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Medical Marijuana Gross Receipts Tax

The Medical Marijuana Program, authorized by Act 16 of 2016, establishes a program for the use of medical marijuana in Pennsylvania by patients with serious medical conditions. The law requires growers/processors to pay a 5 percent excise tax on the gross receipts from the sale of medical marijuana to the dispensary. The Pennsylvania Department of Health will issue permits to approved medical marijuana growers/processors and dispensaries. Visit medicalmarijuana.pa.gov for information on Pennsylvania’s Medical Marijuana Program.

Definitions

Medical marijuana - refers to marijuana obtained for a certified medical use by a Pennsylvania resident with a serious medical condition and is limited by statute in Pennsylvania to the following forms:

  • pill;
  • oil;
  • topical forms, including gel, creams or ointments;
  • a form medically appropriate for administration by vaporization or nebulization;
  • tincture;
  • liquid;
  • A form medically appropriate for administration by vaporization or nebulization, including dry leaf or plant form for administration by vaporization.

Dispensary (Retailer) - A person, including a natural person, corporation, partnership, association, trust or other entity, or any combination thereof, which holds a permit issued by DOH to dispense medical marijuana to a patient/caregiver. The term does not include a health care medical marijuana organization under Chapter 19 of Act 16 of 2016.

Grower/Processor - A person, including a natural person, corporation, partnership, association, trust or other entity, or any combination thereof, which holds a permit from the DOH under this act to grow and process medical marijuana. The term does not include a health care medical marijuana organization under Chapter 19 of Act 16 of 2016.

Licensing/Registration

The Pennsylvania Department of Health will handle all licensing/permitting related to the production and/or sale of medical marijuana. Please visit medicalmarijuana.pa.gov for more information.

Part of the process in applying for a license/permit will require a tax clearance review from the Department of Revenue. However, the Department of Health will request the tax clearance check from Revenue on behalf of the applicant. Once an in-depth review of the company, its partnerships and corporate officers is completed and cleared, a Clearance Certificate will be issued directly to the Department of Health.

Is there a licensing/permit fee?

Yes, please visit medicalmarijuana.pa.gov for more information.

Do I have to register with the Department of Revenue?

No, there is no registration process with the Department of Revenue for medical marijuana. However, the business entity may be liable for other business taxes, such as employer withholding tax. You can register for an account by completing the Online PA-100 at www.pa100.state.pa.us.

Taxation

A business involved in the sale or disbursement of medical marijuana can be subject to various Pennsylvania taxes, such as a gross receipts tax, personal income tax, corporate net income tax, etc., depending upon its business type and activities.

Gross Receipts Tax

What is the tax rate for the sale of medical marijuana by a grower/processor to a dispensary?

There is a 5 percent tax on the gross receipts received from the sale of medical marijuana by a grower/processor to a dispensary.

Who pays the tax?

The tax is paid by the grower/processor.

Who must file?

Growers/processors and clinical registrant growers/processors must submit a quarterly medical marijuana gross receipts tax return with the Pennsylvania Department of Revenue, even for periods where no taxable sales occurred. Effective October 15, 2019, paper returns are no longer available for this tax type.

Growers/processors can file and remit medical marijuana tax electronically by registering at mypath.pa.gov. If you are unable to comply with the electronic payment method, you must notify the Pennsylvania Department of Revenue 30 days prior to the payment due date. In such instances, please call the department at 717-787-8326.

When are the due dates for medical marijuana gross receipts tax?

Payments and returns are due on the last day of January, April, July and October for the preceding calendar quarter. Due dates can be found on form REV-1810 for the current year.

Sales Tax

Is there a sales tax?

No, the sale of medical marijuana is not subject to sales tax.

Income Tax

Do I have to pay income tax on the profits earned as a grower/processor or dispensary?

Yes, businesses in Pennsylvania must file and pay taxes (such a personal income tax or corporate net income tax) based on the business type.

What business expenses/deductions are allowable for personal income tax purposes?

Deductions are allowable for all ordinary, reasonable and necessary business expenses associated with the business activity.

Do I have to pay corporate net income tax on the profits earned as a grower/processor or dispensary?

The calculation of Pennsylvania corporate net income tax begins with federal taxable income and is then adjusted for certain items specified in Article IV of the Tax Reform Code. Currently, there are no adjustments for medical marijuana. A corporation must use the same amount for its Pennsylvania corporate tax return as it does for its federal return.