Amended in Senate August 17, 2015

Amended in Senate July 2, 2015

Amended in Assembly June 1, 2015

Amended in Assembly April 22, 2015

Amended in Assembly April 8, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 243

Introduced by Assembly Member Wood

(Coauthors: Assembly Members Rendon and Williams)

February 5, 2015

An act to add Sections 11362.769 and 11362.777 to the Health and Safety Code, begin insert to add Part 13.5 (commencing with Section 31001) to Division 2 of the Revenue and Taxation Code, end insert and to add Section 13276 to the Water Code, relating to medical marijuana, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

AB 243, as amended, Wood. Medical marijuana cultivation.

(1) Existing law, the Compassionate Use Act of 1996, an initiative measure enacted by the approval of Proposition 215 at the November 5, 1996, statewide general election, authorizes the use and cultivation of marijuana for medical purposes. Existing law makes it a crime to plant, cultivate, harvest, dry, or process marijuana, except as otherwise authorized by law. Under existing law, qualified patients, persons with valid identification cards, and the designated primary caregivers of qualified patients and persons with identification cards, who associate in order collectively and cooperatively to cultivate marijuana for medical purposes, are not subject to criminal sanctions solely on the basis of that fact.

This bill would establish the Division of Medical Cannabis Cultivation in the Department of Food and Agriculture. The bill would authorize a county, city, or city and county to issue or deny a conditional permit to cultivate medical marijuana and would require an applicant to obtain both a conditional permit from the county, city, or city and county and a state medical marijuana cultivation license from the division prior to cultivation occurring. By increasing the duties of local officials relative to issuing a conditional permit to cultivate medical marijuana, the bill would impose a state-mandated local program.

The bill would require the division to implement an identification program for medical marijuana in consultation with the State Water Resources Control Board and the Department of Fish and Wildlife. The bill would authorize the division to charge a fee to cover the reasonable costs of issuing the unique identifier and monitoring, tracking, and inspecting each medical marijuana plant. The bill would allow a county, city, or city and county to administer the unique identifier program, in which case the bill would authorize the county, city, or city and county, to charge a fee to cover the reasonable costs of issuing the unique identifier and monitoring, tracking, and inspecting each medical marijuana plant. begin delete The bill would specify that the unique identifier program established pursuant the bill’s provisions does not apply to a county, city, or city and county that has an existing ordinance pertaining to the cultivation of marijuana that provides for the identification of individual plants during the cultivation period. end delete

begin delete

This bill, on and after June 1, 2016, would impose a tax a licensed medical marijuana cultivator, at the rate of $50 per medical marijuana plant with a unique identifier. This bill would require the tax to be administered by the State Board of Equalization, as prescribed, and

end delete

begin insert The bill would impose a tax in an unspecified amount on marijuana flowers, marijuana leaves, and immature marijuana plants and end insert would require a begin delete licensed medical marijuana distributor end delete begin insert designated entity, as specified, end insert to collect the tax from the begin delete licensed end delete medical marijuana begin delete cultivator and remit the amounts collected end delete begin insert cultivator. The bill would require the State Board of Equalization to collect the tax end insert pursuant to the procedures set forth in the Fee Collection Procedures Law. By expanding the application of the Fee Collection Procedures Law, a violation of which is a crime, this bill would impose a state-mandated local program. begin delete This end delete begin insert The end insert bill would require all moneys less refunds, to be deposited into the Marijuana Production and Environment Mitigation Fund, which this bill would create in the State Treasury, and continuously appropriate those moneys to the board for allocation, as specified. begin delete The bill would require a licensed medical marijuana cultivator to sell his or her medical marijuana products only to a licensed medical marijuana distributor, and would prohibit any other sales of medical marijuana by a licensed medical marijuana cultivator. The bill would also prohibit the sale of medical marijuana plants that do not contain a unique identifier by a licensed cultivator to a licensed distributor. end delete

begin insert

The bill would require the board to adopt a system for reporting the movement of cannabis and cannabis products through the distribution chain, as specified.

end insert begin insert

The bill would require the Legislative Analyst’s Office to regularly review the tax levels established under the above provisions and make recommendations to the Legislature regarding adjustments that would further the goal of addressing the public safety and environmental impacts caused by the proliferation of marijuana cultivation.

end insert

The bill would require, on or before January 1, 2021, specified state agencies, including, among others, the begin delete board, the division, end delete begin insert division end insert and the Department of Justice, to submit reports to the Legislature regarding implementation of the bill.

