BILL NUMBER: SB 626 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Calderon
FEBRUARY 18, 2011
An act to add Division 8.9 (commencing with Section 22992) to the
Business and Professions Code, and to amend Sections 6592 and 6901
of, to add Section 6471.5 to, and to add Article 1.7 (commencing with
Section 6480.50) to Chapter 5 of Part 1 of Division 2 of, the
Revenue and Taxation Code, relating to cannabis.
LEGISLATIVE COUNSEL'S DIGEST
SB 626, as introduced, Calderon. Cannabis and cannabis product:
certificate: taxation.
Existing law provides for the licensure by the State Board of
Equalization of manufacturers, distributors, wholesalers, importers,
and retailers of cigarettes or tobacco products that are engaged in
business in California, and prohibits retailers, manufacturers,
distributors, and wholesalers from distributing or selling those
cigarette and tobacco products unless they are licensed. Existing law
also imposes a tax on the gross receipts from the sale in this state
of, or the storage, use, or other consumption in this state of,
tangible personal property purchased from a retailer for storage,
use, or other consumption in this state.
This bill would create the Cannabis Certification and Regulation
Act of 2011 and provide for the certification by the State Board of
Equalization of growers, wholesalers, retailers, and transporters of
cannabis or cannabis products that are engaged in business in
California. The bill would require these certificated growers,
wholesalers, retailers, and transporters to keep records of every
sale, transfer, or delivery of cannabis or cannabis products, as
specified. The bill would authorize any peace officer and specified
employees of the board to conduct inspections, as provided. It would
prohibit growers, wholesalers, retailers, and transporters from
selling or purchasing cannabis or cannabis products without a
certificate.
The bill would provide for the seizure of cannabis or cannabis
products that are sold or purchased in violation of specified
provisions and impose specified penalties therefor, including
certificate revocation or suspension, civil penalties, and criminal
penalties. By imposing criminal penalties, the bill would create a
state-mandated local program.
The bill would require each wholesaler to prepay the retail sales
tax on its gross receipts derived from the sale of cannabis and
cannabis products, as specified. This bill would create the Cannabis
and Cannabis Products Compliance Fund, as specified.
This bill would require the Bureau of State Audits to conduct a
performance audit and report its findings to the board and
Legislature, as specified.
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 specify that its provisions become operative on
July 1, 2012.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Division 8.9 (commencing with Section 22992) is added
to the Business and Professions Code, to read:
DIVISION 8.9. Cannabis Certification and Regulation Act of
2011
CHAPTER 1. GENERAL PROVISIONS AND DEFINITIONS
22992. This division shall be known, and may be cited, as the
Cannabis Certification and Regulation Act of 2011.
22992.2. The Legislature finds and declares all of the following:
(a) The current controversies surrounding California's medical
marijuana dispensaries authorized to sell medical marijuana under the
Compassionate Use Act, enacted by the voters in 1996, have created
problems for the patients, dispensaries, law enforcement, and local
governments. Many issues about the legal sale and distribution of
medical marijuana remain unaddressed.
(b) Although many dispensaries operate within the law, there is
clear evidence that some are intentionally evading taxes and may be
laundering illegally acquired money and illegally distributing
marijuana for other than medical purposes.
(c) The State Board of Equalization, under its sales tax
authority, has formally registered nearly 300 medical marijuana
dispensaries and issued seller's permits. It has also identified over
500 unregistered dispensaries.
(d) Local governments, in allocating the number and location of
dispensaries, are rightly unwilling to authorize distribution centers
when current state laws are not clear on how to prevent unlawful
activities.
(e) Law enforcement authorities have legitimate concerns about
misuse of these dispensaries as sources of illegal distribution and
consumption.
(f) Dispensaries with the best intentions do not have a clearly
defined legal framework for acquiring and distributing medical
marijuana, and are put unnecessarily at risk in the act of acquiring
an illegal product for legal resale.
(g) In 2003 the Legislature enacted the California Cigarette and
Tobacco Products Licensing Act of 2003 (Division 8.6 (commencing with
Section 22970) of the Business and Professions Code) to provide for
the licensure by the State Board of Equalization of manufacturers,
distributors, and retailers of cigarette and other tobacco products
in California. For the first time in California, the distribution and
sale of cigarette and tobacco products were prohibited pursuant to
Division 8.6 (commencing with Section 22970) of the Business and
Professions Code unless those involved in every aspect of the trade
were licensed.
(h) That act authorized the state, through the State Board of
Equalization, to suspend or revoke the license of any licensee in
violation of the strict regulations governing the legal distribution
of tobacco products. The act established criminal penalties for
selling counterfeit cigarette and tobacco products, and imposed fines
or imprisonment for possessing, selling, or buying fraudulent
cigarette tax stamps.
(i) The primary purpose of the act was to prevent the unlawful
distribution of cigarettes and the loss of state tax revenue, which
had been declining by hundreds of millions of dollars due, in part,
to unlawful distributions and untaxed sales by well-organized
criminals.
(j) The act has been a success. According to a June 2006 report by
the State Auditor, cigarette tax compliance has improved, and there
was a positive effect on tax revenues from cigarettes and tobacco
products.
(k) It is the intention of the Legislature in enacting similar
legislation to license and control the distribution of medical
marijuana to do all of the following:
(1) Enable state and local governments to control sales and
distribution of marijuana in the same way the tobacco licensing act
has stemmed the flow of illegal tobacco products into the market
place.
(2) Increase revenue for the state and local governments.
(3) Provide assurances to the dispensaries that are now paying
sales tax that the state has an effective mechanism to collect tax
from their illegal competitors and shut them down if necessary.
(4) Enable the state to control the current legal distribution of
medical marijuana from the cultivator to the consumer and help law
enforcement authorities stop illegal sales in medical marijuana
dispensaries and elsewhere to minors and other individuals.
(5) Allow the state to prescribe secure packaging requirements to
carry out the intent of the division.
22992.4. The board shall administer a statewide program to
certificate sellers and transporters of cannabis or cannabis
products.
22992.6. For purposes of this division, the following terms shall
have the following meanings:
(a) "Board" means the State Board of Equalization.
(b) "Cannabis" means all parts of the plant Cannabis sativa L.,
whether growing or not; the seeds thereof; the resin extracted from
any part of the plant; and every compound, manufacture, salt,
derivative, mixture, or preparation of the plant, or its seeds or
resin. It does not include the mature stalks of the plant, fiber
produced from the stalks, oil, or cake made from the seeds of the
plant, any other compound, manufacture, salt, derivative, mixture, or
preparation of the mature stalks (except the resin extracted
therefrom), fiber, oil, or cake, or the sterilized seed of the plant
which is incapable of germination.
(c) "Certificate" means a cannabis seller's certificate or
cannabis transporter's certificate issued by the board pursuant to
this division.
(d) "Certificate holder" means any person holding a certificate
issued by the board pursuant to this division.
(e) "Display for sale" means the placement of cannabis or cannabis
products in retail stock for the purpose of selling or gifting the
cannabis or cannabis products. For purposes of this definition, the
clear and easily visible display of cannabis or cannabis products
shall create a rebuttable presumption that either were displayed for
sale.
(f) "Gifting" means any transfer of title or possession without
consideration, exchange, or barter, in any manner or by any means, of
cannabis or cannabis products that have been purchased for resale
under a certificate issued pursuant to this division if the transfer
occurs while the certificate is suspended or after the effective date
of its revocation.
(g) "Grower" means every person that plants, cultivates, harvests,
dries, or processes any cannabis or cannabis products.
(h) "Location" means any premises in this state where cannabis or
cannabis products are sold or offered for sale, or grown, processed,
stored, held, or possessed for the purpose of sale.
(i) "Notice" or "notification" means, unless as otherwise
provided, the written notice or notification provided to a
certificate holder by the board by either actual delivery to the
certificate holder or by first-class mail addressed to the
certificate holder at the address on the certificate.
(j) "Person" means a person, as defined in Section 6005 of the
Revenue and Taxation Code.
(k) "Retailer" means a retailer, as defined in Section 6015 of the
Revenue and Taxation Code, that engages in this state in the retail
sale of cannabis or cannabis products from a retail location.
(l) "Retail location" means any building from which cannabis or
cannabis products are sold at retail, including, but not limited to,
a medical cannabis dispensary that is collectively or cooperatively
cultivating and distributing marijuana for medical purposes pursuant
to Section 11362.775 of the Health and Safety Code.
