CDTFA recently released a guide to Determining Tax on Whole Dry Cannabis plants sold to Manufacturers.
Here is what the California Department of Tax and Fee Administration had to say:
As a cultivator, you are responsible to pay the cultivation tax on all harvested cannabis entering the commercial market. Your distributor or manufacturer is required to collect the cultivation tax from you based on the category and weight of the cannabis.
The current cannabis cultivation tax categories are:
- Cannabis flowers at $9.25 per dry-weight ounce that are harvested, dried, cured, and includes trimmed and untrimmed flower.
- Cannabis leaves at $2.75 per dry-weight ounce, that are harvested, dried, cured, and includes all parts of the cannabis plant other than cannabis flowers.
- Fresh cannabis plant at $1.29 per ounce that is weighed within two hours of harvesting and includes flowers, leaves, or a combination of flowers, leaves, stems, and stalks cut above the roots, or otherwise removed from the cannabis plant, without further processing, such as any form of drying, curing, or trimming.
Selling or transferring whole dry cannabis plants to a manufacturer
There is no cultivation tax category for a whole dry cannabis plant. When you sell or transfer the cannabis as a whole dried cannabis plant to a manufacturer, you must use the cannabis flower category for the whole dried plant at a rate of $9.25 per dry-weight ounce. Or, you may do one of the following:
- Process the plant and separately weigh the dried cannabis flowers and leaves; the flowers at $9.25 per ounce, and the leaves at $2.75.
- Weigh the cannabis plant within two hours of harvesting in an unprocessed state and sell or transfer the cannabis to a manufacturer as fresh cannabis plant at $1.29 per ounce.
The email sent out by CDTFA was intended to give growers an overview of some of the requirements for cultivators of cannabis and does not address all requirements for the cannabis industry. For more, read the online Tax Guide for Cannabis Businesses, or contact CDTFA.