Earlier this week, the California Department of Tax and Fee Administration reported revenue numbers for cannabis sales for the first quarter of 2020. As of May 15, California’s cannabis excise tax generated $68.3 million in revenue reported on the first quarter 2020 returns due by April 30, and the cultivation tax generated $16.4 million.
According to a statement from the state, due to the COVID-19 pandemic, first quarter 2020 is a unique reporting period since approximately half of the taxpayers normally reporting have yet to file a return with the CDTFA. Revisions to first quarter 2020 data are expected in mid-August after the second quarter return filing due date of July 31. Additional information on the relief offered due to the COVID-19 pandemic can be found at cdtfa.ca.gov/services/covid19.htm.
Sales tax from cannabis businesses totaled $50.2 million in revenue for the same period. Sales tax applies to sales of cannabis, cannabis products, and other tangible personal property. Certain retail sales of medicinal cannabis are exempt from sales and use taxes when the purchaser provides at the time of purchase a valid Medical Marijuana Identification Card issued by the California Department of Public Health and a valid government-issued identification card.
Total tax revenue reported by the cannabis industry is $134.9 million for 1st Quarter returns due by April 30, 2020. This does not include tax revenue collected by each jurisdiction.
Previously reported revenue for fourth quarter 2019 returns was revised to $177.3 million, which included $85.9 million in cannabis excise tax, $24.1 million in cultivation tax, and $67.3 million in sales tax. Revisions to quarterly data are the result of amended and late returns, and other tax return adjustments.
Since January 2018, total program revenue to date is $1.17 billion, which includes $569.8 million in cannabis excise tax, $140.2 million in cultivation tax, and $456.9 million in sales tax.
In November 2016, California voters approved Proposition 64, the Control, Regulate, and Tax Adult Use of Marijuana Act. Beginning on January 1, 2018, two new cannabis taxes went into effect: a cultivation tax on all harvested cannabis that enters the commercial market and a 15 percent cannabis excise tax upon purchasers of cannabis and cannabis products. In addition, retail sales of cannabis and cannabis products are subject to state and local sales tax. To learn more, visit the Tax Guide for Cannabis Businesses on the CDTFA website.
The California Department of Tax and Fee Administration administers California’s sales and use, fuel, tobacco, alcohol, and cannabis taxes, as well as a variety of other taxes and fees that fund specific state programs. CDTFA-administered programs account for over $70 billion annually which in turn supports local essential services such as transportation, public safety and health, libraries, schools, social services, and natural resource management programs through the distribution of tax dollars going directly to local communities.