(m) "Retail sale" means a retail sale, as defined in Section 6007
of the Revenue and Taxation Code.
(n) "Sale" or "sold" means a sale, as defined in Section 6006 of
the Revenue and Taxation Code.
(o) "Seller" means growers, wholesalers, and retailers of cannabis
or cannabis products in California, but does not mean transporters
of cannabis or cannabis products.
(p) "Transporter" means any person transporting within California
cannabis or cannabis products for delivery or use within California.
(q) "Wholesaler" means every person, other than a grower, that
engages in this state in making sales for resale of cannabis or
cannabis products.
22992.8. The board shall administer and enforce this division and
may prescribe, adopt, and enforce rules and regulations relating to
the administration and enforcement of this division.
22992.10. The board may create a cannabis and cannabis products
certification fee compliance task force for the purpose of reviewing
the effects of this division and assisting in making recommendations
to improve tax compliance and in effectuating the other purposes of
the division that may include, but not be limited to, representatives
from the following:
(a) The board.
(b) The office of the Attorney General.
(c) State and local law enforcement agencies.
22992.12. Commencing January 1, 2013, the Bureau of State Audits
shall conduct a performance audit of the certification and
enforcement of this division, and shall report its findings to the
board and the Legislature by July 1, 2013. The report shall include,
but not be limited to, the following:
(a) The actual costs of the program.
(b) The overall effectiveness of enforcement programs.
(c) The appropriateness of the deposit of fines assessed pursuant
to this division.
(d) (1) A report to be submitted pursuant to this section shall be
submitted in compliance with Section 9795 of the Government Code.
(2) Pursuant to Section 10231.5 of the Government Code, this
section is repealed on July 1, 2017.
22992.14. A person is not subject to the requirements of this
division if that person is exempt from regulation under the United
States Constitution, the laws of the United States, or the California
Constitution.
22992.16. Notwithstanding any other state or local law governing
the growing, processing, transportation, distribution, or possession
in this state of cannabis or cannabis products for the purpose of
sale, a person is prohibited from engaging in the sale or
transportation of cannabis or cannabis products in this state without
first obtaining a cannabis and cannabis products seller's or
transporter's certificate pursuant to this division.
22992.18. Any notice required by this division shall be served
personally or by mail. If by mail, the notice shall be placed in a
sealed envelope, with postage paid, addressed to the certificate
holder at the address as it appears in the records of the board. The
giving of notice shall be deemed complete at the time of deposit of
the notice in the United States Post Office, or a mailbox, subpost
office, substation or mail chute, or other facility regularly
maintained or provided by the United States Postal Service, without
extension of time for any reason. In lieu of mailing, a notice may be
served personally by delivering to the person to be served and
service shall be deemed complete at the time of delivery. Personal
service to a corporation may be made by delivery of a notice to any
person designated in the Code of Civil Procedure to be served for the
corporation with summons and complaints in a civil action.
22992.20. (a) All information and records provided to the board
pursuant to this division are confidential in nature and shall not be
disclosed by the board. Information required under this division is
not a public record under the California Public Records Act, as
described in Chapter 3.5 (commencing with Section 6250) of Division 7
of Title 1 of the Government Code, and shall not be open to public
inspection.
(b) All information and records that are submitted to the board by
or on behalf of a grower, wholesaler, or retailer which contain the
name, address, or any other identifying information concerning the
grower, wholesaler, or retailer are confidential, and may only be
used by the board in the administration of board duties.
CHAPTER 2. CERTIFICATE FOR GROWERS OF CANNABIS OR CANNABIS
PRODUCTS
22993. (a) Every grower of cannabis or cannabis products shall
annually obtain and maintain a certificate under this division to
engage in the sale of cannabis or cannabis products. A grower of
cannabis or cannabis products that owns or controls more than one
location shall obtain a separate certificate for each location but
may submit a single application for all such certificates.
(b) Certificates shall be valid for one calendar year, unless
surrendered, suspended, or revoked prior to the end of the calendar
year, and may be renewed each year upon payment of a fee.
(c) The grower shall conspicuously display the certificate at each
location in a manner visible to the public.
(d) A certificate issued to a grower under this division is only
valid with respect to the grower designated on the certificate and
may not be transferred or assigned to another grower. Any grower
issued a certificate under this division that does not commence
business in the manner specified or designated in the certificate,
ceases to do business in the manner specified or designated in the
certificate, or is notified that the certificate is suspended,
revoked, or canceled shall immediately surrender that certificate to
the board.
22993.2. (a) An application for a certificate or certificate
renewal by a grower shall be submitted in a form prescribed by the
board and shall include the following:
(1) The name, address, electronic mail address, and telephone
number of the applicant. If the applicant is a firm, exchange,
association, or corporation, the full name, address, electronic mail
address, and telephone number of each member of the firm or the
names, addresses, electronic mail addresses, and telephone numbers of
the officers of the exchange, association, or corporation.
(2) The business name, address, electronic mail address, and
telephone number for each location where cannabis or cannabis
products will be grown, stored, held, or sold. For any applicant
whose headquarters or corporate office is at a location other than
that specified in the preceding sentence, the business name, address,
electronic mail address, and telephone number of the headquarters or
corporate office. Citations issued to certificate holders shall be
forwarded to all addresses on the certificate.
(3) If any other certificate, permit, or license has been issued
by the board or other state agency or local government to the
applicant, the certificate, permit, or license numbers for each
certificate, permit, or license in effect.
(4) A statement by the applicant affirming that the applicant has
not been convicted of a felony and has not violated and will not
violate or cause or permit to be violated any of the provisions of
this division or any rule of the board applicable to the applicant or
pertaining to the growing, sale, or distribution of cannabis or
cannabis products. If the applicant is unable to affirm this
statement, the application shall contain a statement by the applicant
of the nature of any violation or the reasons that prevent the
applicant from complying with the requirements with respect to the
statement.
(5) A statement by the applicant that the content of the
application is complete, true, and correct. Any person who signs a
statement pursuant to this subdivision that asserts the truth of any
material matter that he or she knows to be false is guilty of a
misdemeanor punishable by imprisonment of up to one year in a county
jail, or a fine of not more than one thousand dollars ($1,000), or
both the imprisonment and fine.
(6) Signature of the applicant.
(7) Any other information the board may require.
(b) The board may investigate to determine the truthfulness and
completeness of the information provided in the application.
(c) The board shall provide electronic means for applicants to
submit applications for registration and renewal.
22993.4. (a) Each grower of cannabis or cannabis products shall
submit with each application or application for renewal a certificate
fee of one thousand three hundred dollars ($1,300) per location. The
fee shall be for a calendar year and shall not be prorated. An
applicant that owns or controls more than one location shall obtain a
separate certificate for each location, but may submit a single
application for those certificates or renewal of those certificates.
(b) A reasonable background check fee, as determined by the board,
shall be submitted by each applicant with each application and, if
deemed necessary, with each application for renewal.
22993.6. (a) The board shall issue a certificate to a grower upon
receipt of a completed application, payment of the fee prescribed in
Section 22993.4, a completed background check, and a determination
by the board that all other applicable requirements of this division
have been met. The board shall not issue a certificate if any of the
following applies:
(1) The grower or, if the grower is not an individual, any person
controlling the grower has previously been issued a certificate that
is suspended or revoked by the board for violation of any provision
of this division.
(2) The application is for a certificate or renewal of a
certificate for a grower whose certificate is revoked or for which
revocation is pending, unless either of the following occurs:
(A) It has been more than five years since the grower's previous
certificate was revoked.
(B) The person applying for the certificate provides the board
with documentation demonstrating that the applicant has acquired or
is acquiring the business in an arm's length transaction. For
purposes of this section, an "arm's length transaction" is defined as
a sale in good faith and for valuable consideration that reflects
the fair market value in the open market between two informed and
willing parties, neither under any compulsion to participate in the
transaction. A sale of the business between relatives, related
companies, or partners, or a sale for the primary purpose of avoiding
the effect of a violation or violations of state cannabis or
cannabis products control laws that were committed by the grower is
presumed not to be made at "arm's length."
(3) The grower or, if the grower is not an individual, any person
controlling the grower has been convicted of a felony.
(b) (1) Any grower that is denied a certificate may petition for a
redetermination of the board's denial of the certificate within 30
days after service upon that grower of the notice of the denial of
the certificate. If a petition for redetermination is not filed
within the 30-day period, the determination of denial becomes final
at the expiration of the 30-day period.
