Bill Text: CA AB2243 | 2015-2016 | Regular Session | Amended
Bill Title: Medical cannabis: taxation: cannabis production and environment mitigation.
Spectrum: Bipartisan Bill
Status: (Failed) 2016-11-30 - From Senate committee without further action. [AB2243 Detail]
Download: California-2015-AB2243-Amended.html
BILL NUMBER: AB 2243 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 1, 2016
AMENDED IN SENATE JUNE 29, 2016
AMENDED IN SENATE JUNE 15, 2016
AMENDED IN ASSEMBLY JUNE 2, 2016
AMENDED IN ASSEMBLY MAY 31, 2016
AMENDED IN ASSEMBLY MAY 3, 2016
AMENDED IN ASSEMBLY APRIL 26, 2016
INTRODUCED BY Assembly Member Wood
(Coauthor: Senator Runner)
FEBRUARY 18, 2016
An act to add and repeal Part 13.5 (commencing with Section 31001)
of Division 2 of the Revenue and Taxation Code, relating to medical
cannabis, making an appropriation therefor, and declaring the urgency
thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 2243, as amended, Wood. Medical cannabis: taxation: cannabis
production and environment mitigation.
The Medical Marijuana Cannabis
Regulation and Safety Act, administered by the director of the Bureau
of Medical Marijuana Cannabis
Regulation, provides for the licensure of persons engaged in
specified activities relating to medical cannabis, including
cultivation and distribution.
The Fee Collection Procedures Law, the violation of which is a
crime, provides procedures for the collection of certain fees and
surcharges.
This bill would would, for the privilege
of doi ng business as a distributor in this state,
impose a tax in specified amounts upon the distribution of
medical cannabis flower, immature medical cannabis plant, and medical
cannabis product. on every distributor upon all
medical cannabis and medical cannabis products distributed to a
dispensary in this state, as specified. The bill would require
the State Board of Equalization to administer and collect the tax
pursuant to the procedures set forth in the Fee Collection Procedures
Law. The bill would require a distributor to register for a permit
with the board and would allow the board to suspend or revoke a
permit. The bill would authorize the board to prescribe by regulation
a method and manner for payment of the tax that utilizes tax stamps
or state-issued product bags. The bill would require all moneys, less
refunds and costs of administration, to be deposited into the
Cannabis Production and Environment Mitigation Fund, which this bill
would establish in the State Treasury.
This bill would continuously appropriate the moneys in that fund
in specified percentages to, among other things, fund competitive
grants for local law enforcement-related activities pertaining to
illegal cannabis cultivation; to fund environmental cleanup
restoration and protection of public and private lands that have been
damaged by illegal cannabis cultivation; to address the
environmental impacts of cannabis cultivation on public and private
lands in California and fund other state enforcement-related
activities pertaining to illegal cannabis cultivation; and to fund
Regional Marijuana Enforcement Officers.
This bill, except as provided, would become inoperative on January
1, 2018, if the Secretary of State Initiative Number 1762,
Proposition 64, also known as the Control,
Regulate and Tax Adult Use of Marijuana Act, is approved by the
voters at the November 8, 2016, statewide general election and takes
effect. This bill would repeal all of its provisions as of January 1,
2025.
By expanding the application of the Fee Collection Procedures Law,
which imposes criminal penalties for various acts, this bill would
impose a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
This bill would declare that it is to take effect immediately as
an urgency statute.
Vote: 2/3. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Part 13.5 (commencing with Section 31001) is added to
Division 2 of the Revenue and Taxation Code, to read:
PART 13.5. Medical Cannabis Tax Law
CHAPTER 1. GENERAL PROVISIONS AND DEFINITIONS
31001. This part shall be known and may be cited as the Medical
Cannabis Tax Law.
31001.5. Unless the context otherwise requires, the definitions
set forth in this chapter and those in the Medical Cannabis
Regulation and Safety Act (Chapter 3.5 (commencing with Section
19300) of Division 8 of the Business and Professions Code) shall
govern the construction of this part.
31002. As used in this part, the following terms have the
following definitions:
(a) "Board" means the State Board of Equalization.
(b) "Cannabis" has the same meaning as that term is defined in
Section 19300.5 of the Business and Professions Code.
(c) "Cultivator" means a person subject to licensing as a
cultivator for purposes of the Medical Marijuana Regulation and
Safety Act (Chapter 3.5 (commencing with Section 19300) of Division 8
of the Business and Professions Code).
