Washington | Configure taxes and DoH-approved products

This article details how Washington operators should configure taxes and DoH-approved products. Medical patients are exempt from paying state cannabis excise taxes when purchasing DoH-approved products and recreational customers are exempt from paying state sales tax on high-CBD, DoH-approved products.

Create tax categories

Tax categories in Dutchie POS determine which tax(es) apply to which products. To create tax categories:

  1. In the Dutchie Backoffice, go to Settings > Taxes & compliance.
  2. On the Taxes tab, select Add category.
    bo_settings_taxes and compliance_add tax category.png
  3. Enter a Category name. The exact category names you use can be whatever makes sense for your operations, but should cover the following product categories:
    • Cannabis
    • Non-cannabis
    • DoH approved
    • High CBD DoH approved
  4. Click Add.
  5. Repeat these steps for each additional category.

Map tax categories to product categories

Now that you've created your tax categories, assign your product categories to the correct tax categories.

  1. Go to Products > Configure.
  2. On the Categories tab, you should have product categories for the following. Again, the exact names you use may vary, but should cover the following:
    • Separate categories for DoH-approved and non-DoH-approved products, such as:
      • "Solid Edibles" and "Solid Edibles (DoH-approved)"
      • "Flower" and "Flower (DoH-approved)"
      • And so on for each type of product you carry where some products are DoH-approved and others are not.
    • A separate category for DoH-approved, high-CBD products

  3. Assign each product category to the corresponding Tax categories. Again, your exact category names may vary, but for example:

    Product category Tax category
    High CBD DoH Approved Edibles High CBD DoH Approved
    Solid Edibles (DoH) DoH Approved
    Solid Edibles Cannabis
    Flower (DoH) DoH Approved
    Flower Cannabis
    Batteries Non-Cannabis

    wa state_high cbd doh approved example 2.png
    wa state_high cbd doh approved example 1.png

To ensure correct tax application, each individual product must also be assigned to the correct product Category. 

wa state_DoH edible category assignment example.png

Note that products inherit the tax category from their assigned product category. Individual products also have a Tax categories dropdown that is only used to override the tax category for that specific product, which is not necessary if you've configured your tax categories and product categories as outlined above.

Mark products as DoH Approved and High CBD

On individual products, set the DoH Approved and/or High CBD dropdowns to Yes as applicable:

bo_products_catalog_doh approved and high cbd yes.png

Configure tax rates

In Settings > Taxes & compliance, you should have four separate tax rates. The exact names of your tax rates may vary. Select an existing tax rate to edit it or click Add rate to add a new one.

wa state tax rates and categories example.png

Sales tax for medical patients

Field Select/enter
Rate name Example: MED State/Local Sales Tax
Rate type Percentage
Rate amount Enter the total sales tax for your locality as a decimal. For example, enter 0.1055 for 10.55% 
Arms length No
Book to sales account No
Is excise tax No
Customer types Select Apply to selected types and then check the box for your Medical customer type.
Tax categories Select Apply to selected categories and then check the box for your Non-Cannabis tax category.
All other fields No

Sales tax for recreational customers

Field Select/enter
Rate name Example: REC State/Local Sales Tax
Rate type Percentage
Rate amount Enter the total sales tax for your locality as a decimal. For example, enter 0.1055 for 10.55% 
Arms length No
Book to sales account No
Is excise tax No
Customer types Select Apply to selected types and then check the box for your Recreational customer type.
Tax categories Select Apply to selected categories and then check the boxes for your Non-Cannabis, Cannabis, and DoH Approved tax categories.
All other fields No

Cannabis excise tax for medical patients

Field Select/enter
Rate name Example: MED Cannabis Excise Tax
Rate type Percentage
Rate amount Enter 0.37
Arms length No
Book to sales account No
Is excise tax

Yes

This places your cannabis taxes into a separate column from your regular (non-excise) sales tax in the Washington Tax by Product Type (DoH/DoR Tax Record) report.
Customer types Select Apply to selected types and then check the box for your Medical customer type.
Tax categories Select Apply to selected categories and then check the box for your Cannabis tax category.
All other fields No

Cannabis excise tax for recreational customers

Field Select/enter
Rate name Example: REC Cannabis Excise Tax
Rate type Percentage
Rate amount Enter 0.37
Arms length No
Book to sales account No
Is excise tax

Yes

This places your cannabis taxes into a separate column from your regular (non-excise) sales tax in the Washington Tax by Product Type (DoH/DoR Tax Record) report.
Customer types Select Apply to selected types and then check the box for your Recreational customer type.
Tax categories Select Apply to selected categories and then check the boxes for your Cannabis, DoH Approved, and High CBD DoH Approved tax categories.
All other fields No

Taxes in Washington should always be based on the net (post-discount) total. To ensure correct tax calculations, make sure each tax rate is set to Gross tax = No and that all discounts are configured with Ignore net taxes = No.

Reporting

Use the Washington Tax by Product Type (DoH/DoR Tax Record) report for tax reporting purposes.

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