Bill Text: CA AB2243 | 2015-2016 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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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-Introduced.html

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BILL NUMBER: AB 2243	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Wood
   (Coauthor: Senator Runner)

                        FEBRUARY 18, 2016

   An act to add Part 13.5 (commencing with Section 31001) to
Division 2 of the Revenue and Taxation Code, relating to medical
cannabis, and making an appropriation therefor.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2243, as introduced, Wood. Medical cannabis: taxation: cannabis
production and environment mitigation.
   The Medical Marijuana Regulation and Safety Act, administered by
the director of the Bureau of Medical Marijuana 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 impose a tax in specified amounts on the
distribution in this state by a licensed cultivator, as defined, of
medical cannabis flowers, medical cannabis leaves, and immature
medical cannabis plants to a licensed distributor, as specified, and
would require the licensed distributor to collect the tax from the
cultivator and remit it to the State Board of Equalization. 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 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 fund competitive grants for local law
enforcement-related activities pertaining to illegal cannabis
cultivation; to fund a competitive grant program for 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
ongoing studies and reports of areas that may create challenges to
compliance of the Medical Marijuana Regulation Safety Act. This bill
would require the bureau or other state agencies and departments to
submit reports to the Legislature on the results of those studies
funded by this tax by January 1, 2020, and every 2 years thereafter.
   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 include a change in state statute that would
result in a taxpayer paying a higher tax within the meaning of
Section 3 of Article XIII A of the California Constitution, and thus
would require for passage the approval of 2/3 of the membership of
each house of the Legislature.
   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.
   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) "Distribution" has the same meaning as that term is defined in
Section 19300.5 of the Business and Professions Code.
   (d) "Immature medical cannabis plant" means a 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.
   (e) "Licensed cultivator" means a person that is licensed as a
cultivator under the Medical Marijuana Regulation and Safety Act
(Chapter 3.5 (commencing with Section 19300) of Division 8 of the
Business and Professions Code).
   (f) "Licensed distributor" means "distributor" as defined in
Section 19300.5 of the Business and Professions Code.
   (g) "Medical cannabis flowers" means the flowers of a plant
described in subdivision (b), which excludes the leaves and stems,
that are 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 leaves" means all parts of a plant described
in subdivision (b), other than cannabis flowers, that are 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.
   (i) "Sale" means the transfer of title or possession for
consideration in any manner or by any means whatever.
   (j) "Qualified nonprofit organization" means an organization
exempt from tax as an organization described in Section 501(c)(3) of
the Internal Revenue Code .
      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 flowers,
medical cannabis leaves, and immature medical cannabis plants, a tax
is hereby imposed upon all licensed cultivators at a rate of nine
dollars and twenty-five cents ($9.25) per ounce of medical cannabis
flowers, two dollars and seventy-five cents ($2.75) per ounce of
medical cannabis leaves, and one dollar and twenty-five cents ($1.25)
per immature medical cannabis plant from the sale of all medical
cannabis flowers, medical cannabis leaves, and immature medical
cannabis plants distributed to a licensed distributor in this state.
   (b) The licensed distributor shall collect the tax from the
licensed cultivator and shall separately state the amount of the tax
imposed under this part on the purchase order, which shall be given
by the licensed distributor to the licensed cultivator at the time of
sale.
   (c) There are exempted from the taxes imposed by this part, sales
by a licensed cultivator that the state is prohibited from taxing
under the Constitution or laws of the United States or the
Constitution of this state. Any claim for exemption from the tax
imposed by this part shall be made to the board in the manner
prescribed by the board.
   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 2018, 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.  (a) 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) of Division 2 of the Revenue and
Taxation Code) with those changes as may be necessary to conform to
this section. 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 person
required to pay the tax imposed by this part.
   (b) The tax that is required to be collected by the licensed
distributor and any amount unreturned to the licensed cultivator that
is not owed as part of the tax, but was collected from the licensed
cultivator under the representation by the licensed distributor that
it was owed as a tax, constitutes debts owed by the licensed
distributor to the state.
   (c) A licensed cultivator is liable for the tax until it has been
paid to the state, except that payment to the licensed distributor
relieves the licensed cultivator from further liability for the tax.
Any tax collected from a licensed cultivator that has not been
remitted to the board shall be a debt owed to the state by the
licensed distributor required to collect and remit the tax. This part
does not impose any obligation upon the licensed distributor to take
any legal action to enforce the collection of 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.
   (c) Returns shall be authenticated in a form or pursuant to
methods as may be prescribed by the board.
   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 ____ for disbursement for local law
enforcement-related activities pertaining to illegal cannabis
cultivation. Funds allocated pursuant to this paragraph shall be
allocated on a competitive grant application process administered by
the ____. Applicants may include local entities that support
enforcement activities related to unpermitted activity. The ____
shall promulgate guidelines for the grant process as soon as
administratively possible.
   (2) Thirty percent to the Natural Resources Agency to fund a
competitive grant program 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 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 California
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.
   (3) Thirty percent to the multiagency task force, the Department
of Fish and Wildlife and State Water Resources Control Board, 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.
   (4) Ten percent to the Bureau of Medical Marijuana Regulations,
and other state agencies or departments that the bureau determines is
appropriate, to conduct ongoing studies of areas that may create
challenges to compliance of the Medical Marijuana Regulation Safety
Act (Chapter 3.5 (commencing with Section 19300) of Division 8 of the
Business and Professions Code), including, but not limited to,
financial transactions, allowable tax deductions, and the public
safety implications of a cash industry. The bureau or other state
agencies or departments shall prepare reports on the results of those
studies and submit those report to the Legislature, in compliance
with Section 9795 of the Government Code, on or before January 1,
2020, and on or before January 1, every two years thereafter.
      CHAPTER 4.  REPORT TO THE LEGISLATURE


   31020.  (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.
  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.