cannabis Archives - Mendes Weed, LLP

[Video ] Understanding California’s Emergency Cannabis Regulation Package

On November 16, 2017, California’s three state licensing cannabis authorities publicly noticed proposed emergency regulations for commercial medicinal and adult-use cannabis.

Today, we will cover some of the highlights for manufacturers in this industry.

The California Department of Public Health (CDPH) will issue temporary business licenses that allow a business to engage in commercial cannabis activity. The licenses are valid for 120 days and may be extended for an additional 90 if the business submit a complete annual license application.

Applications for annual licenses will be accepted online beginning in December, 2017. Those applying for an annual license must disclose owners and financial interest holders, typical business information, a description of their procedure for waste disposal, transportation and security, as well as other requirements. Businesses that are currently operating under the September 1, 2016, Compassionate Use Act will receive priority review. The annual fees are $1,000 per license for the application and $2,000 to $75,000 for licensing depending on the gross annual revenue of the licensed premises. Applicants must have a valid local permit.

Licenses that are issued will have one category and one type. A-licenses will be issued for adult-use, and M licenses will be used for medical use. In addition, a Type 7 license will be issued for those extracting volatile solvents. A Type 6 license will be issued for those extracting non-volatile solvents. A Type N license will be issued for infusion products. A Type P license will be issued for packaging and labeling only.

Products cannot be infused with nicotine or alcohol or have caffeine added. Edible products are limited to 10 mg of THC per serving and 100 mg of THC per package.

Cannabis products should not have packaging that is attractive to children or is transparent. Packaging should be re-sealable and child-resistant.

One important point to note is that a transition period will be in effect from January 1 to July 1, 2018, for state licensing authorities. During this period, products can move between A and M licensees. There will be some transition allowed for packaging, but packaging must still be child resistant and comply with certain other requirements such as the THC limits and product restrictions outlined in the emergency regulations.

Additional laws and changes are likely to occur. And this video only covers some of the highlights of the emergency regulations but is by no means a complete summary.

In addition, please remember that cannabis is still a Schedule I drug under the Federal Controlled Substances Act and wholly illegal, even for medical use. Anyone interested in this industry should make sure they are fully informed of the Federal laws related to cannabis.

Disclaimer: The tips and materials provided on this page are for informational purposes only, offered as public service. No information on this website should be considered legal advice or used as a substitute for legal advice. For legal advice, you should contact an attorney directly.

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[Video] CA Tax & Licensing Overview for Cannabis Businesses

California State Tax Law (FTB, EDD, and SBE)

If you are interested in the California tax and licensing overview for cannabis businesses, you should consider the following information:

Licensing of Cannabis

The Bureau of Cannabis Control (BCC) is the lead agency in developing regulations for medical and adult-use cannabis in California. BCC is responsible for licensing retailers, distributors, testing labs and microbusinesses. BCC is currently accepting licensing applications. New users will be required to register an account on the Bureau’s online self-service portal prior to applying for a license.

The Manufactured Cannabis Safety Branch, a division of the California Department of Public Health (CDPH), is responsible for regulating the manufacturers of cannabis-infused edibles for both medical and nonmedical use. CDPH is currently accepting licensing applications. Interested parties can submit their temporary license application by email or mail to the Manufactured Cannabis Safety Branch with a copy of their local authorization.

Manufactured Cannabis Licensing System, a division of the California Department of Food and Agriculture (CDFA), is responsible for licensing cultivators of medicinal and adult-use (recreational) cannabis and implementing a track-and-trace system to record the movement of cannabis through the distribution chain. CDFA is currently accepting temporary licensing applications.

Those interested in preparing for the application process are also encouraged to read through each licensing authority’s proposed emergency regulations.

Temporary License Application Information

Business and Professions Code section 26050.1 allows the Bureau of Cannabis Control to issue temporary licenses. A temporary license is a conditional license that allows a business to engage in commercial cannabis activity for a period of 120 days. The Bureau can only issue a temporary license if the applicant has a valid license, permit, or other authorization issued by the local jurisdiction.

The Bureau intends to start issuing temporary licenses on January 1, 2018. NO TEMPORARY LICENSE WILL BE EFFECTIVE PRIOR TO JANUARY 1, 2018.

Tax Guide for Cannabis Businesses

If you sell cannabis or cannabis products, you must register with the California Department of Tax and Fee Administration (CDTFA) for a seller’s permit. Cannabis cultivators, processors, manufacturers, retailers, microbusinesses, and distributors making sales are required to obtain and maintain a seller’s permit as a prerequisite for applying for a license with the California Department of Food and Agriculture, the California Department of Consumer Affairs, or the California Department of Public Health.

Distributors of cannabis and cannabis products must also register with the CDTFA for a cannabis tax permit to report and pay the two new cannabis taxes to the CDTFA. The cannabis tax permit is in addition to your seller’s permit.

Beginning January 1, 2018, two new cannabis taxes will be in effect:

A 15 percent excise tax is imposed upon purchasers of cannabis and cannabis products. Retailers are required to collect the excise tax from the purchaser and pay it to the cannabis distributor.
A tax on the cultivation of cannabis that enters the commercial market is imposed upon cultivators. Cultivators are required to pay the cultivation tax to either a distributor or a manufacturer depending upon the nature of the transaction. The cultivation tax rates are:
$9.25 per dry-weight ounce of cannabis flowers, and
$2.75 per dry-weight ounce of cannabis leaves.
Additional categories and rates may be specified at a later date.