(2) Every petition for redetermination shall be in writing and
shall state the specific grounds upon which the petition is founded.
The petition may be amended to state additional grounds at any time
prior to the date on which the board issues its order or decision
upon the petition for redetermination.
(3) If the petition for redetermination is filed within the 30-day
period, the board shall reconsider the determination of the denial
and, if the grower has so requested in the petition, shall grant an
oral hearing and shall give the grower at least 10 days' notice of
the time and place of the hearing. The board may continue the hearing
as necessary.
(4) The order or decision of the board upon a petition for
redetermination shall become final 30 days after the mailing of the
notice.
22993.8. (a) Notwithstanding Sections 22993 and 22993.2, the
board may issue to a grower a temporary certificate with a scheduled
expiration date, as determined by the board.
(b) A temporary certificate issued pursuant to this section shall
be automatically terminated upon the board's issuance or denial of a
certificate pursuant to Section 22993.6.
(c) A temporary certificate issued pursuant to this section is
subject to the same suspension, revocation, and forfeiture provisions
that apply to certificates issued by the board pursuant to Section
22993.6.
CHAPTER 3. CERTIFICATE FOR WHOLESALERS OF CANNABIS OR CANNABIS
PRODUCTS
22994. (a) Every wholesaler of cannabis or cannabis products
shall annually obtain and maintain a certificate to engage in the
sale of cannabis or cannabis products. A wholesaler of cannabis or
cannabis products that owns or controls more than one location shall
obtain a separate certificate for each location but may submit a
single application for all such certificates.
(b) Certificates shall be valid for one calendar year, unless
surrendered, suspended, or revoked prior to the end of the calendar
year, and may be renewed each year upon payment of a fee.
(c) The wholesaler shall conspicuously display the certificate at
each location in a manner visible to the public.
(d) A certificate issued to a wholesaler under this division is
only valid with respect to the wholesaler designated on the
certificate and may not be transferred or assigned to another
wholesaler. A person that obtains a certificate as a wholesaler that
ceases to do business as specified in the certificate, or that never
commenced business, or whose certificate is suspended, revoked, or
canceled shall immediately surrender the certificate to the board.
22994.2. (a) An application for a certificate or certificate
renewal by a wholesaler shall be in a form prescribed by the board
and shall include the following:
(1) The name, address, electronic mail address, and telephone
number of the applicant. If the applicant is a firm, exchange,
association, or corporation, the full name, address, electronic mail
address, and telephone number of each member of the firm or the
names, addresses, electronic mail addresses, and telephone numbers of
the officers of the exchange, association, or corporation.
(2) The business name, address, electronic mail address, and
telephone number of each location where cannabis or cannabis products
will be stored, held, or sold. For an applicant whose headquarters
or corporate office is at a location other than that specified in the
preceding sentence, the business name, address, electronic mail
address, and telephone number of the headquarters or corporate
office. Citations issued to certificate holders shall be forwarded to
all addresses on the certificate.
(3) If any other certificate, permit, or license has been issued
by the board or other state agency or local government to the
applicant, the certificate, permit, or license numbers for each
certificate, permit, or license in effect.
(4) A statement by the applicant affirming that the applicant has
not been convicted of a felony and has not violated and will not
violate or cause or permit to be violated any provision of this
division or any rule of the board applicable to the applicant or
pertaining to the growing, sale, or distribution of cannabis or
cannabis products. If the applicant is unable to affirm this
statement, the application shall contain a statement by the applicant
of the nature of any violation or the reason that prevents the
applicant from complying with the requirements with respect to the
statement.
(5) A statement by the applicant that the content of the
application is complete, true, and correct. Any person who signs a
statement pursuant to this subdivision that asserts the truth of any
material matter that he or she knows to be false is guilty of a
misdemeanor punishable by imprisonment of up to one year in a county
jail, or a fine of not more than one thousand dollars ($1,000), or
both the imprisonment and fine.
(6) Signature of the applicant.
(7) Any other information the board may require.
(b) The board may investigate to determine the truthfulness and
completeness of the information provided in the application.
(c) The board shall provide electronic means for applicants to
submit applications for registration and renewal.
22994.4. (a) Every wholesaler of cannabis or cannabis products
shall submit a certificate fee of one thousand three hundred dollars
($1,300) for each location with each application and each application
for renewal. An applicant that owns or controls more than one
location shall obtain a separate certificate for each location but
may submit a single application for those certificates or renewal of
those certificates. The fee shall be for a calendar year and shall
not be prorated.
(b) A reasonable background check fee, as determined by the board,
shall be submitted by each applicant with each application and, if
deemed necessary, with each application for renewal.
22994.6. (a) At the discretion of the board, a certificate may be
issued to a wholesaler upon receipt of a completed application,
payment of the fee prescribed in Section 22994.4, and a completed
background check. The board shall not issue a certificate if any of
the following applies:
(1) The wholesaler or, if the wholesaler is not an individual, any
person controlling the wholesaler has previously been issued a
certificate that is suspended or revoked by the board for violation
of any provision of this division.
(2) The application is for a certificate or renewal of a
certificate for a wholesaler whose certificate is revoked or for
which revocation is pending, unless either of the following occurs:
(A) It has been more than five years since the wholesaler's
previous certificate was revoked.
(B) The person applying for the certificate provides the board
with documentation demonstrating that the applicant has acquired or
is acquiring the business in an arm's length transaction. For
purposes of this section, an "arm's length transaction" is defined as
a sale in good faith and for valuable consideration that reflects
the fair market value in the open market between two informed and
willing parties, neither under any compulsion to participate in the
transaction. A sale of the business between relatives, related
companies, or partners, or a sale for the primary purpose of avoiding
the effect of a violation or violations of state cannabis or
cannabis products control laws that were committed by the wholesaler
is presumed not to be made at "arm's length."
(3) The wholesaler or, if the wholesaler is not an individual, any
person controlling the wholesaler has been convicted of a felony.
(b) (1) Any wholesaler that is denied a certificate may petition
for a redetermination of the board's denial of the certificate within
30 days after service upon that wholesaler of the notice of the
denial of the certificate. If a petition for redetermination is not
filed within the 30-day period, the determination of denial becomes
final at the expiration of the 30-day period.
(2) Every petition for redetermination shall be in writing and
shall state the specific grounds upon which the petition is founded.
The petition may be
amended to state additional grounds at any time prior to the date on
which the board issues its order or decision upon the petition for
redetermination.
(3) If the petition for redetermination is filed within the 30-day
period, the board shall reconsider the determination of the denial
and, if the wholesaler has so requested in the petition, shall grant
the wholesaler an oral hearing and shall give the wholesaler at least
10 days' notice of the time and place of the hearing. The board may
continue the hearing as necessary.
(4) The order or decision of the board upon a petition for
redetermination becomes final 30 days after the mailing of the
notice.
22994.8. (a) Notwithstanding Sections 22994 and 22994.2, the
board may issue to a wholesaler a temporary certificate with a
scheduled expiration date, as determined by the board.
(b) A temporary certificate issued pursuant to this section shall
be automatically terminated upon the board's issuance or denial of a
certificate pursuant to Section 22994.6.
(c) A temporary certificate issued pursuant to this section is
subject to the same suspension, revocation, and forfeiture provisions
that apply to certificates issued by the board pursuant to Section
22994.6.
CHAPTER 4. CERTIFICATES FOR RETAILERS OF CANNABIS OR CANNABIS
PRODUCTS
22995. (a) Every retailer of cannabis or cannabis products shall
annually obtain and maintain a certificate under this division to
engage in the sale of cannabis or cannabis products in California. A
retailer of cannabis or cannabis products that owns or controls more
than one location shall obtain a separate certificate for each
location but may submit a single application for these certificates.
(b) Certificates shall be valid for a 12-month period, unless
surrendered, suspended, or revoked prior to the end of the calendar
year, and may be renewed each year upon payment of a fee.
(c) The retailer shall conspicuously display the certificate at
each location in a manner visible to the public.
(d) A certificate issued to a retailer under this division is only
valid with respect to the retailer designated on the certificate and
may not be transferred or assigned to another retailer. A person
that obtains a certificate as a retailer that ceases to do business
as specified in the certificate, or that never commenced business, or
whose certificate is suspended, revoked, or canceled shall
immediately surrender the certificate to the board.
