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.
Mendes Weed, LLP offices are located in Walnut Creek and our skilled attorneys provide family, tax, business and trust law assistance for clients. For your convenience, we also have attorneys' offices in San Francisco and Sacramento by appointment only.
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