Were Trader Joe's lecithin granules taxable even though the one-pound bag made no use or supplement claims?

Plain-English summary

Trader Joe's lecithin granules were sold in a one-pound bag. The company made no stated use claims, and the label gave only the product name, weight, nutritional value of one tablespoon, and calories per gram.

Even without express supplement wording, Board counsel relied on a prior conclusion that lecithin granules were dietary or food supplements designed to remedy dietary deficiencies and specially mixed or compounded to provide a high nutritional source.

Their sales were therefore taxable.

The same letter exempted the company's pure natural bee pollen because that separate product was simply sold for human consumption without use claims. A later separately published opinion treated whole, bulk lecithin as exempt under different facts; this page concerns the granular product and 1978 reasoning.

Common questions

Did the label call the granules a dietary supplement?

No. The source says the label contained only basic identity, weight, nutrition, and calorie information.

Why were the granules still taxable?

Counsel relied on a prior classification that they were specially compounded high-nutrition dietary supplements.

Does this settle the treatment of every lecithin product?

No. A later official opinion treated whole, bulk lecithin differently. Product form, processing, labeling, and current law matter.

Citations and references

• California Sales and Use Tax Regulation 1602 — cited; source-quoted copy enclosed with the response but not reproduced beyond the quotation in the official PDF
• Redacted private-label coordinator's April 26, 1978 letter asking about one-pound lecithin granules and four-ounce pure natural bee pollen — letter referenced and characterized but not reproduced in the official PDF
• Lecithin-granule and bee-pollen labels considered in the shared opinion — selected identity, weight, tablespoon nutrition, calories-per-gram, and absence-of-claims facts supplied; complete labels, formulations, ingredients, packages, samples, tests, invoices, and sales records not reproduced in the official PDF
• Unidentified prior Board conclusions classifying lecithin granules as compounded high-nutrition supplements and medicinal-claim bee pollen as nonfood — conclusions referenced without opinions, dates, annotations, analyses, or supporting records in the official PDF
• Official Annotation 245.1830's Trader Joe's identity and lecithin-granule classification — the PDF redacts the seller and product prefix, and the annotation does not explain the restored identity or supply the supporting record
• Official Annotation 245.1497's distinct treatment of whole, bulk lecithin without supplement or adjunct labeling — current annotation supplies the product-form distinction and an unexplained 2020-2 amendment marker
• Possible later product sale, label or formulation change, audit, assessment, refund claim, appeal, or other agency action — no follow-up or final outcome supplied in the official PDF

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/245-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/245-1830.pdf

Original ruling text

245.1830

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 445-2488

June 5, 1978

Mr. [R]
Private Label Coordinator
[M]
Post Office Box XXXX
--- ---, California XXXXX

S- -- XX XXXXXX

Dear Mr. [R]:
This is in reply to your letter of April 26, 1978 concerning whether or not tax applies to the following items: (1)

--- ---’s Lecithin Granules Sold in a one pound bag

(2)

--- ---’s Pure Natural Bee Pollen Sold in a four ounce bag

You state that you make no claim regarding either product. The labels on these two products state only the name of the item and the weight and in the case of the lecithin granules, the nutritional value of one tablespoon and the calorie count per gram. Sales and Use Tax Regulation 1602 (copy enclosed) provides that: “‘Food Products’ do not include any product for human consumption in liquid, powered, granular, tablet, capsule, lozenge, or pill form (A) which is described on its package or label as a food supplement, food adjunct, dietary supplement, or dietary adjunct, and to any such product (B) which is prescribed or designed to remedy specific dietary deficiencies or to increase or decrease generally one or more of the following areas of human nutrition: 1. 2. 3. 4.

Vitamins
Proteins
Minerals
Caloric Intake

Mr. [R]

-2-

June 5, 1978
245.1830

In determining whether a product falls within Category (B), it is important whether the manufacturer has specially mixed or compounded ingredients for the purpose of providing a high nutritional source….” We have previously concluded that Lecithin Granules are not considered “food products” as that term is defined in Regulation 1602, but that they are a dietary or food supplement designed to remedy specific dietary deficiencies consisting of ingredients which have been specially mixed or compounded for the purpose of providing a high nutritional source. As such, tax will apply to the sale of Lecithin Granules. We have previously concluded that “Bee Pollen” was not a “food product” when the label on the product indicated the product was for medicinal purposes. In the case of the “Bee Pollen” sold by your company there are no claims made as to this product’s uses, rather it is simply a food sold for human consumption. As such, we would consider “--- ---’s Pure Natural Bee Pollen” to be a “food product” and exempt from tax pursuant to Regulation 1602. If you have further questions concerning this matter, please write to this office. Very truly yours,

Mary C. Armstrong
Legal Counsel

MCA:do