PART 14.6. Noncannabis Cannabinoids Tax
34050.
(a) “Arm’s length transaction” means a sale entered into in good faith and for valuable consideration that reflects the fair market value in an open market between two informed and willing parties, neither under any compulsion to participate in the transaction.(b) “Department” means the California Department of Tax and Fee Administration or its successor agency.
(c) “Manufacturer” means a person who manufactures noncannabis cannabinoids for the ultimate purposes of sale or transfer.
(d) “Noncannabis cannabinoid” means a psychoactive or nonpsychoactive cannabinoid that is derived from a plant that is not cannabis,
the sale of which is regulated pursuant to Part 7.5 (commencing with Section 114500) of Division 104 of the Health and Safety Code.
(e) “Nonprofit” has the same meaning as set forth in Section 26070.5 of the Business and Professions Code.
(f) “Person” has the same meaning as set forth in Section 6005.
(g) “Retailer” means a person offering noncannabis cannabinoids for sale within the state of California.
(h) “Retail sale” has the same meaning as set forth in Section 6007.
(i) “Sale” and “purchase” mean any change of title or possession, exchange, or barter, conditional or otherwise, in any manner or by any means whatsoever, for consideration.
(j) “Tax Fund” means the Noncannabis Cannabinoids Tax Fund created by Section 34054.
(k) “Transfer” means to grant, convey, hand over, assign, sell, exchange, or barter, in any manner or by any means, with or without consideration.
34051.
(a) (1) An excise tax shall be imposed upon purchasers of noncannabis cannabinoids at a rate of one cent ($0.01) per milligram. A purchaser’s liability for the cannabis excise tax is not extinguished until the cannabis excise tax has been paid to this state except that an invoice, receipt, or other document from a retailer given to the purchaser pursuant to this subdivision is sufficient to relieve the purchaser from further liability for the tax to which the invoice, receipt, or other document refers.(2) Each retailer of noncannabis cannabinoids shall provide a purchaser with an invoice, receipt, or other document that includes a statement that reads: “The noncannabis cannabinoids excise taxes are included in the total
amount of this invoice.”
(3) The department may prescribe other means to display the excise tax on an invoice, receipt, or other document from a retailer given to the purchaser.
(b) (1) A manufacturer in an arm’s length transaction shall collect the noncannabis cannabinoids excise tax from the retailer on or before 90 days after the sale or transfer of noncannabis cannabinoids to the retailer. A manufacturer in a nonarm’s length transaction shall collect the excise tax from the retailer on or before 90 days after the sale or transfer of noncannabis cannabinoids to the retailer, or at the time of retail sale by the retailer, whichever is earlier. A manufacturer shall report and remit the excise tax to the department pursuant to Section 34052. A retailer shall be responsible for collecting the excise tax from the purchaser and remitting the excise tax to the
manufacturer in accordance with rules and procedures established under law and any regulations adopted by the department.
(2) A manufacturer shall provide an invoice, receipt, or other similar document to the retailer including the excise tax, and any other information deemed necessary by the department. The department may authorize other forms of documentation under this paragraph.
(3) The excise tax required to be collected by the manufacturer, and any amount unreturned to the retailer that is not tax but was collected from the retailer under the representation by the manufacturer that it was tax, constitute debts owed by the manufacturer to this state.
(4) A manufacturer that has collected any amount of tax in excess of the amount of tax imposed by this part and actually due from a retailer may refund that amount
to the retailer, even though the tax amount has already been paid over to the department and a corresponding credit or refund has not yet been secured. The manufacturer may claim credit for that overpayment against the amount of tax imposed by this part that is due upon any other quarterly return, providing that credit is claimed in a return dated no later than three years from the date of overpayment.
(5) Any tax collected from a retailer that has not been remitted to the department shall be deemed a debt owed to the State of California by the person required to collect and remit the tax.
(c) The excise tax imposed by this section shall be in addition to the sales and use tax imposed by the state and local governments.
(d) Gross receipts from the sale of noncannabis cannabinoids for purposes of assessing the sales
and use taxes under Part 1 (commencing with Section 6001) shall include the tax levied pursuant to this section.
(e) Noncannabis cannabinoids shall not be sold to a purchaser unless the excise tax required by law has been paid by the purchaser at the time of sale.
(f) This section does not impose an excise tax upon medicinal cannabis, medicinal cannabis products, or noncannabis cannabinoids that are used for medicinal purposes.
34052.