22995.2. (a) An application for a certificate or certificate
renewal by a retailer shall be on a form prescribed by the board and
shall include the following:
(1) The name, address, electronic mail address, and telephone
number of the applicant. If the applicant is a firm, exchange,
association, or corporation, the full name, address, electronic mail
address, and telephone number of each member of the firm or the
names, addresses, electronic mail addresses, and telephone numbers of
the officers of the exchange, association, or corporation.
(2) The business name, address, electronic mail address, and
telephone number for each location where cannabis or cannabis
products will be grown, stored, held, or sold. For any applicant
whose headquarters or corporate office is at a location other than
that specified in the preceding sentence, the business name, address,
electronic mail address, and telephone number of the headquarters or
corporate office. Citations issued to certificate holders shall be
forwarded to all addresses on the certificate.
(3) If any other certificate, permit, or license has been issued
by the board or other state agency or local government to the
applicant, the certificate, permit, or license numbers for each
certificate, permit, or license in effect.
(4) A statement by the applicant affirming that the applicant has
not been convicted of a felony and has not violated and will not
violate or cause or permit to be violated any of the provisions of
this division or any rule of the board applicable to the applicant or
pertaining to the growing, sale, or distribution of cannabis or
cannabis products. If the applicant is unable to affirm this
statement, the application shall contain a statement by the applicant
of the nature of any violation or the reasons that prevent the
applicant from complying with the requirements with respect to the
statement.
(5) A statement by the applicant that the content of the
application is complete, true, and correct. Any person who signs a
statement pursuant to this subdivision that asserts the truth of any
material matter that he or she knows to be false is guilty of a
misdemeanor punishable by imprisonment of up to one year in a county
jail, or a fine of not more than one thousand dollars ($1,000), or
both the imprisonment and fine.
(6) Signature of the applicant.
(7) Any other information the board may require.
(b) The board may investigate to determine the truthfulness and
completeness of the information provided in the application.
(c) The board shall provide electronic means for applicants to
submit applications for registration and renewal.
22995.4. (a) Every retailer of cannabis or cannabis products
shall submit a certificate fee of one thousand three hundred dollars
($1,300) for each location where cannabis or cannabis products are
stored or sold with each application and each application for
renewal. An applicant that owns or controls more than one location
shall obtain a separate certificate for each location, but may submit
a single application for those certificates or renewal of those
certificates.
(b) A reasonable background check fee, as determined by the board,
shall be submitted by each applicant with each application and, if
deemed necessary, with each application for renewal.
22995.6. (a) At the discretion of the board, a certificate may be
issued to a retailer upon receipt of a completed application,
payment of the fee prescribed in Section 22995.4, and a completed
background check. The board shall not issue a certificate if any of
the following applies:
(1) The retailer or, if the retailer is not an individual, any
person controlling the retailer has previously been issued a
certificate that is suspended or revoked by the board for violation
of any provision of this division.
(2) The application is for a certificate or renewal of a
certificate for a location that is the same location as that of a
retailer whose certificate was revoked or for which revocation is
pending, unless either of the following occurs:
(A) It has been more than five years since a previous certificate
for the location was revoked.
(B) The person applying for the certificate provides the board
with documentation demonstrating that the applicant has acquired or
is acquiring the premises or business in an arm's length transaction.
For purposes of this section, an "arm's length transaction" is
defined as a sale in good faith and for valuable consideration that
reflects the fair market value in the open market between two
informed and willing parties, neither under any compulsion to
participate in the transaction. A sale between relatives, related
companies, or partners, or a sale for the primary purpose of avoiding
the effect of violations of this division that were committed by the
retailer or occurred at the retail location, is presumed not to be
made at "arm's length."
(3) The retailer or, if the retailer is not an individual, any
person controlling the retailer has been convicted of a felony.
(4) The retailer does not possess all required certificates or
permits required under the Revenue and Taxation Code or Division 8.6
(commencing with Section 22970) of the this code.
(b) (1) Any retailer that is denied a certificate may petition for
a redetermination of the board's denial of the certificate within 30
days after service upon that retailer of the notice of the denial of
the certificate. If a petition for redetermination is not filed
within the 30-day period, the determination of denial becomes final
at the expiration of the 30-day period.
(2) Every petition for redetermination shall be in writing and
shall state the specific grounds upon which the petition is founded.
The petition may be amended to state additional grounds at anytime
prior to the date on which the board issues its order or decision
upon the petition for redetermination.
(3) If the petition for redetermination is filed within the 30-day
period, the board shall reconsider the determination of the denial
and, if the retailer has so requested in the petition, shall grant
the retailer an oral hearing and shall give the retailer at least 10
days' notice of the time and place of the hearing. The board may
continue the hearing as necessary.
(4) The order or decision of the board upon a petition for
redetermination shall become final 30 days after the mailing of the
notice.
22995.8. (a) Notwithstanding Sections 22995 and 22995.2, the
board may issue to a retailer a temporary certificate with a
scheduled expiration date, as determined by the board.
(b) A temporary certificate issued pursuant to this section shall
be automatically terminated upon the board's issuance or denial of a
certificate pursuant to Section 22995.6.
(c) A temporary certificate issued pursuant to this section is
subject to the same suspension, revocation, and forfeiture provisions
that apply to certificates issued by the board pursuant to Section
22995.6.
22995.10. Every retail sale of cannabis or cannabis products
shall be made from a retail location.
CHAPTER 5. CERTIFICATE FOR TRANSPORTERS OF CANNABIS OR
CANNABIS PRODUCTS
22996. (a) Every transporter that transports upon the highways,
roads, or streets of this state more than 28.5 grams (one ounce) of
cannabis in a single load or shipment, except a qualified patient or
a person holding a valid identification card, or the designated
primary caregiver of that qualified patient or person under Sections
11362.7, 11362.765, and 11362.77 of the Health and Safety Code, shall
annually obtain and maintain a cannabis transporter certificate
authorizing the transport of cannabis and cannabis products in this
state. A transporter that owns or controls more than one transport
vehicle shall obtain a separate certificate for each vehicle that is
used to transport cannabis or cannabis products, but may submit a
single application for these certificates.
(b) A certificate issued to a transporter under this chapter is
only valid with respect to the transport vehicle designated on the
certificate and shall not be transferred or assigned to another
vehicle or person.
(c) Certificates shall be valid for one calendar year, unless
surrendered, suspended, revoked, or canceled prior to the end of the
calendar year, and may be renewed each year upon payment of the fee.
(d) A person that obtains a certificate as a transporter that
ceases to do business as specified in the certificate, or that never
commenced business, or whose certificate is suspended, revoked, or
canceled shall immediately surrender the certificate to the board.
22996.2. (a) An application for a certificate or certificate
renewal by a transporter shall be on a form prescribed by the board
and shall include the following:
(1) The name, address, telephone number, and electronic mail
address of the applicant. If the applicant is a firm, exchange,
association, or corporation, the full name, address, electronic mail
address, and telephone number of each member of the firm or the
names, addresses, electronic mail addresses, and telephone numbers of
the officers of the exchange, association, or corporation.
(2) The business name, address, telephone number, and electronic
mail address. Citations issued to certificate holders shall be
forwarded to all addresses on the certificate.
(3) The vehicle identification number, license plate number,
vehicle description, and any other identifying vehicle information
deemed necessary by the board.
(4) If any other certificate, permit, or license has been issued
by the board or other state agency or local government to the
applicant, the certificate, permit, or license numbers for each
certificate, permit, or license in effect.
(5) A statement by the applicant affirming that the applicant has
not been convicted of a felony and has not violated and will not
violate or cause or permit to be violated any provision of this
division or any rule of the board applicable to the applicant or
pertaining to the growing, sale, or distribution of cannabis or
cannabis products. If the applicant is unable to affirm this
statement, the application shall contain a statement by the applicant
of the nature of any violation or the reasons that prevent the
applicant from complying with the requirements with respect to the
statement.
(6) A statement by the applicant that the content of the
application is complete, true, and correct. Any person who signs a
statement pursuant to this subdivision that asserts the truth of any
material matter that he or she knows to be false is guilty of a
misdemeanor punishable by imprisonment of up to one year in a county
jail, or a fine of not more than one thousand dollars ($1,000), or
both the imprisonment and fine.
(7) Signature of the applicant.
(8) Any other information the board may require.
(b) The board may investigate to determine the truthfulness and
completeness of the information provided in the application.
