Can I Sign California Banking Business Letter Template

Can i industry sign banking california business letter template

This video is intended to provide general information regarding issues relating to the sales and use tax laws and cannabis tax law administered by the California Department of tax and fee Administration which may affect cannabis businesses and will not serve as a basis for relief of liability under revenue and Taxation code sections six five nine six and five five zero four five. It is also not intended to provide advice or guidance related to other state and local statutes and regulations relating to the cannabis industry. Additionally for the federal government's guidance regarding marijuana enforcement refer to the US Department of Justice website at www.justice.gov. Hi, and welcome to Tax Help for the Cannabis Industry. My name is Robert and I'm a business taxes specialist with the California Department of Tax and Fee Administration or CDTFA. The CDTFA is responsible for administering many of the tax and fee programs in the state of California including the new cannabis tax program. In this video I'll be focusing on information that applies to cannabis cultivators and manufacturers. I'll be providing you with some basic information on the new cannabis cultivation tax and making sure you are aware of your tax obligations so that you can be in compliance. Please keep in mind that we are providing general information on the new cannabis taxes. You may have other tax requirements that are not covered by this video. Now let's go over the new cannabis tax law. As you may know voters approved the legalization of adult use of cannabis and established the cannabis tax law starting January 1, 2018. The cannabis tax law provides two new taxes on the sale of cannabis; a cannabis cultivation tax and a cannabis excise tax. Cannabis distributors are responsible for collecting both of these taxes and paying them to the CDTFA. Now let's go over a couple important definitions within the cannabis industry. A cannabis cultivator is a person who is engaged in the business of planting, growing, harvesting, drying, curing, grading, or trimming cannabis. This includes a cultivator who grows indoors or outdoors, nurseries, and also includes processors of cannabis plants. A cannabis manufacturer is a person who produces or prepares cannabis or cannabis products, packages or repackages cannabis or cannabis products, or labels or relables their containers. As a cannabis cultivator you are required to register for a seller's permit with the CDTFA. Registration is simple and can be done by going on to the CDTFA website. That's CDTFA.CA.GOV. Just click on the register button and follow the instructions to get your required seller's permit. When you make sales to other cannabis businesses you're required to obtain resale certificates from them to support that your sales were for resale. As part of your obligation for having a seller's permit you'll be required to file sales and use tax returns and you must report and pay use tax on taxable items that you purchased and used without paying tax. The cultivation tax is imposed on cannabis cultivators and is to be collected by cannabis distributors or in some cases to a manufacturer. If unprocessed cannabis is first transferred or sold to a manufacturer the manufacturer needs to collect the cultivation tax from the cultivator and pass it on to a distributor for payment to the CDTFA. You must keep accurate records of your commercial cannabis business activities and ensure that you obtain the appropriate business licenses. The Department of Food and Agriculture is responsible for issuing commercial cannabis cultivator licenses. In addition there may be other local government licensing requirements so you should make sure that you contact your city and county government offices for information on local licenses. The requirements for a cannabis manufacturer are very similar. If you are a manufacturer you are also required to register for a seller's permit, obtain resale certificates when you make sales for resale, file sales and use tax returns, and pay use tax on goods that you used and purchased without paying tax. As a cannabis manufacturer you're responsible for collecting the cultivation tax from cultivators if the unprocessed cannabis is transferred or sold to you first. You then pay the cultivation tax to a cannabis distributor when you transfer your cannabis products to the distributor. You are required to provide a receipt to the cultivator verifying the amount of tax collected. You must also keep accurate records of your commercial cannabis business activities and ensure that you obtain the appropriate business licenses. The Department of Public Health is responsible for issuing commercial cannabis manufacturer licenses, however, there may be other local government licensing requirements. Now let's talk more about the cannabis cultivation tax. The cultivation tax is imposed upon cultivators of cannabis and applies to all harvested cannabis that enters the commercial market. Cannabis is considered to have entered the commercial market once it has completed testing and complies with a quality assurance review as required by law. As I mentioned, cultivators are responsible for paying the cultivation tax to a distributor or in some cases to a manufacturer if the cannabis is transferred or sold to the manufacturer first. In these scenarios the manufacturer will forward the cultivation tax to a distributor. The distributors are responsible for paying the cultivation tax to the CDTFA. The amount of cultivation tax owed depends