Amended in Senate June 13, 2016

Amended in Senate June 13, 2016

Amended in Assembly April 14, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 1609


Introduced bybegin delete Committee on Budget (Assembly Members Ting (Chair), Travis Allen, Bigelow, Bloom, Bonta, Campos, Chávez, Chiu, Cooper, Gordon, Grove, Harper, Holden, Irwin, Kim, Lackey, McCarty, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Patterson, Rodriguez, Thurmond, Wilk, and Williams)end deletebegin insert Committee on Budget (Assembly Members Ting (Chair), Bloom, Bonta, Campos, Chiu, Cooper, Gordon, Holden, Irwin, McCarty, Mullin, Nazarian, Oend insertbegin insert’Donnell, Rodriguez, Thurmond, and Williams)end insert

January 7, 2016


An act to amend Sections 27, 101, 144, 205.1, 19300, 19300.7, 19302, 19302.1, 19303, 19304, 19305, 19306, 19307, 19310, 19311, 19312, 19315, 19321, 19322, 19323, 19326, 19327, 19328, 19332, 19332.5, 19334, 19335, 19341, 19342, 19343, 19344, 19345, 19347, 19350, 19351, and 19360 of, to amend the heading of Chapter 3.5 (commencing with Section 19300) of Division 8 of, to amend and repeal Section 19320 of, to add Sections 19332.2, 19347.1, 19347.2, 19347.3, 19347.4, 19347.5, 19347.6, 19347.7, and 19347.8 to, to repeal Sections 19313 and 19318 of, to repeal Article 6 (commencing with Section 19331) of Chapter 3.5 of Division 8 of, and to repeal and add Section 19300.5 of, the Business and Professions Code, to amend Sections 2154, 2265, 5100, and 5151 of the Elections Code, to amend Sections 1602, 12025.2, and 12029 of, and to add Section 1617 to, the Fish and Game Code, to amend Section 52452 of, and to add Section 37104 to, the Food and Agricultural Code, to add Section 15283 to, and to add Chapter 6.45 (commencing with Section 30035) to Division 3 of Title 3 of, the Government Code, to amend Sections 11362.769, 11362.777, 44559.11, 50800.5, 51341, 51349, 51455, and 51622 of, to amend and renumber Sections 51344 and 51345 of, to amend and repeal Section 11362.775 of, to add Section 44559.14 to, to add Sections 50912.5 and 51511 to, to repeal Sections 51342, 51347, 51348, 51618, and 51619 of, and to add Chapter 19 (commencing with Section 50899.1) to Part 2 of Division 31 of, the Health and Safety Code, to amend Sections 12206, 17058, 18900.24, and 23610.5 of, to add and repeal Sections 17053.88.5 and 23688.5 of, and to repeal Section 31020 of, the Revenue and Taxation Code, and to amend Sections 1058.5, 1525, 1535, 1552, 1831, 1840, 1845, 1846, and 5103 of, and to add Sections 1847, 1848, and 13149 to, the Water Code, relating to state government, and making an appropriation therefor, to take effect immediately, bill related to the budget.

LEGISLATIVE COUNSEL’S DIGEST

AB 1609, as amended, Committee on Budget. State government.

(1) Existing law, the Medical Marijuana Regulation and Safety Act, regulates and licenses the cultivation, dispensing, distribution, manufacturing, testing, and transportation of medical cannabis through various state agencies, including, among others, the Bureau of Medical Marijuana Regulation, the Department of Food and Agriculture, and the State Department of Public Health, and authorizes the bureau to adopt rules to carry out the provisions of that act, as specified. That act requires a person to obtain both a local and state license to engage in commercial cannabis activities, except that the act authorizes, until January 1, 2018, a facility or entity that is operating in compliance with local laws to continue in operation until its application for licensure is approved or denied. That act requires the State Department of Public Health to regulate cannabis testing laboratories, as specified. That act authorizes the bureau to establish appellations of origin for marijuana grown in the state. That act establishes the Medical Marijuana Regulation Safety Act Fund and provides that moneys in the fund shall be available upon appropriation by the Legislature.

This bill would, among other things, change the name of the Medical Marijuana Regulation and Safety Act, the Bureau of Medical Marijuana Regulation, and the Medical Marijuana Regulation and Safety Act Fund to the Medical Cannabis Regulation and Safety Act, the Bureau of Medical Cannabis Regulation, and the Medical Cannabis Regulation and Safety Act Fund, and would change references to medical marijuana or marijuana to medical cannabis or cannabis, respectively. The bill would authorize licensing authorities, as defined, to adopt rules and regulations to carry out the purposes of that act and emergency regulations, as specified. The bill would add additional grounds for disciplinary action, including failure to maintain safe conditions for inspection by a licensing authority. The bill would exempt the premises or person from the above-mentioned requirement to obtain both a local and state license only if certain conditions are met, including that the applicant continues to operate in compliance with all local and state laws, except for possession of a state license. The bill would require the State Water Resources Control Board, in consultation with the Department of Fish and Wildlife, to adopt principles and guidelines for diversion and use of water for cannabis cultivation, as specified. The bill would require an applicant for a state license issued by a licensing authority to meet certain requirements, including providing proof of a bond to cover the costs of destruction of medical cannabis or medical cannabis products if necessitated by a violation of the licensing requirements. The bill would require an applicant for a license for indoor or outdoor cultivation to identify the source of water supply, as specified. The bill would authorize the Department of Food and Agriculture to establish appellations of origin for cannabis grown in the state instead of the bureau. The bill would require the bureau to regulate the laboratory testing of cannabis instead of the State Department of Public Health, as specified. The bill would authorize the State Department of Public Health to, among other things, develop standards for the manufacturing and labeling of all manufactured medical cannabis products and would require the State Department of Public Health, when it has evidence that a medical cannabis product is adulterated or misbranded, to notify the manufacturer, and authorizes the department to take certain actions.

