Getting Started for 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 at the November 8, 2016, statewide general election 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 page, under the heading Certain Sales of Medicinal Cannabis Exempt from Sales and Use Tax heading.

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

If you sell cannabis or cannabis products at retail to end users, you must register with us to get a seller’s permit, file sales and use tax returns, and make payments for tax due on your sales or purchases. Additionally, you must also register with us for a cannabis retail excise tax permit, file cannabis excise tax returns, and make payments for the excise tax due.

You can use our online registration system to register 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, log in 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.

If you do not have a username and password, select Register a New Business Activity on our Online Services homepage, select Selling items or goods in California and answer yes to selling Cannabis or cannabis products. 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 (TTY:711) and select 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.

In addition to registering with us for the required tax permit(s), you will also need to obtain the appropriate commercial cannabis activity 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 in California, you are not required to hold a seller's permit. However, to meet the commercial cannabis activity 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 send us an email with the following information:

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

If you provide sufficient information, we will mail a certification letter to the address provided. We will contact you if we need additional information.

Filing Returns

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 sales transactions to us.

Cannabis Retailer Excise Tax Return

Effective January 1, 2023, as a cannabis retailer or a microbusiness authorized to sell cannabis or cannabis products at retail, you are required to electronically file a Cannabis Retail Excise Tax Return, reporting all sales transactions of cannabis or cannabis products subject to the cannabis excise tax and pay the amount due. A return must be filed each reporting period even if there are no taxable transactions to report. Your return and payment are due on or before the last day of the month following the end of each reporting period. For example, if the reporting period is for the first quarter (January 1 through March 31), the return and tax payment are due on or before April 30. If the due date falls on a Saturday, Sunday, or state holiday, we consider returns received by the next business day to be timely.

Even if you already have a sales and use tax account and file regular sales and use tax returns, you must still register for a cannabis retailer excise tax permit and file regular cannabis excise returns.

If you file a late return or late payment, we may assess a late penalty, interest, or both. See the Penalty and Interest topic in this section.

You should file your return and pay your taxes through our online services. Log in using your username and password and select the account for which you want to file a return, then select the File a Return link for the filing period you want to file and follow the prompts.

If you do not have a username and password, select the Sign Up Now link under the Create a Username heading from the online services homepage.

Visit our Tutorials page or our Online Filing Instructions page for instructions on how to file your returns through our online services.

Payments

You must submit payments by the due date for us to consider them timely. If you make your payment on a weekend or holiday the effective date of the payment will be the date the payment is made or on the date you selected your payment to be warehoused.

You can submit payments through our online services. Log in using your username and password and select the account for which you wish to make a payment. Select the More link under the I Want To section, then select the Make a Payment link and follow the prompts.

If your average monthly tax payment is $20,000 or more for your cannabis retailer excise tax account or $10,000 or more for your sales and use tax accounts, we require you to pay by Electronic Funds Transfer (EFT). We will notify you in writing if you are required to pay your taxes by EFT.

For an EFT payment to be timely, you must initiate it on or before the filing due date and funds must settle into our bank account on or before the banking day following the due date. If you are required to make your payment by EFT, you must make the payment before 3:00 p.m. (Pacific time) for us to consider it timely. You will need to confirm with your financial institution when payments need to be initiated to be received timely. For more information regarding EFT payments, please see our EFT FAQs.

Cash Payments

If you are paying your sales and use tax or cannabis excise tax in cash, please contact one of our local 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 team members 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 if your request has been approved and let you know what to do next.

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.

Receiving approval to pay in cash will exclude you from the EFT requirement.

Penalty and Interest

The penalty for filing a late sales and use tax return and/or late payment is ten percent of the amount due for the period. In addition, the Cannabis Tax Law imposes a mandatory minimum fifty percent penalty for not paying the amount of cannabis excise tax due on or before the due date. For more information on the penalty for cannabis excise tax please see the 50 Percent Penalty for Late Payment of Cannabis Excise Tax section on the Retailers page.

Interest also applies to late payments for each month, or fraction of a month, that the payment is late.

You may log into your account to submit an online request for an extension to file a return or to request relief from penalty (including interest due to a disaster).

Refunds

If you believe you have paid more sales or use tax or cannabis excise tax than you owe, you may file a claim for refund using our online services. For more information on refunds of cannabis excise taxes please see the Refunds section on the Retailers page.

Recordkeeping

You must retain records for at least four years from the time the tax is due unless we give you written authorization to destroy them sooner. For additional information regarding record retention, please see our Keeping Records webpage, publication 76, Audits , and Regulations 1698, 3501, and 4901.For more information on record retention specific to cannabis businesses such as receipt requirements, please see our Recordkeeping section of the Retailers page

Updating Your Business Information

You can update your business information through our online services. Log in using your username and password and select the account you want to update. Select More under the I Want To section, then select the option you are requesting to update under Account Maintenance.

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. After 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