(a) Unless otherwise prescribed by the department pursuant to subdivision (c), the excise tax imposed by this part is due and payable to the department quarterly on or before the last day of the month following each quarterly period of three months. On or before the last day of the month following each quarterly period, a return for the preceding quarterly period shall be filed with the department by each manufacturer using electronic media. Returns shall be authenticated in a form or pursuant to methods prescribed by the department.(b) The department may require every person engaged in the manufacture and retail sale of noncannabis cannabinoids to file, on or before the 25th day of each month, a report using electronic media respecting the
person’s inventory, purchases, and sales during the preceding month and any other information the department requires to carry out the purposes of this part. Reports shall be authenticated in a form or pursuant to methods prescribed by the department.
(c) The department may adopt regulations prescribing the due date for returns and remittances of excise tax collected by a manufacturer in an arm’s length transaction pursuant to subdivision (b) of Section 34051.
34053.
(a) The department shall administer and collect the taxes imposed by this part pursuant to the Fee Collection Procedures Law (Part 30 (commencing with Section 55001)). For purposes of this part, the references in the Fee Collection Procedures Law to “fee” shall include the taxes imposed by this part, and references to “feepayer” shall include a person required to pay or collect the taxes imposed by this part.(b) The department may prescribe, adopt, and enforce regulations relating to the administration and enforcement of this part, including, but not limited to, collections, reporting, refunds, and appeals.
(c) The department shall adopt necessary rules and regulations to
administer the taxes in this part. Those rules and regulations may include methods or procedures to tag noncannabis cannabinoids, or the packages thereof, to designate prior tax payment.
(d) The department may bring any necessary legal actions to collect any deficiency in the tax required to be paid, and, upon the department’s request, the Attorney General shall bring the actions.
34054.
(a) The Noncannabis Cannabinoids Tax Fund is hereby created in the State Treasury. The fund shall consist of all taxes, interest, penalties, and other amounts collected and paid to the department pursuant to this part, less payment of refunds.(b) Notwithstanding any other law, the Tax Fund is a special trust fund established solely to carry out the purposes of this part.
(c) Notwithstanding Section 13340 of the Government Code, all revenues deposited into the Tax Fund, together with interest or dividends earned by the fund, are hereby continuously appropriated for the purposes of this part without regard to fiscal year and shall be expended only in accordance with the provisions
of this part and its purposes.
(d) Notwithstanding any other law, the taxes imposed by this part and the revenue derived therefrom, including investment interest, shall not be considered to be part of the General Fund, as that term is used in Chapter 1 (commencing with Section 16300) of Part 2 of Division 4 of Title 2 of the Government Code, shall not be considered General Fund revenue for purposes of Section 8 of Article XVI of the California Constitution and its implementing statutes, and shall not be considered “moneys” for purposes of subdivisions (a) and (b) of Section 8 of Article XVI of the California Constitution and its implementing statutes.
(e) The Controller shall periodically audit the Tax Fund to ensure that those funds are used and accounted for in a manner consistent with this part and as otherwise required by law.
34055.
The taxes imposed by this part shall be in addition to any other tax imposed by a city, county, or city and county.34056.
(a) Beginning with the 2023–24 fiscal year, the Department of Finance shall estimate revenues to be received pursuant to this part and provide those estimates to the Controller no later than June 15 of each year. The Controller shall use these estimates when disbursing funds pursuant to this section. Before any funds are disbursed pursuant to subdivision (b), the Controller shall disburse from the Tax Fund to the appropriate account, without regard to fiscal year, the following:(1) Reasonable costs incurred by the department for administering and collecting the taxes imposed by this part, provided, however, those costs shall not exceed 4 percent of tax revenues received.
(2) Reasonable costs incurred by the State Department of Public Health for any duties prescribed in Part 7.5 (commencing with Section 114500) of the Health and Safety Code.
(3) Reasonable costs incurred by the Controller for performing any duties in connection with this part, including the audit required by Section 34054.
(5) Reasonable costs incurred by the Department of Finance for performing any duties in connection with this part.
(b) The Controller shall next disburse the funds by July 15 of each fiscal year, beginning in the 2024–25 fiscal year, as follows:
(1) Sixty percent shall be deposited in the Youth Education, Prevention, Early Intervention and Treatment Account and disbursed by the Controller to the State Department of Health
Care Services for programs included in the provisions of paragraph (1) of subdivision (f) of Section 34019.
(2) Twenty percent shall be deposited in the Environmental Restoration and Protection Account and disbursed by the Controller to the programs provided in paragraph (2) of subdivision (f) of Section 34019.
(3) Twenty percent to the State Department of Social Services for social justice and equity programs.
(c) Funds allocated pursuant to subdivision (b) shall be used to increase the funding of programs and purposes identified and shall not be used to replace allocation of other funding for these purposes.