(2) Existing law prohibits an entity from substantially diverting or obstructing the natural flow of, or substantially changing or using any material from the bed, channel, or bank of, any river, stream, or lake, or from depositing certain material where it may pass into any river, stream, or lake, without first notifying the Department of Fish and Wildlife of that activity, and entering into a lake or streambed alteration agreement if required by the department to protect fish and wildlife resources. Existing law exempts certain routine maintenance and operation activities from those requirements after the initial notification and agreement and exempts certain emergency activities from those notification and agreement requirements. Existing law authorizes the director of the department to establish a graduated schedule of fees to be charged to any entity subject to the notification and agreement provisions and requires any fees received to be deposited into the Fish and Game Preservation Fund. Under existing law, it is unlawful for any person to violate those notification and agreement provisions, and a person who violates them is also subject to a civil penalty of not more than $25,000 for each violation.

Existing law, in order to facilitate the remediation and permitting of marijuana cultivation sites, requires the department to adopt regulations to enhance the fees on any entity subject to lake or streambed alternation agreement provisions for marijuana cultivation sites that require remediation. Existing law prohibits this fee schedule from exceeding the fee limits established for lake or streambed alteration agreements.

This bill would exempt an entity from the requirement to enter into a lake or streambed alteration agreement with the department for activities authorized by a license or renewed license for cannabis cultivation issued by the Department of Food and Agriculture for the term of the license or renewed license if the entity submits the written notification to the department, a copy of the license or renewed license, and the fee required for a lake or streambed alteration agreement, and the department determines certain requirements are met. If an entity receives an exemption, any failure by the entity to comply with certain requirements contained in the license would constitute a violation of the lake or streambed alteration agreement provisions. Because this violation would be a crime, this bill would impose a state-mandated local program.

This bill would also authorize the department to adopt regulations establishing the requirements and procedure for the issuance of a general agreement in a geographic area for a category or categories of activities related to cannabis cultivation that would be in lieu of an individual lake or streambed alteration agreement.

(3) Existing law, with certain exceptions, requires each person who diverts water after December 31, 1965, to file with the State Water Resources Control Board a statement of diversion and use, and to include specified information, including the purpose of the use.

Existing law requires each person or entity who holds a permit or license to appropriate water, and certain lessors of water, to pay an annual fee according to a schedule established by the board. Existing law requires a person or entity who files a certain application, registration, petition, or request to pay a fee according to a schedule established by the board. Revenues generated from these fees are deposited into the Water Rights Fund, which are available, upon appropriation, for specified purposes.

This bill would require a statement of diversion and use to also include information regarding the amount of water used, if any, for cannabis cultivation. The bill would require a person who files a statement of diversion and use with the board reporting that water was used for cannabis cultivation to pay a fee according to a fee schedule established by the board. The bill would authorize moneys in the Water Rights Fund, upon appropriation, to be expended by the board for the purposes of carrying out water diversion-related provisions of the Medical Marijuana Regulation and Safety Act.

(4) Existing law authorizes the State Water Resources Control Board to issue a cease and desist order against a person who is violating, or threatening to violate, certain requirements relating to water use.

This bill would authorize the board to issue a cease and desist order against a person who is both diverting or using water for cannabis cultivation and violating, or threatening to violate, certain licensing and water diversion-related provisions of the Medical Marijuana Regulation and Safety Act.

(5) Under existing law, a person who violates a cease and desist order may be liable in an amount not to exceed $1,000 for each day in which the violation occurs and, for a violation occurring in a critically dry year immediately preceded by 2 or more consecutive below normal, dry, or critically dry years or during a period for which the Governor has issued a proclamation of a state of emergency based on drought conditions, may be liable in an amount not to exceed $10,000 for each day in which the violation occurs. Existing law authorizes a person or entity in violation of a term or condition of a permit, license, certificate, or registration issued by, an order adopted by, or regulations adopted by, the state board to be civilly liable for an amount not to exceed $500 for each day in which the violation occurs. Revenue generated from these penalties is deposited in the Water Rights Fund.

This bill would authorize a person or entity who violates certain licensing and water diversion-related provisions of the Medical Marijuana Regulation and Safety Act to be held liable in an amount not to exceed the sum of (1) $500 dollars for a violation plus $250 for each additional day on which the violation continues if the person fails to correct the violation within 30 days after the board has called the violation to the attention of the person and (2) $2,500 for each acre-foot of water diverted or used in violation of the applicable requirement. Revenue generated from these penalties would be deposited in the Water Rights Fund.

