Navigating your local tax regulations can be a tricky matter. Luckily, our self-service tax module makes it easy for you to have complete control over your tax situation.
NOTE: Before making any changes to your tax structure, be sure to brush up on your local tax regulations and understand how to properly calculate and compound taxes in your area. Treez will not be held liable for tax discrepancies caused by incorrectly structured tax models. We recommend consulting a tax professional before making any alterations to your tax structure.
- Navigating the Tax Module
- Tax Rates
- Point of Sale Setup
- Layers (how to set up compounding/non-compounding taxes)
- Custom Tax
- Configuring Your Tax Structure
Navigating the Tax Module
Our self-service tax module is designed with the flexibility to organize and compound state and local taxes to any level of complexity. By understanding your individual tax rates, what types of products or customers they apply to, and how they compound, you can be sure you’re always charging customers the exact right amount for your area.
To access the tax module, navigate to Configuration > Config Page > Taxes.
This section allows you to set the current market rates being used to calculate excise tax and sales tax. Tip: Some fields may only be visible to California operators.
- Excise Tax (California Only): The tax paid when purchases are made on a specific product. Current Excise Tax Rate (Effective 1/1/2018): 15%
- Sales Tax: Your city’s current sales tax rate. This differs by location and should be verified before updating this field.
Point of Sale Setup
This section lets you configure your taxes to any degree of complexity for both medical and/or adult-use customers. Multiple tax types can be added to different layers in order to achieve the exact tax requirements for your local area.
The state you operate in will determine what tabs are visible to you in this section — ‘Medical’ and/or ‘Adult-Use’. If your state allows both customer types, then both will be visible, regardless of what type of license you hold
NOTE: Clicking on each tab will allow you to configure your taxes differently for the separate groups. If you only sell to one of the customer groups, then you only need to configure your taxes for that type. If you sell to both customer types, then both will need to be configured.
Creating layers allows you to dictate which taxes should be compounded together and which should be calculated independently of each other.
- Taxes that appear in the same layer do not compound together.
- Taxes created in different layers will compound with the tax layer above it.
To create a new layer, tap Edit, then click the icon to the left of the module.
Some local taxes may be calculated off the subtotal or exclude other taxes in their calculations. By placing multiple tax types in the same layer, you’re saying these taxes should not compound together when being calculated. Instead, their totals will be calculated independently from each other based on the information in the layer above. If these taxes appear in the first layer, then their totals will be calculated off the subtotal.
For example, this photo displays both Excise Tax and a local City Tax in the first layer. Meaning, both taxes are calculated directly off of the subtotal and do not compound together.
For example, let’s assume you’re selling a $10 cannabis item. Here’s how the taxes would be calculated when both taxes appear in the same layer:
- Subtotal = $10
- Excise tax* (15% x $10) = $1.50
- City Tax (5% x $10) = $0.50
- Total = $12
*Using a non-arm's length transaction.
Some state and local taxes require you to calculate their total based on the compounded amounts of the tax layers that came before them. By creating a new layer, you’re saying it should use the preceding layer’s total as the new amount to calculate the new layer's taxes off of i.e. the second layer compounds on the first layer.
For example, this photo displays Excise Tax and a local City Tax in the two different layers. Meaning, the excise tax will be calculated off the subtotal, and the city tax will be calculated off the subtotal + excise tax.
For example, let’s assume you’re selling the same $10 arm’s length cannabis item. Here’s how the taxes would be calculated when the taxes appear in separate layers:
- Subtotal = $10
- Excise tax* (15% x $10) = $1.50
- City Tax (5% x $10 + $1.50) = $0.58
- Total = $12.08
*Using a non-arm's length transaction.
There are three fields for every tax type that are used to determine how much tax is charged to whom, and what type of products it's charged on. Some fields will auto-populate based on others, while some can be customized.
Standard tax types are included in the ‘Tax Label’ drop-down. Adding these taxes to different layers will allow you to dictate exactly what taxes are enabled and how each of them is being compounded and calculated. You can only use each tax type once per customer group (medical vs. adult-use), regardless of what layer it appears in.
NOTE: For compliance reasons, we recommend brushing up on your local tax requirements before making any adjustments to your tax structure.
While there are a variety of sales tax options to choose from, you’ll only be choosing one for each of your medical and adult-use tax structures. Which option you choose will depend on which customer groups you serve (medical or adult-use) and whether or not you offer delivery.
- Sales Tax: If you’re an adult-use only shop that does not do delivery or are located in a state that doesn’t offer a tax exemption for medical patients, this option will allow you to apply a standard sales tax rate across all transactions, regardless of whether a customer has an MMID card or not.
