New TPT and Excise Tax Law for Adult Use Marijuana
In the November 3, 2020 General Election, voters approved the Smart and Safe Arizona Act (Proposition 207), which the Secretary of State certified on November 30, 2020. With this approval, the Smart and Safe Arizona Act has become effective to govern the possession, sale, and taxation of adult use marijuana in Arizona.
In Arizona, any business that wishes to sell medical marijuana or adult use marijuana products must first hold a license issued by the Arizona Department of Health Services (ADHS). Once the business has been issued a license from ADHS, the Arizona Department of Revenue is prepared to support businesses and register them to start collecting transaction privilege tax (TPT) and excise tax. Marijuana establishments are liable for retail TPT and Marijuana Excise Tax (MET) on adult use marijuana products immediately upon being licensed by ADHS to make such sales to Arizona consumers.
To apply for a license to report TPT, excise and withholding tax, dispensaries must complete the Medical, Adult Use or Dual License Transaction Privilege/Use/Excise Tax Application (Form JTM-1) and email it to [email protected].
If a business already holds a TPT license, it must contact ADOR to make the necessary changes to the license that will allow it to file and pay taxes on sales of marijuana products. Please note, the business will not be able to properly report its taxes without first contacting ADOR.
Medical Marijuana
Medical marijuana dispensaries in Arizona are subject to state and local retail TPT on their sales of medical marijuana and other products sold at the dispensaries. They must hold a current TPT license with ADOR and file and pay retail TPT on these sales.
Medical marijuana dispensaries that have been filing and paying TPT on their sales must contact ADOR because such sales need to be reported using a new Medical Marijuana business code on Form TPT-2. Dispensaries will only be allowed to use this code after contacting ADOR.
Adult Use (Non-medical) Marijuana
Adult use marijuana businesses in Arizona are subject to state and local retail TPT on their sales of adult use marijuana and other products. Adult use marijuana retailers must report such sales using a new Adult Use Marijuana business code on Form TPT-2.
In addition to retail TPT, adult use marijuana retail sales are also subject to a 16% state marijuana excise tax (MET). This tax must be reported on Form MET-1, which is separate from and in addition to Form TPT-2. To file and pay MET, an adult use marijuana retailer must register with ADOR in addition to applying for a TPT license.
For Assistance
You can find information on starting a new business at https://azdor.gov/business. For questions or assistance, contact [email protected].
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Friday, Jan 29, 2021