Annual Report on Tax Exemptions for Medicinal Cannabis

analysis full gutter Annual Report on Tax Exemptions for Medicinal Cannabis JULY 2021 Statutory Data Reporting Requirement. goes to the Cannabis Tax Fund created by Chapter 837 of 2019 (SB 34, Wiener) established Proposition 64 (2016). new tax exemptions for donations of medicinal Use Tax Revenue Lost. CDTFA estimates that cannabis. The law directs our office to submit an the 2020 revenue loss from the SB 34 use tax annual report containing data on three outcomes exemption was roughly $120,000. Revenue from related to the exemptions: the number of medicinal the use tax goes to the state’s General Fund and to cannabis patients served, the amount of medicinal local programs. cannabis products donated, and the amount of tax revenue lost. This report fulfills that statutory Figure 1 requirement for 2020. Amounts of Products Donated Under Data Source. Our office obtained the data SB 34 Exemption in 2020 described below from the California Department of Food and Agriculture and the California Department Weight Specified of Tax and Fee Administration (CDTFA). The data Product Total Weight (Pounds) come from the state’s Metrc “track and trace” Flower 2,067 Fresh Plant 39 system for licensed cannabis. In particular, the data Leaf 3,193 reflect transactions that businesses identified as Waste 100 medicinal donations in calendar year 2020. Other 7 Number of Patients Served. In 2020, licensees identified 13,278 transactions as medicinal Weight Not Specified donations. The data do not tell us who received Product Total Packages each donation. Some patients likely received Capsule 3,977 Clone—Cutting 8,521 more than one donation in 2020, so this total Clone—Tissue Culture 26 likely overstates the number of distinct patients. Edible 32,634 For example, if a patient received six donations Extract 10,514 in 2020, then the transaction total includes that Flower 208 person six times. Immature Plant 347 Amounts of Products Donated. As shown Infused Butter/Oil 27 Other Concentrate 8,207 in Figure 1, licensees donated a wide variety Pre-Roll Flower 18,132 of products in 2020. The top panel of the figure Pre-Roll Infused 2,026 summarizes the total weight of donations whose Pre-Roll Leaf 9,055 weights were specified in the Metrc data. The Seeds 167,115 bottom panel summarizes the number of donated Tincture 11,008 packages whose weights were not specified. Topical 2,842 Cultivation Tax Revenue Lost. CDTFA Vape Cartridge 15,935 estimates that the 2020 revenue loss from the SB 34 cultivation tax exemption was roughly $400,000. Revenue from the cultivation tax Legislative Analyst’s Office 1 analysis full gutter LAO Publications This report was prepared by Seth Kerstein, and reviewed by Brian Uhler and Carolyn Chu. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. Legislative Analyst’s Office 2