(c) The board shall provide electronic means for applicants to
submit applications for registration and renewal.
22996.4. (a) Every transporter of cannabis or cannabis products
shall submit a certificate fee of one thousand three hundred dollars
($1,300) for each vehicle used to transport cannabis or cannabis
products with each application and each application for renewal. An
applicant that owns or controls more than one transport vehicle shall
obtain a separate certificate for each transport vehicle, but may
submit a single application for those certificates or renewal of
those certificates. The fee shall be for a calendar year and shall
not be prorated.
(b) A reasonable background check fee, as determined by the board,
shall be submitted by each applicant with each application and, if
deemed necessary, with each application for renewal.
22996.6. (a) At the discretion of the board, a certificate may be
issued to a transporter upon receipt of a completed application,
payment of the fee prescribed in Section 22996.4, and a completed
background check. The board shall not issue a certificate if any of
the following applies:
(1) The transporter or, if the transporter is not an individual,
any person controlling the transporter has previously been issued a
certificate that is suspended or revoked by the board for violation
of any provision of this division, unless it has been more than five
years since a previous certificate was revoked.
(2) The transporter or, if the transporter is not an individual,
any person controlling the transporter has been convicted of a
felony.
(b) (1) Any transporter that is denied a certificate may petition
for a redetermination of the board's denial of the certificate within
30 days after service upon that transporter of the notice of the
denial of the certificate. If a petition for redetermination is not
filed within the 30-day period, the determination of denial becomes
final at the expiration of the 30-day period.
(2) Every petition for redetermination shall be in writing and
shall state the specific grounds upon which the petition is founded.
The petition may be amended to state additional grounds at any time
prior to the date on which the board issues its order or decision
upon the petition for redetermination.
(3) If the petition for redetermination is filed within the 30-day
period, the board shall reconsider the determination of the denial
and, if the transporter has so requested in the petition, shall grant
the transporter an oral hearing and shall give the transporter at
least 10 days' notice of the time and place of the hearing. The board
may continue the hearing as necessary.
(4) The order or decision of the board upon a petition for
redetermination shall become final 30 days after the mailing of the
notice.
22996.8. The certificate issued to the transporter shall be
placed in the transport vehicle for which the certificate is issued
and be made available upon request by an employee of the board or a
law enforcement agency.
22996.10. (a) Each transporter shall obtain from the certificate
holder from which the cannabis or cannabis products are received a
receipt or shipping document for the cannabis or cannabis products
transported and delivered. This receipt or shipping document shall be
carried with the load at all times and contain the following
information:
(1) Name and certificate number of shipper.
(2) Point of origin.
(3) Name of certificate holder to which delivery is made.
(4) Place of delivery.
(5) Name of transporter making delivery.
(6) A complete description of the shipment, including, but not
limited to, brand name, quantity, size, unit, and total weight.
(7) The number of the waybill covering the shipments.
(8) In the case of shipments by rail, the receipt shall also show
the car number; in the case of shipments by water, the receipt shall
also show the name of the vessel and the number of the steamship bill
of lading; and in the case of shipments by air, the receipt shall
also show the flight number and tail number.
(b) A receipt or shipping document containing all the information
described in subdivision (a) shall be deemed to be in compliance with
this requirement. A copy of the receipt or shipping document must be
delivered to the certificate holder to which delivery is made. With
respect to pool shipments in which more than one certificate holder
participates, the transporter shall obtain a receipt or shipping
document from each participating certificate holder shipper and
furnish a copy of the receipt or shipping document to each
participating certificate holder recipient.
22996.12. (a) Every transporter holding a certificate pursuant
this chapter shall file a monthly report to the board, in a manner
specified by the board, which may include, but is not limited to,
electronic media, as defined in Section 6066 of the Revenue and
Taxation Code. The monthly report shall include, but is not limited
to, the following:
(1) Name and certificate number of the consignor.
(2) Name of consignee to which delivery is made.
(3) A complete description of the shipment, including brand name,
quantity, size, unit, and total weight of the cannabis or cannabis
products transported.
(4) The date of transport.
(5) Bill of lading number, as defined in Section 1201 of the
Commercial Code.
(6) Any other information deemed necessary by the board.
(b) The board may suspend or revoke the certificate, pursuant to
the provisions applicable to the suspension and revocation of a
license set forth in Section 30148 of the Revenue and Taxation Code,
of any transporter that has failed to comply with the requirements of
this section.
(c) To facilitate the administration of this section, the board
may require the reports for periods other than monthly periods.
22996.14. (a) Notwithstanding Sections 22996 and 22996.2, the
board may issue to a transporter a temporary certificate with a
scheduled expiration date, as determined by the board.
(b) A temporary certificate issued pursuant to this section shall
be automatically terminated upon the board's issuance or denial of a
certificate pursuant to Section 22996.6.
(c) A temporary certificate issued pursuant to this section is
subject to the same suspension, revocation, and forfeiture provisions
that apply to certificates issued by the board pursuant to Section
22996.6.
22996.16. For purposes of this chapter "certificate" means a
cannabis transporter certificate.
22996.18. This chapter shall not apply to any certificate holder
that transports, in conveyances it owns, leases, or rents in the
course of its business, its own cannabis or cannabis products for
delivery to another certificated location, another certificate holder'
s location, or a consumer's location. Any certificate holder that
transports its own cannabis or cannabis products shall carry, at all
times, a copy of its cannabis seller's certificate with the load to
be delivered.
CHAPTER 6. INVOICES
22997. (a) Every sale, transfer, or delivery of cannabis or
cannabis products from one certificate holder to another certificate
holder shall be recorded on a sales invoice, whether or not
consideration is involved. Invoices covering the sale or purchase of
cannabis or cannabis products shall be filed in a manner as to be
readily accessible for examination by employees of the board and
shall not be commingled with invoices covering commodities other than
cannabis or cannabis products.
(b) Each sales invoice shall have printed on it the name and
address of the seller and shall show all of the following
information:
(1) Name, address, and certificate number of the seller and the
purchaser.
(2) Board-issued certificate numbers of the seller and the
purchaser.
(3) Date of sale and invoice number.
(4) Kind, quantity, size, and capacity of packages of cannabis or
cannabis products sold.
(5) The cost to the purchaser, together with any discount which at
any time is to be given on or from the price as shown on the
invoice.
(6) The place from which delivery of the cannabis or cannabis
products was made.
(c) Invoices covering sales of cannabis or cannabis products
between certificate holders shall show, in addition to the
information in subdivision (b), the total weight covered by the
invoice.
(d) Each invoice for the sale of cannabis or cannabis products
shall be legible and readable.
22997.2. All growers, wholesalers, and retailers subject to
certification under this division shall retain invoices that meet the
requirements set forth in Section 22997 for all cannabis or cannabis
products purchased and sold and any other records required by the
board. The invoices and records shall be maintained for a period of
one year from the date of the purchase or sale at the certificate
holder's location identified in the certificate, and thereafter, the
invoices and records shall be made available for inspection by the
board or a law enforcement agency for a period of four years.
CHAPTER 7. INSPECTIONS, PROHIBITIONS, AND PENALTIES
Article 1. Inspections, Seizures, and Forfeitures
22998. (a) (1) Any peace officer or board employee, upon
presenting appropriate credentials, is authorized to enter any place
as described in paragraph (3) and to conduct inspections in
accordance with the requirements of this subdivision.
(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 conducted at any location or upon any
vehicle, vessel, aircraft, or other conveyance at or upon which
cannabis or cannabis products are sold, grown, stored, or
transported.
(4) Inspections shall be requested or conducted no more than once
in any 24-hour period.
(b) Any person that refuses to allow an inspection shall be
subject to the penalties imposed pursuant to Section 22998.26.
Article 2. Prohibitions
22998.2. (a) A grower shall not sell cannabis or cannabis
products to a wholesaler, retailer, or any other person that is not
certificated pursuant to this division or whose certificate has been
suspended or revoked.
(b) A wholesaler shall not sell cannabis or cannabis products to a
retailer, wholesaler, or any other person that is not certificated
pursuant to this division or whose certificate has been suspended or
revoked.
(c) A retailer or wholesaler shall not purchase cannabis or
cannabis products from a grower that is not certificated pursuant to
this division or whose certificate has been suspended or revoked.
(d) A retailer or wholesaler shall not purchase cannabis or
cannabis products from any person that is not certificated pursuant
to this division or whose certificate has been suspended or revoked.
