Legal cannabis means taxes, but you may not have to pay them all.
Cannabis is now legal for everyone over 21 in California, and that means unavoidable taxes – whether you have a doctor’s recommendation or not.
But medical card holders willing to jump through a few hoops can still claim one significant tax advantage: up to 10% off all retail marijuana purchases.
It takes an extra step: Bring your recommendation to your county’s public health department, and for a $100 fee you’ll be issued a Medical Marijuana Identification (MMID) card that exempts you from “sales and use” tax for one year. Depending on your location, sales and use taxes are 7% to 10% of the total transaction (including other taxes!).
In all, there are three types of California cannabis taxes. The other two, another 15% or more, cannot be avoided.
What are the three types of taxes on cannabis?
Excise Tax: This state tax is tied to the wholesale price, and comes out roughly to 15% of retail. It is generally the highest and most consistent tax on cannabis, and it cannot be avoided—not even discounts bring excise taxes down.
Local Tax: Some California cities and counties tax licensed retailers operating within their borders. Rates and rules range from zero tax to as much as 10% (even 15% in rare cases). This tax calculated from the combined total of retail price and excise tax. Most consumers will see a modest upcharge—5–7% on average—in this category, which also cannot be avoided.
Sales and Use Tax: Also a state tax, “sales and use” rates start at 7.25% California-wide, but grow quickly to 10% or more as jurisdictions add “district” taxes, some of them overlapping. It is generally the second-highest tax on cannabis—it’s calculated upon the combined total of retail price, excise tax, AND local tax where applicable —and if you have an MMID card, you don’t have to pay it!
Why doesn’t my doctor’s recommendation exempt me automatically?
Because it’s not registered with the state of California, which collects sales and use taxes.
A doctor’s recommendation is a statement from a state-licensed physician that allowed patients to purchase medical marijuana from licensed dispensaries prior to January 1, 2018. They’re still available, but you no longer need one to purchase cannabis in California if you’re 21 or older.
A Medical Marijuana Identification Card is a state-issued license that allows you to buy cannabis without paying sales and use tax. MMIDs require a doctor’s recommendation—your current one will do, as there is no additional screening—to be registered at your county’s public health department. A state MMID costs $100 annually.
|Question||Doctor’s Marijuana Recommendation||State MMID|
|How do I get one?||Talk to a doctor online or in person.||Register with your county public health department after you receive a doctor’s recommendation.|
|Do I need to pay taxes on medical marijuana?||Yes. All taxes—state, local, sales, and use—apply.||You are exempt from paying sales and use taxes (around 10% depending on your location).|
|How much does it cost?||Prices vary from $40–$100.||$100 per year in addition to the cost of your doctor’s recommendation.|
|Who can see that I have one?||You, your doctor and, if you so choose, your retailer.||You, the county of registration, and, if you so choose, your retailer. The state only knows that a card exists, but it is not tied to your identity.|
How do I get a state MMID?
Locate your county’s public health office and check to see if you need an appointment. To submit your application, you’ll need to show up with:
- Your valid doctor’s recommendation.
- $100 cash. No credit cards, debit cards, or checks.
- Proof of residence (photo ID with current address, recent utility bill, rental payment receipt).
- Valid government ID (driver’s license, California State ID Card, or passport).
- For a $50 discount, bring proof of Medi-Cal or county health assistance, if necessary (bring your Medi-Cal card).
Your MMID card will arrive by mail. Once it does, access your profile on Eaze and upload a picture of your MMID under “Medical Information” in “Account Settings.”
Eaze will verify your MMID with the state and you will be exempt from state and local taxes on purchases until your MMID expires.
What information will the state keep on file?
As little as possible—not even your name.
California takes medical privacy very seriously. It’s the law. The California Department of Public Health, which administers the program, says:
“The Medical Marijuana Application System does not contain any personal information such as name, address, or social security number. It only contains the unique user ID number and when entered the only information provided is whether the card is valid or invalid.”
Need-to-know is the code on the other end, too: the City and County of San Francisco, for instance, say that only your medical card type (e.g. patient or caretaker), photo, and expiration date will be sent to the state, adding that “we will give back to you all application materials when we issue the (Medical Marijuana Program) card” and “will not keep any identifying information.”