Bill Text: CA SB395 | 2021-2022 | Regular Session | Amended

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

---

Bill Title: Excise tax: electronic cigarettes: Health Careers Opportunity Grant Program: Small and Rural Hospital Relief Program.

Spectrum: Partisan Bill (Democrat 10-0)

Status: (Passed) 2021-10-04 - Chaptered by Secretary of State. Chapter 489, Statutes of 2021. [SB395 Detail]

Download: California-2021-SB395-Amended.html

---

Amended  IN  Senate  May 03, 2021

Amended  IN  Senate  April 12, 2021

Amended  IN  Senate  March 25, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill

No. 395

---

Introduced by Senator Caballero
(Principal coauthor: Assembly Member Arambula)
(Coauthor: Senator Limón) (Coauthors: Senators Limón and Rubio)
(Coauthors: Assembly Members Bauer-Kahan, Quirk-Silva, Robert Rivas, and Stone)

February 11, 2021

---

An act to add Article 7 (commencing with Section 128586) to Chapter 5 of Part 3 of Division 107 of the Health and Safety Code, and to amend Section 30130.57 of, and to add Part 13.6 (commencing with Section 31000) to Division 2 of, the Revenue and Taxation Code, relating to the Healthy Outcomes and Prevention Education Act, and making an appropriation therefor.

LEGISLATIVE COUNSEL'S DIGEST

SB 395, as amended, Caballero. Healthy Outcomes and Prevention Education Act: excise tax: electronic cigarettes: Health Careers Opportunity Grant Program.

(1) Existing law establishes a nonprofit public benefit corporation, known as the Health Professions Education Foundation, for the purpose of administering various programs related to health education, including the California Registered Nurse Education Program.

This bill would establish the Health Careers Opportunity Grant Program under the administration of the foundation for the purpose of improving access by underrepresented students from disadvantaged backgrounds to health profession programs offered by the state’s public postsecondary education institutions. The bill would require the foundation to provide grants to specified types of public postsecondary education institutions, including schools of medicine, to be used only for specified purposes, including identifying, recruiting, and selecting underrepresented students from disadvantaged backgrounds to access education and training programs in a health profession. The bill would also create the Health Careers Opportunity Grant Program Fund and would continuously appropriate the moneys in the fund for the purpose of administering the program.

(2) The Cigarette and Tobacco Products Tax Law imposes a tax on distributors of cigarettes at the rate of $2.87 per package of 20 cigarettes and a tax on distributors of tobacco products, based on wholesale cost, at a rate determined annually that is equivalent to the combined rate of all taxes imposed on cigarettes plus an additional rate equivalent to $0.50 per package of 20 cigarettes. These taxes are inclusive of the taxes imposed under the Tobacco Tax and Health Protection Act of 1988, the California Families and Children Act of 1998, and the California Healthcare, Research and Prevention Tobacco Tax Act of 2016.

The California Healthcare, Research and Prevention Tobacco Tax Act of 2016 (Proposition 56), an initiative measure approved at the November 8, 2016, statewide general election, revised the definition of tobacco products to include electronic cigarettes, thereby extending the taxes on distributors of tobacco products to distributors of electronic cigarettes, which is based on the wholesale cost of these products. Proposition 56 requires the California Department of Tax and Fee Administration to adopt regulations providing for the implementation of the equivalent tax on electronic cigarettes and the methods for collection of the tax.

This bill would, beginning July 1, 2022, require a purchaser of electronic cigarettes, as defined, at retail to pay a tax of 12.5% of the gross receipts from the sale of electronic cigarettes in this state. The bill would require a retailer to collect the tax from the consumer at the time of the retail sale of an electronic cigarette. The bill would require all revenues, interest, and penalties, less refunds, collected from the tax described above to be deposited into the California Electronic Cigarette Excise Tax Fund, a continuously appropriated fund created by the bill, and would require all amounts in the fund to be distributed to the Cigarette and Tobacco Products Surtax Fund, the California Children and Families Trust Fund, and the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund, to fund the Proposition 56 Medi-Cal Physicians and Dentists Loan Repayment Act, and to the Health Careers Opportunity Grant Program Fund created by this bill, as specified. By creating a continuously appropriated fund and allocating additional moneys to continuously appropriated funds, this bill would make an appropriation.

