California Tobacco Taxes

Tax on tobacco products in California rise again. The CA Dept of Tax and Fee Administration (CDTFA) has announced that effective July 1, 2021, through June 30, 2022, the tax rate for tobacco products other than cigarettes will be 63.49% of the wholesale cost (currently 56.93%). The CDTFA is required to annually determine and impose a tax rate on these tobacco products that is the equivalent to the combined rate of taxes on cigarettes.

CA cannabis tax fact

California’s Dept. of Tax and Fee Administration has issued a cannabis tax fact sheet for calculating the cannabis excise tax. To properly calculate the 15% tax, cannabis distributors must determine whether the sale or transfer to the cannabis retailer is an arm’s-length or non-arm’s-length transaction. An arm’s-length transaction is defined as a sale, entered in good faith, between a cannabis retailer and supplier at a fair market value sales price in the open market between willing, informed participants. For more information contact us with questions, or see the CA fact sheet here:

California Cannabis Track-and-Trace

New regulations from the California Dept. of Tax and Fee Administration (CDTFA) affect the operations of the CA cannabis industry. Rules adopted on April 26, 2021, entitled CA Cannabis Track-and-Trace, specify information that certain distributors or retailers of cannabis must enter into the Track-and-Trace system. Those who are required to record commercial cannabis activity in the system must list wholesale cost and retail selling price of the product. The CDTFA uses the information to determine (for cannabis excise tax purposes) the mark-up rate for cannabis and cannabis products sold in arm’s length transactions. The newly adopted rules are the same as previous emergency regulations.