New Bill Eliminates Excise Tax for Donated Cannabis Products

by Roger Tower on March 1, 2020

Senate Bill 34

Senate Bill 34 was introduced in October of 2019 and goes into effect beginning March 1. The new bill, known as the Dennis Peron and Brownie Mary Act, allows cannabis retailers to provide free cannabis goods to qualified medicinal patients or their caregivers. The bill also exempts donated items from excise, sales and use, and cultivation taxes.

Current administrative laws prohibit cannabis retailers from providing free cannabis products to any person. When adult-use cannabis became legal in California in 2018, new regulations cut off access to low-income, terminally and chronically ill patients who relied on cannabis for treatment. 

Many non-profits who provided access to medicinal cannabis, like Jerry Extract’s Shelter Project, were forced to close their doors in 2018 and are now rejoicing the implementation of SB34. 

“What exactly does the passage of SB34 mean to patients in need of cannabis? In short, it means that compassion programs will be permitted to provide free cannabis to medical patients without requiring a state issued medical ID card (MMID). It also means that the significant tax burden carried by cultivators and producers—in addition to the cost of donated products—has been removed” stated the Shelter Project who stopped enrolling new patients in 2018. 

Requirements for Retailers

According to state cannabis licensing authorities, in order for a licensed cannabis retailer to donate cannabis products, it must comply with all current cannabis regulations and testing. 

• The products must go through the same supply chain as cannabis products for sale and also meet all testing requirements, packaging and labeling, and so on. 
• Only licensed cannabis retailers or nonprofit organizations working with them are allowed to donate cannabis products to qualified medicinal patients. 
• Licensed cannabis retailers must document products assigned for donations on invoices and sales receipts as well as designate them as donations in the Track-and-Trace system. 
• Manufacturers producing cannabis products for donation must include the statement “FOR MEDICINAL USE ONLY” on the label.

Specific requirements and more information for licensed cannabis retailers can be found at the California Cannabis Portal website. 

Providing Compassionate Cannabis in California  

The Dennis Peron and Brownie Mary Act intends to regulate the distribution of donated cannabis products to people in need who cannot otherwise afford access to it. 

Dennis Peron and Brownie Mary were cannabis activists in San Francisco in the early 80s who gave cannabis to HIV/Aids patients and lobbied for the legalization of cannabis. 

Compassionate care programs who were forced to stop services or were steered towards a black market will now be able to provide cannabis goods to qualifying patients again.