Daily Tax Report: State

Bill Would Exempt Medical Pot Donations From California Tax

Sept. 12, 2019, 3:48 AM

Donations of marijuana for medical uses would be exempt from California state taxes if Gov. Gavin Newsom signs a bill passed by the state Legislature

S.B. 34 by Sen. Scott Wiener (D) would exempt donated medicinal pot, which has been legal since 1996, from taxes imposed on marijuana when it became legal for recreational use in 2018. The bill won a final vote Senate vote of 36-0 Sept. 11 to accept amendments taken in the Assembly.

Newsom (D) has not said whether he would sign the measure, which is similar to a bill vetoed by former Gov. Jerry Brown (D) in 2018. In his veto message, Brown said the bill conflicted with the approved ballot measure and undermined the intent of the voters. Newsom must sign or veto the latest bill by Oct. 13.

Nonprofit organizations known as compassion programs donate medicinal pot to low-income people including veterans and people with HIV, according to Wiener. An oversight in the measure voters approved to legalize recreational pot imposes cultivation and sales taxes on marijuana that the programs donate.

“We should not burden these programs with taxes meant for businesses, and we should not force people with serious health problems onto the unregulated cannabis market,” Wiener said in a news release.

Taxes of $9.25 per ounce of dried marijuana flowers, $2.75 per ounce of dried leaves, and $1.75 per fresh plant, plus state sales and use taxes, apply to the donations.

To contact the reporter on this story: Laura Mahoney in Sacramento, Calif. at lmahoney@bloomberglaw.com

To contact the editor responsible for this story: Rebecca Baker at rbaker@bloomberglaw.com

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