3820: High-Road Cannabis Tax Credit (2024)
California · FTB · Used for tax years 2024
California Form 3820 calculates and reports the High-Road Cannabis Tax Credit and is attached to your California tax return. It reports qualified expenditures, credits received from pass-through entities, the credit claimed or assigned, and amounts carried over or elected as refu
Who files this form
Form 3820 is used to report the High-Road Cannabis Tax Credit on your California tax return.
- Qualified taxpayers conducting a licensed commercial cannabis business complete Part I, Items A through E. The license types listed are Type-10 (retailer) and Type-12 (micro-business).
- Shareholders, beneficiaries, partners, or members who received the credit from a pass-through entity complete only Items C and E in Part I.
The form states that a business without a tentative credit reservation (TCR) from the Franchise Tax Board does not qualify for the credit.
What you'll need
Have the information and applicable forms used to complete Form 3820:
- Name(s) as shown on your California tax return and the applicable taxpayer or business identification numbers.
- Business name as it appears on the Department of Cannabis Control license, license type, and license number. Pass-through credit recipients complete only the license number and TCR confirmation number in Part I.
- TCR confirmation number.
- Worksheet I, line 1, column (k), for qualified employment compensation expenditures.
- Amounts spent on safety-related equipment, training, and services, and on workforce development and employee safety training.
- Schedule K-1 (100S, 541, 565, or 568), if you received a pass-through credit.
- Any credit carryover amounts from prior years.
- Form FTB 3544, Part A, column (g), if reporting credit assigned by a corporation.
How to file
Attach Form 3820 to your California tax return.
- Qualified taxpayers: Complete Part I, Items A through E, and Part II, lines 1 through 6 and 8 through 11. Skip line 7.
- Pass-through credit recipients: Complete Part I, Items C and E, and Part II, lines 7 through 11. Skip Items A, B, and D and lines 1 through 6.
The provided form does not give a mailing address or e-filing instructions.
Common mistakes
- Claiming the credit without a TCR: The form says a business does not qualify if it did not obtain a tentative credit reservation from the Franchise Tax Board.
- Checking more than one license type: Check only one box in Item B.
- Completing the wrong fields: Pass-through credit recipients must skip Items A, B, and D and lines 1 through 6. Qualified taxpayers must skip line 7.
- Including assigned credit on line 10a: Do not include any assigned credit claimed on Form FTB 3544, Part B.
- Reporting an assigned credit amount as a noncorporation: If you are not a corporation, enter 0 on line 10b.
- Forgetting the attachment: Attach Form 3820 to your California tax return.
Questions people ask
How is the credit amount calculated?
Add qualified employment compensation expenditures, safety-related equipment, training, and services expenditures, and workforce development and employee safety training expenditures. Multiply the total by 25%. Line 6 is the smaller of that result or $250,000.
Can the business qualify without a tentative credit reservation?
No. Item D states that a business does not qualify for the credit if it did not obtain a TCR from the Franchise Tax Board.
Where do I report a credit received from a pass-through entity?
Enter the pass-through credit from Schedule K-1 (100S, 541, 565, or 568) on line 7.
How do I calculate the credit carryover available for future years?
On line 11, subtract the total of lines 10a, 10b, and 10c from line 9. Those three lines cover credit claimed on the current-year return, credit assigned, and credit to be elected as refundable in future years.