(d) "Distribution" means both of the following:
(1) The sale of untaxed medical cannabis flower, immature medical
cannabis plant, and medical cannabis product in this state.
(2) The use or consumption of untaxed medical cannabis flower,
immature medical cannabis plant, and medical cannabis product in this
state.
(e) "Distributor" has the same meaning as that term is defined in
Section 19300.5 of the Business and Professions Code.
(f)
(b) "Immature medical cannabis plant" means a live
cannab is plant described in subdivision
(b) with no observable flowers or buds, that is intended to
be sold for use by medical cannabis patients in California pursuant
to the Compassionate Use Act of 1996 (Proposition 215), found in
Section 11362.5 of the Health and Safety Code.
(g)
(c) "Medical cannabis flower" means the flower
of a plant described in subdivision (b), which excludes the leaves
and stems, that are has the same meaning as a "dried
flower" as defined in the Medical Cannabis Regulation and Safety Act
(Chapter 3.5 (commencing with Section 19300) of Division 8
of the Business and Professions Code), that is intended to be
sold for use by medical cannabis patients in California pursuant to
the Compassionate Use Act of 1996 (Proposition 215), found in Section
11362.5 of the Health and Safety Code.
(h) "Medical cannabis product" means "medical cannabis" as defined
in Section 19300.5 of the Business and Professions Code.
(i)
(d) "Qualified nonprofit organization" means an
organization exempt from tax as an organization described in Section
501(c)(3) of the Internal Revenue Code.
(j) "Person" includes any individual, firm, partnership, joint
venture, limited liability company, association, social club,
fraternal organization, corporation, estate, trust, business trust,
receiver, assignee for the benefit of creditors, trustee, trustee in
bankruptcy, syndicate, or any other group or combination acting as a
unit.
(k) "Sale" means the transfer of title or possession for
consideration in any manner or by any means whatever.
(l) "Use" includes the exercise of any right or power over medical
cannabis flower, immature medical cannabis plant, and medical
cannabis product except that it does not include the sale of medical
cannabis flower, immature medical cannabis plant, and medical
cannabis product in the regular course of business. "Use" includes a
withdrawal of medical cannabis flower and immature medical cannabis
plant from inventory and use in the manufacture of a medical cannabis
product.
(e) "Wholesale cost" means the manufacturer licensee's or
distributor's sales price of medical cannabis products to the
dispensary licensee.
CHAPTER 2. IMPOSITION OF TAX
31005. (a) On and after the operative date set forth in Section
31030, for the privilege of distributing medical cannabis flower,
immature medical cannabis plant, and medical cannabis product every
distributor shall pay a tax upon any distribution of medical cannabis
flower, immature medical cannabis plant, and medical cannabis
product at the following rates:
(1) ____ dollars ($____) per ounce of medical cannabis flower
cultivated by a licensee with a Type 1, Type 1A, or Type 1B
classification as described in Section 19300.7 of the Business and
Professions Code.
(2) Nine dollars and twenty-five cents ($9.25) per ounce of
medical cannabis flower cultivated by a licensee with a Type 2, Type
2A, or Type 2B classification as described in Section 19300.7 of the
Business and Professions Code.
(3) ____ dollars ($____) per ounce of medical cannabis flower
cultivated by a licensee with a Type 3, Type 3A, or Type 3B
classification as described in Section 19300.7 of the Business and
Professions Code.
(4) One dollar and twenty-five cents ($1.25) per immature medical
cannabis plant.
(5) At the rate equivalent to the combined rate of taxes on the
privilege of selling tangible personal property at retail in this
state that are imposed by the Sales and Use Tax Law (Part 1
(commencing with Section 6001) and the California Constitution, upon
the wholesale cost of any medical cannabis product manufactured by a
licensee with a Type 6 or Type 7 classification as described in
Section 19300.7 of the Business and Professions Code.
(b) The rates of tax imposed by this section shall apply
proportionately to quantities of less than one ounce.
(c) The tax imposed by this part shall not apply to the sale of
medical cannabis flower and immature medical cannabis plant by a
cultivator to the distributor.