(6) Existing law requires a person who diverts 10 acre-feet of water per year or more under a permit or license to install and maintain a device or employ a method capable of measuring the rate of direct diversion, rate of collection to storage, and rate of withdrawal or release from storage, as specified, and with certain exceptions. Existing law requires the permittee or licensee to maintain a record of all diversion monitoring and the total amount of water diverted and submit these records to the state board, as prescribed. Existing law requires a person who diverts water under a registration, permit, or license to report to the state board, at least annually, certain information, including the monitoring information, if applicable.

This bill would require a person who diverts water under a registration, permit, or license to also report to the state board, at least annually, information regarding the amount of water used, if any, for cannabis cultivation.

(7) Existing law, the California Seed Law, regulates seed sold in California, and requires each container of agricultural seed that is for sale or sold within this state for sowing purposes to be labeled, as specified, unless the sale is an occasional sale of seed grain by the producer of the seed grain to his or her neighbor for use by the purchaser within the county of production.

This bill would also exclude from the California Seed Law any cannabis seed, as defined, sold or offered for sale in the state.

(8) Existing law, the Milk and Milk Products Act of 1947, regulates the production of milk and milk products in this state. The act specifies standards for butter. The act requires a license from the Secretary of Food and Agriculture for each separate milk products plant or place of business dealing in, receiving, manufacturing, freezing, or processing milk, or any milk product, or manufacturing, freezing, or processing imitation ice cream or imitation ice milk.

This bill would exempt from the Milk and Milk Products Act of 1947 butter purchased from a licensed milk products plant or retail location that is subsequently infused or mixed with medical cannabis at the premises or location that is not required to be licensed as a milk products plant.

(9) The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws, including, for taxable years beginning on or after January 1, 2012, and before January 1, 2017, a credit for a qualified taxpayer, defined as a person responsible for planting a crop, managing the crop, and harvesting the crop from the land, in an amount equal to 10% of the cost that would otherwise be included in, or required to be included in, inventory costs, as specified under federal law, with respect to the donation of fresh fruits or fresh vegetables to a food bank located in California.

This bill would establish similar credits under the Personal Income Tax Law and the Corporation Tax Law for taxable years beginning on or after January 1, 2017, and before January 1, 2022. The bill would, as compared to the existing credits, modify the credit amount to instead equal 15% of the qualified value, as defined, of the fresh fruits or vegetables. The bill would require the credit to be claimed on a timely filed original return.

(10) Existing law requires the Department of Housing and Community Development to administer the Emergency Housing and Assistance Program. Under the program, moneys from the continuously appropriated Emergency Housing and Assistance Fund are available for the purposes of providing shelter, as specified, to homeless persons.

This bill would create the California Emergency Solutions Grants Program, also to be administered by the department. The bill, among other things, would require the department to make grants under the program to qualifying subrecipients to implement activities that address the needs of homeless individuals and families and assist them to regain stability in permanent housing as quickly as possible, as specified. The bill, to the extent funds are made available by the Legislature, would authorize moneys in the Emergency Housing and Assistance Fund to be used for the purposes of the program.

(11) Existing law establishes a low-income housing tax credit program pursuant to which the California Tax Credit Allocation Committee provides procedures and requirements for the allocation of state insurance, income, and corporation tax credit amounts among low-income housing projects based on federal law.

This bill, beginning on or after January 1, 2016, and before January 1, 2020, would allow a taxpayer that is allowed a low-income housing tax credit to elect to sell all or a portion of that credit to one or more unrelated parties, as described, for each taxable year in which the credit is allowed for not less than 80% of the amount of the credit to be sold, and would provide for the one-time resale of that credit, as provided. The bill would require the California Tax Credit Allocation Committee to enter into an agreement with the Franchise Tax Board to pay any costs incurred by the Franchise Tax Board in administering these provisions.

Existing law, in the case of a partnership, requires the allocation of the credits, on or after January 1, 2009, and before January 1, 2016, to partners based upon the partnership agreement, regardless of how the federal low-income housing tax credit, as provided, is allocated to the partners, or whether the allocation of the credit under the terms of the agreement has substantial economic effect, as specified.

This bill would extend the January 1, 2016, date to January 1, 2020.

(12) The Public Safety Communications Act of 2013 (act) establishes the Public Safety Communications Division within the Office of Emergency Services and, among other things, requires the division to acquire, install, equip, maintain, and operate new or existing public safety communications systems and facilities for public safety agencies, as specified. Existing law also authorizes the division to aid local public agencies in the formulation of concepts, methods, and procedures that will improve the operation of nonemergency telephone systems, and requires the division to perform certain duties related to local emergency telephone systems.

This bill, beginning on July 1, 2016, would create the Public Safety Communications Revolving Fund in the State Treasury and require that the fund consist of, among others, revenues from the provision or sale of public safety communications services provided for in the act or of other services rendered by the division, and moneys appropriated and made available by the Legislature for the purposes of the act. The bill would require the Director of Emergency Services to administer the fund and would require the fund to be used, upon appropriation by the Legislature, to pay all costs to the office resulting from the act or from rendering services to the state or public agencies, and to establish reserves, as specified. The bill would require the reduction of the billing rates for services rendered by the office in a fiscal year if the balance in the fund at the end of the prior fiscal year meets certain conditions, and would require the Controller to transfer payments authorized to be collected by the division for the division’s services to the fund, as specified.

