Application of tax to cannabis product samples


The CDTFA released guidance regarding how the cannabis excise tax and the sales and use tax apply to samples of cannabis or cannabis products sold to retailers. (Cannabis Tax Fact: How the Cannabis Excise Tax and Sales and Use Tax Apply to Cannabis Samples (em-400), California Department of Tax and Fee Administration (June 13, 2018))

The cannabis excise tax applies when cannabis or cannabis products are sold by a cannabis retailer to their retail customer. A seller is not required to collect excise tax on sales of samples or promotional items to a cannabis retailer when the retailer is the consumer of the samples and does not resell them. However, the seller will owe sales tax on the sale of samples or promotional items sold to cannabis retailers when the retailer is the consumer and does not resell them, unless the sample or promotional items are sold for less than 50% of cost.

To read the full Tax Fact on cannabis samples, go to: www.cdtfa.ca.gov/industry/cannabis.htm#Distributors