If you live in California and you buy cannabis from a state-licensed and fully-compliant dispensary, you’re probably wondering what the deal is with all the taxes at the bottom of your receipt. There are a lot of terms to wade through and it can get really confusing so here’s our no-brainer breakdown of exactly how much you are paying, and where it goes. Think of it as math with benefits.
As of January 1, 2018, the state has a 15 percent excise tax on all retail purchases of cannabis and cannabis products, including medicinal use. On top of that you have to factor in sales taxes, which are collected on most products sold in California. Add to that the local cannabis tax, which is a rate that varies by city and county. Legally licensed cannabis businesses are required by law to collect it. Sometimes you won’t see a local cannabis tax because certain dispensaries will fold the amount into the cost of each product while others, like MedMen, will list it clearly on the receipt. Regardless, as of 2020, the state has increased taxes on both wholesale cannabis and cultivators, so everyone will be paying more. On the bright side, we’re all in it together.
Below, a breakdown of each line item and how it’s calculated:
This is 15% of your subtotal and goes to the state. So if you spend $100 at the store, you will be charged $15 in excise tax.
LOCAL CANNABIS TAX
This tax can be a bit confusing since it varies based on the city where the store is located. You will be charged anywhere from 5% to 10% and that percentage can apply to either your subtotal or your subtotal plus excise tax.
To put this in perspective let’s look at two examples:
Example 1: You spend $100 at MedMen DTLA so you will be charged $15 for the excise tax by the state. The city of Los Angeles charges a local cannabis tax of 10% of your subtotal plus excise tax, so you will see a local cannabis tax of $11.50 on your receipt. That’s because the tax rate of 10% is applied to $115 ($100 subtotal plus $15 excise tax).
Example 2: You spend $100 at MedMen Kearny Mesa. The city of San Diego applies a local tax only to your subtotal of $100 at a rate of 8%. You will see a local cannabis tax of $8 on your receipt.
See below to find out what you will be charged for local cannabis tax at each of our MedMen locations:
DTLA: 10% of your subtotal plus excise tax.
LAX Airport: 10% of your subtotal plus excise tax.
Venice Beach: 10% of your subtotal plus excise tax.
Abbot Kinney: 10% of your subtotal plus excise tax.
Beverly Hills: 10% of your subtotal plus excise tax.
Central San Jose: 10% of your subtotal plus excise tax.
Downtown Long Beach: 8% of your subtotal plus excise tax.
Long Beach: 8% of your subtotal plus excise tax.
Santa Ana: 8% of your subtotal plus excise tax.
Kearny Mesa: 8% of your subtotal cost.
Torrey Pines: 8% of your subtotal cost.
West Hollywood: 7.5% of your subtotal cost.
Monterey Bay: 5% of your subtotal cost.
This tax rate will vary from 7.75% to 10.25% depending on the city or county you’re shopping in. You calculate this by adding your subtotal, excise tax, and local cannabis tax then multiplying it by the sales tax percentage.
So if you spend $100 at MedMen DTLA, you will see the following tax breakdown:
Excise tax — $15
Local cannabis tax — $11.50