Alternative Energy Partners Inc (AEGY)

[JLE86]

From the California BOE:

The sale of tangible personal property in California is generally subject to tax unless the sale qualifies for a specific exemption or exclusion. Sales and Use Tax Regulation 1591, Medicines and Medical Devices, explains when the sale or use of property meeting the definition of “medicine” qualifies for exemption from tax.
Generally, for an item’s sale or use to qualify for an exemption from tax under Regulation 1591, the item must qualify as a medicine and the sale or use of the item must meet specific conditions. Regulation 1591 defines a medicine, in part, as any substance or preparation intended for use by external or internal application to the human body in the diagnosis, cure, mitigation, treatment, or prevention of disease and which is commonly recognized as a substance or preparation intended for that use. A medicine is also defined as any drug or any biologic, when such are approved by the U.S. Food and Drug Administration to diagnose, cure, mitigate, treat, or prevent any disease, illness, or medical condition regardless of ultimate use.
In order to be exempt, a medicine must qualify under the definition, and it must be either (1) prescribed for treatment by medical professional authorized to prescribe medicines and dispensed by a pharmacy; (2) furnished by a physician to his or her own patients; or (3) furnished by a licensed health facility on a physician’s order. (There are some other specific circumstances not addressed here such as being
by a state-run medical facility or a pharmaceutical company without charge for medical research.)
Generally, all of these requirements must be fulfilled in accordance with state and federal law.

Many medical marijuana dispensing collectives consider themselves to be health care facilities. Are they exempt from applying for a seller’s permit and paying sales tax for this reason?
Regulation 1591 exempts the sale or use of medicines furnished by qualifying health care facilities. (See response to Question 5, above, regarding the requirements to qualify as an exempt medicine.) State law defines a qualifying “health facility” as either a facility licensed under state law to provide 24-hour inpatient care or a state-licensed clinic