BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 236| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- CONSENT Bill No: AB 236 Author: Lackey (R) Amended: 4/15/15 in Assembly Vote: 21 SENATE BUS, PROF. & ECON. DEV. COMMITTEE: 9-0, 6/15/15 AYES: Hill, Bates, Berryhill, Block, Galgiani, Hernandez, Jackson, Mendoza, Wieckowski SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8 ASSEMBLY FLOOR: 78-0, 5/14/15 (Consent) - See last page for vote SUBJECT: Weighmasters: exemptions: pawnbrokers and secondhand dealers SOURCE: California Pawnbrokers Association DIGEST: This bill adds pawnbrokers and secondhand dealers to the list of persons who are not weighmasters and makes other technical changes. ANALYSIS: 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) AB 236 Page 2 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; 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. AB 236 Page 3 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, 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. AB 236 Page 4 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. Background 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. Existing 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 sponsor of this bill contends 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 172, Statutes of 2012) was enacted and established a new requirement that secondhand dealers and pawnbrokers electronically report to the Department of Justice 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. AB 236 Page 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 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 Section 21603 explicitly states that pawnbrokers are not junk dealers. This bill explicitly exempts pawnbrokers from the additional $500 fee - which was specifically required for junk dealers and recyclers. AB 236 Page 6 FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: NoSUPPORT: (Verified7/1/15) California Pawnbroker's Association (source) West Coast Chapter of the Institute of Scrap Recycling Industries, Inc. OPPOSITION: (Verified7/1/15) None received ARGUMENTS IN SUPPORT: The California Pawnbroker's Association is the sponsor of this bill 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 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." ASSEMBLY FLOOR: 78-0, 5/14/15 AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, AB 236 Page 7 Wilk, Williams, Wood, Atkins NO VOTE RECORDED: Linder, Medina Prepared by:Mark Mendoza / B., P. & E.D. / (916) 651-4104 7/1/15 16:33:35 **** END ****