The bill would specify that its provisions regarding the unique identifier program and cultivation do not apply to certain qualified patients cultivating marijuana if the patient cultivates marijuana for his or her personal medical use and does not sell, distribute, donate, or provide marijuana to any other person or entity, or to certain primary caregivers cultivating marijuana if the primary caregiver cultivates marijuana exclusively for the personal medical use of no more than 5 specified qualified patients for whom he or she is the primary caregiver and who does not receive remuneration, except as specified.

The bill would also require indoor and outdoor medical marijuana cultivation to be conducted in accordance with state and local laws and best practices related to land conversion, grading, electricity usage, water usage, water quality, woodland and riparian habitat protection, agricultural discharges, and similar matters. This bill would require state agencies to address environmental impacts of medical marijuana cultivation and coordinate, when appropriate, with cities and counties and their law enforcement agencies in enforcement efforts.

The bill would begin delete state the intent of the Legislature end delete begin insert require end insert that the multiagency task force, the Department of Fish and Wildlife and State Water Resources Control Board pilot project to address the Environmental Impacts of Cannabis Cultivation, begin insert to end insert continue its enforcement efforts on a statewide level and permanent basis.

(2) Under existing law, the Porter-Cologne Water Quality Control Act, the State Water Resources Control Board and the California regional water quality control boards are the principal state agencies with responsibility for the coordination and control of water quality in the state.

This bill would require each regional board, and would allow the state board, to address discharges of waste resulting from medical marijuana cultivation and associated activities.

(3) 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, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

(4) This bill would declare that it is to take effect immediately as an urgency statute.

Vote: ²⁄₃. Appropriation: yes. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

begin delete

SECTION 1.  

It is the intent of the Legislature that the
multiagency task force, the Department of Fish and Wildlife and
State Water Resources Control Board pilot project to address the
Environmental Impacts of Cannabis Cultivation, assigned to
respond to the damages caused from marijuana cultivation on
public and private lands in California, will continue its enforcement
efforts on a statewide level and permanent basis to ensure the
reduction of the adverse impacts of marijuana cultivation on water
quality and fish and wildlife throughout the state.

end delete

begin delete SEC. 2. end delete
begin insert SECTION 1. end insert   

Section 11362.769 is added to the Health and
Safety Code, to read:

11362.769.  

Indoor and outdoor medical marijuana cultivation
shall be conducted in accordance with state and local laws and
best practices related to land conversion, grading, electricity usage,
water usage, water quality, woodland and riparian habitat
protection, agricultural discharges, and similar matters. State
agencies, including, but not limited to, the State Board of Forestry
and Fire Protection, the Department of Fish and Wildlife, the State
Water Resources Control Board, the California regional water
quality control boards, and traditional state law enforcement
agencies shall address environmental impacts of medical marijuana
cultivation and shall coordinate, when appropriate, with cities and
counties and their law enforcement agencies in enforcement efforts.

begin delete SEC. 3. end delete
begin insert SEC. 2. end insert   

Section 11362.777 is added to the Health and Safety
Code, to read:

11362.777.  

(a) The Division of Medical Cannabis Cultivation
is established within the Department of Food and Agriculture. The
division shall be administered by a person appointed by the
Governor and, except as specified in subdivision (c), shall
administer this section as it pertains to the cultivation of medical
marijuana.

(b) (1) A person or entity shall not cultivate medical marijuana
without first obtaining both of the following:

(A) A license, permit, or other begin delete entitlement end delete begin insert entitlement,
specifically permitting cultivation pursuant to these provisions, end insert
from the county, city, or city and county in which the cultivation
will occur.

(B) A license issued by the state pursuant to this section.

(2) A person or entity shall not submit an application for a
license issued by the state pursuant to this section unless that person
or entity has received a license, permit, or other begin delete entitlement end delete
begin insert entitlement, specifically permitting cultivation pursuant to these
provisions, end insert from the county, city, or city and county in which the
cultivation will occur.

(3) A person or entity shall not submit an application for a
license issued by the state pursuant to this section if begin insert the proposed
cultivation of marijuana will violate the provisions of any local
ordinance or regulation, or if end insert medical marijuana is prohibited by
the county, city, or city and county in which the cultivation is
proposed to begin delete occur. end delete begin insert occur, either expressly or otherwise under
principles of permissive zoning. end insert

(c) (1) Except as specified in paragraph (2), begin insert and without limiting
any other local regulation, end insert a county, city, or city and county,
through its current or future land use regulations or ordinance, may
issue or deny a conditional permit to cultivate medical begin delete marijuana. end delete
begin insert marijuana pursuant to this section. end insert A county, city, or city and
county may inspect the intended cultivation site for suitability prior
to issuing a conditional permit. After the city, county, or city and
county have approved a conditional permit, the applicant shall
apply for a state medical marijuana cultivation license from the
division. A locally issued conditional cultivation permit shall only
become active upon licensing by the division and receiving final
local approval. A person shall not cultivate medical marijuana
prior to obtaining both a conditional permit from the county, city,
or city and county and a state medical marijuana cultivation license
from the division.

