Unfortunately this is something that all licensed dispensaries in the state must account for, whether it is bundled into the price or listed separately on the receipt, it still must be paid. Stone Age Long Beach has made the decision to be completely transparent with our medicinal and recreational customers about how much the state of California requires to be set aside for taxes.
The excise tax is a business tax specifically for cannabis products that are passed on to the customer. In California, the 15% state excise tax can either be included in the price of the item or added to the customer receipt.
The sales tax is the traditional tax we're all used to paying when we make purchases. The tax rate differs from state to state and city to city, usually it's between 4% and 17%. In states like California and Maryland, medical patients can avoid this tax with a valid medical marijuana identification card (MMID).
Sales tax is added to the state's general fund and is often used towards public safety, health programs, local transportation, and education.
Cumulative Cannabis Taxes
In California, there are sometimes two, three or even four separate taxes applied that are charged at the point of sale. These taxes include excise taxes, sales taxes, municipal or local business taxes, and any additional flat fees. Unlike other states that calculate taxes just on the simple subtotal or retail price of an item, California and Michigan marijuana taxes must be calculated with a certain order of operations to arrive at the correct total, as the taxable amount increases and compounds after each tax is calculated. We call this type of layered calculation "cumulative taxes" or "compounding taxes".
Local Government Cannabis Business Taxes
Some cities have enacted measures requiring that cannabis businesses located in their jurisdictions pay a cannabis business tax. Whenever an expense of the retailer is separately added to any taxable sale, the expense is also subject to sales tax. Learn more
You can read more about the legislation related to taxing marijuana sales in California, or contact us with any other questions.