on the type of cannabis products being sold. The cultivation tax is based on weight and category. There are currently three categories; cannabis flowers, cannabis leaves, and fresh cannabis plant. To qualify for the fresh plant rate the cannabis plant must be weighed in an unprocessed state within two hours of harvesting. The current rates can be found on the special taxes and fees rate page under cannabis taxes on our website. These rates will be adjusted annually for inflation. Distributors are responsible for collecting the cultivation tax from manufacturers and cultivators. Tax is due when the cannabis or cannabis product enters the commercial market. The distributor will provide an invoice or receipt when they collect the cultivation tax and it must identify the licensees, the associated unique identifier, the amount of collected tax, and the weight and category of the cannabis. These invoices or receipts serve as verification that the cultivation tax was paid to a distributor and relieves you of your liability for the cultivation tax. The distributor is then liable for paying the tax to the CDTFA. On October 12th, 2019, Governor Newsom signed Senate Bill 34 allowing licensees who were authorized to make retail sales to provide free medicinal cannabis to qualified medicinal cannabis patients. The cultivation tax will not apply to medicinal cannabis that a cultivator designates for donation in the California Cannabis Track-and-Trace system. Additionally, licensees are no longer responsible for use tax for donations of cannabis to a retailer for subsequent donation to a medicinal cannabis patient. This bill becomes operative when the necessary changes are made to the California Cannabis Track- and-Trace system or March 1st, 2020, whichever comes first. We will provide additional information on this topic as we receive it so be sure to check out our website. Now that you know about your cannabis tax responsibilities let's discuss some sales and use tax topics. As I mentioned, you're required to have a seller's permit and file sales and use tax returns. Filing your sales and use tax return is different than filing a cannabis tax return or your state and federal income tax returns. You can file your return on the CDTFA website. Make sure you know your return due date and if you need to make pre-payments. If you do not file and pay on time you may be liable for penalties and interest. And always keep copies of the returns you have filed. If you need help give us a call at 1-800-400-7115. In general, sales tax applies to retail sales of tangible personal property in California. In addition, some service and labor costs are taxable if they are part of the sale of tangible personal property. Make sure you note if you are making a taxable sale. Sales tax does not apply to valid sales for resale unless you have a cannabis and micro-business license. As a cannabis cultivator or manufacturer all your sales of cannabis should be sales for resale. However, if you do make taxable sales you're responsible for paying sales tax on these transactions. See our video for cannabis retailers for more information. We provided you with information you need to know about the new cannabis taxes but there is some additional information that all businesses need to know. All businesses should know about resale certificates. A resale certificate allows you to buy resale inventory without paying sales tax reimbursement to the seller. You must provide a timely completed resale certificate to your supplier with your seller's permit information at the time you are making your purchases or prior to making your purchases. We have a form on our website, form CDTFA-230, which you can use as a general resale certificate. There are penalties for misusing resale certificates so you should not use a resale certificate for purchasing items for personal use. Additionally, when you sell products to retailers those retailers will issue a resale certificate for you to keep for your records. The resale certificate will contain the retailers seller's permit information and a statement that the items are purchased for resale. All businesses should also know about use tax. Use tax is a tax on items that you use or consume and purchased without paying tax. Use tax is the same rate as sales tax and generally applies to items you purchased from outside the state of California without the payment of California sales or use tax, or items you remove from your resale inventory for personal use. And finally all businesses should know about their record-keeping requirements. It is very important that you keep adequate books and records and you must make those records available upon request. These records may be in hardcopy or electronic format. Businesses in the cannabis industry must keep records of commercial cannabis activity for at least seven years. For more information on these topics we encourage you to view the additional videos we have available on the CDTFA website. It is important to understand the tax requirements for the cannabis industry. We have much more information available for you in our tax guide for cannabis businesses on the CDTFA website. Please be sure you take a look. If you have general questions for the CDTFA, you can always email us. Our customer service center is also available to help with general questions and provide tax assistance Monday to Friday, from 8:00 a.m. to 5:00 p.m., except state holidays. We also have videos available that address other aspects of the cannabis industry. I hope you found this information for cannabis cultivators and manufacturers helpful. Thanks for watching.