Cannabis Tax Disputes / CDTFA
In the evolving landscape of cannabis law in California, one area that has become increasingly complex is the taxation of cannabis-related activities. The California Department of Tax and Fee Administration (CDTFA) has been proactive in enforcing tax laws related to cannabis, often leading to significant tax bills for individuals and businesses involved in the cannabis industry. This can include landlords of agricultural properties where illegal cannabis cultivation has occurred, or operators of cannabis non-profit collectives that did not pay tax on medical marijuana sales.Understanding Cannabis Tax Laws in California
In California, the cultivation, distribution, and sale of cannabis are subject to various taxes. These include a cultivation tax on all harvested cannabis that enters the commercial market, and an excise tax on purchasers of cannabis and cannabis products. Additionally, retail sales of cannabis and cannabis products are subject to state and local sales tax.
The CDTFA is responsible for the administration of these taxes. They have the authority to issue tax bills, often referred to as "Statements of Accounts," to individuals and businesses they believe owe cannabis taxes. These statements can include information on possible collection actions, which can be daunting for those unfamiliar with the process.How the CDTFA Calculates Cannabis Taxes
The CDTFA calculates cannabis taxes based on a variety of factors, including the type and quantity of cannabis involved, the nature of the cannabis activity (e.g., cultivation, distribution, retail), and the applicable tax rates. In some cases, the CDTFA may estimate the amount of tax owed based on available information if accurate records have not been kept. This can result in substantial tax bills, sometimes amounting to hundreds of thousands of dollars.Challenging a CDTFA Cannabis Tax Bill
If you receive a "Notice of Determination" from the CDTFA stating that you owe cannabis taxes, it's crucial to act quickly. You have the right to challenge the CDTFA's determination by filing a petition for redetermination within 30 days after being served with the notice.
Filing a petition for redetermination involves presenting a case to the CDTFA that the tax assessment is incorrect. This can be a complex process, requiring a thorough understanding of cannabis tax laws and regulations, as well as strong advocacy skills.How Cannabis Law Group Can Help
At Cannabis Law Group, our cannabis tax attorneys have extensive experience representing clients in cannabis tax disputes with the CDTFA. Our lead attorney, Damian Nassiri, is well-versed in the intricacies of California's cannabis tax laws and has a proven track record of effectively advocating for clients in their appeals before the CDTFA.
We understand the stress and uncertainty that can come with receiving a substantial tax bill from the CDTFA. We're here to provide the guidance and support you need. We'll work closely with you to understand the specifics of your situation, develop a strong case for your petition for redetermination, and represent you throughout the appeal process.
We consult with our clients on their rights and potential strategies for their cases. In some instances, we have been successful in getting tax bills reduced or even eliminated entirely. However, it's important to note that each case is unique, and past successes do not guarantee future results.
Whether you're a landlord facing a tax bill due to illegal cannabis cultivation on your property, or a cannabis collective operator dealing with tax issues related to medical marijuana sales, we're here to help. We're committed to providing top-notch legal support, ensuring that your rights are upheld and that you're treated fairly by the CDTFA.
If you're dealing with a cannabis tax issue with the CDTFA, don't hesitate to reach out to us. Contact the cannabis tax attorneys at Cannabis Law Group, Attorney Damian Nassiri, at 949-375-4734, to discuss your case and learn more about how we can assist you.More information on how the cannabis tax is calculate by the CDTFA:
The California Department of Tax and Fee Administration (CDTFA) administers the taxes associated with cannabis in California, as mandated by the state's cannabis laws and regulations. The process for issuing cannabis taxes involves several steps and is based on a number of factors.
- Cultivation Tax: Under the Cannabis Tax Law (Revenue and Taxation Code section 34012), a cultivation tax is imposed upon cannabis that enters the commercial market. The CDTFA determines the tax rate annually. The tax applies to all harvested cannabis that enters the commercial market and is based on the weight and category of the cannabis. The categories include cannabis flowers, leaves, and fresh cannabis plant. The cultivator is responsible for paying the cultivation tax to the distributor or manufacturer, depending on the situation.
- Excise Tax: The Cannabis Tax Law also imposes a 15% excise tax on purchasers of cannabis and cannabis products. The excise tax is calculated based on the average market price of the cannabis or cannabis products sold in a retail sale. The distributor is responsible for collecting the excise tax from the cannabis retailer.
- Sales Tax: In addition to the cultivation and excise taxes, retail sales of cannabis and cannabis products are subject to state and local sales tax. The sales tax is calculated based on the total sales price of the cannabis or cannabis products. The retailer is responsible for collecting the sales tax from the purchaser at the time of sale.
The CDTFA uses these laws and regulations to calculate the amount of tax owed by individuals and businesses involved in the cannabis industry. In some cases, the CDTFA may estimate the amount of tax owed if accurate records have not been kept. This can result in substantial tax bills.
If the CDTFA determines that a person or business owes cannabis taxes, it will issue a "Notice of Determination" stating the amount of tax owed. The person or business has the right to challenge the CDTFA's determination by filing a petition for redetermination within 30 days after being served with the notice.
It's important to note that the laws and regulations governing cannabis taxes in California are complex and subject to change. Therefore, it's crucial to consult with a knowledgeable attorney or tax professional if you're involved in the cannabis industry and have questions about your tax obligations.