Overview of taxes in Dutchie Ecommerce

You can set your taxes in Dutchie Ecommerce to determine how taxes are applied to menu items for medical and recreational sales. You will need to determine the appropriate tax calculation and discount application to add a new tax to Dutchie E-Commerce. If you’re not sure of the correct tax that needs to be applied we advise consulting with a local tax expert in your area.

Tax Calculation

Cumulative Taxes

A cumulative tax is the subtotal of all items plus the sum total of all applicable taxes combined. A common example would be:

Cumulative calculates every tax line amount based on the subtotal.

• Example:
  • Cart subtotal: $100
  • Excise (Cannabis): 15% * $100 = $15.00
  • Local Sales Tax (Sales): 7.75% * $100 = $7.75
  • TOTAL = $122.75

Compounding Taxes

A compounding tax is the subtotal of purchased items and tax (traditionally an excise tax) plus the state tax rate. Compounding taxes allows taxes to calculate in a specific stacking order. A common example would be:

Compounding calculates each tax line based on the subtotal of all tax liens prior to it.

• Example:
  • Cart subtotal: $100
  • Excise (Cannabis): 15% * $100 = $15.00
  • Local Sales Tax (Sales): 7.75% * $115 (new subtotal) = $8.91
  • TOTAL = $123.91

Combination of Cumulative & Compounding

You can also implement a mix of cumulative and compounding taxes to fit their specific needs.

Example:

• Cart subtotal: $10
• Excise (Cannabis): 10% * 10 = $11
• Local Sales Tax (Sales): 5% + City Sales Tax: 5% so 10% * $11 = $12.10
• TOTAL = $12.10

Note: You can adjust the order in which the compound taxes are applied. In this example, the cannabis tax is tacked on to the subtotal, then the city and state taxes cumulatively on top of that. This is done by ordering the two taxes you want to be cumulative to the same order number.

Discount Application

Certain states require that discounts apply to transactions in specific ways that might affect the taxation of transactions differently than most. The current defined terms of our discount application options are:

• Both This option applies discount and taxes on the original price. This is the default.
• Taxes First This option should be the go-to for retailers when tax is included in the Point Of Sale. This option taxes on the original price and then applies the discount.
• Discounts First This option is primarily used in California or other areas that require gross tax. This option applies the discount to the original price and then applies taxes.

Note: When taxes are included in the POS and Discount Application is set to “Taxes First,” then the tax breakdown won't appear at checkout. It will just say “Subtotal” with the tax included.