Sales and use tax: medicinal cannabis.
Should this bill be enacted, it will represent a significant shift in the taxation landscape for medicinal cannabis, relieving patients of the financial burden associated with sales tax on these essential products. By exempting these transactions from sales tax, the bill aims to improve medical access to cannabis products for individuals with verified medical needs, potentially increasing patient numbers and overall cannabis sales in the state.
Assembly Bill 3124, introduced by Assembly Member Lackey, amends the Revenue and Taxation Code to provide a sales and use tax exemption specifically for medicinal cannabis and related products. This bill is set to take effect on January 1, 2021, and applies to sales made to qualified patients and their primary caregivers, contingent on the presentation of a valid physician's recommendation and a state-issued ID. This legislation builds upon existing laws from the Compassionate Use Act of 1996 and Proposition 64, which already outline provisions for the regulated use of medicinal cannabis in California.
The most notable point of contention surrounding AB 3124 is the provision that explicitly states the state will not reimburse local agencies for the potential loss of revenue resulting from the new tax exemption. Critics of the bill may argue that this could strain local government finances, especially for communities where cannabis sales are a significant source of tax revenue. As localities are often left vulnerable to revenue shortfalls due to state-imposed tax changes, this stipulation raises concerns about fiscal accountability and equitable compensation for local governments.