Distributors and retailers: this week, the California Department of Tax and Fee Administration (CDTFA) released a new proposed regulation regarding the California Cannabis Track and Trace system.

The announcement, Emergency Cannabis Tax Regulation 3702, concerns the wholesale cost and retail selling price of cannabis and cannabis products. The prices are defined as follows:

1. Wholesale cost: “when cannabis or cannabis products are sold or transferred to a cannabis retailer in an arm’s length transaction, the distributor and cannabis retailer shall enter the wholesale cost of the cannabis or cannabis products.”
2. Retail selling price: “when cannabis or cannabis products are sold in a retail sale, the cannabis retailer shall enter the retail selling price of the cannabis or cannabis products.”

Why is this important? Previously, cultivators and distributors were the primary users of the Metrc track-and-trace system, using the platform for quality control. Now, the California state government is requiring retailers to get involved by recording the retail selling price and the wholesale price.

Note that this is a proposed emergency regulation, meaning the public will have five days to submit comments to the Office of Administrative Law. You can find information about sending in your comments on the OAL website. If you have an questions, please get in touch with our experts.

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