The rate changed beginning January 1, 2020, and it may have been years since you visited the concept of “wholesale cost”. But the CDTFA endeavors to help both taxpayers and consummers understand.
By definition the “wholesale cost” is the amount paid by the cannabis retailer (retailer) for cannabis or cannabis products, including transportation charges and after any discounts are provided.
Cannabis distributors are required to collect the cannabis excise tax from retailers they supply with cannabis and then remit the 15% excise tax on the sale price. Except they don’t know what the retailer, in the end, will really charge the customer. So the tax agency came up with the average wholesale cost to make calculations easier.
Example
Below are the CDTFA’s examples on how to calculate the wholesale cost and then how to calculate the tax they must remit on those sales.
| Cost of the Cannabis Product | $1,500.00 |
| Less 25% Discount | $375.00 |
| Subtotal | $1,125.00 |
| Transportation Charge | $100.00 |
| Retailer’s Wholesale Cost | $1,225.00 |
The average market price and the cannabis excise tax due are calculated as follows:
| Retailer’s Wholesale Cost | $1,225.00 |
| Plus, the current mark-up ($1,225 x 80%*) | $980.00 |
| Average Market Price | $2,205.00 |
| 15% Cannabis Excise Tax Due ($2,205 x 15%) | $330.75 |
If you still need more explanation see the Special Taxes and Fees rate page at www.cdtfa.ca.gov/taxes-and-fees/tax-rates-stfd.htm, under Cannabis Taxes.