California Cannabis Excise Tax: How to Calculate It in 2026

CEO and Co-Founder

Aug 26, 2026

California's cannabis excise tax is 15 percent of gross receipts from the retail sale of cannabis or cannabis products, and that rate applies to sales that occurred on or after October 1, 2025. Retailers collect it from the customer and remit it to the California Department of Tax and Fee Administration (CDTFA), a responsibility covered in detail in our guide to cannabis excise tax filing in California.

This guide is about the arithmetic. The rate has not been steady: it sat at 15 percent from January 2023 through June 2025, rose to 19 percent for one quarter, and returned to 15 percent in October 2025. If you are reconciling an older period or reading a guide written before late 2025, the rate you need depends entirely on when the sale happened.

This guide covers the current rate and the full rate timeline, what counts as gross receipts, a step by step worked calculation, and the receipt requirements that apply to every transaction.

In This Post

What Is California's Cannabis Excise Tax Rate?

The cannabis excise tax rate is 15 percent of gross receipts for sales that occurred on or after October 1, 2025. CDTFA publishes current and historical rates on its Special Taxes and Fees rate table.

California Cannabis Excise Tax Rate by Period

The rate by period of sale

The rate that applies is the rate in effect when the sale happened, not the rate in effect when you file:

January 1, 2023 through June 30, 2025: 15 percent
July 1, 2025 through September 30, 2025: 19 percent
October 1, 2025 through the present: 15 percent
Fiscal year 2028 to 29: the next scheduled rate review

The 19 percent rate was not undone retroactively. It still applies to any sale that occurred inside that three month window, which matters if you are amending a return or working through an audit for that period.

Why the rate moved and then moved back

Two pieces of legislation drive the whole story.

AB 195 (2022) eliminated the cultivation tax and added a mechanism in Revenue and Taxation Code section 34011.2 requiring CDTFA to adjust the excise rate starting in fiscal year 2025 to 26, capped at 19 percent, to replace the revenue the cultivation tax would have produced. That mechanism triggered on July 1, 2025 and lifted the rate four points, to 19 percent.

AB 564 (Stats. 2025, ch. 127) then amended section 34011.2 to hold 19 percent through September 30, 2025, drop the rate to 15 percent from October 1, 2025 through June 30, 2028, and delay the next adjustment to fiscal year 2028 to 29. CDTFA documented the change in Special Notice L-992, which also notes that a retailer who collected 19 percent on or after October 1, 2025 collected four points more than the law required.

The cultivation tax has not returned. The 19 percent quarter existed to substitute for it, and that substitution is now paused until the 2028 review.

💡 How Meadow handles this: Tax rates in Meadow are configurable per location and per delivery zone, so a rate change is a settings update rather than a rebuild of every product record. How to Choose the Best Dispensary POS System in California →

What Counts as Gross Receipts

Gross receipts subject to the cannabis excise tax include any amount the customer is required to pay in order to buy the cannabis. Per CDTFA's L-931 guidance and Regulation 3802, that covers more than the shelf price.

What is included

The selling price of the cannabis or cannabis product, after discounts
Any expense you pass on to the customer, such as a local cannabis business tax listed on the receipt
Certain transportation fees when you deliver to the customer in your own vehicle
Charges for services that are part of the sale, such as a fee for processing a card payment
The amount charged for anything the customer is required to buy alongside the cannabis, including packaging or a required vaping device

What is excluded

Sales tax
Gross receipts from the retail sale of any non cannabis item
A reasonable amount charged for optional tangible personal property bought in the same transaction

💡 How Meadow handles this: Discounts apply before tax is calculated, so promotional pricing and the excise base stay in sync without a manual adjustment. Building a Profitable Dispensary Discount Strategy →

How to Calculate the Cannabis Excise Tax, Step by Step

The excise tax is calculated on the full gross receipts figure, then sales tax is calculated on the gross receipts plus the excise tax. The order matters.