(13) Existing law establishes the Capital Access Loan Program to assist small businesses in financing the costs of complying with environmental mandates and the remediation of contamination on their properties, and also establishes within the program the California Americans with Disabilities Act Small Business Capital Access Loan Program to assist small businesses in financing the costs of projects that alter or retrofit existing small business facilities to comply with the federal Americans with Disabilities Act. Under existing law, both programs are administered by the California Pollution Control Financing Authority (authority).

This bill would establish within the Capital Access Loan Program the California Seismic Safety Capital Access Loan Program to assist residential property owners and small business owners in seismically retrofitting residences and small businesses by covering losses on qualified loans for those purposes, as specified. The bill would require the authority to administer the program, including regulations and funds received for the program, as specified. The bill would also authorize the authority to, by regulation, implement loan loss reserve programs to benefit any individual person engaged in qualifying activities that require financing, as specified.

This bill would establish the California Seismic Safety Capital Access Loan Program Fund and would continuously appropriate that fund to the authority to carry out the purposes of the California Seismic Safety Capital Access Loan Program.

(14) Existing law authorizes an individual to contribute amounts in excess of his or her income tax liability for the support of specified funds and allows an individual to designate on his or her tax return that a specified amount in excess of his or her tax liability be transferred to the Habitat for Humanity Fund. Existing law requires moneys in the fund, upon appropriation by the Legislature, to be allocated to the Franchise Tax Board, the Controller, and the Department of Housing and Community Development for reimbursement of costs, as provided, and the balance to the Department of Housing and Community Development to distribute grants to Habitat for Humanity affiliates in California that meet certain requirements, including having a specified tax-exempt status. Existing law requires the Department of Housing and Community Development to award grants through a competitive, project-specific grant process and be responsible for overseeing that grant program and prohibits a Habitat for Humanity affiliate from using a grant award for administrative expenses or for any purposes outside of California. Existing law also has administrative provisions applicable to voluntary contributions.

This bill would instead require the Department of Housing and Community Development to disburse these moneys to Habitat for Humanity of California, Inc., and would require that organization to submit a plan to the department for the use and competitive project-specific distribution of moneys to Habitat for Humanity affiliates in California that meet certain requirements, including having a specified tax-exempt status. The bill would allow Habitat for Humanity of California, Inc., to use a specified amount of moneys for administrative costs and would require the organization to submit an annual audit of the program to the department, as provided.

(15) Existing law establishes the California Housing Finance Agency with a primary purpose of meeting the housing needs of persons and families of low or moderate income. Under existing law, the California Housing Loan Insurance Fund, a continuously appropriated fund, is established for the purpose of insuring loans and bonds, and defraying administrative expenses incurred by the agency in operating these programs of loan and bond insurance, as specified. Existing law establishes within the agency a Director of Insurance of the fund who is required to manage and conduct the business and affairs of the insurance fund, as specified.

This bill would repeal provisions relating to the Director of Insurance of the fund. The bill would instead establish the director of enterprise risk management and compliance within the agency, who would be required to assist in the implementation of processes, tools, and systems to identify, assess, measure, manage, monitor, and mitigate risks related to the development of new programs or changes to existing law or regulations that may result in new or increased risk to the agency, as specified.

Existing law requires the agency to obtain an annual audit of the insurance fund’s books and accounts regarding its activities by an independent certified public accountant, to provide that audit to the Governor, the chairperson and vice-chairperson of the Senate and Assembly housing policy committees, the Senate and Assembly budget committees, and the Joint Legislative Budget Committee, and to make the audit available for review by interested parties no later than November 1 of each year.

This bill would instead require the agency to obtain an annual agreed-upon procedures engagement of the insurance fund’s books and accounts, to provide that agreed-upon procedures engagement to the to the Governor, the chairperson and vice-chairperson of the Senate and Assembly housing policy committees, the Senate and Assembly budget committees, and the Joint Legislative Budget Committee, and to make the agreed-upon procedures engagement available for review by interested parties no later than November 1 of each year.

By expanding the purposes of a continuously appropriated fund, this bill would make an appropriation.

(16) Existing law, known as the Second Chance Program, requires the Board of State and Community Corrections to administer a competitive grant program that focuses on community-based solutions for reducing recidivism using certain funds allocated pursuant to the Safe Neighborhoods and Schools Act, enacted by Proposition 47 at the November 4, 2014, general election.

This bill would establish the Community-Based Transitional Housing Program, to be administered by the Department of Finance, for the purpose of providing grants to cities, counties, and cities and counties to increase the supply of transitional housing available to persons previously incarcerated for felony and misdemeanor convictions and funded with moneys appropriated for that purpose in the annual Budget Act or other measure. The bill would require an applicant city, county, or city and county to submit an application between October 1, 2016, and October 1, 2018, that includes specified information and to approve the issuance of a conditional use permit or other local entitlement for a transitional housing facility that meets specified criteria, including that the facility provide transitional housing for a period of not less than 10 years and that it provide additional services to residents. If, after approval of its application, the city, county, or city and county fails to issue the conditional use permit or provide other local entitlement within a specified time period, the bill would provide that the approval of the application is void and the city, county, or city and county is permanently ineligible to submit any future application for funding under the program.

This bill would require the department to approve or deny an application based on specified criteria within 90 days of receipt and determine the amount of funds to award to the applicant city, county, or city and county. The bill would require that the department award up to $2,000,000 to each successful applicant and that 60% of the award be retained by the city, county, or city and county for certain law enforcement and community outreach purposes and 40% of the award be provided to the facility operator to provide services, enhance security, perform community outreach, or cover start-up costs.

