Medicinal and Adult-Use Cannabis Regulation and Safety Act requires a licensee to keep accurate records of commercial cannabis activity for a minimum of seven years. For example, every sale or transport of cannabis or cannabis products from one licensee to another must be recorded on a sales invoice or receipt. Sales invoices and receipts may be maintained electronically and must be available for review. Each sales invoice or receipt must include:

• Name and address of the seller. • Name and address of the purchaser. • Date of sale and invoice number. • Kind, quantity, size, and capacity of packages of cannabis or cannabis

products sold. • The cost to the purchaser, including any discount applied to the price

shown on the invoice. • The location of transport of the cannabis or cannabis product unless the

transport was from the licensee's location. • Any other information specified by the licensing authority.

Manufacturing and Research & Development Partial Exemption

Manufacturers and certain research and developers may qualify for a partial exemption of sales and use tax on certain manufacturing and research and development equipment purchases and leases. To be eligible for this partial exemption of sales and use tax, you must meet certain specified conditions. You must:

• Be engaged in certain types of business, also known as a "qualified person,"

• Purchase "qualified tangible personal property," and • Use the property in a qualified manner.

A "qualified person" generally means a person who is primarily engaged (50 percent or more of the time) in those lines of business described in the North American Industry Classification System (NAICS) Codes 3111 to 3399, inclusive, 541711, or 541712. These lines of business generally include manufacturing business activities, and research and development business activities. A qualified person may be primarily engaged either as a legal entity or as an establishment within a legal entity in a qualifying line of business.

Qualified tangible personal property generally includes:

• Machinery and equipment, including component parts and contrivances such as belts, shafts, moving parts, and operating structures, used in manufacturing or research and development, and treated as having a useful life of one or more years for state income or franchise tax purposes.

• Equipment or devices used or required to operate, control, regulate, or maintain the machinery, including, but not limited to, computers, data-processing equipment, and computer software, together with all repair and replacement parts, with a useful life of one or more years, whether purchased separately or in conjunction with a complete machine, and regardless of whether the machine or component parts are assembled by the qualified person or another party.

• Tangible personal property used in pollution control that meets or exceeds standards established by this state or any local or regional governmental agency within this state at the time the qualified tangible personal property is purchased.

• Special purpose buildings and foundations used as an integral part of the manufacturing, processing, refining, fabricating, or recycling process, or that constitute a research or storage facility used during those processes. Buildings used solely for warehousing purposes after completion of those processes are not included.

The tangible personal property must generally be used 50 percent or more of the time in qualifying manner. The following activities are generally considered qualifying uses of the property:

• Primarily used in any stage of the manufacturing, processing, refining, fabricating, or recycling of tangible personal property;

• Primarily used in research and development; • Primarily used to maintain or repair any qualified tangible personal

property described above; • Property used by a construction contractor purchasing that property for use

in the construction of special purpose buildings and foundations used as an integral part of the manufacturing, processing, refining, fabricating, or recycling process, or that constitute a research or storage facility used during those processes. Buildings used solely for warehousing purposes after completion of those processes are not included.

For more specific information on the partial manufacturing exemption, please visit our Manufacturing and Research & Development Exemption guide.

Special Notices • Recordkeeping Requirements for Exempt Sales of Medical Marijuana

Beginning November 9, 2016 • Information About Proposition 64 for Sellers of Medical Marijuana (L-

481)

Guides • Guide for New Permit and License Holders • Tax Guide for the Manufacturing and Research and Development

Exemption • Tax Guide for the Agricultural Industry

Publications • Publication 44, District Taxes • Publication 66, Agricultural Industry • Publication 100, Shipping and Delivery Charges • Publication 103, Sales for Resale • Publication 110, California Use Tax Basics • Publication 116, Sales and Use Tax Records • Publication 557, Tax Help for the Cannabis Industry

Regulations • Regulation 1316, Exempt Uses of Fuel in a Motor Vehicle • Regulation 1431, Diesel Fuel Used on a Farm for Farming Purposes • Regulation 1533.1, Farm Equipment and Machinery • Regulation 1533.2, Diesel Used in Farming Activities or Food Processing • Regulation 1588, Seed, Plants and Fertilizer • Regulation 1589, Containers and Labels • Regulation 1628, Transportation Charges • Regulation 1668, Sales for Resale • Regulation 1700, Reimbursement for Sales Tax

Other Helpful Resources

• CDTFA Field Offices – A comprehensive listing of all CDTFA field offices and contact information.

• CDTFA Online Services – Learn about the online services CDTFA offers. • City and County Tax Rates – A listing of current and historical tax rates. • Employment Development Department (EDD) Guide for Cannabis

Industry Payroll Tax Reporting – An EDD guide that provides information for cannabis businesses to comply with payroll taxes.

• Contact Us – A listing of CDTFA contacts for your questions and concerns.

• Franchise Tax Board (FTB) Guide for Medical Marijuana Related Activities – An FTB guide that provides information regarding medical marijuana related activities.

• Get It In Writing! – The Sales and Use Tax Law can be complex, and you are encouraged to put your tax questions in writing.

• Internal Revenue Service (IRS) Guide for Cash Intensive Businesses – An IRS guide that provides insight to issues unique to cash businesses.

• Sign Up for CDTFA Updates – Subscribe to our email lists and receive the latest news, newsletters, tax and fee updates, public meeting agendas, and other announcements.

• Special Notices – CDTFA special notices are issued whenever there is a change in law, tax rates, or procedures.

• Taxpayers' Rights Advocate (TRA) – The TRA Office helps taxpayers when they are unable to resolve a matter through normal channels (for example, by speaking to a supervisor), or when there are apparent rights violations.

• Verify a Permit or License – You can use this application to verify a seller's permit.

• Videos and How-To Guides – These resources will help you avoid common mistakes, file your tax returns online, and more.

• California Department of Public Health – Verify the validity of a California Medical Marijuana Identification Card.

• California Department of Food and Agriculture – Learn about cultivation licensing and the cannabis activity tracking system.

• California Department of Public Health – Manufactured Cannabis Safety Branch (MCSB) - Learn about manufacturer licensing.

• California Bureau of Cannabis Control – Learn more about distribution, laboratory testing, and dispensary (sale) licensing.

• California Cannabis Portal – Learn about doing business in California