Tax Guide for Cannabis Businesses
We will continue to update this page as we receive information about the taxation requirements for the cannabis industry.
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 California Department of Tax and Fee Administration (CDTFA) that 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
Assembly Bill 8 (AB 8)
AB 8 (Stats. 2025, ch. 248) was signed into law on October 2, 2025. Beginning January 1, 2028, the definition of cannabis products expands to include products containing concentrates from industrial hemp, excluding CBD isolate only products. On and after January 1, 2028, the cannabis excise tax will apply to the retail sales of these products in California, and cannabis retailers will be required to collect the tax from purchasers. For more information regarding commercial cannabis activity regulated by the Department of Cannabis Control (DCC) please visit DCC's website.
Additionally, on and after January 1, 2028, any person who possesses, keeps, stores, or retains for the purpose of sale in this state, or sells or offers to sell in this state any product presumed to be cannabis or a cannabis product, which includes products containing synthetic cannabinoids, can be held liable for cannabis excise tax and any applicable penalties and interest.
AB 8 also made changes to the Cigarette and Tobacco Products Licensing Act to prohibit cigarette or tobacco product businesses in California from possessing, storing, owning, or making a retail sale of cannabis, cannabis products, or presumed cannabis products. For more information, please visit our Tax Guide for Cigarettes and Tobacco Products.
How to Use This Guide
Each page of this guide contains important information relevant to cannabis businesses. The Getting Started page provides key resources related to registration, filing returns, account maintenance, and other information cannabis businesses may need.
The Retailers section covers topics related to the general application of the cannabis excise tax and sales and use tax on purchases and sales made by cannabis retailers and includes examples of how the cannabis excise tax is calculated. It also has information on the registration and reporting requirements cannabis retailers have with us.
The Distributors/Manufacturers/Cultivators page covers topics related to the general application of sales and use tax to purchases and sales by distributors, manufacturers, and cultivators.
The Videos page contains videos with important information for cannabis retailers.
The Tax Facts page provides information on specific topics important to the cannabis industry.
The Resources page provides links to useful information, including special notices, publications, statutory and regulatory information, cannabis inspection information, and access to assistance from our customer service representatives.
The Historical Industry Topics page covers topics that have been archived and are no longer in effect. This page may be useful for taxpayers seeking information regarding our cannabis excise and cultivation tax programs administered under Revenue and Taxation Code sections 34011 and 34012.
Please note that the general information provided to in this guide does not replace any law or regulation. This guide 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 how taxes and fees apply to your business operations, 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 us or mailed directly to our local office nearest you.
For more details, please see publication 8, Get It in Writing!
Assistance Available
If you need assistance with topics included in this guide, have other related questions, or suggestions for improving this guide, please contact us via email. You can also contact our Customer Service Center at 1-800-400-7115 (TTY:711), and selecting the option for Special Taxes and Fees. Customer service representatives are available Monday through Friday from 7:30 a.m. to 5:00 p.m. (Pacific time), except state holidays. Additional contact information and hours of operation are available on our How to Contact Us
If you have suggestions for improving this guide, please contact us via email.
How the Revenue is Used
Cannabis tax revenues are deposited into the California Cannabis Tax Fund (CCTF) and are used to fund several state agencies that administer and enforce the Cannabis Tax Law. In addition, these revenues fund youth programs providing substance use disorder education and prevention, environmental restoration and protection projects in watersheds and state lands impacted by cannabis cultivation, and enforcement of laws related to driving under the influence of alcohol and drugs.
The CCTF also funds public universities to conduct research to evaluate the impact of cannabis legalization on things like public safety, public health, and the economy.
Free Educational Consultations
If you are starting a new business, or have tax-related questions, our team members are available to consult with you at your business location and help you correctly determine and report your sales and use taxes. To participate, or for more information, please contact your local office today to schedule an appointment.