31005. (a) On and after the operative date set forth in Section
31030, for the privilege of doing business as a distributor in this
state, every distributor shall pay a tax on all medical cannabis and
medical cannabis products distributed to a dispensary in this state,
including distributions to a licensee holding a producing dispensary
license, at the following rates:
(1) Four dollars and seventy-five cents ($4.75) per ounce of
medical cannabis flowers cultivated by a licensee with, or subject
to, a Type 1, Type 1A, or Type 1B classification as described in
Section 19300.7 of the Business and Professions Code.
(2) Nine dollars and twenty-five cents ($9.25) per ounce of
medical cannabis flowers cultivated by a licensee with, or subject
to, a Type 2, Type 2A, or Type 2B classification as described in
Section 19300.7 of the Business and Professions Code.
(3) Thirteen dollars and twenty-five cents ($13.25) per ounce of
medical cannabis flowers cultivated by a licensee with, or subject
to, a Type 3, Type 3A, or Type 3B classification as described in
Section 19300.7 of the Business and Professions Code.
(4) One dollar and twenty-five cents ($1.25) per immature medical
cannabis plant.
(5) (A) At the rate equivalent to the combined rate of taxes on
the privilege of selling tangible personal property at retail in this
state that are imposed by the Sales and Use Tax Law (Part 1
(commencing with Section 6001)) and the California Constitution, upon
the wholesale cost of any medical cannabis product manufactured by a
licensee with a Type 6 or Type 7 classification as described in
Section 19300.7 of the Business and Professions Code.
(B) In the case where a distributor does not make a sale to a
dispensary at the time of distribution, the distributor shall
maintain a copy of the contract provided in paragraph (3) of
subdivision (c) of Section 19326 of the Business and Professions Code
indicating the price and quantity of medical cannabis or medical
cannabis products to be distributed and any other information deemed
necessary by the board. In the case of a licensee with a Type 10A
classification (producing dispensary license) where the cultivator or
manufacturer licensee and dispensary licensee to whom the medical
cannabis or medical cannabis product is distributed are the same
person, a distributor shall maintain any information deemed necessary
by the board to ascertain wholesale cost.
(b) The rates of tax imposed by this section shall apply
proportionately to quantities of less than one ounce.
31005.3. The board may prescribe by regulation a method and
manner for payment of the tax imposed by this part that utilizes tax
stamps or state-issued product bags that indicate that all required
tax has been paid on the distribution of the medical cannabis flower,
immature medical cannabis plant, and medical cannabis product to
which the tax stamp is affixed or in which the medical cannabis
flower, immature medical cannabis plant, and medical cannabis product
are packaged.
31006. The Legislative Analyst's Office shall regularly review
the tax levels established under this part, at a minimum of every
other year, beginning in 2020, and make recommendations to the
Legislature, as appropriate, regarding adjustments that would further
the goal of addressing public safety and the environmental impacts
caused by the proliferation of cannabis cultivation.
CHAPTER 3. ADMINISTRATION
31010. The board shall administer and collect the tax imposed by
this part pursuant to the Fee Collection Procedures Law (Part 30
(commencing with Section 55001)), except that Article 1.1 (commencing
with Section 55050) of Chapter 3 of Part 30 shall not apply. For
purposes of this part, the references in the Fee Collection
Procedures Law to "fee" shall include the tax imposed by this part,
and references to "feepayer" shall include a
any person required to pay the tax imposed by this part.
31011. (a) The board may prescribe, adopt, and enforce
regulations relating to the implementation, administration, and
enforcement of this part, including, but not limited to, applicant
requirements, collections, reporting, refunds, and appeals.
(b) The board may prescribe, adopt, and enforce any emergency
regulations as necessary to implement this part. Any emergency
regulation prescribed, adopted, or enforced pursuant to this section
shall be adopted in accordance with Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code, and, for purposes of that chapter, including Section 11349.6 of
the Government Code, the adoption of the regulation is an emergency
and shall be considered by the Office of Administrative Law as
necessary for the immediate preservation of the public peace, health
and safety, and general welfare.
31012. (a) The tax is due and payable to the board quarterly on
or before the last day of the month following each calendar quarter.
(b) On or before the last day of the month following each calendar
quarter, a return for the preceding calendar quarter shall be filed
with the board using electronic media.
(c) Returns shall be authenticated in a form or pursuant to
methods as may be prescribed by the board.
31012.1. (a) A distributor required to pay the tax imposed under
this part shall register for a permit with the board. Every
application for registration shall be made in a form prescribed by
the board and shall set forth the name under which the applicant
transacts or intends to transact business, the location of the
distributor's place or places of business, and any other information
that the board may require. An application for registration shall be
authenticated in a form or pursuant to methods as may be prescribed
by the board.
