Retail | Arms-Length (AL) and Non Arms-Length (NAL) Vendors - California

In BLAZE, Vendors are listed as Arms-Length (AL) and Non-Arms-Length (NAL):

For California cannabis retailers:

In California, "arm's length" transactions (purchasing cannabis from an outside vendor, as opposed to producing in-house) are required to calculate and pay a standard excise tax to the vendor, and also add a standard markup defined by the state of California. (not to be confused with profit margin/profit markup, which is up to the shop owner to account for in pricing).

In BLAZE, Tax settings are located in Current Shop Settings, including options for State Excise and Arms-length. Link to Tax settings: (Insert Current shop settings: Tax options)

Definitions:

Arms Length (AL) - The vendor is not related to the retailer. Taxes are paid on purchases from vendor. Excise tax is calculated based on the cost of goods and California markup rate.

NOTE: Default Settings in Blaze for vendors: 

• Arms Length - Price includes excise tax
• Non-Arms Length - Price does not include excise tax

California Cannabis Markup Rate = 80%

California Cannabis Excise Tax Rate = 15%

Non-Arms Length (NAL) - Vendor is related to the retailer. Taxes are not paid on purchases from vendor. Excise Tax is calculated based on the retail price.

Examples:

Product Retail Price: $200

Product COGs: $100

Arms Length Excise Tax

• Cost of Goods x California Markup Rate = Average Markup
• COGs + Average Markup x 15% = Excise tax
• Example: $100 x 80% = $80
• Example: $100 + $80 x 15% = $27

Non-Arms Length Excise Tax

• Retail Price x 15%
• Example: $200 x 15% = $30

Example Price Includes Excise Tax

(In Parenthesis) = denoting price includes excise tax

Arms Length:

• Retail Price = $200
• Excise Tax = ($180 x 15%) = ($27)
• Final Cost w/ excise tax: $200

Non-Arms Length

• Price = $200
• Excise Tax = $200 x 15% = ($30)  
• Final Cost w/ excise tax: $200

Example Price does NOT include Excise Tax

Arms Length:

• Price = $200
• Excise Tax = ($180 x 15%) = $27
• Final Cost w/ excise tax: $227 

Non-Arms Length

• Price = $200
• Excise Tax = $200 x 15% = $30
• Final Cost w/ excise tax: $230

 NOTES:

Products can be mass edited to be set as "Includes excise tax in price" or "Does not include excise tax in price"

Vendors need to be set to be Arms Length or Not Arms Length for taxes to be calculated correctly. 

***Always consult a Professional / CPA / Attorney, before setting / changing your taxes ***

BLAZE® is a complex and sophisticated SaaS platform that provides a series of individual tax settings for each client customer, subject to the advice of their tax advisor professional that enables the client customer to comply with local, state, and national governmental tax schemes. YOU ARE SOLELY RESPONSIBLE FOR YOUR TAX SETTINGS. TAX RATES, NAMING CONVENTIONS AND THE ORDER OF OPERATION FOR THOSE RATES VARY BY JURISDICTION AND ARE SUBJECT TO CHANGE. YOU AND YOUR TAX PROFESSIONAL ARE RESPONSIBLE FOR REVIEWING, UPDATING, AND APPLYING THE SPECIFIC TAX SETTINGS, RATES AND THE ORDER OF OPERATION FOR YOUR SERVICE AREA(S). THE COLLECTION, RETENTION, AND PAYMENT OF APPLICABLE TAX LIABILITIES TO APPROPRIATE AUTHORITIES IS YOUR SOLE RESPONSIBILITY. BLAZE® MAKES NO WARRANTY NOR REPRESENTATION THE TAX SETTINGS, RATES AND THE ORDER OF OPERATION YOU SELECT ARE APPROPRIATE AND CORRECT. YOU EXPRESSLY AGREE BLAZE® SHALL NOT HAVE ANY LIABILITY FOR UNDER OR OVERCOLLECTION OF YOUR TAX LIABILITIES BASED UPON THE SETTINGS YOU SELECT.