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

 

These settings were effective through December 31, 2022.

 

INTRODUCTION

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

For California cannabis retailers, "Arm's-Length" transactions (purchasing cannabis from an outside vendor, as opposed to producing in-house or acquiring from an affiliate) require the retailer to calculate and then pay, a standard excise tax to the vendor. The retailer will also have to pay a standard markup on the Cost of Goods (COGs), which is defined by the state of California (this is different than profit margin and profit markup, which are the responsibility of the shop owner to account for in pricing).

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To setup/modify your Arms-Length and Non-Arms-Length tax settings in BLAZE, navigate to

  • Global Settings > Current Shop Settings > Tax Options

taxoptions2

DEFINITIONS

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

NOTE: Default Settings in Blaze for Arms Length vendors set for the Price to include the excise tax.

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

NOTE: Default Settings in Blaze for Non-Arms Length vendors set for the price do not include the excise tax.

California Cannabis Markup Rate = 80%

California Cannabis Excise Tax Rate = 15%

Example InfoProduct 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

COGS_Tax

NOTE: The AL Excise tax will be calculated from the Unit Cost that is associated with the product from the batch level.

Disclaimer

***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.