- Sales Tax w/ MMID exemption: If you serve medical customers, this option will automatically waive the sales tax on all cannabis products for any customers who possess an MMID card. Tip: MMID cardholders are still required to pay sales tax on all non-cannabis products (lighters, merch, accessories etc.).
- Dynamic Sales Tax (California only): This sales tax is only applicable to retailers who do delivery. Selecting this option will automatically apply the correct tax rate for the delivery destination as opposed to applying the rate for the location where the order originated.
- Dynamic Sales Tax w/ MMID exemption (California only): This sales tax option is only applicable for retailers who serve medical customers AND offer delivery. Selecting this option will automatically apply the correct tax rate for the delivery destination as opposed to applying the rate for the location where the order originated. Additionally, it will waive the sales tax on all cannabis products for any customers who possess an MMID card. Tip: MMID holders are still required to pay sales tax on all non-cannabis products (lighters, merch, accessories, delivery fees (CA) etc.).
- Excise Tax (California Only): This is a mandatory tax on all cannabis transactions made in California. Selecting this option will allow retailers to break arm’s length excise tax out as a separate line item below the subtotal on a receipt.
- If you’re a standalone retailer (i.e. not a micro business or vertically integrated) who does not want the excise tax broken out below the subtotal, then you’ll need to bake the excise tax into the retail price of your goods.
Some cities and/or counties have enacted measures requiring that cannabis businesses located in their jurisdictions pay additional local taxes. You can create up to 5 custom taxes through the ‘Custom Tax’ section. Once created, these custom taxes will populate in the ‘Tax Label’ drop-down.
This menu allows you to choose what type of products each of your taxes should be applied to. While some taxes, like sales tax, is applied to all products, some local and state taxes may only apply to certain types of cannabis or non-cannabis products.
- Cannabis Tax: Selecting this option means the chosen tax will only be applied to cannabis products. For example, the excise tax is a “cannabis tax”.
- Non-Cannabis Tax: Selecting this option means the chosen tax will only be applied to non-cannabis products, like merch.
- Everything Tax: Selecting this option means the chosen tax will be applied to all products. For example, sales tax is an “everything tax”.
This field allows you to set the taxable rate for each tax type you’ve selected. Some of these rates are predetermined, while others can be edited to meet local requirements.
- Choosing any one of the sales tax options from the ‘Tax Label’ drop-down will default to using the rate you entered in the ‘Tax Rates’ section above.
- Some tax types have an ‘Automated’ rate, which is determined by the value(s) entered in in the ‘Tax Rates’ section above.
Depending on your city/county, you may have a variety of custom taxes that only apply in your area. These custom taxes often have specific nuances that dictate how they compound with other state and local taxes and what types of products (cannabis or non-cannabis) they apply to.
- To create a new custom tax, click +Add New Tax, enter the name of the tax, and tap Save.
- Once created, you can use the toggle to turn it on or off. When toggled on, this tax option will be displayed in the ‘Tax Label’ drop-down. Toggling off a custom tax does not affect the custom tax previously set up in the POS Tax section. You must edit the POS Tax Set Up to remove the custom tax.
NOTE: It’s the responsibility of the operator to understand how their local taxes interact with other state and local taxes and what types of products they’re applied to. We recommend consulting a tax professional before making any adjustments to your tax structure Treez will not be held liable for incorrectly configured taxes.
NOTE: Whether your new to Post-Tax pricing or not, you’ll need to contact firstname.lastname@example.org for us to enable this configuration and update your current prices to their new Post-Tax amounts.
This is an optional setting that makes it so your eCommerce and partner channel menus advertise the final price of products (all taxes included), instead of the price before taxes. This is a great option for shops that want to display the most transparent pricing on their menus or want to minimize coin change.
To enable Post-Tax, navigate to Configurations > Config Page > Taxes > Post-Tax. When enabled, the flat price/tier prices you have set for products (in Product Management) will become the out the door price the customer pays.
For example, with Post-Tax enabled, if you price an item at $10 our system automatically calculates how much the item is pre-tax so the customer is charged $10 for the item, all taxes included.
NOTE: Attempting to discount a non-arm’s length item below its calculated excise tax amount will result in a total that’s equal the amount of taxes rather than the lesser amount.
Revert to Pre-Tax Pricing
Before restoring pre-tax pricing, you will need to contact us so we can revert your post-tax prices to their former pre-tax amounts. Disabling this configuration without adjusting your prices in-line with this change will result in your customers being double charged for taxes! Alternatively, you can toggle Post-Tax off and update product prices by hand — outside of regular business hours, of course.
- Discounts: Any discounts applied will be calculated off the Post-Tax price of items.
- For example, if you apply a custom discount of $5 to an item priced at $50, the total will be $45 out the door.
