Patients who hold a county-issued Medical Marijuana Identification Card (MMIC) do not pay sales and use tax on qualifying medicinal cannabis. The 15 percent state cannabis excise tax still applies to everyone.
Cannabis taxes in California stack up at checkout: a state cannabis excise tax, state and local sales tax, and in many places a local cannabis business tax that may be passed on in the price. Proposition 64 created one important break for medical patients: a sales and use tax exemption for qualifying purchases by holders of a valid Medical Marijuana Identification Card. This page explains who qualifies, what the exemption covers, what it does not, and the current rates as of October 2026, based on guidance from the California Department of Tax and Fee Administration (CDTFA).
California imposes a cannabis excise tax on retail purchases of cannabis and cannabis products under Revenue and Taxation Code section 34011.2. According to CDTFA, the rate is 15 percent of gross receipts from retail sales, effective October 1, 2025. Retailers collect it from customers, state it separately on the receipt, and pay it to CDTFA.
The rate briefly rose to 19 percent from July 1 through September 30, 2025, under an adjustment required by earlier law. Assembly Bill 564 (Statutes of 2025, chapter 127) returned the rate to 15 percent starting October 1, 2025. Under the current statute, the next possible adjustment would take effect no earlier than the 2028-29 fiscal year, and the rate cannot exceed 19 percent. Starting January 1, 2026, Assembly Bill 8 also broadened the definition of cannabis products subject to the tax to cover many intoxicating hemp-derived THC products.
The excise tax applies to medicinal sales too. CDTFA states plainly that the MMIC exemption applies only to sales and use tax and not to the cannabis excise tax.
California stopped imposing its separate cannabis cultivation tax on harvested cannabis entering the commercial market as of July 1, 2022.
Proposition 64 created a sales and use tax exemption for medical patients, now found in Revenue and Taxation Code section 6369.6. Sales of medicinal cannabis and medicinal cannabis products are exempt from sales and use tax when a person with an identification card, or their primary caregiver, gives the seller both their Medical Marijuana Identification Card issued under the CDPH program and a valid government-issued ID.
California's statewide base sales tax rate is 7.25 percent, and most areas add district taxes on top, so the exemption is worth the full combined local sales tax rate where you shop.
A recommendation from a California-licensed physician is enough to shop at a medicinal retailer if you are 18 or older, and to access medical-only products. It is not enough for the tax exemption. The exemption is tied specifically to the state MMIC, which only county programs issue.
The MMIC is voluntary. Counties set their own fees, capped at $100 per application or renewal, with a 50 percent reduction for Medi-Cal beneficiaries and possible fee waivers for indigent patients in the County Medical Services Program. A card is valid for up to one year. Whether the card pays for itself depends on how much you buy, your local sales tax rate, and your county fee. See /cost/ for typical costs and /renew/ for keeping your recommendation current.
Access to medicinal retailers at 18+, medical-only products, and medical possession limits. Excise tax and sales tax both apply.
Everything above, plus the sales and use tax exemption on qualifying purchases. Excise tax still applies.
Many cities and counties tax cannabis businesses, and rates vary widely. CDTFA notes that when a retailer separately lists a local cannabis business tax on your receipt, that amount is included in the gross receipts subject to the excise tax and sales tax. Some localities treat medicinal sales differently; check with your city or county, or ask the retailer how local taxes apply.
Cannabis is not a deductible medical expense on federal income tax returns. IRS rules limit the medical expense deduction to drugs legally obtained under federal law, and a state recommendation is not a federal prescription. The April 2026 federal rescheduling of state-licensed medical marijuana to Schedule III mainly affects businesses, not individual patient deductions. Talk to a tax professional about your own situation.
Last reviewed: October 13, 2026. This page is general information, not legal or medical advice.
Yes. The 15 percent cannabis excise tax applies to all retail cannabis sales, including medicinal sales to MMIC holders.
CDTFA lists the rate as 15 percent of gross receipts from retail sales, effective October 1, 2025. Under AB 564, the next possible rate adjustment is deferred until the 2028-29 fiscal year.
No. Only a valid county-issued Medical Marijuana Identification Card, shown together with a government ID, qualifies for the sales and use tax exemption.
Counties set the fee, capped by state law at $100 per application or renewal. Medi-Cal beneficiaries get a 50 percent reduction, and indigent patients in the County Medical Services Program may have the fee waived.
Yes. A primary caregiver with a valid MMIC issued for that role can claim the exemption when purchasing medicinal cannabis for the patient, along with a government ID.
Generally no. Federal rules only allow deductions for drugs legally obtained under federal law. Ask a tax professional about your specific case.
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