Please note: This relates to CA excise taxes only. Treez does not provide tax advice and the customer is solely responsible for compliance with all CA Tax laws.
Question:
How do I configure taxes for Cannabis Accessories sold with Cannabis or Cannabis products?
Answer:
The Cannabis Accessories Sold with Cannabis or Cannabis Products states the following:
Cannabis accessories such as pipes, pipe screens, vape pens and vape pen batteries (without cannabis), rolling papers, and grinders are not subject to the 15-percent cannabis excise tax when the sales price of cannabis or cannabis products are separately stated.
Cannabis accessories such as vaping devices or batteries sold in pre-assembled units may include cannabis or cannabis products. If you are a cannabis distributor who sells these pre-assembled units with cannabis or cannabis products, or other cannabis accessories, you may separately list the retailer's cost of the cannabis or cannabis products on your invoice to the retailer to apply the cannabis excise tax to the cannabis or cannabis products only. If you choose to separately state the cost of the cannabis or cannabis product from any cannabis accessories, you must maintain the supporting documentation used to establish the individual cost of the cannabis or cannabis products and the cannabis accessories.
However, when cannabis or cannabis products are sold or transferred with cannabis accessories to a cannabis retailer, and you do not separately state the sales price of the cannabis or cannabis products from the cannabis accessory, the cannabis accessory shall be included in the calculation of the average market price when determining the cannabis excise tax due.
This tax code can change the complexity of tax calculations and the workflow of receiving inventory into Treez. You can review how to receive inventory from METRC into SellTreez here.
The workflow outlined below as it has the least impact on inventory tracking and reporting. Navigate to Inventory > Purchasing > Click on Invoice
Manually adjust cost or excise tax by invoice line:
Enter base cost per unit for cannabis only (exclude package cost initially) so Treez can auto-calculate the cannabis excise tax
Edit the invoice line
Turn off auto-calculate
Update the base cost per unit to include the packaging cost. The excise tax calculated previously on the cannabis cost should stay the same.
Value: You are able to correctly calculate and pay excise taxes based on the cannabis tax amount and you will be able to correctly understand gross margins on products.
You will also be able to maintain the same workflows around selling each of these items online as well as in store, without having to create extra products or change SOPs.
Risk: In an audit, you will need to detail how you calculate the excise on each item on the invoice and explain that you rolled in the cost of packaging as well as cannabis but recorded excise only on cannabis. Your invoices’ total cost in Treez should still align exactly with the total cost on the physical invoice received from the vendor. This will require more manual effort on your part to stay in compliance.
Tip:
Check your compliance dashboard at the end of each day and complete any outstanding tasks.
Navigate to Inventory > Compliance Management > Metrc Control
Above the main table are 4 tabs. Each tab shows sales and adjustments in different send statuses. The tab you're currently viewing is underlined in red.
To Do (Error): Sent from Treez, but not successfully received by Metrc due to an error.
In Progress: Currently sending from Treez to Metrc.
Done: Sent from Treez. (This tab shows tasks successfully received by Metrc, and also includes any Errors you Dismissed from the To Do tab.)
All: Displays all tasks from Treez in all statuses.
Once all sales and adjustments have been resolved, there may still be packages with inventory quantities still out of sync between Treez and Metrc. These can be ‘trued-up’ on the Metrc True Up page, where you can easily adjust Metrc quantities to match Treez quantities.
Other Resources:
This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and Treez, Inc, its employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.