The bill would require the department to submit a report to the Joint Legislative Budget Committee on November 1, 2017, and each November 1 thereafter until November 1, 2020, as provided. In addition, the bill would require the department’s Office of State Audits and Evaluations to conduct a review of the program to determine its effectiveness in providing services to offenders released from state prison or county jail. The bill would authorize the department to use up to $500,000 of the amount appropriated in any budget act or other measure for the program for this review.

The Administrative Procedure Act governs the procedure for the adoption, amendment, or repeal of regulations by state agencies and for the review of those regulatory actions by the Office of Administrative Law. That act exempts from its provisions actions by the department to adopt and update, as necessary, instructions to any state or local agency for the preparation, development, or administration of the state budget.

This bill would provide that any action by the department to adopt and update instructions to any state or local agency for the purpose of carrying out the Community-Based Transitional Housing Program constitutes a department action to adopt and update instructions for the preparation, development, or administration of the state budget and is exempt from the Administrative Procedure Act.

(17) Existing law establishes within the Department of Housing and Community Development the California Housing Finance Agency and provides that the primary purpose of the agency is to meet the housing needs of persons and families of low or moderate income. Existing law requires the California Housing Finance Agency to administer various housing finance assistance programs, including, among others, the California Homebuyer’s Downpayment Assistance Program and the Homebuyer Down Payment Assistance Program of 2002.

This bill would discontinue those and other specified programs on and after July 1, 2016.

Existing law also requires the agency to administer the Roberti-Greene Home Purchase Assistance Program, which provides first-time homebuyers with home purchase assistance in the form of interest rate subsidies and downpayment assistance, among others. Existing law establishes the Home Purchase Assistance Fund in the State Treasury and continuously appropriates the fund to the agency for expenditure pursuant to the program and defraying actual administrative costs of the agency.

This bill, among other things, would modify the program to instead provide home purchase assistance to low- and moderate-income homebuyers to qualify for the purchase of owner-occupied homes and would revise the terms under which that assistance is provided. The bill would authorize the agency, pursuant to specified objectives, to create its own home purchase assistance programs, home purchase assistance products, or both, on such terms and conditions as the agency deems prudent. On and after July 1, 2016, the bill would transfer any obligated amounts from the funds for the programs discontinued by the bill, and any loan receivables, interest, or other amounts accruing to the agency pursuant to those programs, to the Home Purchase Assistance Fund. By expanding the authorized uses of continuously appropriated funds, this bill would make an appropriation.

(18) Existing law permits a person, at the time of registering to vote, to choose whether or not to disclose the name of a political party that he or she prefers on his or her affidavit of registration. When a county elections official receives an affidavit of registration that does not include a political party preference in the space provided, existing law requires the elections official to presume that the person has declined to disclose a party preference.

Existing law requires the Secretary of State to register a person to vote based on the person’s motor vehicle records, which constitute a completed affidavit of registration, as specified. If the person does not provide a political party preference in his or her motor vehicle records, existing law requires the person’s political party preference to be designated as “Unknown” and requires the person to be treated as a “No Party Preference” voter.

This bill would require a county elections official who receives an affidavit of registration that does not include a political party preference to designate the person’s political party preference as “Unknown” on a voter registration index and would require the person to otherwise be treated as a “No Party Preference” voter. This bill would specify that a voter whose political party preference is designated as “Unknown” because he or she did not provide a political party preference in his or her motor voter records is required to be designated as such on a voter registration index.

Existing law provides that a political party is qualified to participate in a primary election or presidential general election if voters equal in number to at least 0.33% of the total number of voters registered on a specified day before the election have declared their preference for that political party. For purposes determining whether a political party qualified to participate in the presidential general election, existing law prohibits a person who is registered to vote by the Secretary of State through his or her motor vehicle records, and whose party preference is designated as “Unknown” because he or she did not provide a party preference, from being counted in the total number of voters registered before the election.

This bill would prohibit counting a person in the total number of voters registered before the election for purposes of determining whether a political party qualified to participate in a primary election if that person is registered by a county elections official through an affidavit of registration, or by the Secretary of State through motor vehicle records, and his or her party preference is designated as “Unknown” because he or she did not include a party preference on his or her affidavit.

By imposing additional duties on the county elections officials, this bill would impose a state-mandated local program.

(19) 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 with regard to certain mandates no reimbursement is required by this act for a specified reason.

With regard to any other mandates, this bill would provide that, if the Commission on State Mandates determines that the bill contains costs so mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

(12) This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.

Vote: majority. Appropriation: yes. Fiscal committee: yes. State-mandated local program: yes.

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

P14   1

SECTION 1.  

Section 27 of the Business and Professions Code
2 is amended to read:

3

27.  