(2) If a county, city, or city and county does not have land use
regulations or ordinances begin delete pertaining to end delete begin insert regulating or prohibiting end insert
the cultivation of begin delete marijuana, does not have a local cultivation
permit process in place, end delete begin insert marijuana, either expressly or otherwise
under principles of permissive zoning, end insert or chooses not to administer
a conditional permit begin delete program, end delete begin insert program pursuant to this section, end insert
then commencing March 1, 2016, the division shall be the sole
licensing authority for medical marijuana cultivation applicants
in that county, city, or city and county.

(d) (1) The division, in consultation with, but not limited to,
the State Water Resources Control Board and the Department of
Fish and Wildlife, shall implement a unique identification program
for medical marijuana. In implementing the program, the division
shall consider issues, including, but not limited to, water use and
environmental impacts. begin insert In implementing the program, the division
shall ensure that individual and cumulative effects of water
diversion and discharge associated with cultivation do not affect
the instream flows needed for fish spawning, migration, and
rearing, and the flows needed to maintain natural flow variability.
The division shall ensure that cultivation will not negatively impact
springs, riparian wetlands, and aquatic habitats. end insert

(2) The division shall establish a program for the identification
of permitted medical marijuana plants at a cultivation site during
the cultivation period. The unique identifier shall be attached at
the base of each plant. A unique identifier, such as, but not limited
to, a zip tie, shall be issued for each medical marijuana plant.

(3) The division may charge a fee to cover the reasonable costs
of issuing the unique identifier and monitoring, tracking, and
inspecting each medical marijuana plant.

begin delete

(e) (1) On and after June 1, 2016, there is hereby imposed a
tax on a licensed medical marijuana cultivator at the rate of $50
per medical marijuana plant with a unique identifier. The unique
identifiers shall serve as the indicator for quantity purposes of
sales.

(2) A licensed medical marijuana distributor shall charge the
licensed medical marijuana cultivator the amount of the tax as a
charge that is separate from, and not included in, any other fee,
charge, or other amount paid by the medical marijuana distributor.

(3) The licensed medical marijuana distributor shall collect the
tax from the licensed medical marijuana cultivator at the time of
sale, and may retain reimbursement pursuant to regulations that
shall be approved by the State Board of Equalization before June
1, 2016, for startup costs associated with the collection of the tax,
to be taken on the first return or next consecutive returns until the
entire reimbursement amount is retained.

(4) The licensed medical marijuana distributor shall separately
state the amount of the tax imposed under this subdivision on the
sales receipt given by the licensed medical marijuana distributor
to the licensed medical marijuana cultivator at the time of sale.

(5) The State Board of Equalization shall administer and collect
the tax imposed by this subdivision pursuant to the Fee Collection
Procedures Law (Part 30 (commencing with Section 55001) of
Division 2 of the Revenue and Taxation Code) with those changes
as may be necessary to conform to this section. For purposes of
this subdivision, the references in the Fee Collection Procedures
Law to “fee” shall include the tax imposed by this subdivision,
and references to “feepayer” shall include the licensed medical
marijuana distributor.

(6) (A) The tax is required to be collected by a licensed medical
marijuana distributor and any amount unreturned to the licensed
medical marijuana cultivator who paid an amount in excess of the
tax, but was collected from the licensed medical marijuana
cultivator under the representation by the licensed medical
marijuana distributor that it was owed as a tax, constitutes debts
owed by the licensed medical marijuana distributor to this state.

(B) A licensed medical marijuana cultivator is liable for the tax
until it has been paid to the state, except that payment to a licensed
medical marijuana distributor relieves the licensed medical
marijuana cultivator from further liability for the tax. Any tax
collected from a licensed medical marijuana cultivator that has not
been remitted to the State Board of Equalization shall be a debt
owed to the state by the licensed medical marijuana distributor
required to collect and remit the tax. This subdivision does not
impose any obligation upon a licensed medical marijuana
distributor to take any legal action to enforce the collection of the
tax imposed by this subdivision.