How many layers you calculate depends on your jurisdiction. If a local cannabis business tax applies where you sell, you are calculating three: local, excise, and sales. If there is no local tax, you are calculating two: excise and sales.

The sequence is the same either way. Local tax and fees go into the excise base, then the excise tax goes into the sales tax base. As a formula, the customer's total is (price + local tax + fees) × 1.15 × (1 + your sales tax rate).

Here is a delivery order that carries a local cannabis business tax, a delivery fee, and a card processing fee:

Selling price after discount: $60.00
Local cannabis business tax (8 percent): $4.80
Delivery fee: $7.00
Card processing fee: $3.00
Gross receipts subject to excise tax: $74.80
Cannabis excise tax (15 percent): $11.22
Gross receipts subject to sales tax: $86.02
Sales tax (9.25 percent): $7.96
Total the customer pays: $93.98

Local and district rates vary by jurisdiction, so the percentages above are illustrative. The sequence is not. Fees and local tax land inside the excise base, and the excise tax lands inside the sales tax base.

One detail catches operators in Los Angeles. Both the City and the State have told LA retailers that the city's cannabis business tax applies last and compounds the others, which produces a different stacking order than the example above. Confirm the treatment for your jurisdiction with a cannabis CPA before you configure it.

Why the Combined Tax Bite Is Higher Than It Looks

Adding 15 percent excise and a local sales tax rate together understates what the customer actually pays, because the excise tax is included in gross receipts subject to sales tax. CDTFA states this directly: sales tax is applied to the price after the cannabis excise tax has been added.

In the example above, the customer pays $33.98 on top of a $60.00 product. Some of that is local cannabis business tax and fees, but the compounding is real: sales tax is charged on the excise tax, so the effective combined rate always exceeds the sum of the posted rates.

Strip out the local tax and the fees and the effect is easy to isolate. Take a $20 product with 15 percent excise and a 10 percent sales tax rate. Excise brings the subtotal to $23.00, sales tax on $23.00 is $2.30, and the customer pays $25.30. That is $5.30 in tax on a $20 product, an effective rate of 26.5 percent rather than the 25 percent that adding the two rates together suggests.

Add a local cannabis business tax and the compounding stacks a third time. On a $10 product with a 10 percent local tax, 15 percent excise, and 9.5 percent sales tax, adding the rates gives $3.45 in tax. The actual calculation multiplies instead of adds:

Additive, which is wrong: $10 x (10% + 15% + 9.5%) = $3.45
Compounded, which is correct: $10 x 1.1 x 1.15 x 1.095 = $13.85, or $3.85 in tax

That $0.40 gap on a single $10 item is the whole point. It scales with every order.

A tax table that lists the rates side by side and adds them will always understate what the customer pays.

Worth checking what your POS actually does here. A system that adds the three rates instead of compounding them undercharges on every order, and the gap does not surface until you file. Book a Call to Learn More

How the Excise Tax Interacts With Your Listed Price

The cannabis excise tax is calculated on what you actually charge, which means every pricing decision is now also a tax decision.

Until 2023, excise was calculated on wholesale cost plus a 75 percent state markup. The amount was effectively fixed before the product hit your shelf, and it was based on an assumed retail price rather than the one you charged. If you sold below that assumption, through a discount or an aging-inventory markdown, the tax did not follow you down.

Now the tax is calculated on retail gross receipts. It rises and falls with the price you set, and three consequences follow.

Discounts reduce the excise tax you collect

Gross receipts are measured after discounts. A product listed at $60 and sold at $45 under a promotion generates excise on $45 plus any local tax and fees, not on $60.

Under the old structure, a discount cut your margin while the excise obligation stayed anchored to the marked-up wholesale figure. The two now move together.

Pass-through fees increase it

Any amount the customer is required to pay in order to buy the cannabis lands inside gross receipts. That includes delivery fees, card processing fees, and a local cannabis business tax listed on the receipt.

