November 13, 2020

While the sale and distribution of cannabis continue to remain federally illegal, California has begun embracing the industry. The Employment Development Department (“EDD”) made itself available to help business owners in the cannabis industry follow payroll tax laws, and avoid tax liabilities. The cannabis industry is quickly growing, and includes employees acting as distributors, transporters, managers, plant caretakers, budtenders, security at dispensaries, salespersons, and now, delivery people.

While the industry itself may be a bit taboo, the payroll laws remain the same. Employees still have the same rights as employees in different industries. If you’d like to learn more about classifying a worker as an employee or an independent contractor, please read our article, Employee Versus Independent Contractor in California.

All businesses that engage employees must pay payroll taxes, including licensed and unlicensed medical and recreational cannabis businesses. Due to the nature of the industry, cannabis businesses often meet resistance when trying to open a business checking account with a bank. Even where a cannabis business cannot open a checking account with a bank, the business must still pay payroll taxes. The EDD is prepared and able to make arrangements with the cannabis industry to help with these situations.

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This article is based on the law as of the date posted at the top of the article. This article does not constitute the provision of legal advice, and does not by itself create an attorney-client relationship with Eskridge Law.