(7) The State Board of Equalization may prescribe, adopt, and
enforce regulations relating to the administration and enforcement
of this subdivision, including, but not limited to, collections,
reporting, refunds, and appeals. The State Board of Equalization
may consult with the division, and the division shall provide to
the board any information necessary for the proper administration
of the tax imposed by this subdivision.

(8) (A) The tax imposed by this subdivision is due and payable
to the State Board of Equalization quarterly on or before the last
day of the month next succeeding each quarterly period.

(B) On or before the last day of the month following each
quarterly period, a return for the preceding quarterly period shall
be filed with the State Board of Equalization using electronic
media, in the form prescribed by the State Board of Equalization.
Returns shall be authenticated in a form or pursuant to methods,
as prescribed by the State Board of Equalization.

(9) (A) A licensed medical marijuana cultivator required to pay
the tax imposed under this subdivision shall register with the State
Board of Equalization. Every application for registration shall be
made in a form prescribed by the State Board of Equalization and
shall set forth the name under which the applicant transacts or
intends to transact business, the location of the person’s place or
places of business, and any other information that the State Board
of Equalization may require. An application for registration shall
be authenticated in a form or pursuant to methods as may be
prescribed by the State Board of Equalization.

(B) An application for registration filed pursuant to this section
may be filed using electronic media as prescribed by the State
Board of Equalization. Electronic media includes, but is not limited
to, computer modem, magnetic media, optical disc, facsimile
machine, or telephone.

(10) A licensed medical marijuana cultivator shall sell his or
her medical marijuana products only to a licensed medical
marijuana distributor and shall not make any other sales of medical
marijuana. Medical marijuana plants that do not contain a unique
identifier shall not be sold by a licensed cultivator to a licensed
distributor.

(11) The State Board of Equalization shall deposit all revenues,
less refunds, collected pursuant to this subdivision into the
Marijuana Production and Environment Mitigation Fund, which
is hereby created in the State Treasury. Notwithstanding Section
13340 of the Government Code, all moneys deposited in the fund
are hereby continuously appropriated, without regard to fiscal
years, to the State Board of Equalization for the purposes of this
section, to be allocated by the board in the following manner:

(A) Five dollars ($5) shall go to the division to administer the
unique identifier program described in subdivision (d).

(B) Fifteen dollars ($15) shall go to the division for disbursement
to local law enforcement-related activities, state law
enforcement-related activities, or both, pertaining to illegal
marijuana cultivation. Funds allocated pursuant to this
subparagraph shall be allocated on a competitive grant application
process administered by the division. The division shall promulgate
guidelines for the grant process as soon as administratively
possible, but no later than April 1, 2016.

(C)  Fifteen dollars ($15) shall go to the Natural Resources
Agency to fund a competitive grant program for environmental
cleanup and restoration of public and private lands that have been
damaged from illegal marijuana cultivation. Funds allocated
pursuant to this subparagraph shall be prioritized to restoration
and cleanup projects, on public or private lands, based on the level
of damages that have occurred. Not less than 35 percent of the
funds shall be used for these purposes related to public lands, and
not less than 20 percent of the funds collected shall be used for
these purposes in regard to private lands. The agency shall consult
and partner with counties, cities, or cities and counties, and may
partner with nonprofit organizations recognized by the California
Attorney General’s office, other appropriate state agencies, and
the appropriate federal entities within the United State Department
of Interior, for the purposes of awarding grants to state or local
government entities and nonprofit organizations that engage in
environmental cleanup and restoration. The agency shall
promulgate guidelines for the grant process as soon as
administratively possible, but no later than April 1, 2016.

(D) Fifteen dollars ($15) shall go to the multiagency task force,
the Department of Fish and Wildlife, and the State Water Resources
Control Board project to address the Environmental Impacts of
Cannabis Cultivation and to respond to the damages caused from
marijuana cultivation on public and private lands in California.

end delete begin delete

(f)

end delete

begin insert (e) end insert  (1) On or before January 1, 2021, the following entities
shall submit a report to the Legislature:

begin delete

(A) The State Board of Equalization shall submit a report on
the total amount of revenue that was collected over the five-year
time period from the tax imposed pursuant to subdivision (e).

end delete begin delete

(B)

end delete

begin insert (A) end insert  The multiagency task force, the Department of Fish and
Wildlife, and the State Water Resources Control Board, shall
submit a report on the project to address the Environmental Impacts
of Cannabis Cultivation and how funds allocated to those entities
pursuant to begin delete subdivision (e) end delete begin insert Section 31013 of the Revenue and
Taxation Code end insert have been used for those purposes.

begin delete

(C)

end delete

begin insert (B) end insert  The Department of Justice shall submit a report on how
local and state law enforcement agencies have used funds allocated
pursuant to begin delete subdivision (e) end delete begin insert Section 31013 of the Revenue and
Taxation Code end insert to address illegal marijuana cultivation and related
activates.

begin delete

(D)

end delete

begin insert (C) end insert  The Natural Resources Agency shall submit a report on how
funds allocated to it pursuant to begin delete subdivision (e) end delete begin insert Section 31013 of
the Revenue and Taxation Code end insert have been used for environmental
cleanup and restoration of public and private lands that have been
damaged from illegal marijuana cultivation.

