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NewYork Microbusiness Tax Filing SOP

To define clear, standardized procedures for calculating, collecting, remitting, and reporting Adult-Use Cannabis Excise Tax and General Sales Tax for a New York–licensed microbusiness that both distributes cannabis products (to its own retail outlet and other retailers) and sells them directly to consumers.

Kelly Beaver
Updated by Kelly Beaver

Purpose

To establish standardized procedures for capturing, calculating, remitting, and reporting Adult-Use Cannabis Excise Taxes and General Sales Taxes for a New York licensed microbusiness, which both distributes (to its own retail outlet and others) and retails cannabis products.

  • N.Y. Tax Law § 493(a)(1):
    “…In the case of a Microbusiness licensee … such [distributor] tax shall accrue at the time of the retail sale and the amount subject to the tax shall be seventy-five percent of the amount charged … to a retail customer.”
    👉 https://newyork.public.law/laws/n.y._tax_law_section_493

  • Retail Excise Tax: 13% on all retail sales to consumers.
  • General Sales Tax: Cannabis products are exempt from New York State sales tax, but non-cannabis goods (e.g., accessories, apparel) remain subject to sales tax.

Tax Structure for Microbusinesses

Tax

Rate

Base

Accrual Event

Notes

Distributor Excise

9%

Wholesale sales price

At the transfer to the retailer

Only for transactions to a 3rd party retailer

Distributor Excise

9%

75% of retail sales price

At retail sale (not transfer)

Special rule for microbusinesses

Retail Excise

13%

Retail sales price

At retail sale

Applies to cannabis products sold to consumers

Sales Tax 

4% state + local

Retail price

At retail sale

Only for non-cannabis goods (accessories, apparel, etc.)

Roles & Responsibilities

Role

Responsibilities

Finance Manager

Oversees compliance, reviews filings

Retail Manager

Ensures POS correctly calculates excise tax

Accountant

Prepares tax schedules, reconciles, files returns

Owner/Controller

Approves returns and payments

Procedures

There are six procedures

  1. Configuration
  2. Transaction Capture
  3. Reconciliation
  4. Filing & Payment
  5. Documentation
  6. Controls & Risk Mitigation

Configuration

Refer to Flourish Software Analytics for information about reports.
  • The Distributor Excise Tax is calculated by default. Flourish provides two configurations: 
    • Calculate excise tax on ordered qty (vs. allocated): This is useful if you want to provide estimates prior to shipping. 
    • Disable automatic excise tax calculation: Turn this off to compute tax liability manually.
  • Flourish Software configures Retail Sales Taxes. Users can not edit these. Sales Tax is computed based on the retail store’s address. 

Transaction Capture

At Wholesale
  • Only compute the Distributor Excise Tax when the sale or transfer is to a 3rd party retailer where the microbusiness acts as the distributor.
  • Record the sale price.
  • A user can uncheck the excise tax box on an order to remove the estimated tax calculation.
  • The Flourish application calculates the standard Distributor Excise Tax (9% x sales price)
At Retail Sale
  • Record sale price.
  • Calculate Retail Excise (13% × sale price) on cannabis goods sold and collect at the time of purchase
  • Calculate the Sales Tax (State 4% + local rates) on non-cannabis goods sold  and collect at the time of purchase
  • Display the Excise and Sales tax on the receipt
  • The POS records each tax liability separately.
Retail Refunds
  • Refund both the retail excise and the sales tax
  • Maintain refund documentation to support reversal.

Reconciliation

Periodic Booking

Use the Flourish tax liability reports to book the liabilities onto the appropriate GL accounts. Export PDFs and Excel exports for supporting documentation. Perform the following action below weekly or monthly. 

Access Permissions

  1. Confirm the user has “User has access to company-wide reporting” toggled on in Flourish.
  2. Without this, the Company Admin > Finance Reports folder will not be visible.

Navigation

  1. Select the correct facility for the reporting period.
  2. Go to Company Admin > Finance Reports.

Exporting for Records

  1. For each report below, export both PDF and Excel versions.
  2. Save exports to your designated Tax Documentation folder and/or upload to QBO.

Required Reports

  1. Sales – Wholesale Facility Invoice List
    1. Purpose: Calculates total wholesale sales for the selected period (basis for distributor excise on 3rd-party retailer sales).
    2. Instructions:
      1. Run with the correct date range.
      2. Only include final goods sales to third-party retailers (exclude intracompany and lab transfers).
      3. Use the “Order Taxes” column to confirm the total computed excise taxes.

  1. Sales – Retail Facility Tax Liability Report
    1. Purpose: Reports the total Retail Excise Tax (13%) and Sales Tax collected at POS.
    2. Instructions:
      1. Run with the correct date range.
      2. All refunds/returns are included in the report, based on the sale’s Completed Date.

  1. Sales – Retail NY Microbusiness Distributor Tax Liability Report
    1. Purpose: Calculates the Distributor Excise Tax liability for microbusiness sales (9% × 75% of retail price).
    2. Instructions:
      1. Run with the correct date range.
      2. Exclude items/categories transferred into retail where excise tax has already been paid upstream.
      3. Note: returns are included in the report based on the sale’s Completed Date.

Quarterly Prep
  1. Summarize total liabilities for each tax. These should already be booked in your GL:
    1. Calculate the Distributor excise 
    2. 9% of Sales to 3rd Party Retailers
    3. 9% × 75% × retail sales for goods sold at retail
    4. Retail excise (13% × retail sales).
    5. Sales Tax
  2. Adjust for returns.
  3. Prepare tax schedules for both excise categories.

Filing & Payment

  • Frequency: Quarterly (due 20th of the month following quarter).
  • Platform: NYS Web File – Adult-Use Cannabis Excise Tax portal.
  • Payment: Must authorize bank debit (remove debit blocks if applicable).
  • Zero Sales: If no sales occurred, file a zero return.

Documentation

Maintain records for at least 6 years:

  • POS sales data (with excise separation). Save as a PDF and export to Excel. 
  • Refund/return logs.
  • Tax schedules and reconciliations.
  • Web File return confirmations.

Controls & Risk Mitigation

  • Dual review: The accountant prepares, and the manager approves the filings.
  • Internal quarterly variance analysis to flag unusual movements.

How did we do?

Flourish Software messages and notifications

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