The California Department of Tax and Fee Administration (CDTFA) has reported cannabis revenue for the fourth quarter of 2022. As of Feb. 16, 2023, total cannabis tax revenue from fourth-quarter returns is $221.6 million. This includes California’s cannabis excise tax, which generated $108 million; and $113.6 million in sales tax revenue from cannabis businesses. The total reported cannabis tax revenues do not include outstanding returns. They also do not include locally imposed taxes collected by cities and counties.
Previously reported revenue for the third quarter of 2022 returns was revised to $251.3 million, including $135.4 million in cannabis excise tax, and $115.9 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 cannabis tax revenue to date is $4.6 billion, including $2.3 billion in cannabis excise tax, $1.8 billion in sales tax. That also includes $501.3 million in cultivation tax, which was eliminated July 1, 2022 as a result of cannabis tax reform legislation.
Additional cannabis tax revenue data is available on the CDTFA Open Data Portal.
In November 2016, California voters approved Proposition 64, the Control, Regulate, and Tax Adult Use of Marijuana Act. On Jan. 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. The cultivation tax no longer applies to cannabis or cannabis products starting July 1, 2022. Since Jan. 1, 2023, distributors (including microbusinesses that distribute cannabis) are no longer responsible for collecting and paying the cannabis excise tax to CDTFA for cannabis or cannabis products sold or transferred to cannabis retailers. Cannabis retailers must register for a cannabis retailer excise tax permit and are now responsible for reporting and paying the cannabis excise tax to CDTFA for sales transactions of cannabis and cannabis products. Since the retailers’ responsibility to report and pay the cannabis excise tax to CDTFA started Jan. 1, 2023, their first cannabis retailer excise tax return is due by May 1, 2023.
Retail sales of cannabis and cannabis products remain subject to state and local sales tax. Sales tax applies to sales of cannabis, cannabis products, and other merchandise such as pipes, rolling papers, and shirts. Certain retail sales of medicinal cannabis are exempt from sales and use taxes when the purchaser holds a valid Medical Marijuana Identification Card issued by the California Department of Public Health. To learn more, visit the Tax Guide for Cannabis Businesses on the CDTFA website.
The California Department of Tax and Fee Administration (CDTFA) administers California’s sales and use, fuel, tobacco, alcohol, cannabis taxes, and various other taxes and fees that fund specific state programs. CDTFA-administered programs accounted for more than $91 billion last fiscal year, supporting essential local 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.
