3821: Cannabis Equity Tax Credit (2025)
California · FTB · Used for tax years 2025
California Form FTB 3821 calculates and reports the Cannabis Equity Tax Credit for qualified taxpayers. It reports licensee information, credit generated or received through a pass-through entity, credit claimed, and carryovers.
Who files this form
Use Form FTB 3821 to calculate and report the Cannabis Equity Tax Credit if you are a qualified taxpayer claiming the credit.
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 qualifies. The approval must cover the license period that begins during the taxable year. All entity types except exempt organizations are eligible.
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 these records and forms available, as applicable:
- Your California tax return, for your name and identifying numbers as shown on the return.
- Your DCC license, for the licensed business name and license number, and your fee relief approval information to check eligibility.
- Schedule K-1 (100S, 541, 565, or 568) if you received pass-through credit, including the attached statement with your share of the credit and the entity's California Cannabis Business License number.
- Your 2024 Form FTB 3821, line 6, if you are reporting a prior-year credit carryover on line 3.
- Form FTB 3544 if your corporation assigns credit within a 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.
- Enter your name and identifying numbers as shown on your return.
- Complete Part I with the equity licensee's business name and license number. For pass-through credit, use the entity information supplied with your Schedule K-1.
- Complete line 1 for credit generated by your licensed business, or line 2 for pass-through credit, but not both. Complete a separate Form FTB 3821 for your generated credit and for each Schedule K-1 reporting credit.
- Enter any prior-year carryover on line 3 and add lines 1 through 3 on line 4. Complete the applicable entries for credit claimed, assigned, or elected as refundable in future years. Calculate the remaining carryover on line 6.
- Report the credit claimed on line 5a and on your California tax return using credit code 247. If you have multiple Forms FTB 3821, report the sum of their line 5a amounts on your return.
Pass-through entities attach this form to Form 100S, 541, 565, or 568, as applicable. They must report each recipient's credit on Schedule K-1 and attach a statement showing the entity's California Cannabis Business License number.
If making the future refundable credit election, attach completed Form FTB 3870 to your original, timely filed return.
Common mistakes
- Combining generated and pass-through credits on one form. Complete line 1 or line 2, not both. Use a separate form for each Schedule K-1 reporting credit.
- Entering more than $10,000 on line 1. The generated credit is limited to $10,000 per qualified taxpayer per taxable year.
- Listing multiple license numbers. If you have multiple cannabis licenses with fee waivers, enter only one license number.
- Including assigned credit received on line 5a. Do not include assigned credit claimed on Form FTB 3544, Part B.
- Treating tax-liability limits as eligible for the refundable election. Line 5c must not include credit limited by your tax liability. Those amounts may instead be carried over.
- Making only a partial refundable election. You cannot elect a partial amount of the disallowed credit. The election must also cover all other credits claimed that year that were disallowed by the $5,000,000 limitation.
- Counting elected refundable amounts as 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 and credit limitations may reduce the amount you can claim for 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. Credit disallowed by the $5,000,000 business credit limitation may receive an extended carryover period if you do not elect future refundability.
Is the credit refundable?
The credit itself is nonrefundable. However, credit disallowed by the $5,000,000 business credit limitation may qualify for an irrevocable election on Form FTB 3870. Under that election, 20% is refundable in each year of a five-year period beginning the third taxable year after the election year. S corporations cannot make this election for credits taken at the entity level.
How does the credit work for an S corporation?
An S corporation may claim only one-third of the credit against its entity-level tax. The remaining two-thirds must be disregarded and cannot be carried over. The S corporation may pass through 100% of the credit to its shareholders.