California Gov. Gavin Newsom handed a win to the cannabis industry over the weekend when he signed a law allowing marijuana businesses to claim state tax deductions.

It’s one of eight laws he signed in the closing weeks of the legislative year aimed at fine-tuning the 2016 ballot initiative voters passed to legalize cannabis and at helping state-registered marijuana companies compete with black market dealers.

California’s burgeoning legal cannabis industry has plenty of advantages in attracting customers with storefront locations and state-mandated health testing that provides buyers some insurance that products are safe.

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But, the industry in general still cannot access commercial banks and its customers pay taxes and fees that black market sellers don’t charge.

The tax deductions “will play a vital role in leveling the playing field for legal cannabis businesses,” said Assemblyman Reginald Jones-Sawyer, D-Los Angeles, who wrote the law allowing cannabis companies to claim them from 2020 to 2024.

The other bills Newsom signed include measures that make it easier for ill people to receive cannabis medication at no cost, encourage workers to join unions and promote minority ownership of marijuana businesses. Here’s a look at the new laws.

Charitable donations

Marijuana retailers will soon be allowed to donate cannabis products to medicinal users without running afoul of state law.

Sen. Scott Wiener, D-San Francisco, said low-income medicinal marijuana patients have struggled to get their medication due to the state’s “ridiculous taxes.”

“Compassion programs save lives by providing free medicine to people in need,” Wiener said in prepared remarks. “We should not burden these programs with taxes meant for businesses, and we should not force people with serious health problems onto the unregulated cannabis market.”

Cannabis testing

Cannabis companies will be permitted to re-test their product to correct for minor errors, under a law signed by Newsom.

Previously, cannabis samples had to be “either remediated or destroyed” if they failed a lab test for chemicals and contaminants, according to a Senate Rules Committee analysis of the bill.

This law permits testing labs to amend their certificates of analysis with approval from the Bureau of Cannabis Control.

Equity in licensing

Newsom signed a law that aims to provide expanded opportunity for communities affected by the War on Drugs to enter into the licensed cannabis industry.

The bill requires that cannabis licensing authorities develop and implement a need-based fee deferral or waiver program by 2021. Under that program, at least 60 percent of the dollar amount of waivers and deferrals of fees “must be allocated to equity applicants and licensees,” according to a Senate floor analysis of the bill.

The goal of the program is “to remedy the failures of the drug war by ensuring that applicants with prior convictions, communities that have been over-policed, and communities where poverty is significant are able to enter the burgeoning industry,” according to the Drug Policy Alliance, a co-sponsor of the bill.

“The state plays a pivotal role to ensure that the conditions exist to create an equitable cannabis industry reflecting the broad diversity of California,” the the alliance said in a statement of support for the bill.

Newsom signed several other cannabis-related bills, including:

A bill authorizing the Center for Medicinal Cannabis Research, at UC San Diego, to cultivate cannabis for use in scientific study. The center has struggled with obtaining enough cannabis for research due to federal restrictions.

A bill setting a deadline of 60 days for cannabis businesses with 20 or more employees to sign a labor peace agreement, allowing employees to unionize without their employer’s interference. The law also requires license applicants with fewer than 20 employees to provide a statement that they will enter into such an agreement once they have 20 or more employees.

A bill allowing the mandatory “universal symbol” for cannabis vapor cartridges to be as small as one-quarter inch high and one-quarter inch wide. The cannabis industry found the previous requirement, one-half inch by one-half inch, to be “a time-consuming and expensive process” to afix to the cartridges, according to an Assembly floor analysis of the bill.





A bill expanding a restriction on cannabis companies advertising that a product is from a certain county or region in California if it was not actually produced in that county or region. The bill prevents the use of similar sounding names in advertisements.

Newsom said he “begrudgingly” chose to veto a bill allowing terminally ill patients at healthcare facilities to use medical marijuana on-site.

In his veto statement, the governor expressed his sympathies with Senate Bill 305, sponsored by Sen. Ben Hueso, D-San Diego, but that “the bill would create significant conflicts between federal and state law that cannot be taken lightly.”

The bill would jeopardize health facilities’ ability to receive Medicare and Medicaid payments, Newsom said.