Cannabis Industry Payroll Tax Reporting

We are here to help business owners in the cannabis industry follow California’s payroll tax laws and avoid unexpected tax liabilities. California businesses that hire employees to perform services are required by law to withhold, report, and pay payroll taxes.

Cannabis businesses include cultivations, manufacturers, distributors, transporters, and dispensaries. Types of employees that are typical in the cannabis industry include, but are not limited to, trimmers, cultivators, testers, managers, plant caretakers, budtenders, security guards, salespersons, delivery persons, etc.

Select from the topics below for more detailed information.

An employee includes:

  • Any officer of a corporation.
  • Any worker who is an employee under the ABC test.
  • Any worker whose services are specifically covered by law.

An employee may perform services on a less than full-time or temporary basis. The law does not exclude services from employment which are commonly referred to as day labor, part-time help, casual labor, temporary help, probationary, or outside labor.

For More Information

Wages are all compensation for an employee’s personal services.

Wages include, but are not limited to:

  • Salaries, hourly pay, piece rate, or payments by the job.
  • Commissions and bonuses.
  • Overtime and vacation pay.
  • The reasonable cash value of compensation other than cash.

An employee’s wages are subject to all payroll taxes and reportable as Personal Income Tax (PIT) wages unless otherwise stated.

For More Information

If you operate a business and employ one or more employees, you must register as an employer and set up an EDD payroll tax account within 15 days of paying wages of more than $100 in a calendar quarter. The registration will allow you to report and pay the required payroll taxes.

For More Information

California businesses that hire employees to perform services are required by law to withhold, report, and pay payroll taxes.

Note: If your cannabis business is unable to open a checking account, you are still required to pay payroll taxes. Contact your local Employment Tax Office to make payment arrangements with one of our representatives to make your Payroll Tax Deposit (DE 88) payments.

All employers are required to electronically submit employment tax returns, wage reports, and payroll tax deposits to us.

e-Services for Business is your fast, easy, and secure way to manage your employer payroll tax account online 24 hours a day, 7 days a week.

Additional Information

e-Services for Business

Use e-Services for Business to manage your employer payroll tax account online.

Contact Us

If you have questions, Contact Payroll Taxes. You can also contact the Taxpayer Assistance Center at 1-888-745-3886 or visit your local Employment Tax Office.