3821: Cannabis Equity Tax Credit (2024)

Who files this form

Use Form FTB 3821 to calculate and report the Cannabis Equity Tax Credit if you are a qualified taxpayer.

• A qualified taxpayer is an equity licensee approved for the California Department of Cannabis Control (DCC) fee waiver and deferral program. Approval contingent on available funds also qualifies.
• The fee relief approval must cover the license period that begins during the taxable year.
• All entity types except exempt organizations are eligible to claim the credit.

Shareholders, beneficiaries, partners, and members also use this form to claim credit received from a pass-through entity.

S corporations, estates, trusts, partnerships, and LLCs classified as partnerships must complete the form to report credit passed through to their owners or beneficiaries.

What you'll need

Have the following information and forms available, as applicable:

• Your California tax return, for the matching name and taxpayer identification number.
• Your DCC license, for the equity licensee's business name and license number.
• Your Schedule K-1 (100S, 541, 565, or 568) and attached statements if you received pass-through credit. These provide your share of the credit and the pass-through entity's California Cannabis Business License number.
• Your 2023 Form FTB 3821, line 6, if you have a credit carryover to enter on line 3.
• Form FTB 3544 if you are a corporation assigning credit within the same combined reporting group.
• Form FTB 3870 if you elect to make credit disallowed by the $5,000,000 business credit limitation refundable in future years.

How to file

Attach Form FTB 3821 to your California tax return. The supplied text does not provide a mailing address or e-file instructions.

• Complete a separate Form FTB 3821 for credit generated by your licensed business and for each Schedule K-1 reporting credit you received.
• Enter the credit claimed on line 5a and on your current-year tax return. If you complete multiple forms, report the total of their line 5a amounts on your return. Use credit code 247.
• Pass-through entities attach the form to Form 100S, 541, 565, or 568, as applicable. Report each recipient's credit on Schedule K-1 and attach a statement with the entity's California Cannabis Business License number.
• If making the future refundable-credit election, attach a completed Form FTB 3870 to your original, timely filed tax return.

Common mistakes

• Completing both line 1 and line 2. Complete only one. Do not report business-generated credit and pass-through credit on the same form.
• Entering more than $10,000 on line 1. The credit generated is limited to $10,000 per qualified taxpayer per taxable year.
• Listing multiple license numbers. If you received fee waivers for multiple cannabis licenses, enter only one license number.
• Including assigned credits on line 5a. Do not include assigned credits claimed on Form FTB 3544, Part B.
• Making an incorrect refundable-credit election. Do not include credit limited by your tax liability. You cannot elect only part of the credit disallowed by the $5,000,000 limitation, and the election must also cover all other credits claimed that year that were disallowed by that limitation.
• Counting elected refundable credit as a carryover. Do not include amounts elected as refundable on Form FTB 3870 in line 6.

Questions people ask

How much is the credit?

The allowable credit is $10,000 per taxable year for each qualified taxpayer. Tax liability and other credit limitations may reduce the amount you can claim in the current year.

Can I carry unused credit forward or back?

Unused credit may generally be carried forward for eight taxable years or until used up, whichever comes first. It cannot be carried back. For credit disallowed by the $5,000,000 business credit limitation and not elected as refundable, the carryover period is extended by the number of taxable years the credit was not allowed.

Is the credit refundable?

The credit is generally nonrefundable. However, credit disallowed by the $5,000,000 business credit limitation may qualify for an irrevocable election on Form FTB 3870 to become refundable in future years. S corporations cannot make this election for credits taken at the entity level.

What if I receive credit from more than one pass-through entity?

Complete a separate Form FTB 3821 for each Schedule K-1 reporting credit. Add the amounts claimed on line 5a of all your Forms FTB 3821 and report the total on your current-year tax return.

Official sources

• https://www.ftb.ca.gov/forms/2024/2024-3821.pdf