Beginning January 1, 2019, every person who is engaged in commercial cannabis cultivation, excluding nurseries, in the unincorporated area of the County shall pay a cannabis business tax set at a rate of 2.5% of Gross Receipts (fixed until July 2021). The 2.5% Gross Receipt tax is due to the County on all transactions entered into by such a business whose situs address is located in the unincorporated area, regardless of where the sale transaction occurs. The IRS defines Gross Receipts as, “the total amounts the organization received from all sources during its accounting period, without subtracting any costs or expenses.”
Cannabis businesses will need to register with this office each year. The form provides us with important information relating to the cannabis business and is used to enter your business into our system and produce a certificate of tax compliance for you to display. The form also provides us with information needed to determine the minimum cannabis business tax due each fiscal year.
Annual Registration Due Date
Cannabis businesses need to submit a Cannabis Business Tax Registration Form upon receiving a state license and annually thereafter by July 31. Additionally, cannabis businesses need to submit a revised Cannabis Business Tax Registration Form if any changes to the business occur during the year.
Quarterly Tax Returns
A Cannabis Business Tax Quarterly Return form and METRC data must be submittedby the due date each quarter, even if no sales occur. If sales do occur, then payment in full must also be submitted. The County cannot accept a tax filing without payment in full. Penalties and interest will accrue until full payment is received. The Cannabis Business Tax Quarterly Return should be filled in completely and signed by the legal officer of the company. An additional 30 days to report and submit forms and payment is allowed so that all receipts for the quarter can be accounted for.
Quarterly Reporting Periods and Due Dates
July - September
October - December
January - March
April - June
*if the due date falls on a weekend, returns will be due the following business day.
What to Submit Each Quarter
1.Cannabis Business Tax Quarterly Return form
2. METRC data (e.g. transfer report or transportation manifest)
3. Payment in full for any taxes due (with penalties and interest, if applicable)
What if No Sales Occur?
Cannabis businesses are required to submit a Cannabis Business Tax Quarterly Return with METRC data by the due date each quarter, even if no sales occur.
Penalties and Interest for Delinquent Taxes
In accordance with Ordinance 2456, when taxes are not paid on or before the due date penalties and interest are applied and will accrue until full payment is received.
Why Report and Pay Cannabis Taxes?
Reporting and paying taxes is an integral part of commercial business activities and contributes to the community in which it operates. All cannabis taxes are subject to significant penalties and interest resulting from non-compliance. Failure to comply with regulations may also result in fines and disciplinary actions. For more information on local requirements, refer to Ordinance 2456. For more information on state requirements, refer to the Medicinal and Adult-Use Cannabis Regulation and Safety Act.
Annual Minimum Cannabis Business Tax
In addition to the tax base rate of 2.5% of Gross Receipts, Ordinance 2456 also established that persons engaging in permitted commercial cannabis cultivation shall not pay less than the following amounts. Minimum tax is based on number of grow cycles each fiscal year and the square footage of each grow cycle, which are reported on the Cannabis Business Tax Registration Form.
1. A minimum tax of $1,250.00 per growing cycle, each fiscal year, for persons cultivating less than or equal to 2,500 square feet of cannabis canopy.
2.A minimum tax of $2,500.00 per growing cycle, each fiscal year, for persons cultivating more than 2,500 square feet but less than or equal to 5,000 square feet of cannabis canopy.
3. A minimum tax of $5,000.00 per growing cycle, each fiscal year, for persons cultivating more than 5,000 square feet of cannabis canopy.
Annual Minimum Tax True-up Process
Minimum tax is based on number of grow cycles each fiscal year and the square footage of each grow cycle, which are reported on the Cannabis Business Tax Registration Form. Minimum tax due will not change based on sales. However, all quarterly payments received will count towards the minimum due for that fiscal year. At the end of the fiscal year, the Tax Collector's office will perform an annual true-up to the set minimumsbased on cycles and square footage that are authorized in the Ordinance. The true-up process will look at overall square footage per cycle and combine multiple cycles to allow for more fairness in how the law is applied.
For example, if a business has 4 cycles of 300 square feet per cycle, that minimum will be 1 cycle of 1200 square feet, or a set minimum of $1,250. It is important for us to know the number of grow cycles and the square footage per grow cycle so we can properly true-up the minimums during this process. This information is reported to us on your Cannabis Business Tax Registration Form. If the number of cycles or the square footage of each cycle differs from what was initially reported, you will need to complete a revised Cannabis Business Tax Registration Form that denotes what has occurred over the previous year.
Annual Minimum Tax Due Date
If it is determined through the true-up process that the annual minimum tax has not been met through quarterly payments, then the Tax Collector's office will send an invoice to the cannabis business for the remaining balance due. The balance due must be paid by the due date on the invoice to avoid additional fees.