Those looking to sell marijuana-based products in California now have another hurdle to clear in the form of a required tax license to sell cannabis.

The additional licensing requirement is not, however, the largest issue for potential dispensaries in the Santa Clarita Valley. Both a city and county ordinance ban the sale of medical marijuana within city limits and the unincorporated county land adjacent to Santa Clarita.

Those outside this restriction who are planning to sell cannabis or cannabis products beginning January 1, 2018, must register with the California Department of Tax and Fee Administration (CDTFA) for a seller’s permit.

Distributors of cannabis and cannabis products must register with the CDTFA for a “cannabis tax permit” – which is separate from a seller’s permit – in order to report and pay the two new cannabis taxes to the CDTFA starting in January. Registration for the cannabis tax permit will be available on Nov. 20, 2017.

The list of businesses required to obtain a license includes cannabis cultivators, processors, manufacturers, retailers and any distributors who make sales.

Before receiving the tax license, businesses must obtain and maintain a seller’s permit with the Bureau of Cannabis Control, the Department of Food and Agriculture, or the Department of Public Health.

Those who already have a seller’s permit (including a permit previously issued by the Board of Equalization) do not need to register for a new one.

The Santa Clarita City Council extended it’s pot ban in January, while officials research local regulations. But the council is looking to “evolve” their position on the issue, said Santa Clarita Mayor Cameron Smyth in a previous KHTS interview.

The council is now looking into potentially allowing some medical marijuana businesses to operate within city limits.

“Things like delivery services are already being done, residents are already receiving medical marijuana in this city,” said Smyth. “Why not take advantage of the tax revenue?”

The mayor emphasized that he did not support retail recreational or medical marijuana storefronts in Santa Clarita.

States that have legalized marijuana are in a legal ‘grey area’ because they are defiant of federal law. Marijuana is currently a Schedule I drug according to the Drug Enforcement Agency (DEA), which means it is illegal and has no medical benefit.

Beginning January 1, 2018, two new cannabis taxes will be in effect:

A 15 percent excise tax is imposed on purchasers of cannabis and cannabis products. Retailers are required to collect the excise tax from the purchaser and pay it to the cannabis distributor.

A tax on the cultivation of cannabis that enters the commercial market is imposed on cultivators, who are required to pay the cultivation tax to either a distributor or manufacturer depending upon the nature of the transaction. The cultivation tax rates are $9.25 per dry weight ounce of cannabis flowers, and $2.75 per dry-weight ounce of cannabis leaves.

Individuals who operate a cannabis business that does not make taxable sales will need to obtain a certification letter from the CDTFA indicating that their business does not require a seller’s permit. The certification letter will be available through the CDTFA online registration system beginning Nov. 20. Individuals may also sign up for CDTFA Cannabis ListServ notifications for the latest information on how to comply with the new laws related to cannabis businesses.

More information about the permits necessary to collect these new taxes is available in this special notice and in the Tax Guide for Cannabis Businesses.

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