Several marijuana-related bills were signed into law by Gov. Gavin Newsom recently. Among them:
- A measure to allow legal marijuana businesses to take advantage of more tax deductions – in a departure from IRS policy.
- A measure to provide free medical marijuana to low-income patients – and exempting those products from state-level taxes.
- A measure directing California regulators to provide the U.S. Department of Agriculture with a program plan for industrial hemp in accordance with the 2018 Farm Bill, which legalized the non-THC crop and its derivatives (which include CBD).
In addition to passing these laws, the governor vetoed a bill that would have allowed medical marijuana to be used in hospitals and other health care facilities.
Our Los Angeles marijuana lawyers are committed to helping our clients navigate the ever-changing legal landscape of California cannabis law and regulation. With so much at stake, marijuana businesses cannot afford to ignore these changes.
Tax Law Changes
Federal tax law – specifically section 280E – prohibits those who grow, process and sell marijuana from being allowed to deduct taxes, due to the fact that the business profits from marijuana, which is illegal under federal law. Up until this point, California tax law closely matched U.S. tax law.
Now, AB 37 changes that, departing from Internal Revenue Service Policy under 280E. The measure will allow cannabis companies to take state-level deductions just like any other business – from Jan. 1, 2020 to Jan. 1, 2025. The bill takes effect immediately as a tax levy.
Greater Access for Low-Income Residents
Another measure gives greater access to medical marijuana for low-income patients. SB 34 changes the law with regard to “cannabis donations.” Existing administrative law bars licensed cannabis retailers from providing free cannabis to anyone at a licensed premises. There is a narrow exception for licensed medical marijuana retailers and those with micro-business licensees that are providing medical marijuana to patients who struggle to afford it.
SB 34 authorizes all licensed cannabis shops to offer free or reduced-cost marijuana or related products to medical marijuana patients who meet certain medical and income requirements. The bill further exempts marijuana businesses from being taxed on these “donations.”