The bill would provide for the administration and collection of this tax pursuant to procedures set forth in the Fee Collection Procedures Law. By expanding the application of the Fee Collection Procedures Law, the violation of which is a crime, 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.

Digest Key

Vote: 2/3   Appropriation: YES   Fiscal Committee: YES   Local Program: YES  

---

Bill Text

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

SECTION 1.

 Article 7 (commencing with Section 128586) is added to Chapter 5 of Part 3 of Division 107 of the Health and Safety Code, to read:

Article  7. Health Careers Opportunity Grant Program

128586.

 The Health Careers Opportunity Grant Program is hereby established under the administration of the Health Professions Education Foundation for the purpose of improving access by underrepresented students from disadvantaged backgrounds to health profession programs offered by the state’s public postsecondary education institutions.

128587.

 As used in this article:

(a) “Foundation” means the Health Professions Education Foundation.

(b) “Grant program” means the Health Careers Opportunity Grant Program.

(c) “Public postsecondary education institution” means California Community Colleges, the California State University, and the University of California.

128588.

 (a) The Health Careers Opportunity Grant Program Fund is hereby created in the Treasury.

(b) Notwithstanding Section 13340 of the Government Code, all moneys in the Health Care Opportunity Careers Opportunity Grant Program Fund are continuously appropriated, without regard to fiscal years, for the administration of the grant program pursuant to this article.

128589.

 (a) The foundation shall provide grants to all of the following types of public postsecondary education institutions:

(1) Schools of medicine.

(2) Schools of osteopathic medicine.

(3) Schools of public health.

(4) Schools of dentistry.

(5) Schools of optometry.

(6) Schools of pharmacy.

(7) Schools of allied health. health, as defined in Section 295p of Title 42 of the United States Code.

(8) Graduate programs in behavioral and mental health.

(9) Programs for the training of physician assistance.

(10) Nursing programs.

(b) A grant provided by the foundation may be used only for any of the following purposes:

(1) Identifying, recruiting, and selecting underrepresented students from disadvantaged backgrounds to access education and training programs in a health profession.

(2) Facilitating underrepresented students from disadvantaged backgrounds in accessing a public postsecondary institutions education or training program.

(3) Providing counseling, mentoring, or other services designed to assist underrepresented students from disadvantaged backgrounds in successfully completing their educational program or training at the applicable public postsecondary institution.

(4) Providing support services to underrepresented students from disadvantaged backgrounds to assist them in accessing an educational program or training at a public postsecondary institution.

(5) Providing outreach to underrepresented students from disadvantaged backgrounds regarding how to access available programs and training at a public postsecondary institution.

(6) Providing financial aid to underrepresented students from disadvantaged backgrounds to enroll in an eligible education or training program.

(7) Developing and implementing programs that enable underrepresented students from disadvantaged backgrounds to gain experience regarding a career in a field of primary health care through working at facilities of public or private nonprofit community-based providers of primary health services.

(8) Developing partnerships with institutions, school districts, and other community-based entities to provide information to underrepresented students from disadvantaged backgrounds who may be interested in pursuing a career in a health occupation.

128590.

 (a) In providing grants to eligible entities pursuant to this article, the foundation shall prioritize applicants that reflect a comprehensive approach to establishing, enhancing, and expanding health educational programs that propose to increase the number of underrepresented students from disadvantaged backgrounds pursuing a health professions career.

(b) The foundation shall give priority consideration, pursuant to subdivision (a), to an applicant only if the applicant does all of the following:

(1) Demonstrates a commitment to expanding the number of underrepresented students from disadvantaged backgrounds enrolling in public postsecondary education and training programs leading to a career in a health occupation.

(2) Reflects an effort to coordinate educational opportunities and support services available to underrepresented students from disadvantaged backgrounds within a specific geographic area.

(3) Reflects the development and implementation of outreach activities focused on expanding the number of underrepresented students from disadvantaged backgrounds pursuing a health professions career.

(4) Focuses on the development of educational opportunities that further enable a culturally competent health care workforce to be available to serve the state’s unserved and underserved populations within a geographic area.

