Bill Text: CA SB1293 | 2021-2022 | Regular Session | Introduced

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

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Bill Title: Income taxation: credits: cannabis: equity applicants and licensees.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Engrossed - Dead) 2022-08-11 - August 11 hearing: Held in committee and under submission. [SB1293 Detail]

Download: California-2021-SB1293-Introduced.html

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CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill

No. 1293

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Introduced by Senator Bradford

February 18, 2022

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An act relating to cannabis.

LEGISLATIVE COUNSEL'S DIGEST

SB 1293, as introduced, Bradford. Cannabis: taxation.

The Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure approved as Proposition 64 at the November 8, 2016, statewide general election, 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 Personal Income Tax Law imposes a net tax at specified rates each taxable year on the entire taxable income of every resident of this state. The Corporation Tax Law imposes an income tax upon every corporation not subject to the corporate franchise tax at a specified rate upon its net income derived from sources within this state, except as otherwise provided.

Existing federal law imposes an income tax upon every corporation, except as specified, and prohibits the allowance of a deduction or credit for any amount paid or incurred during the taxable year in carrying on any trade or business consisting of trafficking in controlled substances, including cannabis.

This bill would state the intent of the Legislature to help equity licensees obtain a personal income or corporate tax credit that would be equal, or in some proportion, to the normal business expenses that they would otherwise have been able to write off on their federal taxes, but for federal law. The bill would make related legislative findings and declarations.

Digest Key

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

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Bill Text

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

SECTION 1.

 The Legislature makes the following findings and declarations:

(a) The War on Drugs has harmed individuals and communities, particularly communities of color.

(b) The Legislature has taken actions to assist individuals and communities harmed by past criminal prohibition related to cannabis as a way of righting past wrongs. And yet, many cannabis businesses owned by equity licensees still struggle to turn a profit and keep their doors open.

(c) The challenge is made worse because federal law under Section 280E of Title 26 of the United States Code does not allow deduction or credit for any amount paid or incurred during the taxable year in carrying on a trade or business that consists of trafficking in controlled substances prohibited by federal or state law. The federal Controlled Substances Act, in turn, lists cannabis as a Schedule I controlled substance.

(d) It is the intent of the Legislature to help equity licensees obtain a personal income or corporate tax credit that would be equal, or in some proportion, to the normal business expenses that they would otherwise have been able to write off on their federal taxes, but for federal law. Doing so will make the business tax structure more fair for licensees that meet the definition of equity and will support cannabis businesses to succeed.