(2) It is the intent of the Legislature to use the reports required
by this subdivision to determine the necessity of a readjustment
to the tax imposed pursuant to begin delete subdivision (e). end delete begin insert Part 13.5
(commencing with Section 31001) of Division 2 of the Revenue
and Taxation Code. end insert

(3) The reports required by this subdivision shall be submitted
in compliance with Section 9795 of the Government Code.

begin delete

(g) (1) Except as specified in paragraph (3), no later than March
1, 2016, a county, city, or city and county

end delete

begin insert (f) end insert begin insert   end insert begin insert A county board of supervisors or city council end insert may adopt a
resolution or ordinance to be the responsible entity for purposes
of administering the unique identification program specified in
subdivision (d), in which case, the begin delete county, city, or city and county end delete
begin insert county board of supervisors or city council end insert shall designate the
appropriate entity to issue the unique identifiers. Counties may
designate the local agricultural commissioner, sheriff, or other
appropriate entity. Cities may designate the city planning and
building department, the Chief of Police, or other appropriate
entity. A county, city, or city and county may charge a fee to cover
the reasonable costs of issuing the unique identifier and monitoring,
tracking, and inspecting each medical marijuana begin delete plant. end delete begin insert plant, in
addition to any other local fees or taxes imposed by the county.
Upon adoption of an ordinance or resolution by the county board
of supervisors or city council, the division shall cooperate with
that local jurisdiction to phase out the division’s operation of the
program. end insert

begin delete

(2) Licensed cultivators and licensed distributors shall comply
with subdivision (e) in a county, city, or city and county that elects
to administer the unique identification program pursuant to
paragraph (1).

(3) If a county, city, or city and county decides at a later date
to be the responsible entity for purposes of administering the unique
identification program specified in subdivision (d), the county,
city, or city and county may adopt an ordinance or resolution to
participate in the provisions of this subdivision at a later date, but
no later than July 1, 2018, in which case the division shall
cooperate with that local jurisdiction to phase out the division’s
operation of the program.

(h) The unique identifier program established pursuant to this
section does not apply to a county, city, or city and county that
has an existing ordinance pertaining to the cultivation of marijuana
that provides for the identification of individual plants during the
cultivation period. A county, city, or city and county may choose
to opt in to the unique identifier program administered by the
division to be eligible for funds pursuant to subdivision (e). A
county, city, or city and county that does not participate in a unique
identifier program pursuant to this section shall not be eligible for
funds pursuant to subdivision (e).

(i)

end delete

begin insert (g) end insert  This section does not apply to a qualified patient cultivating
marijuana pursuant to Section 11362.5 if he or she cultivates
marijuana for his or her personal medical use and does not sell,
distribute, donate, or provide marijuana to any other person or
entity. This section does not apply to a primary caregiver
cultivating marijuana pursuant to Section 11362.5 if he or she
cultivates marijuana exclusively for the personal medical use of
no more than five specified qualified patients for whom he or she
is the primary caregiver within the meaning of Section 11362.7
and who does not receive remuneration for these activities, except
for compensation provided in full compliance with subdivision (c)
of Section 11362.765. begin delete This section does not preclude a county,
city, or city and county from regulating or banning the cultivation,
possession, storage, manufacture, transport, provision, distribution,
donation, or sale of marijuana, or any other activity, by a person
specified in this subdivision, or impair the enforcement of the
same. end delete begin insert Exemption from the requirements of this section does not
limit or prevent a city, county, or city and county from regulating
or banning the cultivation, storage, manufacture, transport,
provision, or other activity by the exempt person, or impair the
enforcement of that regulation or ban. end insert

begin insert

(h) This section does not prevent a city, county, or city and
county from doing any of the following:

end insert begin insert

(1) Adopting local ordinances, whether consistent or inconsistent
with this section, that do either of the following:

end insert begin insert

(A) Regulate the location, operation, or establishment of a
licensed medical marijuana cultivator or a person that cultivates,
processes, possesses, stores, manufactures, tests, transports,
distributes, or sells medical marijuana.

