California Allows Donations Of Cannabis To Medical Marijuana Recipients

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As the stigma behind marijuana usage fades, new challenges have been presented to the burgeoning industry. Unlike most medication, prescribed marijuana generally is not covered by medical insurance. In response, California is taking the unprecedented step in authorizing free marijuana to qualified residents. Seizing upon a need to provide lower cost marijuana to medical marijuana cardholders, California recently passed legislation that allows retailers to designate marijuana for donation to individuals in need. That legislation, known as Senate Bill 34, applies not only to retailers but also to licensed cultivators, manufacturers and distributors.

Senate Bill 34 was necessary for allowing marijuana producers and retailers to legally donate the drug while receiving tax-exempt status for the donation. While it has been legal for individuals to gift marijuana, licensed marijuana entities could not do so as California law designated it as a forbidden form of promotion. Now, with the passage of Senate Bill 34, that has all changed. Brought on by the considerable difficulty in obtaining state-issued medical marijuana ID cards, the new legislation seeks to remove the costly barriers to legal medical marijuana for the indigent and terminally ill.

It remains to be seen what effect the new legislation will have on retailers and producers. While recent data suggests that there isn’t much extra marijuana to spare, one percentage point of the $31 billion industry would amount to $31 million in potential donated cannabis. And with neighboring states experiencing a surplus of the drug, a change in federal law may even allow for the exportation of cannabis in the near future.

A gift of marijuana (also known as a compassionate donation) is kind of a new thing. Those looking for compassionate donations will most likely need to present a doctor’s prescription and proof of indigency (e.g. welfare check or public assistance voucher). Terminally ill patients with limited resources have been the focus of various nonprofit groups who specialize in providing low or no cost medical marijuana to those in need. These groups were previously working with individual donors, but with the passage of the new legislation, they are excited about the prospect of having licensed retailers and producers authorized to donate to their cause.

Senate Bill 34 eliminates certain reimbursement requirements along with the payment of excise tax on any donated marijuana. Retailers and producers simply need to attest in writing that the marijuana was used for the purpose of donation to those who are qualified and in need. Fear of exploitation of this new law appears to be slim as a process has been put in place for eligible recipients of the donated cannabis to prove that they are entitled to the drug.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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