The Humboldt County Grower’s Alliance, in partnership with the Origins Council, hosted a conversation Thursday surrounding compliance with new state guidance for cannabis trade samples and medical cannabis donations.
The Humboldt County Growers Alliance, a trade association that represents 275 licensed cannabis businesses in Humboldt County, recently joined the Origins Council as a regional partner for state and federal cannabis advocacy. The Origins Council, which also represents the Mendocino Cannabis Alliance and the Trinity County Agriculture Alliance, is the largest membership-based cannabis advocacy organization in the state representing nearly 900 licensed cannabis businesses across California.
Natalynne DeLapp, executive director for the Humboldt County Growers Alliance, emphasized the importance of trade samples and the opportunity to foster connections between brands and buyers.
“Trade samples are a marketing tool that allows farmers and manufacturers to share their products through the supply chain, not to consumers,” DeLapp said. “Trade samples allow for products to be tasted, smelled, sampled, and enjoyed by licensed buyers such as distributors and retailers. Prior to 2021, this allowance did not exist within California’s legal framework.”
Before the passage of Assembly Bill 141 in 2021, there was no way to designate cannabis products provided from one licensee to another for marketing purposes as trade samples to avoid the cannabis taxes, according to Omar Figueroa, founder and principal attorney for the Law Offices of Omar Figueroa, one of the leading cannabis licensing and regulatory compliance law firms in California.
“AB 141 added new language to the Business & Professions Code as well as the Revenue and Taxation Code to create such a procedure for trade samples,” Figueroa explained during Thursday’s presentation. “The Department of Cannabis Control has adopted regulations pertaining to trade samples.”
Beginning, Jan. 1, AB 141 exempted trade sales from cannabis taxes, including “all harvested cannabis that will be, or has been, designated as a trade sample and all harvested cannabis that is used to manufacture a cannabis product that is designated as a trade sample.” In addition, the cannabis excise tax does not apply to a cannabis product designated as a trade simply “that is given to another licensee without consideration.”
Attorney Lauren Mendelsohn provided a detailed outline on the new guidelines for trade samples for cultivators, manufacturers, distributors, and retailers.
“As a cultivator, one can provide cannabis trade samples to any cannabis licensee except cannabis event organizers, transport-only distributors, and testing laboratories,” Mendelsohn explained. “One can receive trade samples from manufacturers, distributors, other cultivators, and microbusinesses authorized to engage in cultivation, manufacturing, or distribution.”
As a manufacturer and a distributor, “one can provide cannabis trade samples to any cannabis licensee except cannabis event organizers, transport-only distributors, and testing laboratories. One can receive them from cultivators, distributors, other manufacturers, and microbusinesses,” she added.
When it comes to medical cannabis donations, per Senate Bill 34, cannabis retailers can donate free medicinal cannabis products to medical 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, according to Figueroa.
Cannabis goods donated to medical cannabis patients or primary caregivers must comply with all other requirements applicable to other cannabis goods, he added.