(a) Each entity specified in subdivisions (c), (d), and (e)
4shall provide on the Internet information regarding the status of
5every license issued by that entity in accordance with the California
P15   1Public Records Act (Chapter 3.5 (commencing with Section 6250)
2of Division 7 of Title 1 of the Government Code) and the
3Information Practices Act of 1977 (Chapter 1 (commencing with
4Section 1798) of Title 1.8 of Part 4 of Division 3 of the Civil Code).
5The public information to be provided on the Internet shall include
6information on suspensions and revocations of licenses issued by
7the entity and other related enforcement action, including
8accusations filed pursuant to the Administrative Procedure Act
9(Chapter 3.5 (commencing with Section 11340) of Part 1 of
10Division 3 of Title 2 of the Government Code) taken by the entity
11relative to persons, businesses, or facilities subject to licensure or
12regulation by the entity. The information may not include personal
13information, including home telephone number, date of birth, or
14social security number. Each entity shall disclose a licensee’s
15address of record. However, each entity shall allow a licensee to
16provide a post office box number or other alternate address, instead
17of his or her home address, as the address of record. This section
18shall not preclude an entity from also requiring a licensee, who
19has provided a post office box number or other alternative mailing
20address as his or her address of record, to provide a physical
21business address or residence address only for the entity’s internal
22administrative use and not for disclosure as the licensee’s address
23of record or disclosure on the Internet.

24(b) In providing information on the Internet, each entity specified
25in subdivisions (c) and (d) shall comply with the Department of
26Consumer Affairs’ guidelines for access to public records.

27(c) Each of the following entities within the Department of
28Consumer Affairs shall comply with the requirements of this
29section:

30(1) The Board for Professional Engineers, Land Surveyors, and
31Geologists shall disclose information on its registrants and
32licensees.

33(2) The Bureau of Automotive Repair shall disclose information
34on its licensees, including auto repair dealers, smog stations, lamp
35and brake stations, smog check technicians, and smog inspection
36certification stations.

37(3) The Bureau of Electronic and Appliance Repair, Home
38Furnishings, and Thermal Insulation shall disclose information on
39its licensees and registrants, including major appliance repair
40dealers, combination dealers (electronic and appliance), electronic
P16   1repair dealers, service contract sellers, and service contract
2administrators.

3(4) The Cemetery and Funeral Bureau shall disclose information
4on its licensees, including cemetery brokers, cemetery salespersons,
5cemetery managers, crematory managers, cemetery authorities,
6crematories, cremated remains disposers, embalmers, funeral
7establishments, and funeral directors.

8(5) The Professional Fiduciaries Bureau shall disclose
9information on its licensees.

10(6) The Contractors’ State License Board shall disclose
11information on its licensees and registrants in accordance with
12Chapter 9 (commencing with Section 7000) of Division 3. In
13addition to information related to licenses as specified in
14subdivision (a), the board shall also disclose information provided
15to the board by the Labor Commissioner pursuant to Section 98.9
16of the Labor Code.

17(7) The Bureau for Private Postsecondary Education shall
18disclose information on private postsecondary institutions under
19its jurisdiction, including disclosure of notices to comply issued
20pursuant to Section 94935 of the Education Code.

21(8) The California Board of Accountancy shall disclose
22information on its licensees and registrants.

23(9) The California Architects Board shall disclose information
24on its licensees, including architects and landscape architects.

25(10) The State Athletic Commission shall disclose information
26on its licensees and registrants.

27(11) The State Board of Barbering and Cosmetology shall
28disclose information on its licensees.

29(12) The State Board of Guide Dogs for the Blind shall disclose
30information on its licensees and registrants.

31(13) The Acupuncture Board shall disclose information on its
32licensees.

33(14) The Board of Behavioral Sciences shall disclose
34information on its licensees, including licensed marriage and family
35therapists, licensed clinical social workers, licensed educational
36psychologists, and licensed professional clinical counselors.

37(15) The Dental Board of California shall disclose information
38on its licensees.

39(16) The State Board of Optometry shall disclose information
40regarding certificates of registration to practice optometry,
P17   1statements of licensure, optometric corporation registrations, branch
2office licenses, and fictitious name permits of its licensees.

3(17) The Board of Psychology shall disclose information on its
4licensees, including psychologists, psychological assistants, and
5registered psychologists.

6(d) The State Board of Chiropractic Examiners shall disclose
7information on its licensees.

8(e) The Structural Pest Control Board shall disclose information
9on its licensees, including applicators, field representatives, and
10operators in the areas of fumigation, general pest and wood
11destroying pests and organisms, and wood roof cleaning and
12treatment.

13(f) The Bureau of Medical Cannabis Regulation shall disclose
14information on its licensees.

15(g) “Internet” for the purposes of this section has the meaning
16set forth in paragraph (6) of subdivision (f) of Section 17538.

17

SEC. 2.  

Section 101 of the Business and Professions Code is
18amended to read:

19

101.  

The department is comprised of the following:

20(a) The Dental Board of California.

21(b) The Medical Board of California.

22(c) The State Board of Optometry.

23(d) The California State Board of Pharmacy.

24(e) The Veterinary Medical Board.

25(f) The California Board of Accountancy.

26(g) The California Architects Board.

27(h) The Bureau of Barbering and Cosmetology.

28(i) The Board for Professional Engineers and Land Surveyors.

29(j) The Contractors’ State License Board.

30(k) The Bureau for Private Postsecondary Education.

31(l) The Bureau of Electronic and Appliance Repair, Home
32Furnishings, and Thermal Insulation.

33(m) The Board of Registered Nursing.

34(n) The Board of Behavioral Sciences.

35(o) The State Athletic Commission.

36(p) The Cemetery and Funeral Bureau.

