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Los Angeles Cannabis Dispensaries: MUST-KNOW Business Tax Updates for 2018

2/28/2018

 
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Nearly three months into the legalization of cannabis in California, and we’re still covering state updates to taxes related to running a cannabis business. This is a big update for dispensary owners located in Los Angeles – and impacts how you pay your city taxes. Today’s post: Los Angeles’ updates to the existing L050 Medical Marijuana business tax classification.

As of January, 2018, the previous business tax classification was replaced by the following rates.
Classification
Activities Taxed
Tax Rate
L701 - Medical Cannabis Sales
All sales related to medical use cannabis by retail or microbusiness operations
$50 per $1,000 in gross receipts
L702 - Adult-Use Cannabis Sales
​All sales related to adult or recreational use by retail or microbusiness operations
$100 per $1,000 in gross receipts
L703 - Cannabis Transportation
​Transportation or delivery of cannabis products
$10 per $1,000 in gross receipts
L704 - Cannabis Testing
​Activities related to the testing of cannabis products
$10 per $1,000 in gross receipts
L706 - Cannabis Cultivation
Wholesale sales related to the cultivation of cannabis
$20 per $1,000 in gross receipts
L708 - Cannabis Misc
Sales related to all other cannabis activities such as manufacturing and packaging
​$20 per $1,000 in gross receipts
For more on cannabis taxes for retailers and cannabis cultivators, check out our blog series on cannabis taxes.

When do you need to pay these taxes? 

These tax payments are due on a quarterly basis starting in January 2018. To give businesses time to adjust, any activities related to the first quarter of 2018 (January, February, March) and the 2nd quarter of 2018 (April, May, June) will be both due on July 1, 2018. After that, quarters will be due after the last day of that quarter. For example the 3rd quarter of 2018 will be due October 1, 2018. In July 2019, the schedule will change to reporting on a monthly basis. 

How do you report these taxes? 

Look for tax certificates to come in the mail from the Office of Finances within 3 to 4 weeks after registering as a business. These business tax registrations certificates (BTRC’s) are for the purpose of business tax compliance, and you should not consider them as your permit to begin operating as a cannabis business. For more information about these business tax classifications please refer to the Los Angeles Municipal Code sections 21.51 and 21.52 or get in touch with the experts at California Cannabis CPA. 
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