Cannabis Business Tax
Cannabis Business Tax Revision Effective July 1, 2023
Beginning July 1, 2023 each person engaged in a legally authorized commercial cannabis cultivation within the unincorporated area of Nevada County shall pay an initial annual tax of $0.16 per square foot per cycle of outdoor or mixed light tier 1 cultivation area or $0.32 per square foot per cycle of mixed-light tier 2 or indoor cultivation area. The annual registration process will remain unchanged, however, instead of Quarterly reporting and tax remittance to our office, an annual invoice with two (2) payment installments due January 12th and June 12th will be sent to you. These due dates will remain the same in subsequent years. If January 12th or June 12th fall on a weekend or Legal holiday payment is due no later than 5:00 pm the next business day. Quarterly reporting will still be required for all other business types in the unincorporated area of the County.
Cannabis businesses need to register with this office each year. The Registration Form provides us with important information about your business and is used to enter the business into our system and produce a certificate of tax compliance. The form also provides us with the information needed to determine the minimum tax due each fiscal year. Registration forms are due upon receiving a license and/or permit and annually thereafter by July 31.
Quarterly Tax Returns
Effective July 1, 2023, Quarterly tax returns and METRC data must be submitted by the due date each quarter, even if no sales occur. If sales do occur, then payment in full must also be submitted. The County cannot accept a tax return without payment in full. Penalties and interest will accrue until full payment is received. The tax return should be filled in completely and signed by a legal officer of the company. An additional 30 days to report and submit forms and payment is allowed so that all receipts for the quarter can be accounted for.
*** Please be aware the Square Foot Methodology takes effect July 1, 2023, and applies to each person engaged in legally authorized cannabis cultivation within the unincorporated area of Nevada County. Quarterly tax returns will still be required for all other commercial cannabis business, including but not limited to as a retailer, distributor, distribution facility, testing laboratory, transporter, manufacturing facility, nursery, dispensary, or engaging in the delivery of cannabis or operating as a microbusiness. ***
Quarterly Reporting Periods and Due Dates
- 1st Quarter (July 1 through September 30) – due by October 31
Penalties and Interest on Delinquent Taxes
In accordance with Ordinance 2456, when taxes are not paid on or before the due date penalties and interest are applied and will accrue until full payment is received.
Annual Minimum Cannabis Business Tax
In addition to the tax on Gross Receipts, Ordinance 2456 also established that persons engaging in permitted commercial cannabis cultivation shall not pay less than the following amounts. The minimum tax is based on the number of growing cycles harvested each fiscal year and the square footage of each growing cycle harvested, which are reported on the registration form.
- A minimum tax of $1,250.00 per growing cycle, each fiscal year, for persons cultivating less than or equal to 2,500 square feet of cannabis canopy.
- A minimum tax of $2,500.00 per growing cycle, each fiscal year, for persons cultivating more than 2,500 square feet but less than or equal to 5,000 square feet of cannabis canopy.
- A minimum tax of $5,000.00 per growing cycle, each fiscal year, for persons cultivating more than 5,000 square feet of cannabis canopy.
- A minimum tax of 2,500.00 per fiscal year for all other commercial cannabis businesses.
Annual Minimum Tax Due Date
At the end of the fiscal year, the Tax Collector's office will perform an annual true-up to the set minimums based on cycles and square footage that are authorized in the Ordinance. The true-up process will look at the overall square footage per cycle and combine multiple cycles to allow for more fairness in how the law is applied. If it is determined through the true-up process that the annual minimum tax has not been met through quarterly payments, the Tax Collector's office will send an invoice to the cannabis business for the remaining balance due. The balance due must be paid by the due date on the invoice to avoid additional fees.
*** Please be aware the Annual Minimum True Up for the 22/23 Cannabis Tax Year will still apply- these invoices will be sent out in the Fall of 2023 and true-ups will be due by December 5, 2023***
Why Report and Pay Cannabis Taxes?
Reporting and paying taxes is an integral part of commercial business activities and contributes to the community in which it operates. All cannabis taxes are subject to significant penalties and interest resulting from non-compliance. Failure to comply with regulations may also result in fines and disciplinary actions. For more information on local requirements, refer to Ordinance 2456. For more information on state requirements, refer to the Medicinal and Adult-Use Cannabis Regulation and Safety Act.