(e) Each separate sale to a retailer, or by a grower, or to or by
a wholesaler or any other person that is not certificated as required
pursuant to this division, shall constitute a separate violation.
(f) Failure to comply with this section shall be a misdemeanor
subject to penalties pursuant to Section 22998.26.
Article 3. Seizure for Violating Prohibitions
22998.4. (a) Notwithstanding any other provision of this
division, upon discovery by the board or a law enforcement agency
that a grower, wholesaler, retailer, or any other person has made a
purchase or sale of cannabis or cannabis products in violation of
Section 22998.2 or subdivision (d) of Section 22998.16, or an
uncertificated person is in possession of more than 28.5 grams (one
ounce), or in possession of products containing more than 28.5 grams
(one ounce) of cannabis, or in possession of both cannabis and
products containing cannabis which together total more than 28.5
grams (one ounce) of cannabis, except a person holding a valid
identification card, or the designated primary caregiver of that
qualified patient or person pursuant to Sections 11362.7, 11362.765,
and 11362.77 of the Health and Safety Code, the board or the law
enforcement agency shall be authorized to seize all cannabis or
cannabis products at the grower's, wholesaler's, or retailer's
location, or any other location it deems necessary, or at any other
person's location.
(b) Notwithstanding any other provision of this division, upon
discovery by the board or a law enforcement agency that a transporter
of cannabis or cannabis products is in violation of Section 22996,
the board or the law enforcement agency shall be authorized to seize
all cannabis or cannabis products in the possession or control of the
person or persons in the transport vehicle, vessel, aircraft, or
other conveyance.
(c) Notice of the seizure of the cannabis or cannabis products as
described in subdivision (a) shall be given by the board as follows:
(1) Notice shall be given as set forth in Section 22992.18 to all
persons known by the board to have any right, title, or interest in
the property.
(2) The board shall include a notice of the seizure of 2,000 grams
or more of cannabis or cannabis products on its Internet Web site
for a period of six months from the notice of seizure.
(3) Notice shall include a description of the cannabis, cannabis
products, or cannabis and cannabis products, the reason for the
seizure, and the time and place of the seizure.
(d) Within 30 days from the date of the mailing of the board's
notice of seizure or, if no notice was mailed to a person, 30 days
from the date of publication of the notice, any person owning or
claiming a right, title, or interest in the cannabis or cannabis
products seized may file an action against the board in the Superior
Court of the County of Sacramento for the release or recovery of the
cannabis or cannabis products on the ground that the cannabis or
cannabis products were erroneously or illegally seized. The failure
of the person to file a timely action shall constitute a bar to that
person's right to any interest in the cannabis or cannabis products.
The court shall determine whether the seizure of the cannabis or
cannabis products was in accordance with law and shall enter an
appropriate order for the disposition of the cannabis or cannabis
products.
22998.6. Any grower, wholesaler, or retailer that fails to
display a license as required by this division shall, in addition to
any other applicable penalty, be liable for a penalty of one thousand
dollars ($1,000).
22998.8. (a) Any transporter that fails or refuses to make
available a cannabis transporter certificate or a receipt for the
cannabis or cannabis products being transported upon request by the
board or law enforcement agency shall be liable for a penalty of ten
thousand dollars ($10,000).
(b) Any transporter that fails to retain a cannabis transporter
certificate in a vehicle so certificated, as required by Section
22996.8, shall be liable for a penalty of ten thousand dollars
($10,000).
Article 4. Invoicing Penalties
22998.10. (a) Failure of a certificate holder to comply with
Section 22997 or 22997.2 shall be a misdemeanor subject to penalties
pursuant to Section 22998.26.
(b) Any retailer found in violation of Section 22997 or 22997.2,
or any person that fails, refuses, or neglects to retain or make
available invoices for inspection and copying during normal business
hours in accordance with this section shall be subject to penalties
pursuant to Section 22998.26.
Article 5. Penalty for Sales by Persons Not Certificated
22998.12. (a) A person or entity that engages in the business of
selling or transporting cannabis or cannabis products in this state
either without a valid certificate or after a certificate has been
suspended or revoked, and each officer of any corporation that
engages in this business, is guilty of a misdemeanor punishable as
provided in Section 22998.26.
(b) Each day after notification by the board or by a law
enforcement agency that a grower, wholesaler, retailer, or any other
person required to be certificated under this division offers
cannabis or cannabis products for sale or exchange without a valid
certificate for the location from which they are offered for sale
shall constitute a separate violation.
(c) Continued sales or gifting of cannabis or cannabis products
either without a valid certificate or after a notification of
suspension or revocation shall constitute a violation punishable as
provided in Section 22998.26, and shall result in the seizure of all
cannabis and cannabis products in the possession of the person by the
board or a law enforcement agency. Any cannabis or cannabis products
seized by the board or delivered to the board by a law enforcement
agency shall be deemed forfeited and destroyed.
Article 6. Suspension or Revocation Penalty
22998.14. The board may suspend the certificate or revoke the
certificate, pursuant to the provisions applicable to the revocation
of a license set forth in Section 30148 of the Revenue and Taxation
Code, of any certificate holder that has failed to comply with the
requirements of this section.
22998.16. The board shall revoke the certificate, pursuant to the
provisions applicable to the revocation of a license as set forth in
Section 30148 of the Revenue and Taxation Code, of any certificate
holder if the certificate holder or any person controlling the
certificate holder has done either of the following:
(a) Been convicted of a felony.
(b) Allowed any license or permit to be revoked under any
provision of the Revenue and Taxation Code or Division 8.6
(commencing with Section 22970) of this code.
22998.18. In addition to any other civil or criminal penalty
provided by law, upon a finding that a certificate holder has
violated any provision of this division, the board may take the
following actions:
(a) In the case of any offense, the board may revoke or suspend
the certificate or certificates of the certificate holder pursuant to
the procedures applicable to the revocation of a certificate set
forth in Section 30148 of the Revenue and Taxation Code.
(b) In addition to the action authorized under subdivision (a),
the board may impose a civil penalty in an amount not to exceed the
greater of either of the following:
(1) Five times the retail value of the seized cannabis or cannabis
products.
(2) Ten thousand dollars ($10,000).
22998.20. (a) Certificates issued pursuant to this division shall
be subject to suspension or revocation for violations of this
division or Part 1 (commencing with Section 6001) of Division 2 of
the Revenue and Taxation Code.
(1) In addition to any applicable fines or penalties for a
violation, upon first conviction of a violation, a certificate holder
shall receive a written notice from the board detailing the
suspension and revocation provisions of this division. At its
discretion, the board may also suspend a certificate for up to 30
days.
(2) In addition to any applicable fines or penalties for a
violation, upon a second conviction of a violation within four years
of a previous violation, the certificate shall be revoked.
(b) The date of the occurrence of a violation shall be used to
calculate the duration between subsequent violations. A violation
shall be noted in the certificate record at the board only after
judicial conviction or final adjudication of a violation.
(c) Upon updating a record for a violation triggering a
suspension, the board shall serve the certificate holder with a
notice of suspension and shall order the certificate holder to cease
the sale, gifting, or displaying for sale of cannabis or cannabis
products for the period of the suspension. The notice of suspension
shall inform the certificate holder of the effective dates of the
suspension.
(d) Continued sales, transportation, or gifting of cannabis or
cannabis products after the effective date of the suspension shall
constitute a violation of this division and result in the revocation
of a certificate.
(e) Upon updating a record for a violation triggering a
revocation, the board shall serve the certificate holder with a
notice of revocation and shall order the certificate holder to cease
the sale, gifting, or displaying for sale of cannabis or cannabis
products on and after the effective date of the revocation. The
notice of revocation shall inform the certificate holder of the
effective date of the revocation.
(f) After a revocation, a previously certificated applicant may
apply for a new certificate after six months. The board may, at its
discretion, issue a new certificate.
(g) Upon updating a certificate record for a violation,
suspension, or revocation of a certificate of a person or entity that
owns or controls more than one location, the board shall send notice
in writing of the violations, suspensions, or revocations within 15
days of the board's action to the address included in the application
and listed on the certificate for receipt of correspondence or
notices from the board.
(h) Upon suspension or revocation of a certificate pursuant to
this section, the board shall notify all certificate holders by
electronic mail within 48 hours of the suspension or revocation of
that certificate. All certificate holders shall provide the board and
shall update, as necessary, an electronic mail address that the
board can use for purposes of making the notifications required by
this subdivision.
