The California Department of Tax and Fee Administration (CDTFA) recently published Q3 tax collection data from the state’s cannabis industry. Receipts from the two cannabis-specific state levies to which such businesses are subject – the 15% excise tax on retailers and the cultivation tax – increased compared to Q2’s collections, with receipts from the cultivation tax seeing the largest proportional increase in Q3. State sales taxes paid by cannabis businesses, on the other hand, declined from Q2 to Q3.
Overall, CDTFA reported that tax revenue generated by the cannabis industry totaled $93.1 million, based on Q3 returns received through the end of October. That figure is up by 16.1% compared to Q2’s combined returns of $80.2 million, an amount that was revised to account for amended or late returns, as well as other adjustments.
In Q3, CDTFA collected $12 million from the state cultivation tax. Licensed growers in California pay $9.25 per ounce ($148 per pound) on flower, $2.75 per ounce ($44 per pound) on trim, and $1.29 per ounce ($20.64 per pound) on fresh whole plants that are sold and enter the commercial market. Q3’s receipts from this levy are up by 255% compared to the $4.7 million collected from the state cultivation tax in the prior quarter, indicating that there was a significant uptick in the volume of product traded wholesale that was subject to taxation.
The CDTFA’s Office of Public Affairs recently provided an itemized breakdown of Q3’s cultivation tax receipts to Cannabis Benchmarks, which allowed us to determine the volumes of various product types that were traded and taxed in California’s regulated market.
In Q3 of this year:
On the retail side, the state’s 15% cannabis excise tax generated $52.4 million in revenue for California in Q3. That figure is up by 23.9% compared to Q2’s receipts of $42.3 million from this levy.
Despite the uptick in collections from California’s cannabis excise tax on retailers, state sales tax collections contracted from Q2 to Q3. In Q3, CDTFA reported that the state sales tax generated $28.7 million in revenue, down from $33.2 million collected from this levy in Q2, a decline of 13.6%.