BILL ANALYSIS Ó
AB 236
Page 1
Date of Hearing: April 21, 2015
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Susan Bonilla, Chair
AB 236
Lackey - As Amended April 15, 2015
SUBJECT: Weighmasters: exemptions: pawnbrokers and secondhand
dealers.
SUMMARY: Adds pawnbrokers and secondhand dealers to the list of
persons who are not weighmasters and makes other technical
changes.
EXISTING LAW:
1)Defines a "secondhand dealer" to mean "any person,
co-partnership, firm, or corporation whose business includes
buying, selling, trading, taking in pawn, accepting for sale
on consignment, accepting for auctioning, or auctioning
secondhand tangible personal property," and specifies that a
"secondhand dealer" does not include a coin dealer or
participant at gun shows or events, as specified. (Business
and Professions Code (BPC) Section 21626 (a))
2)Specifies that "secondhand dealers" are not persons who
perform the services of an auctioneer for a fee or salary, or
persons whose business is limited to the reconditioning and
selling of major household appliances, as long as specified
conditions are met. (BPC Section 21626.5)
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3)Defines a "weighmaster" to mean any person who, for hire or
otherwise, weighs, measures, or counts any commodity and
issues a statement or memorandum of the weight, measure or
count which is used as the basis for either the purchase or
sale of that commodity or charge for service. (BPC Section
12700)
4)Specifies that the following persons are not weighmasters:
(BPC Section 12701)
a) Retailers weighing, measuring or counting commodities
for sale by them in retail stores directly to consumers;
b) Producers of agriculture commodities or livestock, as
specified, when no charge is made for the weighing, or when
no signed or initiated statement or memorandum is issued of
the weight upon which a purchase or sale of the commodity
is based;
c) Common carriers issuing bills of lading, as specified;
d) Milk samplers and weighers, as specified;
e) Persons who measure the amount of oil, gas, or other
fuels for purposes of royalty computation and payment, or
other operations of fuel and oil companies and their retail
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outlets;
f) Newspaper publishers weighing or counting newspapers for
sale to dealers or distributors;
g) Textile maintenance establishments, as specified;
h) County sanitation districts; as specified;
i) Facilities that handle medical waste, as specified;
j) Persons who purchase scrap metal or salvage materials
pursuant to a nonprofit recycling program, as specified;
aa) Licensed pest control operators;
bb) Retailers or recycling centers established solely for
the redemption of empty beverage containers; as defined in
the Public Resources Code, as specified; and,
cc) Any log scaler who performs log scaling functions, as
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specified.
5)Requires an applicant for a weighmaster's license, who is a
recycler or junk dealer, as specified, or performing services
on behalf of a recycler or junk dealer, to pay additional
licensing fees to the California Department of Food and
Agriculture (CDFA), as specified. (BPC Section 12704)
THIS BILL:
1) Specifies that a pawnbroker or secondhand dealer, who is
weighing property that is acquired and reports the acquisition
of the property as specified, is not a weighmaster.
2)Clarifies that the weighmaster's requirements for junk dealers
and recyclers do not apply to pawnbrokers.
3)States the intent of the Legislature is to clarify that
licensed pawnbrokers and secondhand dealers are not
weighmasters and declares that the clarification is necessary
based on the CDFA's administrative interpretation of SB 485
(Calderon), Chapter 518, Statutes of 2013 placing pawnbrokers
and secondhand dealers within the meaning of weighmasters.
FISCAL EFFECT: Unknown. This bill is keyed fiscal by the
Legislative Counsel.
COMMENTS:
1)Purpose. This bill is sponsored by the California
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Pawnbroker's Association . According to the author, "[this
bill] simply clarifies that the fee created by SB 485
(Calderon), Chapter 518 Statutes of 2013, does not apply to
pawnbrokers. SB 485 was passed in 2013 as a measure to help
increase compliance with metal theft laws. Scrap metal
recyclers agreed to assess a new $500 fee on their weighmaster
permit in order to improve enforcement. In 2014 several
pawnbrokers in the Los Angeles area were told that they must
become weighmasters and pay the fee despite SB 485's intent
being clear that it only applied to scrap metal dealers. [This
bill] explicitly exempts pawnbrokers from being considered a
weighmaster. This is appropriate because pawnbrokers do not
deal with commodities exclusively priced by weight. Instead
the value of products they purchase is based on a variety of
factors. [This bill] prevents pawnbrokers around California
from unnecessarily being charged a $500 fee to fund improved
compliance with metal theft laws-something that could violate
Prop 26's provisions because pawnbrokers have nothing to do
with metal theft."
2)Background. According to the sponsor, those individuals
involved in pawnbroking or secondhand dealing typically do not
conduct transactions which require the use of a scale; yet,
the author and sponsor state that recently pawnbrokers have
been required by the CDFA to obtain a weighmaster's license.