end insert begin insert

(B) Prohibit medical marijuana activity within its jurisdiction.

end insert begin insert

(2) Providing for the administrative, civil, or criminal
enforcement of the ordinances described in paragraph (1).

end insert begin insert

(3) Enacting and enforcing other laws or ordinances pursuant
to the authority granted by Section 7 of Article XI of the California
Constitution.

end insert begin insert

(i) This section does not preclude a county from establishing a
fee for the operation of a licensed medical marijuana cultivator
within the jurisdiction of the county.

end insert begin insert

(j) This section does not preempt any local ordinance regulating
or banning cultivation of medical marijuana, or otherwise prevent
or limit a city, county, or city and county from adopting or
enforcing a zoning ordinance or other law, ordinance, or
regulation, that bans or regulates the location, operation, or
establishment of an entity that cultivates medical marijuana.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Part 13.5 (commencing with Section 31001) is added
to Division 2 of the end insert begin insert Revenue and Taxation Code end insert begin insert , to read: end insert

begin insert

 

PART  begin insert 13.5. end insert   Medical Marijuana Tax

 

Chapter   begin insert 1. end insert General Provisions and Definitions

 

begin insert 31001. end insert   

This part shall known and may be cited as the Medical
Marijuana Tax Law.

begin insert 31002. end insert   

As used in this part, the following terms have the
following definitions:

(a) “Marijuana” means all parts of the plant Cannabis sativa
L., Cannabis indica, or Cannabis ruderalis, whether growing or
not; the seeds thereof; the resin, whether crude or purified,
extracted from any part of the plant; and every compound,
manufacture, salt, derivative, mixture, or preparation of the plant,
its seeds, or resin. “Cannabis” 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. “Cannabis”
also means the separated resin, whether crude or purified, obtained
from marijuana. Without limiting the definition, “cannabis” also
means marijuana as defined by Section 11018 of the Health and
Safety Code, as enacted by Chapter 1407 of the Statutes of 1972.

(b) “Marijuana flowers” means the flowers of the plant specified
in subdivision (a). “Marijuana flowers” does not include any part
of the plant other than the flowers.

(c) “Marijuana leaves” means the leaves of the plant specified
in subdivision (a). “Marijuana leaves” does not include any part
of the plant other than the leaves.

(d) “Medical marijuana tax” means the tax imposed pursuant
to this part.

(e) “Cultivation” means any activity involving the planting,
growing, harvesting, drying, curing, grading, or trimming of
marijuana.

(f) “Cultivator” means a person that plants, grows, cultivates,
harvests, dries, cures, grades, or trims medical marijuana, or that
does all or any combination of those activities.

(g) “Designated entity” means an entity defined by Section ___
of the Business and Professions Code, or an entity designated by
the board.

(h) “Immature marijuana plant” means a marijuana plant with
no observable flowers or buds.

(i) “Medical marijuana,” “medical marijuana product,” or
“marijuana product” means a product containing marijuana,
including, but not limited to, concentrates and extractions intended
to be sold for use by medical marijuana patients in California
pursuant to the Compassionate Use Act of 1996 (Section 11362.5
of the Health and Safety Code).

(j) “Sale” means the transfer of title or possession for
consideration in any manner or by any means whatever.

 

Chapter   begin insert 2. end insert Imposition of Tax

 

begin insert 31005. end insert   

(a) A marijuana tax shall be imposed upon each
cultivator and shall be collected by the designated entity at the
time of distribution at the following rates:

(1) $___ per ounce on all cannabis flowers.

(2) $___ per ounce on all cannabis leaves.

(3) $___ per immature cannabis plant.

(b) The tax imposed by this section shall be measured by the
quantities of cannabis flowers, cannabis leaves, and immature
cannabis plants sold by any cannabis cultivator to the designated
entity.

(c) The designated entity shall separately state the amount of
the tax imposed under this part on the sales receipt given by the
designated entity to the licensed medical marijuana cultivator at
the time of sale.

(d) Any claim for exemption from the tax pursuant to this part
shall be made to the board in the manner prescribed by the board.

begin insert 31006. end insert   

The Legislative Analyst’s Office shall regularly review
the tax levels established under this part and make
recommendations to the legislature, as appropriate, regarding
adjustments that would further the goal of addressing public safety
and the environmental impacts caused by the proliferation of
marijuana cultivation.

