California Signs a Bill on Cannabis Tax Fairness into Law but Bans Marijuana in Hospitals

California Signs a Bill on Cannabis Tax Fairness into Law


Governor Gavin Newsom made the public announcement on Saturday after signing a series of bills on marijuana into law. One of the proposals will enable businesses to capitalize on tax deductions while blocking any measure that will give patients the freedom to use cannabis in hospitals.

Section 280E of the current state law prohibits cannabis farmers, sellers, and processors from deducting taxes expenses that would potentially be written off by businesses in other sectors. At this point, the current policy mirrors the approach taken by federal law.

The state taxation code outlined under section AB37 differs slightly from the IRS (Internal Revenue Service) policy as it will allow licensed businesses make deductions like other enterprises.

Mr. Newsom successfully lobbied for the legalization of marijuana in the state, and his constituents approved the measure through a vote in 2016. He went further to sign code SB34 that permits businesses to provide tax-free medical marijuana to patients with low-incomes.

Besides, the Governor also signed an additional bill, SB 153 that prompts state agencies to create a comprehensive industrial marijuana plan in line with the requirements of the Farm Bill (2018) and avail their submissions to the Department of Agriculture. The 2018 Farm Bill legalized cannabis and CBD products.

Eric Steensera, who is the CEO of Vote Hemp, told the press in a statement that the bill will make the California marijuana industry a significant force nationally.

The decision to bar some healthcare facilities from offering medical marijuana to terminally ill patients was not an easy one. Newsom “hesitantly” approved SB305 law. “The potential conflict between state laws and federal laws resulting from this bill cannot be ignored,” Governor Newsom said in a veto statement that insinuated facilities risk losing both Medicaid and Medicare funds for allowing the use of federally prohibited marijuana.

“It is a mystery that federal authorities continue to disregard the medicinal value of marijuana,” he said, adding that such stance poses risks to patients who need help.

Dale Gieringer, the Executive head of NORML, expressed his disappointment with the Veto saying the legislation has been altered immensely. An initial version explicitly covered terminal patients.

Governor Newsome signed other bills, which include industry peace agreements, appellations and marketing marijuana testing laboratories, vape cartilage labels, equity license applicants, and cultivation canopy sizes. He also assented a bill to law last week that will enable parents to use medical marijuana to students at schools.

Besides, the governor also signed another bill that seeks to promote cannabis-related research, labeled as AB420.

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