37(q) The State Board of Guide Dogs for the Blind.

38(r) The Bureau of Security and Investigative Services.

39(s) The Court Reporters Board of California.

P18   1(t) The Board of Vocational Nursing and Psychiatric
2Technicians.

3(u) The Landscape Architects Technical Committee.

4(v) The Division of Investigation.

5(w) The Bureau of Automotive Repair.

6(x) The Respiratory Care Board of California.

7(y) The Acupuncture Board.

8(z) The Board of Psychology.

9(aa) The California Board of Podiatric Medicine.

10(ab) The Physical Therapy Board of California.

11(ac) The Arbitration Review Program.

12(ad) The Physician Assistant Committee.

13(ae) The Speech-Language Pathology and Audiology Board.

14(af) The California Board of Occupational Therapy.

15(ag) The Osteopathic Medical Board of California.

16(ah) The Naturopathic Medicine Committee.

17(ai) The Dental Hygiene Committee of California.

18(aj) The Professional Fiduciaries Bureau.

19(ak) The State Board of Chiropractic Examiners.

20(al) The Bureau of Real Estate.

21(am) The Bureau of Real Estate Appraisers.

22(an) The Structural Pest Control Board.

23(ao) The Bureau of Medical Cannabis Regulation.

24(ap) Any other boards, offices, or officers subject to its
25jurisdiction by law.

26

SEC. 3.  

Section 144 of the Business and Professions Code is
27amended to read:

28

144.  

(a) Notwithstanding any other law, an agency designated
29in subdivision (b) shall require an applicant to furnish to the agency
30a full set of fingerprints for purposes of conducting criminal history
31record checks. Any agency designated in subdivision (b) may
32obtain and receive, at its discretion, criminal history information
33from the Department of Justice and the United States Federal
34Bureau of Investigation.

35(b) Subdivision (a) applies to the following:

36(1) California Board of Accountancy.

37(2) State Athletic Commission.

38(3) Board of Behavioral Sciences.

39(4) Court Reporters Board of California.

40(5) State Board of Guide Dogs for the Blind.

P19   1(6) California State Board of Pharmacy.

2(7) Board of Registered Nursing.

3(8) Veterinary Medical Board.

4(9) Board of Vocational Nursing and Psychiatric Technicians.

5(10) Respiratory Care Board of California.

6(11) Physical Therapy Board of California.

7(12) Physician Assistant Committee of the Medical Board of
8California.

9(13) Speech-Language Pathology and Audiology and Hearing
10Aid Dispenser Board.

11(14) Medical Board of California.

12(15) State Board of Optometry.

13(16) Acupuncture Board.

14(17) Cemetery and Funeral Bureau.

15(18) Bureau of Security and Investigative Services.

16(19) Division of Investigation.

17(20) Board of Psychology.

18(21) California Board of Occupational Therapy.

19(22) Structural Pest Control Board.

20(23) Contractors’ State License Board.

21(24) Naturopathic Medicine Committee.

22(25) Professional Fiduciaries Bureau.

23(26) Board for Professional Engineers, Land Surveyors, and
24Geologists.

25(27) Bureau of Medical Cannabis Regulation.

26(c) For purposes of paragraph (26) of subdivision (b), the term
27“applicant” shall be limited to an initial applicant who has never
28been registered or licensed by the board or to an applicant for a
29new licensure or registration category.

30

SEC. 4.  

Section 205.1 of the Business and Professions Code
31 is amended to read:

32

205.1.  

Notwithstanding subdivision (a) of Section 205, the
33Medical Cannabis Regulation and Safety Act Fund is a special
34fund within the Professions and Vocations Fund, and is subject to
35subdivision (b) of Section 205.

36

SEC. 5.  

The heading of Chapter 3.5 (commencing with Section
3719300) of Division 8 of the Business and Professions Code is
38amended to read:

 

P20   1Chapter  3.5. Medical Cannabis Regulation and Safety
2act
3

 

4

SEC. 6.  

Section 19300 of the Business and Professions Code
5 is amended to read:

6

19300.  

This act shall be known and may be cited as the Medical
7Cannabis Regulation and Safety Act.

8

SEC. 7.  

Section 19300.5 of the Business and Professions Code
9 is repealed.

10

SEC. 8.  

Section 19300.5 is added to the Business and
11Professions Code
, to read:

12

19300.5.  

For purposes of this chapter, the following definitions
13shall apply:

14(a) “Accrediting body” means a nonprofit organization that
15requires conformance to ISO/IEC 17025 requirements and is a
16signatory to the International Laboratory Accreditation Cooperation
17Mutual Recognition Arrangement for Testing.

18(b) “Applicant,” for purposes of Article 4 (commencing with
19Section 19320), includes the following:

20(1) Owner or owners of the proposed premises, including all
21persons or entities having ownership interest other than a security
22interest, lien, or encumbrance on property that will be used by the
23premises.

24(2) If the owner is an entity, “owner” includes within the entity
25each person participating in the direction, control, or management
26of, or having a financial interest in, the proposed premises.

27(3) If the applicant is a publicly traded company, “owner” means
28the chief executive officer or any person or entity with an aggregate
29ownership interest of 5 percent or more.

