MEDIA RESOURCE: Medical Marijuana/Legalization of Marijuana
What is the California State Board of Equalization (BOE) policy regarding sales of medical marijuana?
The sale of medical marijuana has always been considered taxable. However, prior to October 2005, the BOE did not issue seller's permits to sellers of property that could be considered illegal. A policy change was issued in October 2005 and the Board directed BOE staff to issue seller's permits regardless of the fact that the property being sold may be illegal, or because the applicant for the permit did not indicate what products it sold.
How many dispensaries are registered with the BOE?
All sellers of medical marijuana are required to hold a seller's permit. However, the BOE does not have actual numbers for sellers of medical marijuana because dispensaries are not required to identify their business type when registering for a selling permit and can report total taxable sales without categorizing the specific product sold.
How much sales tax revenue is generated from medical marijuana dispensaries in California?
The BOE estimates the total sales of medical marijuana range between $700 million and $1.3 billion, resulting in $58 to $105 million in sales tax annually. This estimate is from December of 2009 and is based on 2007 BOE receipts from businesses that were identified as dispensaries in BOE records, extrapolated to the possible number of dispensaries operating in the state at an average sales tax rate of 8.38%.
Are there more current figures regarding revenue from marijuana dispensaries?
In 2013, the BOE reviewed more recent data and determined that this range of revenue continues to be the most accurate set of estimates given the information available.
Where does the sales tax levied on marijuana sellers go?
The sales tax for medical marijuana revenue goes to the state's General Fund as well as cities, counties, and other local jurisdictions where the sale was made.
Are these tax revenues tied to any specific programs in the state budget?
No. The tax from the sale of medical marijuana is treated the same as the tax received from the sale of all tangible personal property.
Is the sale of medical marijuana considered more lawful if the seller registers for a seller's permit?
No. Registering for a seller's permit will bring a seller into compliance with the Sales and Use Tax Law, but holding a seller's permit does not make sales more lawful under state and federal law.
BOE Special Notices
- Important Information for Sellers of Medical Marijuana – January 2010
- Information on Sales Tax and Registration for Medical Marijuana Sellers – June 2007
- Important Information for Sellers of Medical Marijuana – February 2007
- Senate Bill 626 (Calderon): Cannabis Study – 2011-2012 Session
- Senate Bill 847 (Correa): Medical Marijuana Indicia Program – 2011-2012 Session
- Proposition 19 – The Regulate, Control and Tax Cannabis Act of 2010
- Assembly Bill 390 (Ammiano) Marijuana Fee – 2009-2010 Session
- Senate Bill 1098 (Migden) Medical Marijuana – 2007-2008 Session
- Senate Bill 529 (Migden) Tax amnesty: medical cannabis dispensaries – 2007-2008 Session
- Testimony on Fiscal and Legal Implications of Legalization and Regulation of Marijuana – October 28, 2009
- Business Taxes Committee Meeting Minutes – October 25, 2005
- Formal Issue Paper (05-009) – October 14, 2005