BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                        AB 236|
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                                      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)









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          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.  









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          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.









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          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. 








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          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. 








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          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No
           
           SUPPORT:   (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,  








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            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


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