(b) The board shall grant and issue to each applicant that
complies with subdivision (a) a separate permit for each place of
business within the state.
(c) A permit issued pursuant to this section is not assignable and
is valid only for the person in whose name it is issued and for the
transaction of business at the place designated therein. It shall at
all times be conspicuously displayed at the place for which it is
issued.
31012.3. Whenever any distributor fails to comply with any
provision of this part or any rule or regulation of the board
prescribed and adopted under this part, the board upon hearing, after
giving the distributor at least 10 days' notice in writing
specifying the time and place of the hearing and requiring the
distributor to show cause why the permit should not be suspended or
revoked, may suspend or revoke the permit held by the distributor.
The board shall give to the distributor written notice of the
suspension or revocation of any of the distributor's permits. The
notices herein required may be served personally or by mail in the
manner prescribed for service of notice of a deficiency
determination. The board shall not issue a new permit after the
revocation of a permit unless it is satisfied that the former holder
of the permit will comply with the provisions of this part and the
regulations of the board prescribed and adopted under this part.
31012.4. (a) (1) Any peace officer, or board employee granted
limited peace officer status pursuant to paragraph (6) of subdivision
(a) of Section 830.11 of the Penal Code, upon presenting appropriate
credentials, is authorized to enter any place as described in
paragraph (3) and to conduct inspections in accordance with this
section.
(2) Inspections shall be performed in a reasonable manner and at
times that are reasonable under the circumstances, taking into
consideration the normal business hours of the place to be entered.
(3) Inspections may be at any place at which medical cannabis
flowers, immature medical cannabis plants, and medical cannabis
products are sold, produced, or stored or at any site where evidence
of activities involving evasion of the tax imposed pursuant to this
part may be discovered.
(4) Inspections shall be requested or conducted no more than once
in a 24-hour period.
(b) The board shall forward the business name, address, license
number, and any other information necessary, to the appropriate
licensing authority for any person that refuses to allow an
inspection. Any refusal to allow an inspection shall be grounds for
disciplinary action and subject to any disciplinary action imposed
pursuant to the Medical Cannabis Regulation and Safety Act (Chapter
3.5 (commencing with Section 19300) of Division 8 of the Business and
Professions Code).
(c) Upon discovery by the board that a dispensary or any other
person possesses, stores, owns, or has made a retail sale of medical
cannabis flower, immature medical cannabis plant, and medical
cannabis products on which tax is due but has not been paid to the
board, a licensing authority shall affix a tag or other appropriate
marking and take other action as provided in Section 19347.8 of the
Business and Professions Code.
31012.5. A licensing authority may enter into memoranda of
understanding with the board for data sharing purposes for
administration and collection of the tax imposed under this part.
31013. (a) The Cannabis Production and Environment Mitigation
Fund is hereby created in the State Treasury. All taxes, interest,
penalties, and other amounts collected and paid to the board pursuant
to this part, less payments of refunds and costs of administration,
shall be deposited in the fund.
(b) Notwithstanding Section 13340 of the Government Code, all
moneys deposited in the Cannabis Production and Environment
Mitigation Fund are hereby continuously appropriated, without regard
to fiscal years, in the following manner:
(1) Thirty percent to the Board of State and Community Corrections
for disbursement for local law enforcement-related activities
pertaining to illegal cannabis cultivation. The Board of State and
Community Corrections shall give priority of funds to applicants that
demonstrate that the area within the applicant's jurisdiction has a
high rate of criminal activity from organized crime as defined by
Section 186.2 of the Penal Code related to illegal cannabis
cultivation. Funds allocated pursuant to this paragraph shall be
allocated on a competitive grant application process administered by
the Board of State and Community Corrections. Applicants may include
local entities that support enforcement activities related to
unpermitted activity. The Board of State and Community Corrections
shall promulgate guidelines for the grant process as soon as
administratively possible.
(2) Two percent to the Department of Justice to fund and create
Regional Marijuana Enforcement Officers who shall coordinate
enforcement efforts, related to illegal cannabis cultivation, between
the Department of Fish and Wildlife's Marijuana Enforcement Team,
the Department of Justice's Bureau of Narcotic Enforcement, the
United States Drug Enforcement Administration, and local law
enforcement. The Department of Justice shall prioritize creation of
Regional Marijuana Enforcement Officers in counties that have
demonstrated that the area within the county's jurisdiction has a
high rate of criminal activity from organized crime, as defined by
Section 186.2 of the Penal Code, related to illegal cannabis
cultivation.
