The Nov. 8 passage of Proposition 64 (The Control, Regulate and Tax Adult Use of Marijuana Act) exempts certain sales of medical marijuana from sales and use tax, and that exemption has taken effect, according to Jerome Horton, chair of the California Board of Equalization.
Sales of medical cannabis to those who have a medical marijuana identification card (MMIC) issued on a county-by-county basis by the California Department of Public Health (CDPH) and a valid government-issued identification card are now exempt from sales and use tax. Consumers can obtain the CDPH-issued cards at their county health department, at a cost that varies by county. A paper recommendation from a physician is not sufficient to qualify for the sales-tax exemption.
The county-issued MMIC will have the State of California seal and indicate whether the card holder is a “patient” or “caregiver.” The card will also contain the patient’s or primary caregiver’s photo, a nine-digit ID number, a CDPH website to verify the ID number, an expiration date and the county that issued the card. Cards are valid for the duration of the physician recommendation or up to one year, at which time the card must be renewed. Retailers should retain the purchaser’s nine-digit ID number and expiration date, along with the related sales invoice or other record of sale, to support the exempt sale.
Exempted products include medical cannabis, medical cannabis concentrate, edible medical cannabis products and topical cannabis. These terms are defined in Business and Professions Code section 19300.5.
Retailers should not collect sales-tax reimbursement on qualifying exempt sales of medical marijuana. They should claim a deduction on their sales- and use-tax returns for their qualifying exempt medical marijuana sales. Retailers may verify the validity of a nine-digit ID number on the CDPH website at calmmp.ca.gov. Cities, consumers and retailers are advised that the exemption applies to the local and state portions of the sales tax. Accordingly, local municipalities that have authorized the sale of medical marijuana will not receive any local taxes on the exempt sales of medical marijuana.
Legal sales of recreational marijuana will not be authorized until Jan. 1, 2018. Such sales will be subject to sales tax and a 15-percent excise tax. There will also be a cultivation tax on growers of $9.25 per ounce for flowers and $2.75 per ounce for leaves. Effective immediately, medical marijuana consumers can legally possess 28.5 grams and grow up to six marijuana plants for personal use. Medical-marijuana patients may still possess the quantities necessary to meet their medical needs, even in excess of the 28.5 gram limit.
“Other states, where the recreational consumption of marijuana is legal, have experienced significant non-compliance with the reporting of taxes,” Horton said. “I anticipate California losing millions to the black market, to the distribution of unregulated weed, and an increase in criminal activities associated with marijuana consumption— without legislation and resources to arrest criminal activity. I am working with legislative leaders to accomplish this objective.”
Source: BOE