 

Chapter   begin insert 3. end insert Administration

 

begin insert 31010. end insert   

(a) The board shall administer and collect the tax
imposed by this part pursuant to the Fee Collection Procedures
Law (Part 30 (commencing with Section 55001) of Division 2 of
the Revenue and Taxation Code) with those changes as may be
necessary to conform to this section. For purposes of this part, the
references in the Fee Collection Procedures Law to “fee” shall
include the tax imposed by this part, and references to “feepayer”
shall include a person required to pay the cannabis tax imposed
by this part.

(b) The tax that is required to be collected by the designated
entity, and any amount unreturned to the medical marijuana
cultivator that is not owed as part of the tax, but was collected
from the medical marijuana cultivator under the representation
by the designated entity that it was owed as a tax, constitutes debts
owed by the designated entity to the state.

(c) A medical marijuana cultivator is liable for the tax until it
has been paid to the state, except that payment to the designated
entity relieves the medical marijuana cultivator from further
liability for the tax. Any tax collected from a medical marijuana
cultivator that has not been remitted to the board shall be a debt
owed to the state by the designated entity required to collect and
remit the tax. This part does not impose any obligation upon the
designated entity to take any legal action to enforce the collection
of the tax imposed by this part.

begin insert 31011. end insert   

(a) The board may prescribe, adopt, and enforce
regulations relating to the implementation, administration, and
enforcement of this part, including, but not limited to, applicant
requirements, collections, reporting, refunds, and appeals.

(b) The board may prescribe, adopt, and enforce any emergency
regulations as necessary to implement this part. Any emergency
regulation prescribed, adopted, or enforced pursuant to this section
shall be adopted in accordance with Chapter 3.5 (commencing
with Section 11340) of Part 1 of Division 3 of Title 2 of the
Government Code, and, for purposes of that chapter, including
Section 11349.6 of the Government Code, the adoption of the
regulation is an emergency and shall be considered by the Office
of Administrative Law as necessary for the immediate preservation
of the public peace, health and safety, and general welfare.

begin insert 31012. end insert   

(a) The marijuana tax is due and payable to the board
quarterly on or before the last day of the month following each
calendar quarter.

(b) On or before the last day of the month following each
calendar quarter, a return for the preceding calendar quarter shall
be filed using electronic media with the board.

(c) Returns shall be authenticated in a form or pursuant to
methods as may be prescribed by the board.

begin insert 31013. end insert   

(a) The Marijuana Production and Environment
Mitigation Fund is hereby created in the State Treasury. The fund
shall consist of all medical marijuana taxes, interest, penalties,
and other amounts collected and paid to the board pursuant to
this part, less payments of refunds and reimbursement to the board
for expenses incurred in the administration and collection of the
medical marijuana tax.

(b) Notwithstanding Section 13340 of the Government Code,
all moneys deposited in the Marijuana Production and
Environment Mitigation Fund are hereby continuously
appropriated, without regard to fiscal years, in the following
manner:

(1) Ten percent to the Division of Medical Cannabis Cultivation
to administer the unique identifier program specified in Section
11362.777 of the Health and Safety Code.

(2) Thirty percent to the Division of Medical Cannabis
Cultivation for disbursement to local law enforcement-related
activities, state law enforcement-related activities, or both,
pertaining to illegal marijuana cultivation. Funds allocated
pursuant to this subparagraph shall be allocated on a competitive
grant application process administered by the Division of Medical
Cannabis Cultivation. The Division of Medical Cannabis
Cultivation shall promulgate guidelines for the grant process as
soon as administratively possible, but no later than April 1, 2016.

(3) Thirty percent to the Natural Resources Agency to fund a
competitive grant program for environmental cleanup and
restoration of public and private lands that have been damaged
by illegal marijuana cultivation. Funds allocated pursuant to this
subparagraph shall be prioritized to restoration and cleanup
projects, on public or private lands, based on the level of damages
that have occurred. Not less than 35 percent of the funds shall be
used for these purposes related to public lands, and not less than
20 percent of the funds collected shall be used for these purposes
in regard to private lands. The agency shall consult and partner
with counties, cities, or cities and counties, and may partner with
nonprofit organizations recognized by the California Attorney
General’s office, other appropriate state agencies, and the
appropriate federal entities, including, but not limited to, the
United States Department of Agriculture and the United States
Department of the Interior, for the purposes of awarding grants
to state or local government entities and nonprofit organizations
that engage in environmental cleanup and restoration. The agency
shall promulgate guidelines for the grant process as soon as
administratively possible, but no later than April 1, 2016.