The sponsor contends that pawnbrokers loan money on an item
based on several criteria and not solely on the factor of the
weight alone. Further, to clarify that if a pawnbroker were
using a scale for the valuation of commodities and needed an
additional weighmasters license, he or she would not be
required to pay the additional fee which is currently required
for junk dealers and recyclers under BPC Section 12704(b), as
a result of SB 485 (Calderon), Chapter 518, Statutes of 2013.
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BPC Section 21625 specifies the intent of the Legislature in
establishing the provisions for secondhand dealers was to help
curtail the dissemination of stolen property and help
facilitate the recovery of stolen property through a
statewide, uniform reporting system. Every secondhand dealer,
including pawnbrokers, are required to report daily or on the
first working day after the purchase of property to the
Department of Justice (DOJ). The reporting helps law
enforcement track and monitor items of high crimes as
determined by the DOJ in an effort to prevent stolen property
from being sold between secondhand dealers or taken in pawn.
The regulation of weighmasters is found in a separate section
of the BPC. Weighmasters weigh, measure, or count any
commodity and issue a statement or memorandum of the weight,
measure or count which is used as the basis for either the
purchase or sale of that commodity or charge for service.
Weighmasters, include those individuals who are junk dealers
and recyclers who typically buy recycled "junk" including all
ferrous and nonferrous scrap materials.
Unlike pawnbrokers and secondhand dealers, junk dealers
typically base the value of their items on the weight of the
commodity and are therefore subject to the provisions
requiring a weighmaster's license. Under current law,
pawnbrokers are specifically exempt from the laws regulating
junk dealers and recyclers however; they are not exempt from
the weighmasters law. This bill seeks to clarify that
pawnbrokers and secondhand dealers, while conducting
transactions with a scale and holding and reporting property
as required, are not required to obtain a weighmaster's
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license when performing those duties for which they are
licensed.
Pawnbrokers and Secondhand Dealers. A secondhand dealer
includes a person, business or corporation whose main purpose
is to buy, sell, trade, take in pawn, accept for sale on
consignment, or accept for auction, secondhand tangible
personal property. Current law specifically exempts certain
individuals from the definition of a secondhand dealer,
including coin dealers, certain auctioneers and certain
appliance repair persons. According to the National
Pawnbrokers Association, the core of a pawn store's business
is making collateral loans by securing something of value.
The pawn store may have other business elements such as retail
sales. However, pawnbrokers focus on lending money. Customers
bring in an item of value, and the pawnbroker offers a loan
based on a percentage of the item's estimated value. The
pawnbroker then keeps the item until the customer repays the
loan with interest and any additional fees that may apply.
Pawn stores are regulated on a federal, state, and local
level. On average, customers receive only a portion of the
item's retail value. The average loan amount nationally is
$150. The sponsors of this bill contend that pawnbrokers
typically value the item based on several factors and not
weight alone.
Pawn Broker and Secondhand Dealer Transactions. Traditional
pawn and secondhand dealer transactions typically take place
through face-to-face encounters where applicable state and
local laws can apply, such as California's 30-day hold
requirement. In 2012, AB 391 (Pan) Chapter, Statutes of 2012,
was enacted and established a new requirement that secondhand
dealers and pawnbrokers electronically report to the DOJ all
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secondhand tangible property which has been purchased, taken
in trade, taken in pawn, accepted for sale on consignment or
accepted for auctioning, the new electronic database is in the
process of development.
Weighmasters. Enforcement of California's weights and
measures laws and regulations is the responsibility of the
Division of Measurement Standards (DMS) under the CDFA.
Weights and measures officials have the authority to issue
citations for misdemeanor and infraction violations involving
weights and measures laws. The CDFA is authorized to inspect
all weighmasters, including those of junk dealers and
recyclers, to ensure compliance with recordkeeping and
reporting requirements with relation to the issuance of
weighmaster certificates. According to the CDFA, most
pawnbrokers are not required to obtain a weighmaster's
certificate unless they are conducting business services which
require a weighmaster's license. The sponsor notes that the
majority of pawnbroking businesses do not overlap with the
requirements that would trigger a weighmaster's license.
In 2013, SB 485 (Calderon) Chapter 518, Statutes of 2013,
increased the amount of information that must be provided by a
junk dealer or recycler on an application for a new
weighmaster's license or renewal in order to provide both the
CDFA and the county sealers with better information to
determine if a junk dealer or recycler business is operating a
legitimate business.
The current license fee a weighmaster is required to pay to
the CDFA for each license year, depending on location, is: $75
for a weighmaster operating at a fixed location; $30 for each
additional fixed location; and $200 if the weighmaster is
operating at other than a fixed location. SB 485 enhanced
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that fee by requiring a junk dealer or recycler to pay an
additional $500 fee for each fixed location or other location
where it operates to cover costs associated with the
investigative work performed by the DMS to review the
additional material submitted on the application for a
weighmaster's license or renewal.
The author and sponsor explain that the pawnbrokers and
secondhand dealers are being required to pay the additional
$500 fee which was established for junk dealers. BPC Section
21603 explicitly states that pawnbrokers are not junk dealers.
