SACRAMENTO, Calif — The new year brings hundreds of new laws to California. Two new laws that go into effect on January 1, 2020, help to clarify state and federal tax laws related to the legal cannabis industry in the state.
Summary: This bill allows licensed cannabis retailers to donate cannabis to medical patients who have difficulty accessing it through compassionate care programs.
Current Law: The Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) regulates all aspects of the cannabis business in California including distribution and tax laws.
What’s new: This bill, known as “The Dennis Peron and Brownie Mary Compassionate Care Act” authorizes cannabis business's the ability to provide free cannabis products to medicinal cannabis patients who have difficulty accessing it and excludes the cultivation tax.
Why it’s needed: This bill was presented to help very sick veterans and low-income people access medicinal cannabis.
According to the Author, Scott Wiener, representing the 11th district; "[This bill] would help veterans and low-income people who are very sick access medicine by allowing compassionate care programs to partner with existing retailers to facilitate the donation of medical cannabis or cannabis products on their licensed [premises]. It also codifies existing Bureau of Cannabis [Control] regulations that permit retailers to donate cannabis and cannabis products to medical patients. SB 34 would also exempt all donations of cannabis to valid medical patients from the use and cultivation taxes as we don't tax any other medicine in California."
The bill had strong support from the California Cannabis Industry Association. There were no groups listed as opposition on file.
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Summary: This bill updates tax law related to the legal cannabis industry in California.
Current Law: Commercial cannabis businesses are not allowed to claim deductions and credits available to other legal businesses in the state of California due to existing IRS code and federal income tax laws.
What’s new: Assembly Bill 37 was introduced on December 3, 2018, to help equalize the treatment of taxpayers related to the Personal Income Tax Law with the Corporate Income Tax Laws of the state and the federal laws. The bill brings tax equity to the cannabis industry like other legal California businesses.
It was passed by the state senate and approved by the Governor on October 12, 2019, to start on each taxable year beginning on or after Jan 1, 2020, and before Jan 1, 2025.
Why it’s needed: This bill was presented to bring clarity and equality to the tax laws for California businesses involved in the cannabis industry.
According to the bill's author, Reggie Jones-Sawyer, representing the 59th district; "The cannabis industry has multiple barriers to entry – limited access to banking, compliance with complex state regulations and a high tax burden. In addition to these challenges, the federal government continues to treat our state's legal industry as a criminal activity. Current state law conforms to federal policies that disallow tax deductions for businesses that "traffic" controlled substances, resulting in higher taxes for legal cannabis businesses. Californians voted overwhelmingly to make cannabis a legal enterprise in our state and to benefit from the tax revenue brought in by this new industry. High taxes imposed on legal cannabis products are putting the legal industry at a disadvantage in competing with the illicit market, which results in less tax revenue for the state. AB 37 will ensure that cannabis businesses are taxed like any other legal industry in our state and will help legal businesses thrive in California."
The support for the bill included the sponsor of the bill, California Cannabis Industry Association, along with other groups including; CMG/Caliva, Osiris Ventures dba NorCal Cannabis, Rural County Representatives of California, Southern California Coalition, and State Treasurer Fiona Ma. There were no groups listed as opposition on file.
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