California's legal cannabis market opens for business in January 2018: here's what to expect.
- All cannabis businesses in California must register with the California Department of Taxes and Fees Administration for a seller's permit and regularly file sales and use tax returns.
- If you do not sell tangible personal property in California, you are not required to hold a seller’s permit.
- Cultivators, distributors, and manufacturers are all governed by different agencies in California – and must register accordingly.
Speak to one of our experts for help getting registered with the right agency in California.
As you probably already know, as of January 1, 2018, cannabis businesses in the state of California will be required to have a seller’s permit. Here’s a quick guide to tell you what you need to be compliant as of January 1, 2018, depending on your role in the cannabis industry.
If you are a…
CDTFA permit(s) required...
State Commercial Cannabis License Required...
|Collective/Cooperative||Seller’s permit||See below.|
|Cultivator||Seller's permit||Cultivator license issued by the California Department of Food and Agriculture|
|Distributor||Seller's permit, cannabis tax permit||Distributor license issued by the Bureau of Cannabis Control|
|Manufacturer||Seller's permit||Manufacturer license issued by the California Department of Public Health|
|Microbusiness||Seller's permit, cannabis tax permit||Microbusiness license issued by the Bureau of Cannabis Control|
|Nursery||Seller's permit||Cultivator license issued by the California Department of Food and Agriculture|
|Processor||Seller’s permit||Cultivator license issued by the California Department of Food and Agriculture|
|Retailer or dispensary||Seller’s permit||Retail license issued by the Bureau of Cannabis Control|
|Testing facility||MAY need a seller's permit||Testing laboratory license issued by the Bureau of Cannabis Control|
For anyone who owns a business in California that sells cannabis and/or cannabis products, you must register with the California Department of Taxes and Fees Administration for a seller's permit and regularly file sales and use tax returns. Distributors of cannabis products must also register with CDTFA for a cannabis tax permit and regularly file cannabis tax returns.
For collectives and cooperatives, the permit you need to get depends on your specific roles played in the cannabis industry. For example, if you are a retailer or cultivator, you will need the licenses and to pay the cannabis taxes required of those roles. If your collective also acts as a distributor, you will need to obtain a permit and pay taxes to the CDTFA. GreenGrowth CPAs can help you determine the specific requirements of your collective.
How do you get a cannabis seller's license? Applications have been open as of November 20, 2017. Here’s what you need to do to go about getting your sellers permit.
Who Is Exempt From Registering for a Seller’s Permit?
There’s one exemption for businesses who generally don’t need a seller’s permit. If you do not sell tangible personal property in California, you are not required to hold a seller’s permit. That said, if you wish to meet the commercial cannabis licensing requirements, you must get a certification letter from the CDTFA to verify that you don’t need the sellers permit. You can ask for this letter from the CDTFA by emailing CDTFA.Cannabis.Reg@cdtfa.ca.gov with this information:
- Owner name
- Business address
- Contact name
- Contact phone number
- Description of your business activities
Applying for a Seller’s Permit
You can apply for a California cannabis seller’s permit online. Start by gathering information to make the process go as smoothly as possible. Here’s a list of the information the application will ask for:
- Your social security number (corporate officers excluded).
- Your date of birth.
- Your driver license number, state ID number, or other ID (e.g., passport, military ID).
- Incorporation date, corporate number, and FEIN number (corporations and LLCs only).
- The name and location of a bank where you have an account.
- Names and addresses of suppliers.
- Name of the person maintaining your account.
- Names and addresses of personal references.
- Anticipated average monthly sales and the amount of those sales which are taxable.
- Your email address.
- Additional information may be required.
There is no fee to apply for a seller’s permit, however, the CDTFA may ask for a security deposit to cover any unpaid taxes in the event your business closes at a later date.
Create an Online Account
Click here to start the registration process with CDTFA. You can use the same link to register for a cannabis tax permit, which you will also need to do before January 1. Once you have successfully registered, you will be given a User ID for your business for future access for your sales and tax returns.
Note that your seller’s permit is NOT the same as a business license. You should still contact your city and/or county business license department to start that process.
How Many Seller’s Permits Do I Need?
If you’re a canna-business with multiple locations, you need to register each location of your business. In some instances, CDTFA will consolidate your permits for multiple business outlets. Regardless, you should provide information for all your locations when you apply for your seller’s permit so the CDTFA can give you the correct type of permit.