Taxation is an important topic for dispensaries and cultivators in Mississippi to understand, as it can have a significant impact on their operations and finances. There are two taxes associated with the sale of medical cannabis in Mississippi: excise tax and sales tax. Applicants are required to obtain tax permits as part of the application process. This involves registering for a sales tax account and applying for a permit on TAP. Failure to obtain the necessary tax permits and comply with tax regulations can result in penalties and legal issues. Therefore, it is crucial for medical cannabis establishments in Mississippi to be aware of and comply with all tax requirements.
Excise tax is a tax levied on the first sale or transfer of medical cannabis by cultivators in Mississippi. The rate of the tax is set at 5% and is due when the cultivator sells to a processing facility or on the transfer of cannabis between related entities. Medical cannabis cultivators are responsible for paying this tax, which must be remitted to the Mississippi Department of Revenue. Failure to pay the excise tax can result in penalties and legal repercussions.
In addition to excise tax, dispensaries in the cities of Jackson and Tupelo may be subject to special tax levies. These tax levies are intended to support local initiatives and may be applied in addition to the standard sales tax of 7%.
Sales tax is imposed on the sale of tangible goods, including medical cannabis, in Mississippi. Medical cannabis dispensaries are required to charge a standard sales tax rate of 7% to cardholders at the point of sale. This tax is collected by the dispensary and must be remitted to the Mississippi Department of Revenue. Failure to collect or remit the required sales tax will result in penalties.
Cultivators and processors are also required to obtain a sales tax account and permit if they are making sales. This involves registering for a sales tax account and applying for a permit on TAP. In some cases, a direct pay permit may be required for processors who are manufacturing a medical cannabis product. This permit allows the processor to pay the sales tax directly to the state rather than having the dispensary collect and remit the tax on their behalf.
Income Tax or Withholding Tax
Operators in Mississippi may be subject to applicable income tax or withholding tax, depending on their business structure and other factors. Income tax is a tax on the income earned by the operator, while withholding tax is a tax on the wages paid to employees. The requirements for paying applicable taxes can vary depending on the specific circumstances of the medical cannabis establishment. Generally, operators in Mississippi are required to file an annual tax return with the Mississippi DOR and pay taxes owed. This may involve obtaining a tax identification number, keeping accurate financial records, and reporting all income and expenses. Failure to comply can have a significant impact on operations and viability.
Fair Market Value in Mississippi
Fair market value refers to the price that a willing buyer would pay a willing seller for a particular item. In Mississippi, fair market value is used to calculate the 5% excise tax on sales or transfers of cannabis from a cultivation facility to a medical cannabis establishment. Fair market values are set by the DOR and are adjusted twice per year, on January 1 and July 1.
For the period of July 1, 2022 to December 31, 2022, the fair market value for medical cannabis flower sold is $3,200 per pound. The fair market value for medical cannabis trim sold to a common interest establishment is $640 per pound. For the period of January 1, 2023 to June 30, 2023, the fair market values remain the same.
Operators are required to calculate the 5% excise tax based on the fair market value of the cannabis being sold or transferred. This may involve obtaining an appraisal or using other methods to determine the fair market value of the medical cannabis.
Sales Tax Permit Application
Registering for a sales tax account and applying for a permit in Mississippi involves a few key steps. First, medical cannabis establishments must register for a sales tax account with the Mississippi Department of Revenue. This involves submitting an application and providing information about the business, including its name, address, and federal tax identification number. Once the sales tax account is established, medical cannabis establishments can apply for a sales tax permit through the Taxpayer Access Point (TAP) system. This involves submitting an application, providing information about the business, and paying any applicable fees. The application process can take up to three weeks to complete, so it is important for medical cannabis establishments to apply for the necessary permits as early as possible.
Obtaining a sales tax permit ID is crucial for those seeking a dispensary license. In order to apply for a dispensary license, medical cannabis establishments must have a sales tax permit ID. This requirement ensures that medical cannabis establishments are in compliance with all tax laws and regulations. This also helps to prevent fraudulent or illegal activities.
Need Help Filing?
If you’re living in Mississippi and are confused about filing your taxes, GreenGrowth CPAs can help! We have several financial programs to assist companies and individuals with their fiscal responsibilities, including tax planning and compliance, accounting & finance support, audit preparation, tax controversy support, and much more.