Local Government Retail Marijuana Taxes

Retail marijuana - requirements for levying excise taxes - fencing and lighting rules - appropriation. The act:

• Generally requires a county or municipality that levies excise tax on the first sale or transfer of unprocessed retail marijuana by a retail marijuana cultivation facility (retail marijuana excise tax) to levy the tax at a rate of up to 5% of the average market rate (the only basis for calculation allowed under current law) of the unprocessed retail marijuana if the transaction is between affiliated retail marijuana business licensees and at a rate of up to 5% of the contract price of the unprocessed retail marijuana if the transaction is between unaffiliated retail marijuana business licensees;
• As a temporary exception to the new general requirement that retail marijuana excise tax on transactions between unaffiliated marijuana business licensees be calculated based on the contract price of the unprocessed retail marijuana, allows a county or municipality which, before November 1, 2018, obtained voter approval to levy only an excise tax calculated based on the average market rate of the unprocessed retail marijuana and thereafter could not obtain voter approval for an amendment to allow the excise tax to be calculated based on the contract price for the unprocessed retail marijuana to continue to collect retail marijuana excise tax on such transactions based on an average market rate calculation until December 31, 2020;
• Clarifies that if a retail marijuana cultivation facility uses a retail marijuana transporter, as defined by existing law, to transport unprocessed retail marijuana being sold or transferred by the retail marijuana cultivation facility to a retail marijuana product manufacturing facility, a retail marijuana store, or another retail marijuana cultivation facility, the transportation of the unprocessed retail marijuana by the retail marijuana transporter is not a transfer of unprocessed retail marijuana for the purpose of levying a county or municipal retail marijuana excise tax; and
• Requires the executive director of the department of revenue, who is designated by existing law as the state licensing authority for the purpose of regulating and controlling the licensing of the cultivation, manufacture, distribution, and sale of medical and retail marijuana, to complete rule making on rules relating to fencing and lighting requirements for outdoor marijuana grows and greenhouses no later than January 1, 2019.

The act clarifies that a metropolitan district may levy only its general uniform sales tax on retail sales of marijuana and may not levy a special marijuana sales tax. The act also requires state retail marijuana excise tax to be calculated as 15% of the contract price if the first transfer of retail marijuana that has been harvested for sale at a retail marijuana store or extraction by a retail marijuana product manufacturing facility is between unaffiliated retail marijuana cultivation facilities.

The act appropriates $15,480 to the department of revenue for tax administration IT system (GenTax) support.

(Note: This summary applies to this bill as enacted.)