Getting Started with Cannabis Businesses

Sales and Use Taxes

If you own a business in California that sells cannabis or cannabis products, you must register with us for a seller's permit and regularly file sales and use tax returns.

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.

The Control, Regulate and Tax Adult Use of Marijuana Act of 2016, an initiative measure approved as Proposition 64 on November 8, 2016, provides that certain sales of medicinal cannabis and medicinal cannabis products are exempt from sales and use tax in this state. For more information on how Proposition 64 affects your medicinal cannabis sales, please see the Retailers section, under the heading, Certain Sales of Medicinal Cannabis Exempt from Sales and Use Tax.

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 also 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 Beginning January 1, 2023

For retail sales of cannabis or cannabis products made beginning January 1, 2023, cannabis retailers must collect the 15 percent cannabis excise tax (rate subject to change July 1, 2025) from purchasers of cannabis or cannabis products based on gross receipts from the retail sale of cannabis or cannabis products.

In addition to a seller's permit, if you are a cannabis retailer, or microbusiness licensed to act as a cannabis retailer, you must also register with us for a cannabis retailer excise tax permit and regularly file cannabis retailer excise tax returns.

Registration

Online Registration

Register with us online for a seller's permit and/or a cannabis retailer excise tax permit, or add a business location to an existing permit or account. Online registration is available 24 hours a day.

To register with us for a cannabis retailer excise tax permit, login to your online account with your username and password. Click on the More link under the I Want To section. Then select the Register a New Business Activity link under the Manage Business Activity heading. Select Selling items or goods in California and answer yes to selling Cannabis or cannabis products to get started.

If you do not have a username and password, select Register a New Business Activity on our Online Services homepage and select Selling items or goods in California and answer yes to selling Cannabis or cannabis products to get started. The online registration system will prompt you to enter the required information.

If you have registration questions, please contact our Customer Service Center at 1-800-400-7115 (CRS:711). Customer service representatives are available Monday through Friday from 7:30 a.m. to 5:00 p.m. (Pacific time) except state holidays.

In addition to registering with us for the required tax permit(s), you will also need to obtain the appropriate commercial cannabis license(s) for your business. The Department of Cannabis Control (DCC) is responsible for licensing cannabis cultivators, manufacturers, distributors, retailers, microbusinesses, testing laboratories, and cannabis event organizers.

You are also responsible for contacting your city or county government office for information on local licenses you may be required to obtain.

No Seller's Permit Required – Obtain Certification Letter

If you do not sell tangible personal property (items) in California, you are not required to hold a seller's permit. However, to meet the commercial cannabis licensing application requirements, a certification letter must be provided to the licensing agency stating that a seller's permit is not required. To receive a certification letter from us, please email us with the following information:

  • Owner name
  • DBA
  • Business address
  • Contact name
  • Contact phone number
  • A description of your business activities

Upon receipt of your email, we will review your information and, if you provided sufficient information, we will mail a certification letter to the address provided. We will contact you if we need additional information.

Filing and Payments

Sales and Use Tax Return

If you sell cannabis or cannabis products, you are required to file regular sales and use tax returns to report your sales. If you have no taxable transactions to report, you are still required to file your sales and use tax return and report your activities to us.

Cannabis Retailer Excise Tax Return Beginning January 1, 2023

As a cannabis retailer, you are required to file your cannabis retailer excise tax return with us online to report the amount of cannabis excise tax due for your sales transactions that occur beginning January 1, 2023. If you have no taxable transactions to report, you are still required to file your cannabis retailer excise tax return and report your activities to us. The cannabis retailer excise tax return is due on the last day of the month following the reporting period.

The cannabis retailer excise tax permit is separate from other permits or accounts you may already have with us.

Once you register with us for a cannabis retailer excise tax account, you can file your return and make payments online through our online services.

Online Services

Whether you are new to operating a cannabis business or growing your existing business, you'll find our online services helpful in maintaining your account. By logging into your online account, you can:

  • File a Tax Return
  • Make a payment for any tax and fee program
  • Amend your previously filed tax return
  • View correspondence from us
  • Request relief from penalties or interest
  • File or manage an appeal
  • File a claim for refund
  • Add a location to your tax account(s)
  • Update your business information

Cash Payments

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

We may grant an exemption if paying in cash is necessary to avoid an undue hardship. Our staff will provide you with form CDTFA-245-NC, No Cash Exemption Request. 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. We will notify you in writing when your request has been approved or denied and we will provide you with additional information on how to proceed.

If you receive approval to pay in cash, you must call your local office at least 21 days in advance for an appointment to make your payment. Please see our Cash Payment Instructions for more information.

If you have an estimated monthly tax liability over $20,000 for your cannabis retailer excise tax account or $10,000 for your sales and use tax accounts, you may be required to pay any amounts due by electronic funds transfer (EFT). Receiving approval to pay in cash will exclude you from the EFT requirement. If you do not pay those accounts electronically as required, you will be subject to a 10 percent penalty of the taxes. If you believe you were assessed a penalty in error, you can request relief of the mandatory EFT penalty online.