The California Department of Tax and Fee Administration (CDTFA) has reported cannabis tax revenue for the third quarter of 2024. As of Nov.18, total cannabis tax revenue from third-quarter returns is $250.5 million. This figure includes $148.4 million in cannabis excise tax and $102 million from sales tax collected from cannabis businesses. These figures do not include outstanding returns or returns that still are being processed.
Reported revenue for the second quarter of 2024 returns has been revised to $269 million. This includes $157.7 million attributed to cannabis excise tax and $111.3 million to sales tax. These revisions are a result of amended and late returns, as well as other tax return adjustments.
These figures reflect the states’ vendor compensation program. During the second quarter, eligible cannabis vendors retained more than $900,000 in vendor compensation.
Eligible retailers may retain 20 percent of the cannabis excise tax due on their retail sales of cannabis or cannabis products for a 12-month period. Cannabis retailers must be approved by the Department of Cannabis Control and CDTFA before claiming vendor compensation. The program runs through Dec. 31, 2025.
Since January 2018, total cannabis tax revenue is more than $6.5 billion, including $3.4 billion in cannabis excise tax and more than $2.6 billion in sales tax. This also includes $501 million in cultivation tax, which was eliminated on July 1, 2022, as a result of cannabis tax reform legislation.
Retail sales of cannabis and cannabis products are subject to state and local sales tax. Sales tax applies to sales of cannabis, cannabis products, the cannabis excise tax, and sales of 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.
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.
To learn more, visit the Tax Guide for Cannabis Businesses on the CDTFA website.
The California Department of Tax and Fee Administration administers California’s sales and use, fuel, tobacco, alcohol, cannabis taxes, and other taxes and fees that fund specific state programs. CDTFA-administered programs accounted for more than $96.2 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.
