ASA Comments on CA Sales Tax Exemption Proposal

Recently, the California State Board of Equalization asked for comments on a conceptual proposal to exempt terminally ill patients from paying sales tax on cannabis provided by dispensaries. In California, as in many other states, medications prescribed by doctors are not taxable. Below is Americans for Safe Access' letter to the Board of Equalization.

Americans for Safe Access (ASA) is encouraged that the Board of Equalization (BOE) is considering revising the present system which subjects medical cannabis patients to retail sales tax when purchasing their medicine; however, we have concerns about patient privacy and fairness that makes the proposal untenable in it’s present form.

The idea to grant a waiver to terminally ill patients from having to pay sales tax raises a number of concerns. In order to become eligible for such a waiver, a patient would have to disclose their specific medical condition to BOE or another agency. In addition to forcing patients to disclose their condition or even their greater medical history to receive the benefit of not having to pay sales tax, the state would be put in the precarious position of determining what patients are sick enough to earn a sales tax exemption.

Instead, ASA feels a more appropriate approach would be to treat medical cannabis sales in the same manner as other sales of medicine in California by not taxing patients for the purchase of medicine from a health care facility. An approach that better meets the spirit of Revenue & Taxation Code § 6369(a)(3), (“Sales of medicines are exempt from sales and use taxes if…(3) furnished by a health facility for patient treatment pursuant to the order of a licensed physician.”) would be more appropriate for the BOE to adopt. Rather than taxing patients for the purchase of their medicine, the BOE should consider other ways of raising revenue from the medical cannabis industry that do not directly affect patients, many of whom are low-income and permanent chronic debilitating conditions that are not terminal.
ASA thanks the Board for offering the chance to comment and would gladly welcome any opportunity to further discuss revising sales tax for medical cannabis purchases.

Mike Liszewski is ASA's Policy Director.