Cannabis Business Tax

How to Pay Taxes

All payments must include a Quarterly Return and METRC data (e.g., Transportation Manifest)


1. Pay online with a credit card, debit card or E-Check. 

  • Enter your permit number in the registration field. 
  • There is a 2.38% processing fee for credit and debit card payments. 
  • E-Checks are free.

2. Mail checks to PO Box 128, Nevada City, CA 95959.
3. Use the drop box located at 950 Maidu Ave, Nevada City, CA 95959.
4. For cash payments, please call (530) 265-1285 to schedule an appointment.


How to Submit Forms

1. Email forms to CannabisTax@co.nevada.ca.us

2. Mail forms to PO BOX 128, Nevada City, CA 95959.

3. Use the drop box located at 950 Maidu Ave, Nevada City, CA 95959.

4. Bring forms with you to a cash payment appointment. 

5. Fax forms to (530) 265-9857.  


Cannabis Business Defined

On November 6, 2018, the voters in the unincorporated area of the County of Nevada passed Measure G, which defined "Cannabis Business" as any business activity relating to cannabis, including but not limited to cultivating, transporting, distributing, manufacturing, compounding, converting, possessing, processing, preparing, storing, packaging, labeling, delivering, testing, dispensing, and selling (retail or wholesale sales) of cannabis, cannabis products, or of any ancillary products and accessories, whether or not carried on for gain of profit.

 

Cannabis Business Tax

"Cannabis Business Tax" is defined as the tax due pursuant to Ordinance 2456 for engaging in cannabis business in the unincorporated area of the County. The Ordinance established that the initial Cannabis Business Tax base rate is 2.5% of Gross Receipts, which is due on a quarterly basis. This rate went into effect on January 1, 2019 and is set until June 30, 2021.


Who Needs to File Cannabis Business Tax Returns?

Beginning January 1, 2019, every person who is engaged in commercial cannabis cultivation, excluding nurseries, in the unincorporated area of the County shall pay a cannabis business tax set at a rate of 2.5% of Gross Receipts (fixed until July 2021). The 2.5% Gross Receipt tax is due to the County on all transactions entered into by such a business whose situs address is located in the unincorporated area, regardless of where the sale transaction occurs. The IRS defines Gross Receipts as, “the total amounts the organization received from all sources during its accounting period, without subtracting any costs or expenses.”


Annual Registration  

Cannabis businesses will need to register with this office each year. The Cannabis Business Tax Registration Form can be found on our website. The form provides us with important information relating to the cannabis business and is used to enter your business into our system and produce a certificate of tax compliance for you to display. The form also provides us with information needed to determine the minimum cannabis business tax due each fiscal year.


Annual Registration Due Date

Cannabis businesses need to submit a Cannabis Business Tax Registration Form upon initial permit approval and each year thereafter by July 31. Additionally, cannabis businesses need to submit a revised Cannabis Business Tax Registration Form if any changes to the business occur during the year.

 

Quarterly Tax Returns 

Cannabis businesses must submit a Cannabis Business Tax Quarterly Return each quarter, even if no sales occur. These quarterly forms are required to be submitted, along with your quarterly METRC report and payment of quarterly tax (if any due), to the Tax Collector’s Office by the quarterly due dates. There is a fill-in form on the website that will calculate tax due based on due dates and gross receipts reported. The County cannot accept a tax filing without payment in full. Penalties and interest will accrue until full payment is received. The Cannabis Business Tax Quarterly Return should be filled in completely and signed by the 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.


Quarterly Reporting Periods and Due Dates

QUARTER

MONTHS

DUE BY

1st Quarter

July through September

October 31

2nd Quarter

October through December

January 31

3rd Quarter

January through March

April 30

4th Quarter

April through June

July 31


Annual Minimum Cannabis Business Tax

In addition to the tax base rate of 2.5% of Gross Receipts, Ordinance 2456 also established that persons engaging in permitted commercial cannabis cultivation shall not pay less than the following amounts. Minimum tax is based on number of grow cycles each fiscal year and the square footage of each grow cycle, which are reported on the Registration Form.


1. 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.
 

2. 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.
 

3. 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.


Annual Minimum Tax True-up Process

Minimum tax due will not change based on sales. However, all quarterly payments received will count towards the minimum due for that fiscal year. 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 overall square footage per cycle and combine multiple cycles to allow for more fairness in how the law is applied. For example, if a business has 4 cycles of 300 square feet per cycle, that minimum will be 1 cycle of 1200 square feet, or a set minimum of $1,250. If it is determined that the annual minimum tax has not been met through quarterly payments, then the Tax Collector's office will send an invoice for the remaining balance due. It is important for us to know the number of grow cycles and the square footage per grow cycle so we can properly true-up the minimums during this process. This information is reported to us on your annual registration form. If the number of cycles or the square footage of each cycle differs from what was initially reported, you will need to complete a revised registration form that denotes what has occurred over the previous year.  


Annual Minimum Tax Due Date

If it is determined through the true-up process that the annual minimum tax has not been met through quarterly payments, then 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. 

 

Cannabis Business Requirements

1. Annually: Complete and submit a Cannabis Business Tax Registration Form upon approval and annually thereafter by July 31, or if any changes to cycles or square footage occur during the fiscal year.


2. Quarterly: Complete and submit a Cannabis Business Tax Quarterly Return by the due date each quarter, regardless if sales occur or not. If sales do occur, METRC data (e.g. transportation manifest) must also be submitted along with payment in full for taxes due.

 

What Documentation is Needed for Submittals?

If there are any sales being reported, then Cannabis Business Tax Quarterly Returns must include payment in full (with penalties and interest, if applicable) as well as METRC data (e.g. transportation manifest) showing the product was transferred and traced at the state level. 


What if No Sales Occur?

Cannabis businesses must submit a Cannabis Business Tax Quarterly Return by the due date each quarter, even if no sales occurred.

 

Penalties and Interest for Delinquent Taxes

In accordance with Ordinance 2456, when taxes are not paid on or before the due date penalties and interest are applied as follows:

 

1.  A penalty equal to ten percent (10%) of the amount of the tax, in addition to the amount of the tax, plus interest on the unpaid tax calculated from the due date of the tax at the rate of one and one-half percent (1.5%) per month.


2.  If the tax remains unpaid for a period exceeding one calendar month beyond the due date, an additional penalty equal to ten percent (10%) of the amount of the tax, plus interest at the rate of one and one-half percent (1.5%) per month on the unpaid tax and on the unpaid penalties.


3.  Interest shall be applied at the rate of one and one-half percent (1.5%) per month on the first day of the month for the full month and will continue to accrue monthly on the tax and penalty until the balance is paid in full.


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.

Forms