Now that you are efficiently using Distru to create Sales Orders and Transfers, what's the best way to send samples of your products? In the Metrc world there are a few ways to track them. Before we get into the flow, here are some definitions and updates to keep in mind:
From CDTFA Regulation 3700, (a) Definitions:
(11) “Wholesale cost” means:
(A) Prior to January 1, 2020, the amount paid by the cannabis retailer for the cannabis or cannabis products, including transportation charges. Discounts and trade allowances must be added back when determining wholesale cost....
(B) On and after January 1, 2020, “Wholesale cost” now means the amount paid by the cannabis retailer for the cannabis or cannabis products, including transportation charges.
Notice how the verbiage in (B) regarding discounts is omitted, which means that you no longer need to factor discounts back in to calculate excise tax on the retail value because you can do it on the discounted value.
Samples (or promotional items) scenarios
Samples (not for resale)
In this case the retailer is the consumer, therefore no excise tax collection is required. Generally, you owe sales tax on the sale of samples sold to cannabis retailers when the retailer is not purchasing these for resale, and the sales tax is calculated based on the sales price. However, if the sample items are sold for less than 50 percent of your cost (when the value of the cannabis or cannabis product is not obsolete or the cannabis or cannabis product is about to expire), you do not owe sales tax. However, you do owe use tax based on your cost of the cannabis or cannabis product sold.
For example, you sell a cannabis sample to a retailer for $1.00, which you originally purchased from the cultivator or manufacturer for $10.00. Since your selling price is less than 50 percent of your cost to purchase the item, you owe use tax based on your purchase price of $10.00. If your sales and use tax rate is 9.5 percent, you owe use tax of $0.95 ($10.00 x 9.5 percent).
Make sure to track which sample orders will require use tax remittance by making a note on the order or using a custom field.
Samples (for resale)
In this case excise tax must be collected. However, collection of sales tax is not required as long as the retail recipient has a resale certificate.
How to manage samples in Distru
If using separate sample SKUs
Create a separate sample SKU for each product type (products in Distru and items in Metrc) that should have the same naming convention but with the word -sample added to the end (i.e. Friendly Farms - Kosher Kush 1/8 -Sample) Also a reminder: these sample packages will each need to be marked with a sticker or stamp indicating they are 'Not For Resale.'
Set the desired quantity and the price for the sample SKUs (should be at least $0.01) when creating the product
Create sales orders, add a line item for the regular and sample product, set the pricing, and assign packages to both line items (be sure to create a separate package for samples via an assembly or split package feature)
At this point you can either create two separate invoices, one for regular items and one for sample(s), or have them in one invoice. (NOTE: Creating two invoices has no impact on your sales order).
If NOT using separate sample SKUs
Add two separate line items with the same product on the sales order
Set the desired quantity and price for each line item
You can have them on the same invoices or keep the same
Example
You want to sell 100 vape carts and give away 5 samples for Gelato Vape Cart 1g.
You create a sales order and add the vape cart with 100 quantity, at retail price.
Add a second line item with quantity 5, adjust the unit price accordingly
Create new packages from parent for both items using Inline Repackaging.
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