(3) Thirty percent to the Natural Resources Agency for
environmental cleanup restoration and protection of public and
private lands that have been damaged by illegal cannabis cultivation.
Where appropriate, the agency may administer funds using competitive
grant programs established pursuant to Chapter 3.8 (commencing with
Section 5750) of Division 5 of the Public Resources Code and
described in subdivision (a) and paragraph (1) of subdivision (l) of
Section 75050 of the Public Resources Code. Funds allocated pursuant
to this paragraph shall be prioritized to restoration and cleanup
projects, on public or private lands, based on the level of damages
that have occurred. Not less than 35 percent of the funds shall be
used for these purposes related to public lands, including, but not
limited to, parks managed by the Department of Parks and Recreation,
and not less than 20 percent of the funds shall be used for these
purposes related to private lands. The agency shall consult and
partner with counties, cities, or cities and counties and may partner
with qualified nonprofit organizations, other appropriate state
agencies, and the appropriate federal entities, including, but not
limited to, the United States Department of Agriculture and the
United States Department of the Interior, for the purposes of
awarding grants to state or local government entities and qualified
nonprofit organizations that engage in environmental cleanup and
restoration. The agency shall promulgate guidelines for the grant
process as soon as administratively possible. All funds appropriated
pursuant to this paragraph shall only be used for purposes that
directly correlate to cleanup of damage caused by illegal cannabis
cultivation and the restoration and protection of public or private
lands by illegal cannabis cultivation.
(4) Eight percent to the Open Space Subvention Payment Account of
the California Land Conservation Act of 1965 (Chapter 7 (commencing
with Section 51200) of Part 1 of Division 1 of Title 5 of the
Government Code). Administrative costs to the Department of
Conservation shall be no more than the reasonable costs to administer
the program and shall be no more than 0.5 percent of the 8 percent.
(5) Thirty percent to the Department of Fish and Wildlife's and
the State Water Resources Control Board's multiagency task force, the
Watershed Enforcement Team, to address the environmental impacts of
cannabis cultivation on public and private lands in California and
fund other state enforcement-related activities pertaining to illegal
cannabis cultivation.
CHAPTER 4. REPORT TO THE LEGISLATURE
31025. (a) The board shall submit a report to the Legislature on
the total amount of revenue that was collected for the two-year
period commencing on the operative date of this part. The report is
due to the Legislature on or before the last day of the month
commencing 180 days after the two-year period commencing on the
operative date of this part.
(b) The report required by this section shall be submitted in
compliance with Section 9795 of the Government Code.
CHAPTER 5. OPERATIVE DATE AND FUNDING
31030. This part shall become operative on or after the first day
of the first calendar quarter commencing more than 270 days after
adequate funding has been received by the board to implement and
administer this part. The board shall post a notice on its Internet
Web site when this condition has been satisfied.
31031. Funds for the establishment and support of the activities
required pursuant to this part shall be advanced as a General Fund or
special fund loan, and shall be repaid by the board from the initial
proceeds from taxes collected pursuant to this part, no later than
six months after the operative date specified in Section 31030.
31032. (a) Except as provided in subdivision (b), this part shall
become inoperative on January 1, 2018, if the Secretary of
State Initiative Number 1762, Proposition 64,
also known as the Control, Regulate and Tax Adult Use of Marijuana
Act, is approved by the voters at the November 8, 2016, statewide
general election and takes effect.
(b) The provisions of this part relating to the collection of the
tax, refunds, allowance for credits, disposition of moneys deposited
into the Cannabis Production and Environment Mitigation Fund, and the
commencement of an action or proceeding shall remain operative with
respect to taxes for which the liability accrued before January 1,
2018.
(c) This part shall remain in effect only until January 1, 2025,
and as of that date is repealed.
CHAPTER 6. NO PREEMPTION OF LOCAL TAXATION AUTHORITY
31035. The tax shall be in addition to, and shall not limit, any
taxes or fees imposed by a county or city and county.
SEC. 2. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
SEC. 3. This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
In order to address the damage done by illegal cannabis
cultivation at the earliest time possible, it is necessary that this
act take effect immediately.