- Reports: These stay the same even with Post-Tax enabled. They will still reflect pre-tax prices, pre-tax discounts, and applied taxes, as usual, for accurate bookkeeping.
- Receipts: These will appear as usual (with pre-tax prices, a pre-tax subtotal, and a breakdown of the taxes that were applied). The total, as usual, will show the Post-Tax price minus any applied discounts.
Configuring Your Tax Structure
There are a variety of factors that will determine how your taxes should be structured, including your business model (standalone retailer (arm’s length), micro business or vertically integrated (non-arm’s length), how you decided to structure your prices (excise tax broken out below the subtotal vs. excise tax baked in to the retail price), and what your local tax requirements are. These differences will determine what types of taxes need to be enabled, the order they should appear in, and how many layers you’ll need to create.
To learn more about the different tax types and how this module compounds and calculates taxes, see Navigating the Tax Module.
Standalone Retailers w/ Excise Tax Broken Out
Breaking the excise tax out below the subtotal on a receipt means you can clearly itemize the taxes a customer is being charged without affecting the retail price of your products. This process ensures customers have a clear understanding of what costs are associated with your individual retail operation and which are mandatory taxes.
Step 1: Navigate to Configuration > Config Page > Tax Rates.
Step 2: Fill out the ‘Tax Rates’ drop-down card. These values will be used to calculate any taxes entered on the ‘Point of Sale Tax Setup’ card, below.
- AMP Multiplier (California Only): The Average Market Price (AMP) multiplier used to calculate excise tax. This rate is set to change every 6 months. (Effective 1/1/20: 80%)
- Excise Tax (California Only): The tax on the average market price (AMP) of wholesale products in California. This tax is passed on to the consumer through every arm’s length transaction. (Effective 1/1/18: 15%)
- Sales Tax: The rate at which all purchases made in your city & state are taxed.
NOTE: The system will save any edits you make automatically. Tapping the Update Sales Tax button will reset the sales tax rate across all tax layers created in the ‘Point of Sale Tax Setup’ card, and should only be used if the sales tax rate for your area changes.
Step 3: If you have any custom taxes navigate down to the ‘Custom Tax’ section, where you can create up to 5 additional taxes by clicking the +Add New Tax button. If you don’t have any additional custom taxes, move on to step 4.
NOTE: The names added on these fields will be displayed on the customer’s receipt, so make sure you’re using short, descriptive names for each.
Step 4: Navigate back up to the ‘Point of Sale Tax Setup’ drop-down and click Edit to begin setting up your tax layers.
- If your shop serves both ‘Medical’ and ‘Adult Use’ customers, you’ll need to configure taxes for each of these groups separately by clicking on their respective tabs.
Step 5: Name your first layer and click Add Tax to begin populating different tax types in the layer.
- Each tax type you enable has three fields that must be set in order to properly calculate your taxes. Some of these values may be predetermined based on the ‘Tax Label’ selected from the drop-down.
- For more information on what each tax type represents, see the Tax Label section.
- Tax Label: The type of tax your enabling. This can be excise tax (CA only), a variety of sales tax options, or up to 5 custom taxes you’ve created.
- Applies to: This option defines the product group (all products, cannabis products or non-cannabis products) that each tax type applies to.
- Rate: This field reflects the tax rate of each tax type. This field may be '*Automated' based on the tax type selected. If automated, this rate will be generated by the values entered in the ‘Tax Rate’ section.
Step 6: Start by selecting Excise Tax from the ‘Tax Label’ drop-down. In California, the excise tax should always appear as the first tax type in your primary tax layer. If you operate outside of CA, skip to step 7.
- Both the ‘Rate’ and ‘Applied to’ fields will auto-populate when ‘Excise Tax’ is selected.
Step 7: If you’ve created any ‘Custom Taxes’, you’ll need to identify which should be calculated off the subtotal, versus which should be calculated off the subtotal + excise tax (or other custom state/local taxes for operators outside who don't utilize excise tax).
- For custom taxes that calculate directly off the subtotal (i.e. do not compound on excise tax), add these to your primary tax layer under the excise tax line, and select the type of product this tax applies to, and enter its rate for the selected customer group.
- For custom rates that calculate off the subtotal + excise tax, these will need to be added to a secondary tax layer in order to properly compound with any taxes in the layer above it.
- Depending on the specific requirements for each of your custom taxes will determine
NOTE: Clicking on the icon will allow you to create a new tax layer. This icon will only show in edit mode.
Step 8: Once you’ve added any applicable custom taxes the appropriate layers, create a final layer by clicking on the icon. From here, select the appropriate sales tax option for your operation.
- For more information on the different sales tax types, see the Tax Label section.
Step 9: Tap Save to lock in your new tax structure and begin properly calculating taxes. Then, repeat the steps above for the other customer type, if applicable.
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