BUSINESS , MARIJUANA LAW New Cannabis Business Laws & Taxes You Need To Know

On January, 1st 2018, the curtains will pull back to include a whole new world for California; recreational use of marijuana. We’ve touched upon Measure M and for the entrepreneurs salivating at a chance to strike gold in Californias Cannabis Industry, there are some regulations that you will need to be wary of, fortunately, it’s not all dreary. First, I will outline how to begin the initial set up for your business and the taxes you should be aware of as you enter the Cannabis Industry. At the conclusion of this article, I have a few tips to save you money on the back-end.

The Adult Use of Marijuana Act is a great step forward, but with over 60 Pages of Rhetoric, anyone who wants to pursue a business in cannabis might have overlooked a few detrimental clauses and Taxes which can quickly put you out of the game.

Let’s start off with some good news.

Starting in 2018, The Board of Equalization will be requiring all cannabis businesses to legally file their business, which makes life a lot simpler for public distribution. Here is what you’ll need to do to start/legitimize your Cannabis Business:

6 different Licenses you can obtain in the industry File for a Business License: There areyou can obtain in the industry Cultivation Manufacturers Testing Facility Retailer Distributor Microbusiness



Proposed Regulations solely for Marijuana Cultivation. In the document, there are price ranges for application fees, which max out at $4,260 for a Medium Indoor location. More licensing fees and regulations will be set later within the year. Follow Cannabis.gov for up-to-date info on hearings. You must be over 21 and have continuous California Residency since January, 1st 2015. At the time of this article, there weresolely for Marijuana Cultivation. In the document, there are price ranges for application fees, which max out at $4,260 for a Medium Indoor location. More licensing fees and regulations will be set later within the year. Follow Cannabis.gov for up-to-date info on hearings.

File for a Sellers Permit: They don’t even care about the specifics, they just want your tax money. Once you do this you are now a legal entity and can feel comfortable dishing out those flashy business cards of yours. Remember, now that you’re a legal business, Sales Tax is due every quarter.

heavy fines and possible imprisonment for not having the right records. Record all inventory and sales for tax purposes. Now that this is legal, you NEED to keep a record of everything! Make sure you’re selling in your licensed establishment only and have all sales in the books. Expect at the very least to have an attentive eye on all your paperwork. There arefor not having the right records.

All the necessary forms for Cannabis can be found on the BOE Website.

Now, here’s the drawback. The taxes implemented for running a cannabis business can be hefty. Here’s a list of the major taxes to keep in mind when starting your Cannabis Business:

15% Excise tax on the gross total. This will be enforced for every retail sale. Make sure to mark up your items so you aren’t hit with a huge blow every quarter. Excise Tax: No matter whether it’s recreational or medical, there is aon the gross total. This will be enforced for every retail sale. Make sure to mark up your items so you aren’t hit with a huge blow every quarter.

Cultivation Tax: For growers, here are the big hits you’ll have when selling your product to dispensaries. Adjust your prices accordingly. $9.25 per dry-weight ounce of Marijuana Flowers $2.75 per dry-weight ounce of Marijuana Leaves

Sales Tax: Yes, you still have to pay sales tax too. On top of the 15% Excise, the normal state Sales Tax of 8.5% will be enforced as well. Either add the tax on during the sale, or you can have the Sales Tax included already in the price. BE AWARE though, that you must post a sign stating the Sales Tax is included in the price. If you don’t, then you’ll have to pay the tax on the Total Sale.

Use Tax: More things to consider as a legal business. If you buy a product from a company for Resale, make sure you have a resale receipt. Without this, you are subject to a Use Tax on the assumption that you have consumed the product.

I’m sure if you’re like me, that last part was tough to swallow. And for the consumers, get ready for a possible increase in cost for your nugs. But let’s finish on a good note. From the research, there is a silver lining that can save you some money come tax season. You just need to make sure the guy or gal doing your books is premium grade.

There’s a clause in the law that will negate you from having to pay sales and use tax. As long as the customer buying the product has their medical card and ID, any sale of cannabis, concentrate, products or topicals for medical use is Non-Taxable. Something to definitely keep in mind.

When running a business, there is a multitude of costs that most people are unaware of. It makes life a bit difficult and can put a damper on how awesome it is to pursue a dream. Taxes are some of the most expensive and detrimental costs that can blindside you, don’t let that happen to you. We are only halfway through this year and there are still a lot of hearings, regulations and potential taxes that haven’t been set yet. If you’re ready to make that jump into a cannabis business, make sure you’ve studied up so you are prepared for the changes to come and prosperity to follow! Stay Tuned as we will have more Cannabis Industry News updates as we continue to examine the fine print.