California Taxes Explained

If you reside in California and use cannabis, you might be curious about the high taxes you’re paying on your purchases. To dispel any misconceptions and provide clarity, we consulted our compliance team to explain the exact tax breakdown for consumers.

As of January 1, 2018, California introduced a 15 percent excise tax on all retail cannabis and cannabis product purchases, which also includes medicinal cannabis. Additionally, the state and local municipalities levy sales taxes on most products sold in California, including cannabis and cannabis products. The specific rates for sales taxes vary depending on the city or county. It’s important to note that legally licensed cannabis businesses are obligated to collect these taxes from consumers.

Here’s a simple formula to calculate the cost of a cannabis product after taxes:

1. Retail Price + 15% Excise Tax = Subtotal
2. Subtotal + Sales Tax = Cost

The sales tax rates typically range from 7.25% to 10.25% and are calculated based on the total, inclusive of the excise taxes.

An exception exists for holders of the Medical Marijuana Identification Card (MMIC), who are exempt from paying sales tax on medical cannabis products.

Please be aware that the statements made here have not been evaluated by the Food and Drug Administration. The products are not intended to diagnose, treat, cure, or prevent any disease.