(i) Violations by a certificate holder at one location may not be
accumulated against other locations of that same certificate holder.
Violations accumulated against a prior owner at a certificated
location may not be accumulated against a new owner at the same
certificated location.
(j) For purposes of this section, a violation includes violations
of Part 1 (commencing with Section 6001) of Division 2 of the Revenue
and Taxation Code relating to cannabis and cannabis products, and
violations of this division. Only one violation per discrete action
shall be counted toward a suspension or revocation of a certificate.
22998.22. A person that, after receiving a notice of suspension
or revocation, continues to display for sale or transport cannabis or
cannabis products shall be subject to a civil penalty of twenty-five
thousand dollars ($25,000) for each offense, and shall not be
subject to Section 22998.26.
Article 7. Notice of Suspension or Revocation
22998.24. (a) A retailer whose certificate has been suspended or
revoked by order of the board shall conspicuously post a notice at
both of the following locations:
(1) Each public entrance to the retail location. The notice shall
directly face any person who enters the retail location and shall not
be obstructed from view or placed at a height of less than four feet
or greater than nine feet from the floor.
(2) Each cash register and other point of retail sale. The notice
shall be posted to be readily viewable by a person standing at or
approaching the cash register or other point of retail sale. The
notice shall directly face the purchaser and shall not be obstructed
from view or placed at a height of less than four feet or greater
than nine feet from the floor.
(b) The notices described in this section shall be in the size and
form prescribed by the board. The notice shall be provided by the
board and may be reproduced in the same size and form in order to
comply with subdivision (a).
(c) A retailer whose certificate was suspended shall post the
notice at the retail location that was the subject of the suspension
for the duration of the suspension.
(d) A retailer whose certificate was revoked shall post the notice
at the retail location that was the subject of the revocation for a
30-day period from the effective date of the revocation.
(e) Every retailer that fails to post the notices as required by
this section, that alters the notice provided by the board, or that
removes the notice before the posting period required in subdivision
(c) or (d), as appropriate, expires, shall be subject,
notwithstanding Section 22998.26, to a civil penalty of one thousand
dollars ($1,000) for each offense.
Article 8. Criminal Penalty
22998.26. Any violation of this division by any person, except as
otherwise provided, is a misdemeanor. Each offense shall be punished
by a fine not to exceed fifty thousand dollars ($50,000), or
imprisonment not exceeding one year in a county jail, or both the
fine and imprisonment. The court shall order that fine assessed be
deposited in the Cannabis and Cannabis Products Compliance Fund.
Article 9. Miscellaneous
22998.28. (a) Every person that engages in the sale or
transportation for sale of cannabis or cannabis products in this
state shall obtain and maintain a cannabis and cannabis products
seller's or transporter's certificate pursuant to this division.
(b) It shall be rebuttably presumed that a person that is in
possession of more than 28.5 grams (one ounce) of cannabis, or in
possession of products containing more than 28.5 grams (one ounce) of
cannabis, or in possession of both cannabis and products containing
cannabis which together total more than 28.5 grams (one ounce) of
cannabis, except a person holding a valid identification card, or the
designated primary caregiver of that qualified patient or person
pursuant to Sections 11362.7, 11362.765, and 11362.77 of the Health
and Safety Code, is engaged in the sale or transportation for sale of
cannabis or cannabis products.
(c) The board or other law enforcement agency may, in its
discretion, also consider, with respect to the circumstances in which
the cannabis or cannabis products are discovered, the equipment with
which it is found, the place it is found, and the manner of
packaging in determining if the person in possession of the cannabis
or cannabis products is engaged in the sale or transportation for
sale of cannabis or cannabis products.
(d) Notwithstanding subdivision (b), a person who is discovered at
his or her private residence to be in possession of an amount of
cannabis in excess of 28.5 grams (one ounce) shall not be presumed to
be engaging in the sale or transportation for sale of cannabis or
cannabis products.
22998.30. Any prosecution for a violation of any of the penal
provisions of this division shall be instituted within four years
after the commission of the offense.
22998.32. The provisions of Chapter 4 (commencing with Section
55121) of Part 30 of Division 2 of the Revenue and Taxation Code
shall apply with respect to the collection of the fees, civil fines,
and penalties imposed pursuant to this division.
22998.34. The board may cancel or revoke any certificate which
has been issued erroneously or issued based on erroneous or false
statements.
22998.36. (a) Any report, application, declaration, statement, or
other document required to be made under this division that is filed
using electronic media shall be filed and authenticated pursuant to
any method or form the board may prescribe.
(b) Notwithstanding any other law, any report, application,
declaration, statement, or other document otherwise required to be
signed that is filed by the taxpayer using electronic media in a form
as required by the board shall be deemed to be a signed, valid
original document, including upon reproduction to paper form by the
board.
(c) Electronic media includes, but is not limited to, computer
modem, magnetic media, optical disk, facsimile machine, or telephone.
CHAPTER 8. DISPOSITION OF FUNDS
22999. (a) All moneys collected pursuant to this division shall
be deposited in the Cannabis and Cannabis Products Compliance Fund,
which is hereby created in the State Treasury. Moneys in the Cannabis
and Cannabis Products Compliance Fund shall not be used to supplant
state or local general fund money for any purpose.
(b) All moneys in the Cannabis and Cannabis Products Compliance
Fund are available for expenditure, upon appropriation by the
Legislature, solely for reimbursing the board for its administrative
costs to implement, enforce, and administer this division with
respect to the purpose for which the money was collected.
22999.2. The board shall adjust the cannabis certificate fees
annually to ensure that the aggregate amount of fees is equal to the
amount necessary to fund the board's administration and enforcement
of this division.
SEC. 2. Section 6471.5 is added to the Revenue and Taxation Code,
to read:
6471.5. Any person required to make prepayment pursuant to
Article 1.7 (commencing with Section 6480.50) may not be required to
make additional prepayment pursuant to this article, provided that
more than 75 percent of the gross receipts of that person are from
the retail sale of cannabis or cannabis products.
SEC. 3. Article 1.7 (commencing with Section 6480.50) is added to
Chapter 5 of Part 1 of Division 2 of the Revenue and Taxation Code,
to read:
Article 1.7. Prepayment of Sales Tax on Cannabis and Cannabis
Products
6480.50. (a) For purposes of the imposition of the prepayment of
sales tax on cannabis and cannabis products pursuant to this article,
the term "cannabis" is defined pursuant to Chapter 1 (commencing
with Section 22992) of Division 8.9 of the Business and Professions
Code.
(b) "Wholesaler" includes every person making sales, other than
retail sales, of cannabis or cannabis products. "Wholesaler" does not
include any person making sales of cannabis or cannabis products at
retail in the capacity of an operator of a medical cannabis
dispensary or any other retail establishment.
(c) With respect to cannabis and cannabis products, "sale" means
the transfer of title or possession, exchange, or barter, conditional
or otherwise, in any manner or by any means whatsoever, of cannabis
or cannabis products to a purchaser for a consideration. If the board
determines it necessary for the timely and effective collection of
sales tax, it may require growers, wholesalers, transporters, and
retailers to package medical marijuana in a secure manner, as
prescribed by the board.
6480.51. (a) At any time that cannabis or cannabis products are
sold in this state, the wholesaler shall prepay the retail sales tax
on its gross receipts derived from that sale of cannabis or those
cannabis products. Each wholesaler shall report and pay the
prepayment amounts to the board, in a form as prescribed by the
board, in the period in which the cannabis or cannabis products are
sold. The prepayment amounts shall be collected by the wholesaler
from the purchaser to which the cannabis or cannabis products are
sold. The prepayment amount constitutes a debt owed by the wholesaler
to this state until paid to the board, until satisfactory proof has
been submitted to prove that the retailer of the cannabis or cannabis
products has paid the retail sales tax to the board, or until a
wholesaler that has consumed the cannabis or cannabis products has
paid the use tax to the board on the sales price of the amount
consumed. On any subsequent sale of that cannabis or cannabis
product, each wholesaler shall collect from its purchaser a
prepayment computed using the combined rate specified in subdivision
(e) of the gross receipts from that sale.
(b) (1) Each wholesaler shall provide its purchaser with an
invoice for or other evidence of the collection of the prepayment
amounts, which shall be separately stated on the invoice.
