Three Big Changes to Marijuana This Year
Three big changes were ushered into California’s cannabis market at the start of 2020. Two are the result of legislation passed last year. One is a tax increase previously announced by a state agency.
Higher Pot Taxes
In November, the California Department of Tax and Fee Administration announced an increase in the tax on wholesale cannabis from 60% to 80%, starting Jan. 1. This means higher prices for consumers. As wary industry officials and lawmakers note, it could bolster the state’s black market.
Known as “The Dennis Peron and Brownie Mary Compassionate Care Act,” AB 34 will revive the compassionate care programs that were decimated after Prop. 64. It allows cannabis businesses to provide free medicinal cannabis products to patients who lack access or funds for medical marijuana, free of the current cultivation tax.
Until now, cannabis businesses could not claim tax deductions the way other businesses do. As of Jan. 1, thanks to AB 37, that has changed.
This bill, for each taxable year beginning on or after January 1, 2020, and before January 1, 2025, would specifically provide in the Personal Income Tax Law for nonconformity to that federal law disallowing a deduction or credit for business expenses of a trade or business whose activities consist of trafficking specified controlled substances only for commercial cannabis activity, as defined under MAUCRSA, by a licensee under MAUCRSA, thus allowing deduction of business expenses paid or incurred during the taxable year in carrying on that commercial cannabis activity under the Personal Income Tax Law.