California Excise Tax Changes for Jan 1, 2023

Beginning January 1, 2023, the responsibility for collecting and paying the cannabis excise tax to the California Department of Tax and Fee Administration (CDTFA) shifts from Distributors to Retailers.

The BLAZE in-house compliance team is updating our Platform to allow you to remain compliant when these regulations are implemented. Additionally, we will continue to monitor for updates from the DCC as they finalize the proposed delivery regulations and will provide separate guidance once those regulations are finalized.

 

What’s changing:

  • Starting January 1, 2023, if you are a Retailer, you will now be responsible for collecting and paying the California Cannabis Excise Tax.
  • You may be eligible to obtain a tax credit for excise tax you paid to Distributors for products you sell on or after January 1, 2023. In order to obtain this credit you must provide evidence that the cannabis was not only purchased prior to January 1, 2023, but also provide evidence that the retail sale occurred after January 1, 2023, and that the excise tax was paid to a Distributor.

What is BLAZE doing:

  • We are adjusting our tax settings. This will include those settings regarding what was formerly known as arms-length and non arms-length transactions. 
  • Building a report that you can utilize to reconcile excise taxes paid on batches that were received before year-end but are sold after the new year. 
  • Entity tax type is being removed from the UI in both product and vendor profiles.

What you need to do:

  • Always consult your Professional / CPA / Attorney before setting/changing your tax rates. You are responsible for setting the tax rates that apply to your business. These rates are subject to change. Blaze does not adjust your rates.
  • Review the CDTFA website for updates to their interpretation of CA cannabis tax regulations
  • Obtain a Cannabis Retailer Excise tax account from the CDTFA
  • Ensure you are filling in the Batch Received Date on all new batches. 
  • The adjustments in the documentation below will be visible on January 1, 2023, in BLAZE.  
  • Adjust your receipt settings by January 1st to include an excise tax on the receipt.
  • Utilize the Report created by BLAZE after the new year to reconcile any batches you might otherwise overpay excise tax on.
  • Please review the following for further understanding of what is changing in BLAZE.