The CDTFA’s cannabis vendor compensation program, which went into effect starting January 1, 2023, will end as planned on December 31, 2025. (CDTFA Special Notice L-998 (September 18, 2025)) No current legislation has extended approval for any cannabis retailer to retain vendor compensation beyond that date.
Under the program, cannabis retailers that have been approved by the Department of Cannabis Control for an equity fee waiver can apply with the CDTFA for vendor compensation. (R&TC §34011.1) Under the vendor compensation program, eligible cannabis retailers may retain 20% of the cannabis excise tax due on their retail sales of cannabis or cannabis products.
Eligible cannabis retailers that intend to apply to retain vendor compensation must submit an application to the CDTFA by September 30, 2025. The last period the CDTFA can approve to retain vendor compensation begins October 1, 2025. Retailers can submit applications or renewals via the CDTFA’s Online Services account by selecting their cannabis excise tax account.
If the CDTFA already approved a retailer to retain vendor compensation through December 31, 2025, the retailer may retain vendor compensation from the cannabis excise taxes reported on their December 2025 monthly return or on the fourth quarter 2025 return. These retailers do not need to take any further action.
