Retail shops will pay less for excise tax effective July 1, 2022

CORRECTION posted July 5, 2022

Effective July 1, 2022, the CDTFA is making a change to the cannabis excise tax.

Old rate

The old rate has been in existence from January 1, 2020, through June 30, 2022. The excise tax rate at the retail level is 15%. The markup rate is 80%. That means that the wholesaler, or distro, is charging 27% on the invoices for product sold to the retail shops.

New rate

The new rate goes into effect on July 1, 2022. It maintains the retail rate of 15%, but the markup rate is changed to 75%. That means that the wholesaler, or distro, is charging 26.25% on the invoices for product sold to the retail shops.

What it means in the supply chain

The rate of tax the distro operators will charge the retail shops effective July 1 will be 0.75% less. The end consumer may not see much change in the retail price of products, whether it be when the tax change goes into effect or a month or so later when the supply chain has sold through all the product at the old tax rate.

Thank you CDTFA! Every little bit helps!

BTW, under separate cover, I’ve discussed the other wonderful news that the cultivation tax ended effective 7/1/2022.

If you have any questions, please contact me by email at Bruce@CannabisCPA.Tax or phone 818-225-8022.