What you need to know about the transaction privilege tax and the marijuana excise tax

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As you may already know, on November 3, 2020, Arizona voted into law the “Smart and Safe Arizona Act” (Proposition 207), which the Secretary of State certified on November 30, 2020. With Katie Hobb’s approval, Proposition 207 has become effective to govern the possession, sale and taxation of adult use marijuana in Arizona. Licensing and registration information can be convoluted as you must complete each step in order. So… where do you start? How about the transaction privilege tax and the marijuana excise tax.

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Where do I start?

In Arizona, any business that wishes to sell medical or recreational marijuana products must first hold a license issued by the Arizona Department of Health Services (ADHS). Once your business has been issued a license from the ADHS, you will need to apply for the Transaction Privilege Tax (TPT) license and/or the Marijuana Excise Tax (MET) license through the Arizona Department of Revenue (ADOR). To determine which tax is applicable to you, please see the “Do I need a Transaction Privilege Tax (TPT) license or Marijuana Excise Tax (MET) license?” by clicking the following link: Adult Use Marijuana.  In short, Medical Marijuana will be exposed to only TPT, while the Adult Use (Non-Medical) Marijuana will be exposed to both TPT and MET.

How do I obtain a TPT License and/or MET License?

In order to obtain an TPT license number, you will need to complete the paper registration form Medical, Adult Use or Dual License Transaction Privilege/Use/Excise Tax Application (JTM-1) with proof of licensing from ADHS. Form JTM-1 is used to apply for the TPT and MET as well as the MET registration number. It can also be used to register for Employer Withholding and Unemployment Insurance. Please note that TPT licenses are valid for a calendar year and must be renewed yearly. Unfortunately, registration for MET cannot be done online, it must be done by paper.

If you are already licensed for medical marijuana and/or want to start selling recreational marijuana in addition to medical marijuana (dual license), you must contact the ADOR because medical and recreational marijuana sales need to be reported using new business codes.

Is there additional assistance or resources I can look through?

The ADOR has recently dedicated web pages to Adult Use Marijuana tax requirements, frequently asked questions, examples, and other helpful information. Please see the link for information: Adult Use Marijuana. There is also an Outreach Unit that the ADOR created to assist with registration, to ensure systems are set-up correctly to collect TPT and MET, and to help obtain dual licenses. You can contact the ADOR Outreach Unit by email at AZTaxHelp@azdor.gov.