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Cannabis has been legalized for everyone who is over 21 in California, so that means there are going to be unescapable taxes whether or not you have a doctor’s recommendation. However, if you have a cannabis medical card and you are willing to jump through some hoops, then you can still claim major tax advantage i.e. up to 10% off all retail cannabis purchases.
Let’s say you are legally allowed to visit a drug store or dispensary in California and buy up to eight grams of cannabis, why would you want to have a cannabis medical card? Firstly, there is a limit on how much cannabis you can possess, which is generally higher for a cannabis medical card holder. Secondly, there are certain advantages when it comes to lowering the taxes, which this article will explore.
Everyone loves receiving a tax break. Although the terms and conditions may vary depending on where you live in California, most cannabis medical card holders can expect to pay relatively less tax. However, the tax matters in the state of California are a bit confusing at the moment as it has recently legalized the recreational use of cannabis.
Currently, cannabis medical card holders don’t need to pay the ‘sales and use’ tax on cannabis or marijuana bought from a medical cannabis retailer. This applies to the purchase of cannabis topical, edibles, and concentrate products as well regardless of any RX discount or discount prescription card. You will need to present your cannabis medical card in order to avoid this certain tax on marijuana. Otherwise, you will have to bear about 7-10% extra.
According to the terms of Proposition 64, buyers are required to pay excise tax along with local tax and sales and use tax. As a cannabis medical card holder, you pay at least 20% tax in most cases even if you have a discount prescription card or RX discount. However, if you are buying cannabis for recreational use, then you may even have to pay 40-50% tax.
Three Types of Taxes on Cannabis
Following are three types of taxes that you will need to pay on cannabis purchase as a California resident:
• Excise Tax: The excise tax comes out roughly to 15% of retail and it is tied to the wholesale price. It is generally the most consistent and the highest tax on cannabis and it is unavoidable – not even RX discount or discount preparation card bring excise taxes down.
• Local Tax: Some California counties and cities tax licensed retailers operating within their borders. Rules and rates range from no tax to as much as 10% (and even 15% in some cases). This tax is calculated from the collective total of excise tax and retail price.
• Sales and Use Tax: In California, ‘sales and use’ rates start at 7.25%. However, they grow quickly to 10% and even more as ‘district’ taxes are added by jurisdictions. Sales and use tax is the second-largest tax on marijuana and it is calculated from the collective total of local tax, excise tax, and retail price. The good news is, you don’t have to pay this if you have a cannabis medical card.
What Are the Savings with a Cannabis Medical Card?
As mentioned before, you can save up to 10% off all retail cannabis purchases if you are a cannabis medical card holder. However, there is also a product tax for cultivators of $9.25 per ounce of flowers and $2.75 per ounce of leaves. You may need to pay up to $150 for a doctor’s appointment and a $33 application cost may apply as well. The cost of cannabis is about $250 on average and medical cannabis are available at about $60. Overall, in California, you will need to use over 4 ounces of cannabis annually in order to justify the cost of cannabis medical card.
Why Doesn’t My Doctor’s Recommendation Automatically Exempt Me?
Your doctor’s recommendation doesn’t automatically exempt you because it is not registered with the state of California that collects sales and use taxes. A state-licensed physician can provide recommendation allowing you to buy medical cannabis from licensed dispensaries. However, you don’t need one to buy cannabis in California if you are 21 or older.
In conclusion, cannabis medical card in California allows you to purchase cannabis medically or recreationally and pay less taxes. However, you may need doctor’s recommendation to be registered at the public health department of your county in order to take advantage of it.
Since cannabis got legalized in California, it is possible for you to visit a dispensary and purchase recreational cannabis across the state as you are legally permitted to do so, providing that you are 21 or older. Not only can you visit a drug store for purchasing cannabis, but you can also have it delivered to you without feeling like that you are doing anything wrong. However, cannabis legalization means you will have to bear certain taxes. You can save yourself from some of the tax amounts if you have a state-authorized cannabis card.
Why Should I Get a Cannabis Card?
There are certain economic benefits of getting a cannabis card in California. Firstly, you can save yourself from having to pay the sales tax that usually applies to recreational cannabis users. The percentage of saving varies depending on the area because different locales have different tax rules. Generally, it could be 5-15%. Apart from this, there are more extreme tax projections and you can expect the taxes on cannabis to go as high as 45%. If that is the case, then you can save a lot of cash by getting a cannabis card.
Secondly, certain dispensaries and drug stores have sales and offers (e.g. RX discount, discount prescription card, etc.) that are exclusively made for medical cannabis patients. In California, you can save enough in tax over the course of the year to compensate the cost of the cannabis card.
Another advantage of having a cannabis card is that your limit for cannabis possession is significantly higher for recreational use. Generally, it is said to be higher than 28.5 grams.
How Much Will a Cannabis Card Save You?
As stated before, the percentage of savings by having a cannabis card varies from one state to another. Following is an overview of the taxes in some of the states which allow medical and recreational cannabis:
Alaska has no state sales tax, however, if you are a cannabis grower, then you will have to pay $50 an ounce when selling cannabis to dispensaries or retailers. Since marijuana costs around $300 an ounce, a 20% tax will apply.
Applying for a cannabis card costs about $25 and renewal of the card costs around $20. A doctor’s appointment cost ranges from $50 to $150. The cost of the cannabis card is about $75. In order to compensate all these costs with savings, you will need to purchase four ounces of cannabis a year.
For growers, the product tax is about $9.25 per ounce of flowers and $2.75 per ounce of leaves. A doctor’s appointment costs about $150 and the average cost of cannabis is around $250 an ounce. In order to justify the cannabis card cost, you will need to purchase over four ounces of cannabis a year.
You avoid sales tax if you are a cannabis card holder. However, you will still have to pay others taxes e.g. 15% excise tax. The average cost of cannabis is around $240 an ounce and you can expect to pay about 27% tax. In order to justify the cannabis card cost, you will need to purchase up to eight ounces of cannabis a year.
The average tax is about 20% however, you don’t have to pay sales tax if you are a medical patient. A doctor’s appointment costs around $200 and the cost of applying and renewal is about $50. The average cost of cannabis is around $340 an ounce. In order to justify the cannabis card cost, you will need to purchase up to five ounces of cannabis a year.
There is a 17% in tax for cannabis users. However, if you are a cannabis card holder, then you can save up to 8%.
However, the average cost of cannabis per ounce, doctor’s appointment, and the cost of application and renewal is very high so having a cannabis card in Oregon may not be worth it.
There is a 37% in tax for cannabis users which is the highest as compared to other states. If you are purchasing cannabis for recreational use, then you will have to pay an extra 6.5%. A doctor’s appointment costs about $200 and there is no cost of applying and renewing the cannabis card. In order to justify the cannabis card cost, you will need to purchase up to twelve ounces of cannabis a year.
Overall, there is no real ‘discount’ on medical cannabis. However, some drug stores and dispensaries provide exclusive offers, for example a discount prescription card or RX discount, to medical patients. Having a cannabis card is beneficial as it allows you to pay less tax. The percentage of savings depends on where you live.