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HomeBusiness and Professions CodeDiv. 7Pt. 1Ch. 1§ 16005 Cannabis Retailer Tax Exclusion

§ 16005 Cannabis Retailer Tax Exclusion

Business and Professions Code·California
AI Summary·Official Text·Key Terms·Related Statutes·References
AI SummaryVerified

§ 16005 Cannabis Retailer Tax Exclusion

Key Takeaways

  • •Cities can't count certain taxes when calculating how much money a cannabis shop makes for local taxes.
  • •This means cannabis shops won't pay local taxes on the money they already paid in state cannabis taxes or sales taxes.
  • •This rule applies to all cities in California, including big cities with their own rules.

Example

A cannabis shop in Los Angeles sells a product for $100. They already paid $15 in state cannabis tax and $8 in sales tax on that $100.

When Los Angeles calculates its local tax on the shop, it can only tax the original $100, not the $115 (which includes the state taxes). So the shop saves money on local taxes.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source
View on CA.gov

§ 16005 Cannabis Retailer Tax Exclusion

(a) A city shall not include in the definition of gross receipts, for purposes of any local tax or fee imposed by the city on a cannabis retailer licensed under Division 10 (commencing with Section 26000), the amount of any cannabis excise tax imposed under Section 34011.2 of, or any sales and use taxes imposed under Part 1 (commencing with Section 6001) of, Part 1.5 (commencing with Section 7200) of, or Part 1.6 (commencing with Section 7251) of, Division 2 of the Revenue and Taxation Code, or Section 35 of Article XIII of the California Constitution. (b) For purposes of this section, “city” includes a charter city and a city and county. (Added by Stats. 2024, Ch. 874, Sec. 1. (SB 1059) Effective January 1, 2025.)

Last verified: January 22, 2026

Key Terms

gross receiptslocal tax or feecannabis retailercannabis excise taxsales and use taxesRevenue and Taxation CodeSection 35 of Article XIII of the California Constitution

Related Statutes

  • § 16106 Cannabis Retailer Tax Exclusion
  • § 16002.2 Laundry Equipment Rental Taxes
  • § 16002.5 Vending Machine Tax Limits
  • § 100 Department Of Consumer Affairs
  • § 10000 Real Estate Law

References

  • Official text at leginfo.legislature.ca.gov
  • California Legislature. Business and Professions Code. Section 16005.
View Official Source