Gov. Newsom’s Budget Trailer Bill Makes Significant Reforms to California Cannabis Laws, Including Elimination of the Cannabis Cultivation Tax

Gov. Newsom’s Budget Trailer Bill Makes Significant Reforms to California Cannabis Laws, Including Elimination of the Cannabis Cultivation Tax
CANNANNEW REPORT

Andrea Golan On June 30, Gov. Gavin Newsom signed budget trailer bill Assembly Bill 195 (AB-195) into law. AB-195 contains several significant reforms to California’s cannabis laws. The most noteworthy changes are outlined below, beginning with the much-anticipated changes to cannabis taxes. California Cannabis Cultivation Tax Eliminated The budget trailer bill eliminated the cannabis cultivation tax beginning July 1, 2022. The language provides that, effective July 1, 2022, no cultivation tax on harvested cannabis that enters the commercial market is required if any of the following apply: The harvested cannabis was first sold or transferred by a cultivator to a manufacturer on or after July 1, 2022 The harvested cannabis was first sold or transferred by a cultivator to a distributor on or after July 1, 2022 The harvested cannabis, or cannabis products containing that harvested cannabis, was first sold or transferred by a microbusiness to a distributor or manufacturer that arranges for laboratory testing One potential gray area is how the cultivation tax will be applied or apportioned to manufactured cannabis products that are created from harvest batches from both before and after the July 1 transition. Any cultivation tax collected on cannabis that enters the commercial market on or after July 1, 2022, must be returned to the cultivator that initially paid the cultivation tax or, if unable to be returned to the cultivator, must be paid to CDTFA as excess tax. California Cannabis Excise Tax Capped at 15% for Three Years AB-195 also caps the cannabis excise tax at 15% for three fiscal years. Beginning July 1, 2025, the CDTFA must adjust the excise tax rate every two years to a rate that would generate an amount of revenue equivalent to what would have been collected from the cultivation tax (such rate not to exceed 19%). The bill also…

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Source : Gov. Newsom’s Budget Trailer Bill Makes Significant Reforms to California Cannabis Laws, Including Elimination of the Cannabis Cultivation Tax

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