All cannabis businesses making sales are required to:

Register online with the CDTFA for a seller’s permit.
File sales and use tax returns electronically and pay any sales and use tax to the CDTFA. Even if none of your sales are subject to sales tax, you are still required to file a return and report your activities on your return to the CDTFA.

In addition, if you are a cannabis distributor, the following requirements apply to you:

Prior to January 1, 2018, register online with the CDTFA for a cannabis tax permit. (Registration will be available in November 2017.)
Beginning January 1, 2018, collect the excise tax from retailers you supply.
Beginning January 1, 2018, collect the cultivation tax from cultivators or manufacturers that send or transfer cannabis and cannabis products to you.
File both your cannabis tax and sales and use tax returns electronically and pay any tax amounts due to the CDTFA.

If you have any questions, please feel free to contact Mendes Weed, LLP to schedule an appointment.

Tax Guide for Cannabis Businesses – Tips from a California Tax Attorney

This video only covers California law, please remember that cannabis is still a Schedule I drug under the Federal Controlled Substances Act and wholly illegal, even for medical use. Anyone interested in this industry should make sure they are fully informed of the Federal laws related to cannabis. Contact Mendes Weed, LLP for more information.

Disclaimer: The tips and materials provided on this page are for informational purposes only, offered as public service. No information on this website should be considered legal advice or used as a substitute for legal advice. For legal advice, you should contact an attorney directly.

[Video] Tax and Medical Cannabis

Tax Lawyer

Tax Information on Proposition 64

On November 8, 2016, California voters passed Proposition 64. What does this mean for California dispensaries?

First of all, it is important to remember that it is still illegal to possess or sell marijuana under U.S. Federal law, even for medical use. The federal government regulates drugs through the Controlled Substances Act which does not recognize the difference between medical and recreational use of cannabis. Cannabis is classified as a Schedule 1 drug, which means the federal government views cannabis as a highly addictive drug with no medical value. This video will discuss the laws under the State of California only, especially as they pertain to the Board of Equalization.

With that said, California has passed Prop 64, which decriminalized personal use of marijuana effective January 1, 2018. Business owners and entrepreneurs interested in the marijuana industry should be aware of the regulations effective in 2018 which are highlighted below.

Information Regarding Prop 64 for Business Owners and Entrepreneurs

Only adults 21 years of age and older will be allowed to purchase marijuana products. Adults can be in possession of 28.5 grams of marijuana and 8 grams of concentrated cannabis.
The Bureau of Marijuana Control will be responsible for issuing licenses to dispensaries.
Marijuana dispensaries need to obtain a state license to sell cannabis for personal use. Local governments may also require a dispensary to obtain an appropriate local license.
Large scale dispensaries cannot obtain licenses for 5 years.
Any business that sells marijuana products cannot operate within 600 feet of a youth center, day care facility, or school.
Marijuana products sold for personal use must be packaged in child-resistant containers as regulated by the state.
Businesses that sell marijuana for personal use will not be allowed to sell alcohol or tobacco in the same store.
Marketing will be regulated, especially if a certain type of marketing has the potential to cross state lines.
With respect to taxes, currently marijuana will be taxed a 15% excise tax and an additional tax will be imposed on retail purchases. Local governments may also impost taxes. There are certain exceptions for medical use.

Contact An Attorney Experienced in Tax Laws if You Have Questions

If you have questions about any of this, especially if you are considering venturing into this business, it is important to meet with an attorney who can assist you in navigating the laws in this area, which are still in process and may continue to change and evolve.

Mendes Weed, LLP

We can help you understand how tax laws may pertain to you and your business. Contact us today.

Marijuana Taxation Without Legalization

Tax Lawyer

If you turn on the news, television or radio, it is difficult to avoid discussions of marijuana and its legalization. Recently, Bethenny Frankel, known for appearing on the “Real Housewives of New York,” and for creating the “Skinnygirl cocktails,” has announced her intention to brand and market “Skinnygirl Marijuana,” which she boasts will not give you the munchies.[1]

In the world of professional football, consumption of marijuana is still strictly forbidden pursuant to NFL policy. However, the NFL has recently been forced to consider whether the medicinal properties of marijuana warrant a change.[2]

This year, the U.S. almost had its first “Weed Bowl” between Washington and Colorado teams, where marijuana has been fully legalized, but the Broncos had an unexpected early exit from the NFL Playoffs. In Seattle, a local grower of marijuana has “honored” Seattle Seahawks player, Marshawn Lynch, by naming a strain of marijuana after the Seattle running back—aptly titled “Beast Mode.”[3]

Outside of the NFL and pop culture, the public perception of marijuana consumption is changing. Recently, Congress passed a spending bill[4] that would essentially defund federal efforts to combat the use of medical marijuana in states where it has been legalized. The bill is still pending, but it is one example of the overall changing attitude towards marijuana…

Click here for the full text. This article was written for Contra Costa Lawyer, a publication of the Contra Costa Bar Association.