128591.

 (a) The foundation shall work with other existing programs under its administration to implement this section and provide opportunities for underrepresented students from disadvantaged backgrounds to access the grant program and other foundation programs.

(b) The foundation may enter into contracts to meet the requirements of this article with nonprofit entities headquartered in California that have previous experience with administering statewide workforce programs aimed at building a diverse provider workforce.

SEC. 2.Section 30130.57 of the Revenue and Taxation Code is amended to read:

30130.57.

Implementation and Administrative Costs.

(a)Moneys from the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund shall be used to reimburse the board for expenses incurred in the administration, calculation, and collection of the tax imposed by this article and for expenses incurred in the calculation and distribution of funds and in the promulgation of regulations as required by this act, provided, however, that after deducting the necessary funds pursuant to subdivision (b) of Section 30130.54, not more than 5 percent annually of the funds remaining in the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund shall be used for such administrative costs.

(b)Moneys from the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund shall be used to reimburse the independent nonpartisan California State Auditor up to four hundred thousand dollars ($400,000) annually for actual costs incurred to conduct each of the audits required by Section 30130.56 for the purpose of providing public transparency and ensuring that the revenues generated by this article are used for health care, tobacco use prevention and research.

(c)Moneys from the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund in the amount of forty million dollars ($40,000,000) annually shall be used to provide funding to the University of California for the purpose and goal of increasing the number of primary care and emergency physicians trained in California. This goal shall be achieved by providing this funding to the University of California to sustain, retain, and expand graduate medical education programs to achieve the goal of increasing the number of primary care and emergency physicians in the State of California based on demonstrated workforce needs and priorities.

(1)For the purposes of this subdivision, “primary care” means internal medicine, family medicine, obstetrics/gynecology, and pediatrics.

(2)Funding shall be prioritized for direct graduate medical education costs for programs serving medically underserved areas and populations.

(3)For the purposes of this subdivision, all allopathic and osteopathic residency programs accredited by federally recognized accrediting organizations and located in California shall be eligible to apply to receive funding to support resident education in California.

(4)The University of California shall annually review physician shortages by specialty across the state and by region. Based on this review, to the extent that there are demonstrated state or regional shortages of nonprimary care physicians, funds may be used to expand graduate medical education programs that are intended to address such shortages.

(5)____ percent of the moneys in the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund attributable to the California Electronic Cigarette Excise Tax, imposed by Section 31002 shall be annually allocated to the Health Careers Opportunity Grant Program Fund created pursuant to Section 128588 of the Health and Safety Code.

(d)Moneys from the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund in the amount of thirty million dollars ($30,000,000) annually shall be used to provide funding to the State Department of Public Health state dental program for the purpose and goal of educating about, preventing and treating dental disease, including dental disease caused by use of cigarettes and other tobacco products. This goal shall be achieved by the program providing this funding to activities that support the state dental plan based on demonstrated oral health needs, prioritizing serving underserved areas and populations. Funded program activities shall include, but not be limited to, the following: education, disease prevention, disease treatment, surveillance, and case management.

The department shall have broad authority to fully implement and effectuate the purposes of this subdivision, including the determination of underserved communities, the development of program protocols, the authority to reimburse state-sponsored services related to the program, and the authority to contract with one or more individuals or public or private entities to provide program activities.

(e)Moneys from the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund in the amount of forty-eight million dollars ($48,000,000) annually shall be used for the purpose of funding law enforcement efforts to reduce illegal sales of tobacco products, particularly illegal sales to minors; to reduce cigarette smuggling, tobacco tax evasion, the sale of tobacco products without a license and the sale of counterfeit tobacco products; to enforce tobacco-related laws, court judgments, and legal settlements; and to conduct law enforcement training and technical assistance activities for tobacco-related statutes; provided that these funds are not to be used to supplant existing state or local funds for these same purposes. These funds shall be apportioned in the following manner:

(1)Thirty million dollars ($30,000,000) annually to the California Department of Justice/Office of the Attorney General to be distributed to local law enforcement agencies to support and hire front-line law enforcement peace officers for programs, including, but not limited to, enforcement of state and local laws related to the illegal sales and marketing of tobacco to minors, and increasing investigative activities and compliance checks to reduce illegal sales of cigarettes and tobacco products to minors and youth.

