California Department of Tax and Fee Administration Adds 'Fresh' Category for Cannabis Cultivation Tax

Sacramento – The California Department of Tax and Fee Administration (CDTFA) has added a new category and rate for the cannabis cultivation tax, which took effect on January 1, 2018.

Proposition 64, which was approved by voters on November 8, 2016, established a cultivation tax based on the dry-weight ounce of cannabis flowers and leaves. The CDTFA has added a new cannabis cultivation tax category for fresh cannabis plants at a rate of $1.29 per ounce. The cultivation tax rates are:

• $9.25 per dry-weight ounce of cannabis flowers,
• $2.75 per dry-weight ounce of cannabis leaves, and
• $1.29 per ounce of fresh cannabis plant.

All fresh cannabis plants must be weighed within two hours of harvesting.

Cultivators are responsible for paying the cultivation tax on all harvested cannabis entering the commercial market to the distributor (or to the manufacturer if that is where the first transfer or sale of unprocessed cannabis takes place). Manufacturers who collect the cultivation tax are required to pay the tax to the distributor. The distributor reports and pays the cultivation tax to the CDTFA. Cultivation rates are also posted on our website.

For more information, read our Tax Guide for Cannabis Businesses on the CDTFA website. If you have additional questions, you may call our Customer Service Center at 1-800-400-7115 (TTY:711) Monday through Friday, 8:00 a.m. to 5:00 p.m. (Pacific time), except state holidays.