(4) Thirty percent to the multiagency task force, the Department
of Fish and Wildlife and State Water Resources Control Board
pilot project to address the Environmental Impacts of Cannabis
Cultivation and to respond to the damages caused by marijuana
cultivation on public and private lands in California, specified in
Section 13276 of the Water Code.

 

Chapter   begin insert 4. end insert Track and Trace Process

 

begin insert 31020. end insert   

The board shall adopt a system for reporting the
movement of cannabis and cannabis products throughout the
distribution chain. The system shall also employ secure packaging
and be capable of providing information to the board. This system
shall capture, at a minimum, all of the following:

(a) The amount of tax due by the designated entity.

(b) The name, address, and license number of the designated
entity that remitted the tax.

(c) The name, address, and license number of the succeeding
entity receiving the product.

(d) The transaction date.

(e) Any other information deemed necessary by the board for
the taxation and regulation of marijuana and marijuana products.

begin insert 31021. end insert   

(a) The board shall submit a report to the Legislature
on the total amount of revenue that was collected for the five-year
period from the operative date of the tax imposed pursuant to this
part. The report is due to the Legislature on or before the last day
of the month commencing 180 days after the 5-year period from
the operative date of the tax imposed under this part.

(b) The report required by this section shall be submitted in
compliance with Section 9795 of the Government Code.

 

Chapter   begin insert 5. end insert Operative Date and Funding

 

begin insert 31030. end insert   

This part shall become operative on or after the first
day of the first calendar quarter commencing more than 270 days
after adequate funding has been received by the board to implement
and administer this part, or on or after the first day of the first
calendar quarter commencing more than 180 days from the
adoption and funding of the cannabis track and trace process
required pursuant to Section 31020, whichever is later. The board
shall post a notice on its Internet Web site when this requirement
has been satisfied.

begin insert 31031. end insert   

Funds for the establishment and support of the
regulatory activities required pursuant to this part shall be
advanced as a General Fund or special fund loan, and shall be
repaid by the board from the initial proceeds from fees collected
pursuant to this part or any rule or regulation adopted pursuant
to this part, no later than six months after the operative date
specified in Section 31030.

end insert

SEC. 4.  

Section 13276 is added to the Water Code, to read:

13276.  

begin insert

(a) The multiagency task force, the Department of Fish
and Wildlife and State Water Resources Control Board pilot project
to address the Environmental Impacts of Cannabis Cultivation,
assigned to respond to the damages caused by marijuana
cultivation on public and private lands in California, shall continue
its enforcement efforts on a permanent basis and expand them to
a statewide level to ensure the reduction of adverse impacts of
marijuana cultivation on water quality and on fish and wildlife
throughout the state.

end insert begin delete

Each

end delete

begin insert (b) end insert begin insert   end insert begin insert Each end insert regional board shall, and the State Water Resources
Control Board may, address discharges of waste resulting from
medical marijuana cultivation and associated activities, including
by adopting a general permit, establishing waste discharge
requirements, or taking action pursuant to Section 13269. In
addressing these discharges, each regional board shall include
conditions to address items that include, but are not limited to, all
of the following:

begin delete

(a)

end delete

begin insert (c) end insert  Site development and maintenance, erosion control, and
drainage features.

begin delete

(b)

end delete

begin insert (d) end insert  Stream crossing installation and maintenance.

begin delete

(c)

end delete

begin insert (e) end insert  Riparian and wetland protection and management.

begin delete

(d)

end delete

begin insert (f) end insert  Soil disposal.

begin delete

(e)

end delete

begin insert (g) end insert  Water storage and use.

begin delete

(f)

end delete

begin insert (h) end insert  Irrigation runoff.

begin delete

(g)

end delete

begin insert (i) end insert  Fertilizers and soil.

begin delete

(h)

end delete

begin insert (j) end insert  Pesticides and herbicides.

begin delete

(i)

end delete

begin insert (k) end insert  Petroleum products and other chemicals.

begin delete

(j)

end delete

begin insert (l) end insert  Cultivation-related waste.

begin delete

(k)

end delete

begin insert (m) end insert  Refuse and human waste.

begin delete

(l)

end delete

begin insert (n) end insert  Cleanup, restoration, and mitigation.

SEC. 5.  

If the Commission on State Mandates determines that
this act contains costs mandated by the state, reimbursement to
local agencies and school districts for those costs shall be made
pursuant to Part 7 (commencing with Section 17500) of Division
4 of Title 2 of the Government Code.

SEC. 6.  

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

In order to address the damage done by illegal marijuana
cultivation at the earliest time possible, it is necessary that this act
take effect immediately.