At SafePort we want you to understand taxes a bit better. Who are they coming from and how they’re being used. By breaking things down you may better appreciate where your money is going. We attempt to tell you what they are, who’s collecting, and what is happening with the money so you, as a consumer, can get a better idea of where all the cannabis tax goes and how it benefits you and your community.
Like most industries the cannabis industry is reliant on many different kinds of businesses in order for products to reach customers. Each business in the supply chain is taxed differently, these include cultivators, manufacturers/packagers, and distributors. The following information is focused on retailers.
There are three taxes applied at checkout one that is simply city sales tax which is applied to all purchases in Port Hueneme wether it be cannabis or non cannabis items. The other two taxes are imposed by the state of California as part of the agreement to legalize cannabis. The taxes break down like so:
A 8.75% tax all customers must pay unless they have a valid Medical Marijuana Identification Card (MMID)*. This tax is imposed by the state of California to fund Public Safety Services. The rate of 8.75% is consistent with all retail locations in Port Hueneme. This tax was increased after passing Measure U in November of 2018 which made Port Hueneme’s sales taxes the highest in the region. Generally, 6% of this tax goes to the state of California and the rest is allocated locally which helps support the general fund so they can implement programs that benefit Port Hueneme citizens. This sales tax generates approximately 1.8 million dollars per year towards the city’s general fund.
*Medical Marijuana cards must be validated by the state of California Department of Health through the Medical Marijuana Identification Card Program (MMICP). Stay tuned for our next blog for information and how to apply for a Marijuana Identification Card .
A 5% tax, each city can implement their own Cannabis tax ranging from 1- 15% and here in beautiful Port Hueneme the rate is only 5%, a bargain considering they could have charged up to 15%. This is why you will notice dispensary tax rates differing between cities and the answer to, “Why is the dispensary I go to in “BLANK” cheaper?”. This goes directly to the city they use this money to fund city safety, infrastructure projects, and charitable undertakings. In 2019 Port Hueneme tax dollars went to some of the following charities; West County Homeless Shelter, DRAGG Program (Drag Racing Against Gangs and Graffiti), REACH (Recreation, Education, Arts, Culture in Hueneme), Hueneme Lifeguard Association, Police Explorer Program, Reel Guppies, Cops for Tots, Hueneme Chamber of Commerce, Boys and Girls Club of Greater Oxnard and Port Hueneme, Hueneme Historical Museum, Senior Holiday Luncheon, and Youth Involvement Fair.
Is 15% added to the average market price. Meaning, regardless of any discount this tax will always reflect the pre discounted price and the price is established by what is considered fair based on the average market price. This tax is charged to growers who must pay a specific dollar amount dependent on the weight of cannabis produced. Again this money goes straight to the state of California. When the product is sold to dispensaries this tax is also calculated into the price and, of course, passed on to the consumers at checkout. By law this tax must be paid by retailers to distributors and then charged to customers. As you can decipher from the chain of custody, retailers must pay the excise taxes before they charge the consumers. According to the California Department of Tax and Fee Administration which regulates and collects this tax; “As a retailer, you are required to pay the cannabis excise tax to your distributor and collect the cannabis excise tax from your customers. No cannabis and/or cannabis products may be sold unless the cannabis excise tax is paid by the purchasers (consumers) at the time of sale.” This tax is used to support a number of welfare programs throughout the state of California by going towards California’s general fund.
Although there are a lot of taxes and regulations in the cannabis industry the intention is not just to stuff the pockets of the state and local governments. In actuality these taxes benefit California and Port Hueneme residents through funding public safety programs, upkeep of parks and recreation centers, as well as putting more money into public schools. The positive thing to remember is when you pay these taxes you are supporting programs to help the local community and the state of California continue to fund safety, environmental, and educational programs. Also, in addition to all these customer tax contributions, SafePort happily joined other Cannabis retailers as part of the Community Contributions Program here in Port Hueneme where businesses give back 1% of gross sales on top of all other taxes paid to support the community. We hope this blog helped explain things a little bit better and you feel good knowing your tax dollars are being put to good use!
California Department of Tax and Fee Administration — Cannabis Tax Guide
Port Hueneme: CANNABIS/MARIJUANA ORDINANCE & INFORMATION