Bill Text: CA SB1059 | 2023-2024 | Regular Session | Amended

California Senate Bill 1059

Bill Title: Cannabis: local taxation: gross receipts.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Engrossed) 2024-06-25 - From committee: Do pass and re-refer to Com. on APPR. (Ayes 18. Noes 0.) (June 25). Re-referred to Com. on APPR. [SB1059 Detail]

Download: California-2023-SB1059-Amended.html

Amended IN Senate April 24, 2024

Amended IN Senate March 18, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill

No. 1059

Introduced by Senator Bradford

February 08, 2024

An act to add Sections 16005 and 16106 to the Business and Professions Code, and to amend Section 37101 of the Government Code, ~~and to amend Section 34013 of the Revenue and Taxation Code,~~ relating to cannabis.

LEGISLATIVE COUNSEL'S DIGEST

SB 1059, as amended, Bradford. Cannabis: local taxation: gross receipts.

The Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure, authorizes a person who obtains a state license under AUMA to engage in commercial adult-use cannabis activity pursuant to that license and applicable local ordinances. The Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), among other things, consolidates the licensure and regulation of commercial medicinal and adult-use cannabis activities.

Existing law, the Cannabis Tax Law, imposes an excise tax upon purchasers of cannabis or cannabis products sold in this state at the rate of 15% of the gross receipts of any retail sale by a cannabis retailer, and prior to July 1, 2022, a cultivation tax on all harvested cannabis that entered the commercial market, as specified. Existing law provides that taxes imposed under the Cannabis Tax Law are in addition to any other tax imposed by a city or county. Existing law defines “gross receipts” for purposes of the Cannabis Tax Law as it is defined under the Sales and Use Tax Law.

This bill would prohibit a city or county from including in the definition of gross receipts, for purposes of any local tax or fee on a licensed cannabis retailer, the amount of any cannabis excise tax imposed under the Cannabis Tax Law or any sales and use taxes. By imposing new requirements on local governments with respect to their taxes and fees, the bill would impose a state-mandated local program.

AUMA imposes a monetary penalty, among other things, on a licensee who fails to pay the above-described excise or cultivation tax of at least 12 of the amount of taxes not paid. AUMA requires these taxes and penalties, among other amounts collected, to be deposited in the California Cannabis Tax Fund, a continuously appropriated fund, for specified purposes required under AUMA.
~~This bill would remove the monetary penalty imposed on a licensee who fails to pay the excise or cultivation tax enacted by AUMA.~~

The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.

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, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

~~AUMA authorizes the Legislature to amend its provisions with a 23 vote of both houses to further its purposes and intent.~~
~~This bill would declare that its provisions further specified purposes and intent of the act.~~

Vote: ~~TWO_THIRDS~~MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES

The people of the State of California do enact as follows:

SECTION 1.

Section 16005 is added to the Business and Professions Code, to read:

16005.

(a) A city shall not include in the definition of gross receipts, for purposes of any local tax or fee imposed by the city on a cannabis retailer licensed under Division 10 (commencing with Section 26000), the amount of any cannabis excise tax imposed under Section 34011.2 of, or any sales and use taxes imposed under Part 1 (commencing with Section 6001) of, Part 1.5 (commencing with Section 7200) of, or Part 1.6 (commencing with Section 7251) of, Division 2 of the Revenue and Taxation Code, or Section 35 of Article XIII of the California Constitution.

(b) For purposes of this section, “city” includes a charter city and a city and county.

SEC. 2.

Section 16106 is added to the Business and Professions Code, to read:

16106.

A county shall not include in the definition of gross receipts, for purposes of any local tax or fee imposed by the county on a cannabis retailer licensed under Division 10 (commencing with Section 26000), the amount of any cannabis excise tax imposed under Section 34011.2 of, or any sales and use taxes imposed under Part 1 (commencing with Section 6001) of, Part 1.5 (commencing with Section 7200) of, or Part 1.6 (commencing with Section 7251) of, Division 2 of the Revenue and Taxation Code, or Section 35 of Article XIII of the California Constitution.