(2)Six million dollars ($6,000,000) annually to the board to be used to enforce laws that regulate the distribution and retail sale of cigarettes and other tobacco products, such as laws that prohibit cigarette and tobacco product smuggling, counterfeiting, selling untaxed cigarettes and other tobacco products, and selling cigarettes and other tobacco products without a proper license.

(3)Six million dollars ($6,000,000) annually to the California Department of Public Health to be used to support programs, including, but not limited to, providing grants and contracts to local law enforcement agencies to provide training and funding for the enforcement of state and local laws related to the illegal sales of tobacco to minors, increasing investigative activities, and compliance checks, and other appropriate activities to reduce illegal sales of tobacco products to minors, including, but not limited to, the Stop Tobacco Access to Kids Enforcement (STAKE) Act, pursuant to Section 22952 of the Business and Professions Code.

(4)Six million dollars ($6,000,000) annually to the California Attorney General to be used for activities, including, but not limited to, enforcing laws that regulate the distribution and sale of cigarettes and other tobacco products, such as laws that prohibit cigarette smuggling, counterfeiting, selling untaxed tobacco, selling tobacco without a proper license and selling tobacco to minors, and enforcing tobacco-related laws, court judgments, and settlements.

(f)Not more than 5 percent of the funds received pursuant to this article shall be used by any state or local agency or department receiving such funds for administrative costs.

(g)The California State Auditor shall promulgate regulations pursuant to the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) to define administrative costs for purposes of this article. Such regulations shall take into account the differing nature of the agencies or departments receiving funds.

(h)The board shall determine beginning two years following the effective date of this act, and annually thereafter, any reduction in revenues, following the first year after the effective date of this act, resulting from a reduction in the consumption of cigarettes and tobacco products due to the additional taxes imposed on cigarettes by this article, and the increase in the tax on tobacco products required by subdivision (b) of Section 30123. If the board determines there has been a reduction in revenues, the amount of funds allocated pursuant to subdivisions (c), (d), and (e) shall be reduced proportionately.

SEC. 3.SEC. 2.

 Part 13.6 (commencing with Section 31000) is added to Division 2 of the Revenue and Taxation Code, to read:

PART 13.6 Healthy Outcomes and Prevention Education (HOPE) Act

31000.

 This article shall be known, and may be cited, as the “Healthy Outcomes and Prevention Education (HOPE) Act.”

31001.

 For purposes of this article:

(a) “California Electronic Cigarette Excise Tax” means the tax imposed by Section 31002.

(b) “Department” means the California Department of Tax and Fee Administration.

(c) (1) Electronic cigarette” means any of the following:

(A) A device or delivery system sold in combination with any liquid substance containing nicotine that can be used to deliver to a person nicotine in aerosolized or vaporized form, including, but not limited to, an e-cigarette, e-cigar, e-pipe, vape pen, or e-hookah.

(B) A component, part, or accessory of a device described in subparagraph (A) that is used during the operation of the device if sold in combination with a liquid substance containing nicotine.

(C) A liquid or substance containing nicotine, whether sold separately or sold in combination with any device, that could be used to deliver to a person nicotine in aerosolized or vaporized form.

(2) “Electronic cigarette” does not include a product that has been approved by the United States Food and Drug Administration for sale as a tobacco cessation product or for other therapeutic purposes if that product is marketed and sold solely for that approved use.

(d) “Gross receipts” has the same meaning as that term is defined in Section 6012.

(e) “In this state” means within the exterior limits of California and includes all territory within these limits owned by or ceded to the United States of America.

(f) “Purchaser” means a person who purchases electronic cigarettes in a retail sale.

(g) (1) “Retailer” has the same meaning as defined in Section 6015.

(2) “Retailer” includes a person that operates vending machines from which electronic cigarettes are sold in this state or a person conducting a sale regulated by Section 22963 of the Business and Professions Code.

(h) “Retail sale” has the same meaning as defined in Section 6007.

31002.

