BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 821|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
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THIRD READING
Bill No: AB 821
Author: Gipson (D)
Amended: 1/13/16 in Assembly
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 6-1, 5/11/16
AYES: Hertzberg, Beall, Hernandez, Lara, Moorlach, Pavley
NOES: Nguyen
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 58-17, 1/28/16 - See last page for vote
SUBJECT: Sales and use taxes: administration: payments:
dispensaries
SOURCE: Author
DIGEST: This bill allows a medical marijuana dispensary to
remit tax liability due in a method other than an electronic
funds transfer.
ANALYSIS:
Existing law:
1)Imposes a sales and use tax on the sale, storage, or use of
tangible personal property unless exempted by state law.
2)Provides a sales and use tax exemption related to medicine. To
be exempt, medication must be:
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a) Prescribed by an authorized person and dispensed on a
prescription filled by a pharmacist;
b) Furnished by a licensed physician to his or her own
patient; or
c) Furnished by a health facility for treatment pursuant to
a licensed physician's order, or sold to a licensed
physician.
This bill:
1)Allows medical marijuana dispensaries to remit tax liability
due in a method other than an electronic funds transfer.
2)Remains in effect until January 1, 2022.
Comments
1)Nowhere to bank. Individuals who run a marijuana dispensary
in compliance with California law are currently shut off from
the banking system. Marijuana is classified as a Class I drug
and the cultivation, sale, and possession can constitute a
felony. Therefore, the majority of banks and credit unions
have decided not to accept marijuana dispensaries as customers
for fear of federal sanctions. As such, less than 1% of all
banks and credit unions nationwide provide banking services to
cannabis businesses.
2)Burden on dispensaries. Taxpayers must remit tax liability
due by an electronic funds transfer (EFT) if the estimated tax
liability averages $10,000 or more per month, otherwise a 10%
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penalty of the tax amount due is assessed on the taxpayer.
Because many banks and credit unions refuse to accept medical
dispensaries as customers for fear of federal sanctions,
dispensaries that are remitting their tax liability in a form
other than an EFT are assessed a 10% penalty. The Board of
Equalization may waive the 10% penalty for medical marijuana
dispensaries if it can be shown that the failure to utilize an
EFT is due to reasonable cause and circumstances beyond the
person's control, and occurred notwithstanding the exercise of
ordinary care and in the absence of willful neglect. However,
taxpayers must request a waiver every time amounts due are
remitted in a manner other than EFT, which creates an unfair
administrative burden for cash-only industries. It appears,
therefore, that the problem is not the imposition of a penalty
but the burden of having to request the waiver.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
SUPPORT: (Verified6/28/16)
3C Medical, LP
Americans for Safe Access
Board of Equalization Member Fiona Ma
Board of Equalization Member George Runner
California Growers Association
California Tax Reform Association
Four individuals
OPPOSITION: (Verified6/28/16)
None received
ARGUMENTS IN SUPPORT: According to the author, "Currently,
due to the fact that marijuana is still federally classified as
a Schedule 1 substance, the medical marijuana industry has been
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rendered unbankable. This leads to companies having to hold
large amounts of cash and requires that tax payments be made in
cash as well. This bill seeks to support the state's collection
of tax payments by removing the penalty associated with cash tax
payments above $10,000 a month in cases where an industry has
lack of access to banking services."
ASSEMBLY FLOOR: 58-17, 1/28/16
AYES: Alejo, Baker, Bloom, Bonilla, Bonta, Brown, Burke,
Calderon, Campos, Chau, Chiu, Chu, Cooley, Dababneh, Daly,
Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia,
Gipson, Gomez, Gonzalez, Gordon, Gray, Hadley, Roger
Hernández, Holden, Irwin, Jones, Kim, Lackey, Levine, Linder,
Lopez, Low, McCarty, Medina, Mullin, Nazarian, O'Donnell,
Olsen, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas,
Santiago, Steinorth, Mark Stone, Thurmond, Ting, Waldron,
Weber, Wilk, Williams, Wood, Atkins
NOES: Achadjian, Travis Allen, Bigelow, Brough, Cooper, Dahle,
Beth Gaines, Gallagher, Gatto, Grove, Harper, Maienschein,
Mayes, Melendez, Obernolte, Patterson, Wagner
NO VOTE RECORDED: Chang, Chávez, Jones-Sawyer, Mathis
Prepared by: Myriam Bouaziz / GOV. & F. / (916) 651-4119
6/29/16 15:45:51
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