This bill is part of the 2019 Cannabis Bills section of our ongoing update on California Cannabis Legislation – see the full California Cannabis Law Legislative Update which includes information on cannabis bills from other years.
SB 475 (Skinner D) Cannabis: trade samples: cultivation tax: exemption.
The Control, Regulate and Tax Adult Use of Marijuana Act of 2016 (AUMA) prohibits a licensee from giving away any amount of cannabis or cannabis product as part of a business promotion or other commercial activity.
This bill, on and after January 1, 2020, would allow a licensee to designate cannabis or a cannabis product as a trade sample at any time while the cannabis or cannabis product is in the possession of the licensee and would impose specific requirements on the licensee making the designation. This bill would prohibit the sale or donation of cannabis or a cannabis product that is designated a trade sample, but would allow those trade samples to be given for no consideration to an employee of the licensee that designated the trade sample or to another licensee. The bill would require trade samples given to another licensee to be recorded in the track and trace system and would require a licensee to maintain records of cannabis trade samples given to employees. The bill would prohibit an employee of a licensee from possessing or transporting trade samples in excess of specified amounts. The bill would allow the bureau to establish by regulation a limit on the quantity of cannabis and cannabis goods designated by a licensee as a trade sample, as specified.
MAUCRSA provides that cannabis batches are subject to quality assurance and testing prior to sale at a retailer, microbusiness, or specified nonprofit, except as provided.
This bill would require cannabis or cannabis products designated as a trade sample that are intended to be given to retailer licensees to be subject to quality assurance and testing.
AUMA, and as further amended by statute, imposes a cultivation tax on all harvested cannabis that enters the commercial market upon all cultivators and requires a distributor or a manufacturer to collect that tax from a cultivator, as specified. Existing law requires the California Department of Tax and Fee Administration to administer that tax.
This bill, on and after January 1, 2020, would exempt from the cultivation tax the cultivation of all harvested cannabis that has been, or will be, designated a trade sample and all harvested cannabis that is used to manufacture a cannabis product that is designated a trade sample. This bill would require the department to adopt regulations prescribing the procedures for how the exemption will be implemented, including, but not limited to, procedures for the refund or credit of any cultivation tax paid or collected before the cannabis is designated as a trade sample or is used to manufacture cannabis product that is designated as a trade sample.
Existing state sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state of, or on the storage, use, or other consumption in this state of, tangible personal property purchased from a retailer for storage, use, or other consumption in this state. The Sales and Use Tax Law provides various exemptions from those taxes.
This bill would provide an exemption from those taxes for the sale of, or the storage, use, or consumption of, cannabis or a cannabis product that will be, or has been, designated a trade sample by a licensee under MAUCRSA, as specified.
Read more about California Cannabis Legislation – see the full California Cannabis Law Legislative Update.
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