 (a) (1) Beginning July 1, 2022, a purchaser shall pay a tax at the rate of 12.5 percent of the gross receipts from the retail sale of electronic cigarettes in this state.

(2) A retailer shall collect the tax imposed by this part from the consumer at the time of the retail sale of an electronic cigarette.

(b) A retailer shall include the amount of the tax in any price marketing on any sign or display inside or outside a licensed brick and mortar establishment.

(c) (1) department shall collect the tax imposed by this part pursuant to the Fee Collection Procedures Law (Part 30 (commencing with Section 55001)).

(2) For purposes of this article, the references in the Fee Collection Procedures Law to “fee” shall include the tax imposed by this part, and references to “feepayer” shall include any person liable for the payment of the tax imposed by this article.

(d) (1) Except as provided in paragraph (3), the tax imposed by this part shall be due and payable quarterly on or before the last day of the month following each calendar quarter.

(2) (A) The payments shall be accompanied by a return filed by the retailer using electronic media on or before the last day of the month following each quarterly period for the preceding quarterly period.

(B) Returns shall be authenticated in a form or pursuant to methods as may be prescribed by the department.

(3) The department may require the payment of the tax and the filing of returns for other than quarterly periods.

(e) A retailer subject to the provisions of this part shall register with the department using electronic media and shall set forth the name under which it transacts or intends to transact business and any other information as the department may require.

(f) (1) 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.

(2) (A) The department may prescribe, adopt, and enforce emergency regulations as necessary to implement this part.

(B) An emergency regulation prescribed, adopted, or enforced pursuant to this paragraph 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.

31003.

 For each retail sale of an electronic cigarette, a retailer shall provide a purchaser with a receipt or other document that sets out and separately identifies the “California Electronic Cigarette Excise Tax” and the amount paid by the purchaser.

31004.

 (a) (1) The department may, upon a hearing, revoke or suspend one or more of the permits held by a person after giving the person 10 days’ notice in writing specifying the time and place of the hearing and requiring the person to show cause why the person’s permit or permits should not be revoked if any of the following is true:

(A) A person fails to comply with a provision of this part or any rule or regulation of the department prescribed and adopted under this part.

(B) A person’s seller’s permit has been suspended or revoked under Part 1 (commencing with Section 6001).

(C) A person’s license has been suspended or revoked under Division 8.6 (commencing with Section 22970) of the Business and Professions Code.

(2) The department shall give to the person written notice of the suspension or revocation of any of the person’s permits.

(b) The notice required by subdivision (a) shall be served personally or by mail in the manner prescribed for service of notice of a deficiency determination under Section 55061.

(c) The department 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 department.

(d) A person whose permit has been previously suspended or revoked shall pay the department a fee of one hundred dollars ($100) for the issuance of a permit.

31005.

 (a) All revenues, interest, and penalties derived from the California Electronic Cigarette Excise Tax shall be deposited into the California Electronic Cigarette Excise Tax Fund, which is hereby created in the State Treasury, less payments for refunds and reimbursement to the department for expenses incurred in the administration and collection of the tax.

(b) Notwithstanding Section 13340 of the Government Code, all amounts in the California Electronic Cigarette Excise Tax Fund are continuously appropriated without regard to fiscal year as follows:

(1) Twenty-six Twenty-three percent of the moneys into the Cigarette and Tobacco Products Surtax Fund created by Section 30122.

(2) Fifteen Thirteen percent of the moneys into the California Children and Families Trust Fund created by Section 30131.

(3)Fifty-nine percent of the moneys into the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund created by Section 30130.53.

(3) Fifty-two percent of the moneys to fund the Proposition 56 Medi-Cal Physicians and Dentists Loan Repayment Act (Section 14114 of the Welfare and Institutions Code).

(4) Twelve percent of the moneys into the Health Careers Opportunity Grant Program Fund created pursuant to Section 128588 of the Health and Safety Code.

(c) (1) The department shall transmit the funds, pursuant to subdivision (b), periodically as promptly as feasible but shall transmit funds at least once in each calendar quarter.

(2) The department shall furnish a quarterly statement indicating the amounts paid and withheld for expenses of the department.

SEC. 4.SEC. 3.

 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.