The practical effect is that passing a cost through costs more than the cost. A $7 delivery fee adds $7 to the order, then excise on that $7, then sales tax on the excise. In the worked example above, the $7 delivery fee and $3 processing fee together added $10 to gross receipts and $1.50 in excise before sales tax was applied.

The tax follows the actual sale, not an assumed one

The old system taxed a hypothetical price. The current one taxes the real one. That makes the excise line predictable from your own menu rather than from a state markup formula, and it means the figure you owe is derivable from the sales you already recorded.

💡 How Meadow handles this: Reporting breaks out excise tax collected by location and reporting period, so the figures you need at filing time come out of the system rather than out of a spreadsheet rebuild. Why Integrated Cannabis POS Software Is Essential for Compliance →

Receipt and Recordkeeping Requirements

Every retail cannabis sale requires an invoice, receipt, or similar document provided to the customer, and the cannabis excise tax must be listed separately on it. A receipt that folds excise into a single tax line does not meet the requirement.

A few related points that come up in practice:

Medicinal sales. A customer with a valid Medical Marijuana Identification Card issued by the California Department of Public Health plus a valid government issued ID is exempt from sales tax. The excise tax still applies. A physician's note alone does not support the sales tax exemption.
Excess tax collected. If you compute excise on an amount that is not subject to it, or at a rate higher than the law imposes, that is excess excise tax collected and CDTFA has a defined procedure for handling it.
Local cannabis business tax. CDTFA does not administer local cannabis business taxes. Questions about how your city or county applies its tax go to that agency.

For deliveries, district tax treatment depends on where the product is delivered, which is a separate calculation from the excise tax and worth confirming zone by zone if you run delivery across multiple jurisdictions.

Closing Thoughts

The rate is the easy part. It is published, it applies by date of sale, and it holds at 15 percent through June 2028. The harder number is the base, because gross receipts depend on your local cannabis business tax, your fees, your delivery model, and your discounts. Two dispensaries charging the same price for the same product, both applying the same 15 percent, can collect different amounts.

That is where the compounding lives. Local tax sits inside the excise base, and the excise tax sits inside the sales tax base, so an error in the base carries down through every line beneath it.

Rates and local rules change. Confirm current figures with CDTFA, and work through your own configuration with a cannabis CPA.

Common Questions

What is the cannabis excise tax rate in California right now?

The rate is 15 percent of gross receipts for retail sales that occurred on or after October 1, 2025. It is scheduled to hold at 15 percent through June 30, 2028, with the next adjustment possible in fiscal year 2028 to 29.

Is the California cannabis excise tax still 19 percent?

No. The 19 percent rate applied only to sales that occurred from July 1, 2025 through September 30, 2025. AB 564 returned the rate to 15 percent effective October 1, 2025. The 19 percent rate still governs sales made inside that three month window.

Do cannabis delivery fees get taxed in California?

Yes. Certain transportation fees are included in gross receipts subject to the cannabis excise tax when you deliver cannabis directly to a customer using your own vehicle. Local cannabis business tax and service fees such as card processing charges are also included.

Is sales tax charged on the cannabis excise tax?

Yes. The cannabis excise tax is included in gross receipts subject to sales and use tax, so sales tax is calculated on the total after the excise tax has been added.

Does the excise tax apply to medical cannabis sales?

Yes. Customers with a valid Medical Marijuana Identification Card and a valid government issued ID are exempt from sales tax, but the cannabis excise tax still applies to the sale.

Do discounts reduce the cannabis excise tax I collect?

Yes. Gross receipts are measured after discounts, so the excise base moves with your promotional pricing. If you sell a $60 product at $45 under a promotion, the excise tax is calculated on the discounted price plus any local tax and fees, not on the original price.

Getting the Tax Math Right Shouldn't Take a Spreadsheet

Rates change, local rules stack differently in every jurisdiction, and the excise tax has to break out separately on every receipt. Meadow has been building cannabis retail software since 2014, and California operators run their tax configuration, receipts, and excise reporting in one place.

Book a Call to Learn More

More Resources for Dispensaries

About the Author

David Hua