SEC. 3.

Section 37101 of the Government Code is amended to read:

37101.

(a) The legislative body may license, for revenue and regulation, and fix the license tax upon, every kind of lawful business transacted in the city, including shows, exhibitions, and games. It may provide for collection of the license tax by suit or otherwise. If the legislative body levies a sales tax under the authority of this section, it may impose a complementary tax at the same rate upon use or other consumption of tangible personal property.

If the legislative body imposes a sales or use tax, it shall do so in the same manner and use the same tax base as prescribed in Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code.

(b) Any legislative body, including the legislative body of a charter city, that levies a license tax pursuant to subdivision (a) upon a business operating both within and outside the legislative body’s taxing jurisdiction, shall levy the tax so that the measure of tax fairly reflects that proportion of the taxed activity actually carried on within the taxing jurisdiction.

(c) No license tax levied pursuant to subdivision (a) that is measured by the licensee’s income or gross receipts, whether levied by a charter or general law city, shall apply to any nonprofit organization that is exempted from taxes by Chapter 4 (commencing with Section 23701) of Part 11 of Division 2 of the Revenue and Taxation Code or Subchapter F (commencing with Section 501) of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, or the successor of either, or to any minister, clergyperson, Christian Science practitioner, rabbi, or priest of any religious organization that has been granted an exemption from federal income tax by the United States Commissioner of Internal Revenue as an organization described in Section 501(c)(3) of the Internal Revenue Code or a successor to that section.

(d) A county shall not include in the definition of gross receipts, for purposes of any local tax or fee imposed by the county on a cannabis retailer licensed under Division 10 (commencing with Section 26000) of the Business and Professions Code, the amount of any cannabis excise tax imposed under Section 34011.2 of, or any sales and use taxes imposed under Part 1 (commencing with Section 6001) of, Part 1.5 (commencing with Section 7200) of, or Part 1.6 (commencing with Section 7251) of, Division 2 of the Revenue and Taxation Code, or Section 35 of Article XIII of the California Constitution.

SEC. 4.Section 34013 of the Revenue and Taxation Code is amended to read:
34013.
(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)(1)A person licensed to engage in commercial cannabis activity under Division 10 (commencing with Section 26000) of the Business and Professions Code that failed to remit amounts due by means of electronic funds transfer on and after January 1, 2022, and before January 1, 2023, is not subject to or is relieved of any of the penalties imposed by Section 55050 for that failure.
(2)On or after January 1, 2022, subdivision (a) of Section 55050 shall not apply to a person required to pay or collect the taxes imposed by this part on a person licensed to engage in commercial cannabis activity under Division 10 (commencing with Section 26000) of the Business and Professions Code if the department deems it necessary to facilitate the collection of amounts due.
(c)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.
(d)The department shall adopt necessary rules and regulations to administer the taxes in this part. Such rules and regulations may include methods or procedures to tag cannabis or cannabis products, or the packages thereof, to designate prior tax payment.
(e)Until January 1, 2024, the department may prescribe, adopt, and enforce any emergency regulations as necessary to implement, administer, and enforce its duties under this division. 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. Notwithstanding any other law, the emergency regulations adopted by the department may remain in effect for two years from adoption, and may be readopted in accordance with subdivision (h) of Section 11346.1 of the Government Code.
(f)Any person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code who fails to pay the taxes imposed under this part, in addition to owing the taxes not paid, shall be subject to having its license revoked pursuant to Section 26031 of the Business and Professions Code.
(g)The department may bring such legal actions as are necessary to collect any deficiency in the tax required to be paid, and, upon the department’s request, the Attorney General shall bring the actions.

SEC. 5.SEC. 4.

The Legislature finds and declares that Section 1 of this act adding Section 16005 to the Business and Professions Code, addresses a matter of statewide concern rather than a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, Section 1 of this act applies to all cities, including charter cities.

SEC. 6.SEC. 5.

If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.

SEC. 7.
The Legislature finds and declares that this act furthers the purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act, enacted as Proposition 64 at the November 8, 2016, statewide general election.