In the event that a pawnbroker is providing a separate
service that would require a weighmaster's license. This bill
would exempt pawnbrokers, who may also need to obtain a
weighmaster's licenses, from the additional $500 fee which was
specifically required for junk dealers and recyclers.
Prior Related Legislation. ACR 101 (Jones-Sawyer), Chapter
154, Statutes of 2014, requested the DOJ convene stakeholder
meetings in 2014 with representatives from law enforcement,
prosecutors, the secondhand dealer and pawnbroker industry,
and interested members of the public to identify changes in
current law which would allow secondhand dealers and
pawnbrokers to conduct Internet-based business.
SB 485 (Calderon), Chapter 518, Statutes of 2013, required a
junk dealer or recycler to submit additional information
regarding its junk dealer business to the CDFA when applying
for a weighmaster's license or a renewal license; required the
CDFA to complete an investigation of the information on the
application or renewal within a specified period of time and
revoke the license if the information submitted in the
application or renewal is materially inaccurate; increases the
fees that junk dealers or recyclers pay for each fixed
location; and sunsets these provisions on January 1, 2019.
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SB 757 (Berryhill) of 2013, would have made conforming changes
to authorize a junk dealer or recycler buying newspaper or
California Redemption Value (CRV) containers, as specified, to
accept as valid seller identification a passport from any
country or a Matricula Consular issued by Mexico. It also
specified that the term "secondhand dealer" did not include a
junk dealer. NOTE: This bill was amended to address an
unrelated issue: Groundwater management.
AB 909 (Gray) of 2013, would have required the Board of State
and Community Corrections to establish the Metal Theft Task
Force Program to provide, evaluate and monitor grants
disbursed to enhance the capacity of local law enforcement and
prosecutors to deter, investigate, and prosecute metal theft
and related metal theft crimes. NOTE: This bill was vetoed by
Governor Brown.
AB 841 (Torres) of 2013, would have required junk dealers and
recyclers to provide payment to sellers of nonferrous material
by mailed check only, as specified. NOTE: This bill was
vetoed by Governor Brown. In the Governor's veto message he
stated that "he signed four bills last year to prevent more
theft" ?.What's really missing today is robust enforcement of
our laws."
AB 316 (Carter), Chapter 317, Statutes of 2011, provided that
every person who steals, takes, or carries away copper
materials which are of a value exceeding $950 is guilty of
grand theft, punishable by a fine not exceeding $2,500,
imprisonment in a county jail not exceeding one year, or by
both that fine and imprisonment, or by imprisonment in a
county jail or the state prison not exceeding 16 months, or 2
or 3 years and a fine not to exceed $10,000, as specified.
AB 1778 (Ma), Chapter 733, Statutes of 2009, required
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recyclers to obtain identifying information of individuals who
bring in more than $50 worth of CRV recyclables and
newspapers. AB 1778 also required that payments of $50 or
more be made by check.
SB 447 (Maldonado), Chapter 732, Statutes of 2008, required
scrap metal dealers and recyclers to report what materials are
being scraped at their facilities and by whom on a daily
basis.
AB 844 (Berryhill), Chapter 731, Statutes of 2008, required
recyclers to hold payment for three days, check a photo ID,
and take a thumbprint of anyone selling scrap metals. Also
required any person convicted of metal theft to pay
restitution for the materials stolen and for any collateral
damage caused during the theft.
SB 691 (Calderon), Chapter 730, Statutes of 2008, required
junk dealers and recyclers to take thumbprints of individuals
selling copper, copper alloys, aluminum, and stainless steel.
Also, required sellers to show a government identification
(ID) and proof of their current address. Recyclers who
violated the law faced suspension or revocation of their
business license and increased fines and jail time.
ARGUMENTS IN SUPPORT:
The California Pawnbroker's Association writes in support,
"Pawnbrokers are not commodity dealers, recyclers, or junk
dealers; we loan money on a multitude of factors other than
metal weight and we already report to DOJ all reportable
transactions and pay a large biannual fee to do so. With
understandable zeal, the [CDFA] has attempted to interpret
2013's SB 485 (Calderon) as classifying pawnbrokers as recyclers
or junk dealers for purposes of imposing the fee authorized in
that legislation."
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ARGUMENTS IN OPPOSITION:
None on file.
POLICY ISSUES FOR CONSIDERATION:
It is currently unclear how many pawnbrokers or secondhand
dealers may be conducting transactions that would also require
them to obtain a weighmaster's license. While this bill seeks
to clarify that pawnbrokers, who conduct transactions of a
pawn-broking nature, should not be required to obtain a
weighmaster's license, it may be necessary for pawnbrokers who
also provide services such as buying or selling scrap metals and
salvage materials based on weights or measures, to obtain a
weighmaster's license for their additional business
transactions.
REGISTERED SUPPORT:
California Pawnbroker's Association (sponsor)
West Coast Chapter of the Institute of Scrap Recycling
Industries, Inc.
REGISTERED OPPOSITION:
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None of file.
Analysis Prepared by:Elissa Silva / B. & P. / (916) 319-3301