BILL ANALYSIS Ó
SENATE COMMITTEE ON
BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Jerry Hill, Chair
2015 - 2016 Regular
Bill No: AB 236 Hearing Date: June 15,
2015
-----------------------------------------------------------------
|Author: |Lackey |
|----------+------------------------------------------------------|
|Version: |April 15, 2015 |
-----------------------------------------------------------------
----------------------------------------------------------------
|Urgency: |No |Fiscal: |Yes |
----------------------------------------------------------------
-----------------------------------------------------------------
|Consultant|Mark Mendoza |
|: | |
-----------------------------------------------------------------
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 "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. (Business and
Professions Code (BPC) BPC § 12700)
2) Specifies that the following persons are not weighmasters:
(BPC § 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;
AB 236 (Lackey) Page 2
of ?
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 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 specified.
3) 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 § 12704)
4) Defines a "secondhand dealer" to mean "any person,
AB 236 (Lackey) Page 3
of ?
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. (BPC §
21626 (a))
5) 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 § 21626.5)
6) Provides that "tangible personal property" includes, but is
not limited to, all secondhand tangible personal property
which bears a serial number or personalized initials or
inscription or which, at the time it is acquired by the
secondhand dealer, bears evidence of having had a serial
number or personalized initials or inscription. (BPC §
21627(a)).
7) Defines a pawnbroker as "every person engaged in the business
of receiving goods, including motor vehicles, in pledge as
security for a loan." (Financial Code § 21000).
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 California Department of Food and Agriculture's
AB 236 (Lackey) Page 4
of ?
(CDFA) administrative interpretation of SB 485 (Calderon,
Chapter 518, Statutes of 2013), placing pawnbrokers and
secondhand dealers within the meaning of weighmasters.
FISCAL
EFFECT: This bill is keyed "fiscal" by Legislative Counsel.
According to the Assembly Appropriations Committee:
Minor and absorbable costs to the CDFA.
COMMENTS:
1. Purpose. This bill is sponsored by the California
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
AB 236 (Lackey) Page 5
of ?
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 § 12704(b), as a result of
SB 485.
BPC § 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
license when performing those duties for which they are
licensed.
3. Pawnbrokers and Secondhand Dealers. A secondhand dealer
includes a person, business or corporation whose main purpose
AB 236 (Lackey) Page 6
of ?
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.
4. 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 172, Statutes of
2012), was enacted and established a new requirement that
secondhand dealers and pawnbrokers electronically report to
the DOJ all 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.
5. 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
AB 236 (Lackey) Page 7
of ?
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 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
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 § 21603
explicitly states that pawnbrokers are not junk dealers.
This bill would explicitly exempt pawnbrokers from the
additional $500 fee - which was specifically required for
junk dealers and recyclers.
6. Related Legislation. AB 632 (Eggman) of the current
legislative session, permits a secondhand dealer or
pawnbroker to submit the International Mobile Station
Equipment Identity (IMEI) or the mobile equipment identifier
(MEID) or other unique number assigned to a handheld
electronic device in lieu of the serial number for reporting
purposes and defines a "handheld electronic device".
( Status: This bill is currently referred to the Senate
Committee on Business, Professions and Economic Development).
ACR 101 (Jones-Sawyer, Chapter 154, Statutes of 2014),
AB 236 (Lackey) Page 8
of ?
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.
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. ( Status : 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. ( Status: 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. ( Status : 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 236 (Lackey) Page 9
of ?
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
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.
The bill 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.
7. Arguments in Support. The California Pawnbroker's
Association is the sponsor of this measure and writes that
"pawnbrokers are not commodity dealers, recyclers, or junk
dealers; we loan money on a multitude of factors other than
metal weights and we already report to DOJ all reportable
transactions and pay a large biannual fee to do so."
West Coast Chapter of the Institute of Scrap Recycling
Industries, Inc. argues that "SB 485 [Calderon, 2013] was
AB 236 (Lackey) Page 10
of ?
never intended to encompass secondhand dealers or pawn
brokers as it is being interpreted by the Department of Food
and Agriculture. AB 236 clarifies this misinterpretation of
the law."
SUPPORT AND OPPOSITION:
Support:
California Pawnbroker's Association (Sponsor)
West Coast Chapter of the Institute of Scrap Recycling
Industries, Inc.
Opposition:
None on file as of June 9, 2015.
-- END --