Cannabis law: excise duty on CBD Cannabis dried.

The issue of excise taxation of hemp CBD dried is an increasingly emerging topic. And not without reason, as the legal situation for many hemp entrepreneurs is not entirely clear. Not every type of product and not all cannabidiol-containing preparations are subject to excise duty. Hemp law is gradually being transformed in a direction that is desirable from the point of view of the State's interests. As a result, pre-rolls and dried hemp for smoking have been subject to excise duty. Polish cannabis law is starting to be enforced en masse, and entrepreneurs in the industry are increasingly facing unpleasant inspections by state institutions.

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How did the hemp law tax dried CBD?

In 2018, it was assumed that CBD dried hemp will be subject to excise duty on so-called novelty products intended for smoking or vaporisation.

New hemp law was supposed to take effect from July last year, but the pandemic caused this to be postponed until the end of 2020 around October. The law has therefore come into force. What products have been excised? What has actually been taxed?

We clarify a few important points in cooperation with cannabis law experts.

Under the legislation, dried hemp is subject to 32.05% of the weighted average retail selling price of smoking tobacco, as well as an excise duty of PLN 155.79 per kilogram.

In practice, this means that per 1g of dried industrial hemp, excise duty will be approximately 35 gr.

It is necessary in this aspect to point out that from a production perspective it will be 75gr.

In addition, repackaging is also considered production in accordance with the standards. Entrepreneurs and individual brands that have produced, processed or sold hemp and dried hemp for smoking or CBD for vaporisation are likely to face a call for outstanding tax from the past five years or so.

In some cases, it is not impossible that this will mean that interest will have to be paid for this period, as well as the amount of the excise duty itself.

How to deal with unpaid excise duty?

It certainly becomes necessary to pay the outstanding excise duty with interest as well. In addition, it is necessary to complete the excise formalities. This includes implementing the current excise clearance processes and bringing the company into compliance with the statutory requirements.

From this angle, it is definitely worth considering the use of legal services.

If you have never dealt with the sale of excise goods before then, the moment further interest accrues, it is better to act promptly and precisely. The whole procedure can drag on and on, and the Tax Office will continue to accrue further arrears.

In this case, you will find more help from experts in Hemp law.

I predict that all or almost all companies that have been selling dried cannabis in recent years can expect audits, clarifications and a whole host of administrative and tax issues. Legal services from an experienced legal team may be the only sensible option to help minimise the impact of legal, tax and excise changes on the cannabis industry.

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What is worth knowing about the excise duty on dried cannabis?

In order to adapt to legal changes, entrepreneurs should:

  • register on the customs and tax portal before carrying out an activity involving the movement of excise goods,
  • This will require the establishment of a tax warehouse, which requires VAT registration,
  • having legal title to use the tax storage place and
  • confirmation in the form of an excise duty security.

A warehouse allows excise products to be manufactured, processed or packaged. The whole procedure is complicated and costly, and for many smaller companies it can mean the end of their business.

This does not change the fact that playing games with the system and circumventing cannabis laws by using old tricks is not necessarily a good idea.

Selling dried food as a decorative or collector's item may still work for a while. For how long? It is difficult to say. However, with the vision of having to pay outstanding taxes and excise duties for five years back with interest, it is worth reconsidering and consulting the business risks.

Especially those of you operating under your own name and as a sole trader may want to review your business model.

Cannabis products market related to the popularisation of supplementation and recreational use of cannabinoids including CBD does not operate in isolation from the system and the public-legal order.

The article was written in cooperation with lawyers and specialists in so-called cannabis law from the law firm Kufieta, Hupajło, Grzegorczyk:

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