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.