Assembly Bill No. 195, published July 1, 2022, makes a number of important changes to streamline administration and transparency of California’s cannabis industry. One such amendment was made which discontinues cultivation tax beginning on January 1, 2023, and instead imposes the cannabis excise tax on purchasers at the rate of 15%. The purpose of this change is to simplify the state’s cannabis tax structure by consolidating the state’s cannabis taxes into a single excise tax imposed at the point of retail sale, instead of having the distributor collect tax from the retailer who in turn collects tax from the consumer. This allows for a more efficient and transparent way to tax the entire cannabis supply chain, from cultivation to sale.
Other areas of change include providing fines for certain problem areas such as the diversion of water for use in cultivation, and to provide grants to assist with local equity programs in jurisdictions that were negatively or disproportionately impacted by cannabis criminalization.
To read the full content of changes affecting the cannabis industry, click here.