(2) Each wholesaler shall report to the board, in a form as
prescribed by the board and for the period in which the cannabis and
cannabis products were sold, all of the following:
(A) The amount of cannabis and cannabis products sold, the gross
receipts derived from the sale, and the amount of sales tax
prepayments collected by the wholesaler.
(B) The amount of tax-paid cannabis and cannabis products
purchased, the sales price of that amount, and the amount of sales
tax prepayments made by the wholesaler.
(C) If the amount of sales tax prepayments collected by the
wholesaler is greater than the amount of sales tax prepayments made
by the wholesaler, then the excess constitutes a debt owed by the
wholesaler to the state until paid to the board, or until
satisfactory proof has been submitted that the retailer of the
cannabis or cannabis products has paid the tax to the board.
(c) A wholesaler that pays the prepayment and issues a resale
certificate to the seller, but subsequently consumes the cannabis or
cannabis product, shall be entitled to a credit against its sales and
use taxes due and payable for the period in which the prepayment was
made, provided that it reports and pays the use tax to the board on
the consumption of that cannabis or cannabis product.
(d) The amount of a prepayment paid by the retailer or a
wholesaler that has consumed the cannabis and cannabis products to
the seller from which it acquired the cannabis and cannabis products
shall constitute a credit against its sales and use taxes due and
payable for the period in which the sale was made. Failure of the
wholesaler to report prepayments or a wholesaler's failure to comply
with any other duty under this article shall not constitute grounds
for denial of the credit to the retailer or wholesaler, either on a
temporary or permanent basis or otherwise. To be entitled to the
credit, the retailer or wholesaler shall retain for inspection by the
board any receipts, invoices, or other documents showing the amount
of sales tax prepaid to its wholesaler, together with the evidence of
payment.
(e) The rate of the prepayment required to be collected shall be
the combined rate of tax imposed pursuant to this part, Part 1.5
(commencing with Section 7200) and Section 35 of Article XIII of the
California Constitution on all sales of cannabis or cannabis products
sold by wholesalers in this state.
6480.52. (a) If the board determines that it is necessary for the
efficient administration of this part, the board may require a
wholesaler to provide the board with a list of purchasers to which
the cannabis or cannabis products were sold.
(b) In addition to any other reports required under this article,
the board may, by rule and otherwise, require additional, other, or
supplemental reports, in any form which the board may require, from
wholesalers with respect to their sales of cannabis or cannabis
products, which shall include, but not be limited to, the name of the
purchaser, the number of the purchaser's certificate issued pursuant
to Division 8.9 (commencing with Section 22992) of the Business and
Professions Code, a description of the product sold, including the
weight of the cannabis included in each sale, the date of each sale,
and the gross receipts derived from each sale of cannabis or cannabis
product.
(c) Any wholesaler that fails to comply with this section is
guilty of a misdemeanor punishable as provided in Section 7153.
6480.53. The wholesaler shall file its prepayment form together
with a remittance of the prepayment amounts, if any, required to be
collected pursuant to Section 6480.51 payable to the State Board of
Equalization, on or before the last day of the month following the
monthly period to which the prepayment form or each prepayment
relates.
6480.54. (a) Any wholesaler that fails to make a timely
remittance to the board of the prepayment amounts, if any, required
pursuant to Sections 6480.51 and 6480.53 shall also pay a penalty of
10 percent of the amount of the prepayment due but not paid, plus
interest at the modified adjusted rate per month, or fraction
thereof, established pursuant to Section 6591.5, from the date the
prepayment became due and payable to the state until the date of
payment.
(b) The penalty amount specified in subdivision (a) shall be 25
percent if the wholesaler knowingly or intentionally fails to make a
timely remittance.
6480.55. (a) The following persons that have paid prepayment
amounts either directly to the board or to the person from which the
cannabis or cannabis products were purchased shall be refunded those
amounts:
(1) Any person that exports the cannabis or cannabis products for
subsequent sale outside this state.
(2) Any person that sells cannabis or cannabis products the sale
of, or the storage, use, or other consumption of which is exempt from
sales or use tax pursuant to Sections 6352, 6381, and 6396.
(3) Any person that has lost the cannabis or cannabis products
through fire, flood, theft, spillage, or accident, prior to any
retail sale.
(4) Any person that is unable to collect the prepayment from the
purchaser insofar as the sales of the cannabis and cannabis products
are represented by accounts which have been found to be worthless and
charged off for income tax purposes, or, if the person is not
required to file income tax returns, accounts which have been charged
off in accordance with generally accepted accounting principles. If
partial payments have been made, the payments shall be prorated
between amounts due for the sale of cannabis or cannabis products and
the amounts due for the related prepayment. If any of those accounts
are thereafter in whole or in part collected by the seller, the
gross receipts derived from the cannabis or cannabis products
represented by the amounts collected shall be included in the first
return filed after that collection and the amount of the prepayment
thereon paid with the return.
(b) In lieu of a refund, the board may authorize a credit to be
taken by the person to whom the refund is due upon his or her
prepayment form or sales and use tax return.
6480.56. (a) The board may require any wholesaler subject to this
article to place with the board any security that the board
determines is necessary to ensure compliance with this article. The
amount of the security shall be fixed by the board but shall not be
greater than three times the estimated average liability of
wholesalers required to file returns for monthly periods, determined
in any manner that the board deems proper, or five hundred thousand
dollars ($500,000), whichever amount is less. These amounts apply
regardless of the type of security placed with the board. The amount
of the security may be increased or decreased by the board subject to
the maximum amounts.
(b) The board may sell the security at public auction if it
becomes necessary to so do in order to recover any tax or any amount
required to be collected or penalty due. Notice of the sale may be
served upon the person that placed the security personally or by
mail. If service is by mail, service shall be made in the manner
prescribed for service of a notice of a deficiency determination and
shall be addressed to the person's address as it appears in the
records of the board. However, security in the form of a bearer bond
issued by the United States or the State of California which has a
prevailing market price may be sold by the board at a private sale at
a price not lower than the prevailing market price thereof. Upon any
sale, any surplus above the amounts due shall be returned to the
wholesaler that placed the security.
SEC. 4. Section 6592 of the Revenue and Taxation Code is amended
to read:
6592. (a) If the board finds that a person's failure to make a
timely return or payment is due to reasonable cause and circumstances
beyond the person's control, and occurred notwithstanding the
exercise of ordinary care and the absence of willful neglect, the
person shall be relieved of the penalties provided by Sections 6476,
6477, 6479.3, 6480.4, 6480.8, 6480.54, 6511, 6565, 6591,
7051.2, 7073, and 7074.
(b) Except as provided in subdivision (c) , any person
seeking to be relieved of the penalty shall file with the board a
statement under penalty of perjury setting forth the facts upon which
he or she bases his or her claim for relief.
(c) The board shall establish criteria that provides for
efficient resolution of requests for relief pursuant to this section.
SEC. 5. Section 6901 of the Revenue and Taxation Code is amended
to read:
6901. (a) If the board determines that any
amount, penalty, or interest has been paid more than once or has been
erroneously or illegally collected or computed, the board shall set
forth that fact in the records of the board and shall certify the
amount collected in excess of the amount legally due and the person
from whom it was collected or by whom paid. The excess amount
collected or paid shall be credited by the board on any amounts then
due and payable from the person from whom the excess amount was
collected or by whom it was paid under this part, and the balance
shall be refunded to the person, or his or her successors,
administrators, or executors, if a determination by the board is made
in any of the following cases:
(a)
(1) Any amount of tax, interest, or penalty was not
required to be paid.
(b)
(2) Any amount of prepayment of sales tax, interest, or
penalty paid pursuant to Article 1.5 (commencing with Section 6480)
, or Article 1.7 (commencing with Section 6480.50),
of Chapter 5 was not required to be paid.
(c)
(3) Any amount that is approved as a settlement
pursuant to Section 7093.5.
Any
(b) Any overpayment of the use
tax by a purchaser to a retailer who that
is required to collect the tax and who
that gives the purchaser a receipt therefor pursuant to Article
1 (commencing with Section 6201) of Chapter 3 shall be credited or
refunded by the state to the purchaser. Any proposed determination by
the board pursuant to this section with respect to an amount in
excess of fifty thousand dollars ($50,000) shall be available as a
public record for at least 10 days prior to the effective date of
that determination.
SEC. 6. 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. 7. This act shall become operative on July 1, 2012.