Beginning March 1, 2020, California law provides that cannabis retailers may donate free medicinal cannabis or medicinal cannabis products (medicinal cannabis) to medicinal cannabis patients, or cannabis licensees may donate free medicinal cannabis to cannabis retailers for subsequent donation to medicinal cannabis patients, without payment of certain taxes (see Senate Bill 34).

• The cultivation tax will not apply to medicinal cannabis when the cultivator designates for donation in the California Cannabis Track‑and‑Trace system.
• The cannabis excise tax does not apply when a cannabis retailer donates free medicinal cannabis to a medicinal cannabis patient.
• The use tax will not apply when a cannabis retailer donates free medicinal cannabis to a medicinal cannabis patient, or when another licensee, such as a distributor or manufacturer, donates free medicinal cannabis to a retailer for subsequent donation to a medicinal cannabis patient.

Who qualifies as a medicinal cannabis patient?
A medicinal cannabis patient is a qualified patient who possesses a qualifying physician’s recommendation, or a qualified patient or the patient’s primary caregiver with a valid Medical Marijuana Identification Card issued by the California Department of Public Health.

How do you certify that the medicinal cannabis will be donated?
The cannabis licensee that receives medicinal cannabis for donation must certify in writing to the licensee donating it that the medicinal cannabis will ultimately be donated to a medicinal cannabis patient. Cannabis licensees may use a written document, such as a letter, note, purchase order, or preprinted form, as a cannabis donation certificate. Or, a cannabis licensee may use CDTFA‑230‑CD, Cannabis Donation Certificate as a written certification that the medicinal cannabis will be donated to a medicinal cannabis patient.

More detailed information can be found in the CDTFA’s Tax Guide for Cannabis Businesses.