California Makes Gifting Cannabis to Terminally Ill Tax-Exempt

The terminally ill of California can soon receive more free marijuana, as Gov. Gavin Newsom signed a bill into law on October 12, making medical marijuana tax-exempt when donated to the sick, dying and poor.

Beginning on March 1 of next year, as much as $53 million worth of “compassionate” medical marijuana could be donated to the needy. That equates to approximately 125,000 patients receiving one gram of flower each day, every day, for an entire year.

The Brownie Mary and Dennis Peron Act, as Senate Bill 34 is known, was sponsored by Sen. Scott Wiener. At the onset of California’s legal adult-use era in early 2018, it quickly became apparent that greater legal protections were needed to ensure marijuana could more easily reach those with medical needs for it.

If you need help deciphering medical marijuana laws, or help trying to get compassionate marijuana out to seriously ill patients, our Los Angeles medical marijuana attorneys are here for you.

Proposition 64 Shortcomings
It was a lot less difficult to freely gift medical marijuana to patients in need between 1996 and 2017. Then with the introduction of Proposition 64, which called for the sunset of collectives beginning in 2019, no legal way existed to move free cannabis between medical growers and the terminally ill, elderly or poor.

Under Proposition 64:

• Adults aged 21 and older can only legally gift one another up to one ounce of marijuana at a time; and
• State licensed medical and adult-use stores cannot give away marijuana (that would be considered ‘illegal promotion,’ which could cost cultivators and store owners their licenses.)

Brownie Mary and Dennis Peron Act
Senate Bill 34 re-enables the charitable giving of marijuana by re-working California’s track-and-trace system. Simply put, SB 34 implores the state to conduct $375,000 worth of software upgrades, which would then allow for the addition of a tax-free “compassion class” of marijuana within the adult-use supply chain.

Farmers and retailers would also enjoy exemptions to help incentivize compassionate medical-marijuana giving. The new law will give growers an exemption of $9.25 per ounce in cultivation taxes on all marijuana donated to patients in need. While store owners would receive an exemption to the Prop. 64 law that requires a 15 percent state excise tax.

The Brownie Mary and Dennis Peron Act pays homage to two medical-marijuana activists, now internationally lauded for their civil disobediences, who gave medical marijuana to seriously ill patients in the 1980’s.

Legal Implications
Making more free marijuana legally available to the terminally ill will make life-changing differences to patients in need. But more barriers will need to be addressed. For instance, many legal cannabis farmers have taken a number of steep losses, via licensing fees, taxes and general business expenditure, so it remains to be seen just how much of their crops they will be willing to give away.

Industry insiders project that in 2020, less than one percent of the state’s $3.1 billion industry might be compassionately given to those medically in need. That would check out to less than $31 million worth of cannabis donations. While that is a start, and passing SB 34 is a first step, now follow up steps will likely become a focus for compassion groups. Broadening SB 34 to permit donations of tax-free products as well, would be a welcomed follow up.

About Cannabis Law Group
The Los Angeles CANNABIS LAW Group represents growers dispensaries, ancillary companies, patients and those facing criminal marijuana charges. Call us at 949-375-4734.

Additional Resources:
Senate Bill 34 – The Brownie Mary and Dennis Peron Act
Proposition 64 – The Adult Use of Marijuana Act