California: 2023 excise tax change
California dispensaries are now directly responsible for paying the cannabis excise tax, which had previously been paid to vendors for remittance to the California Department of Tax and Fee Administration (CDTFA). You can find details about this change on the CDTFA website.
Any inventory you brought in prior to 2023, for which the excise tax has already been paid to the vendor, qualifies for a tax credit reimbursement from the state.
Use this guide to manage the change and learn how to calculate your reimbursements.
Separate your pre-2023 inventory
To determine your reimbursement amounts, you'll need to be able to distinguish pre-2023 inventory from the inventory you receive from January 1, 2023, onward.
We recommend immediately renaming your current Product Types and Products to indicate that the associated inventory was brought in prior to 2023, and creating new Product Types for inventory brought in during 2023 and going forward.
When you receive new inventory, create new Products and assign them to your new Product Types to maintain the separation of pre-2023 inventory.
Update your tax settings
The excise tax should now be applied at the point of sale. You can adjust your tax settings using the steps in the following articles:
Greenbits does not provide tax advice. Merchants using Greenbits products should determine their tax responsibilities by utilizing their own tax advisors. Greenbits provides tools that calculate taxes in many optional configurations. Greenbits does not and cannot ensure that tax calculations in Greenbits products are correctly configured. Configuring taxes is exclusively the responsibility of the merchant.
Receive inventory without entering Excise Tax or Markup rates
When receiving inventory in 2023, leave the Excise Tax Rate and Markup Rate manifest fields blank. New inventory is no longer subject to the distributor excise tax, and the excise tax should now be collected at the time of sale.
Use the Profit Report to determine your reimbursement amount for each tax period
With your Product Types, Products, and Inventory separated by year, you can use the Profit Report to calculate the excise tax previously paid on pre-2023 inventory that you sell in 2023 when you submit your taxes.
- Run and download the Profit Report for the date range taxes are being submitted for.
- Enable filters for the report.
- Filter Product Category (column F) to only include Marijuana.
- Filter Product Type (column G) to only include your pre-2023 Product Types.
- Find the sum of Cost (column T).
- Calculate your reimbursement amount for the tax period:
- Multiply the sum of Cost by 1.75 (the 2022 markup rate).
- Multiply that amount by 0.15 (the excise tax rate). This is the amount to claim for your reimbursement.