California Gov. Gavin Newsom's approval of Assembly Bill 2555 extends the California use tax provisions originally included in the Dennis Peron and Brownie Mary Act, presenting a charitable tax planning opportunity for eligible entities interested in donating medicinal cannabis.
The original bill aimed to reduce the tax burden of charitable cannabis donations to increase patient access to medicinal cannabis. AB 2555, approved in late September, extends the use tax exemption for medicinal cannabis donations by a licensed cannabis retailer to a patient, or by a licensed person to a licensed cannabis retailer for subsequent donation to a patient. Given the base use tax rate in California is 7.25% and can be increased by local district taxes by another 0.10% to 1.50%, this exemption can be a valuable incentive to donate medicinal cannabis.
Organizations that are interested in taking advantage of the exemption should first verify the entity or individual they want to donate to is covered under the exemption. The only eligible recipients of donated medicinal cannabis are licensed cannabis retailers and medicinal cannabis patients.
After identifying an eligible recipient of the intended cannabis product donation, donating entities must comply with two provisions when making the donation.
Read more at Bloomberg Tax