Cannabis Sellers Permit Instructions
If you sell marijuana-related items in United States, the law requires that you register with the Board of Equalization (BOE) for a Seller’s Permit. Both cannabis growers and dispensaries are required to register, even if your business has not made any sales yet. There is no cost to obtain a Seller’s Permit.
Here are the steps to help you apply for your Seller’s Permit along with a brief overview of what you need to do after you’ve been approved by the BOE.
Applying for a Seller’s Permit
In order to start the registration application process, you will need to gather a number of documents about your business and the management team for your business. The full list of required documents can be found here.
Create an Online Account
The BOE registration process will guide you through the steps that are required to obtain your Seller’s Permit. Once you have successfully registered, you will be provided with a User ID for your business so that you can access the BOE online system and file your sales and use tax returns.
When to Register for a Seller’s Permit
The BOE wants every business to register for a Seller’s Permit before it makes its first sale. Although the requirement to register for a Seller’s Permit for businesses who sell medical cannabis didn’t go into effect until 2005, business who opened before the effective date are still required to register and pay any taxes that they may owe. Additionally, businesses who opened after this date and failed to register for a Seller’s Permit are required to register and may also be required to make back tax payments.
How Many Seller’s Permits Do I Need?
If you have multiple locations, you are required to register each location (located on different premises) of your business. Each location may be required to maintain a separate Seller’s Permit. In some cases, the BOE does allow you to obtain a consolidated permit for multiple business outlets. Even if you run a mobile dispensary, you still have to register.
The sales and use tax rate is made up of:
- State Tax
- County Tax
- Local Tax, and
- District Tax(es)
Cities and counties with applicable district taxes add to the base rate, which cause rates to be different throughout the state. As a result, you will also need to register with your city and county. A comprehensive list of the different California city and county sales and use tax rates can be found here.
What to Do After You Register
After you have applied and have been approved for a seller’s permit, you must make sure that you file sales and use tax returns, along with paying any tax that is due. If you file to file your returns on time, you may be subject to additional penalties and interest. The state offers an online sales tax filing service, which you should use to file your returns. When you have to file will be determined by the BOE based on your reported sales tax or your anticipated taxable sales at the time of your registration.
Sales and Use Tax Return Due Dates
The sales and use tax return due dates may vary depending on whether you are a monthly, quarterly or annual filer. However, they are generally due on April 30th, July 31st, October 31st, and January 31st for quarterly filers. For monthly filers, the due date is the last day of the following month. For annual filers, the due date is January 31st of the following year. If any of these due dates fall on a weekend or state holiday, the returns are due on the next business day. Even if you made no sales, you still need to file a return showing zero sales.
The BOE generally does not accept cash payments for tax due. However, with many cannabis businesses operating in cash only, some provisions have been made to accommodate these businesses. If you plan to make your payments of sales and use tax in cash, you will need to make an arrangement with one of the BOE’s field offices for cash the transactions by completing a ‘No Cash Exemption Request’ form.
Record Keeping for Your Business
In addition to filing timely sales and use tax returns, you are also required to maintain records about your business including:
- The normal books of account
- Original entry documents, including bills, receipts, invoices, job orders, contracts that support the entries that were made in your books of account
- All documents that you used to prepare your sales and use tax returns
- Resale and exemption certificates that you accepted at your business
These records must be maintained for at least 4 years unless you have been given explicit permission by the BOE to discard these records.