30(c) “Batch” means a specific quantity of homogeneous medical
31cannabis or medical cannabis product and is one of the following
32types:

33(1) “Harvest batch” means a specifically identified quantity of
34dried flower or trim, leaves, and other cannabis plant matter that
35is uniform in strain, harvested at the same time, and, if applicable,
36cultivated using the same pesticides and other agricultural
37chemicals, and harvested at the same time.

38(2) “Manufactured cannabis batch” means either:

P21   1(A) An amount of cannabis concentrate or extract produced in
2one production cycle using the same extraction methods and
3standard operating procedures, and is from the same harvest batch.

4(B) An amount of a type of manufactured cannabis produced
5in one production cycle using the same formulation and standard
6operating procedures.

7(d) “Bureau” means the Bureau of Medical Cannabis Regulation
8within the Department of Consumer Affairs.

9(e) “Cannabinoid” or “phytocannabinoid” means a chemical
10compound that is unique to and derived from cannabis.

11(f) “Cannabis” means all parts of the plant Cannabis sativa
12Linnaeus, Cannabis indica, or Cannabis ruderalis, whether growing
13or not; the seeds thereof; the resin, whether crude or purified,
14extracted from any part of the plant; and every compound,
15manufacture, salt, derivative, mixture, or preparation of the plant,
16its seeds, or resin. “Cannabis” also means the separated resin,
17whether crude or purified, obtained from cannabis. “Cannabis”
18also means marijuana as defined by Section 11018 of the Health
19and Safety Code as enacted by Chapter 1407 of the Statutes of
201972. “Cannabis” does not include the mature stalks of the plant,
21fiber produced from the stalks, oil or cake made from the seeds of
22the plant, any other compound, manufacture, salt, derivative,
23mixture, or preparation of the mature stalks (except the resin
24extracted therefrom), fiber, oil, or cake, or the sterilized seed of
25the plant which is incapable of germination. For the purpose of
26this chapter, “cannabis” does not mean “industrial hemp” as defined
27by Section 81000 of the Food and Agricultural Code or Section
2811018.5 of the Health and Safety Code.

29(g) “Cannabis concentrate” means manufactured cannabis that
30has undergone a process to concentrate one or more active
31cannabinoids, thereby increasing the product’s potency. Resin
32from granular trichomes from a cannabis plant is a concentrate for
33purposes of this chapter. A cannabis concentrate is not considered
34food, as defined by Section 109935 of the Health and Safety Code,
35or a drug, as defined by Section 109925 of the Health and Safety
36Code.

37(h) “Certificate of accreditation” means a certificate issued by
38an accrediting body to a testing laboratory .

39(i) “Chief” means Chief of the Bureau of Medical Cannabis
40Regulation within the Department of Consumer Affairs.

P22   1(j) “Commercial cannabis activity” includes cultivation,
2possession, manufacture, processing, storing, laboratory testing,
3labeling, transporting, distribution, delivery, or sale of medical
4cannabis or a medical cannabis product, except as set forth in
5Section 19319, related to qualifying patients and primary
6caregivers.

7(k) “Cultivation” means any activity involving the planting,
8growing, harvesting, drying, curing, grading, or trimming of
9medical cannabis.

10(l) “Cultivation site” means a location where medical cannabis
11is planted, grown, harvested, dried, cured, graded, or trimmed, or
12that does all or any combination of those activities.

13(m) “Delivery” means the commercial transfer of medical
14cannabis or medical cannabis products from a dispensary, up to
15an amount determined by the bureau to a primary caregiver or
16qualified patient as defined in Section 11362.7 of the Health and
17Safety Code, or a testing laboratory. “Delivery” also includes the
18use by a dispensary of any technology platform owned and
19controlled by the dispensary, or independently licensed under this
20chapter, that enables qualified patients or primary caregivers to
21arrange for or facilitate the commercial transfer by a licensed
22dispensary of medical cannabis or medical cannabis products.

23(n) “Dispensary” means a premises where medical cannabis,
24medical cannabis products, or devices for the use of medical
25cannabis or medical cannabis products are offered, either
26individually or in any combination, for retail sale, including an
27establishment that delivers, pursuant to Section 19340, medical
28cannabis and medical cannabis products as part of a retail sale.

29(o) “Dispensing” means any activity involving the retail sale of
30medical cannabis or medical cannabis products from a dispensary.

31(p) “Distribution” means the procurement, sale, and transport
32of medical cannabis and medical cannabis products between entities
33licensed pursuant to this chapter.

34(q) “Distributor” means a person licensed under this chapter to
35engage in the business of purchasing medical cannabis from a
36licensed cultivator, or medical cannabis products from a licensed
37manufacturer, for sale to a licensed dispensary.

38(r) “Dried flower” means all dead medical cannabis that has
39been harvested, dried, cured, or otherwise processed, excluding
40leaves and stems.

P23   1(s) “Edible cannabis product” means manufactured cannabis
2that is intended to be used, in whole or in part, for human
3consumption, including, but not limited to, chewing gum, but
4excluding products set forth in Division 15 (commencing with
5Section 32501) of the Food and Agricultural Code. An edible
6medical cannabis product is not considered food as defined by
7Section 109935 of the Health and Safety Code or a drug as defined
8by Section 109925 of the Health and Safety Code.

9(t) “Fund” means the Medical Cannabis Regulation and Safety
10Act Fund established pursuant to Section 19351.

11(u) “Identification program” means the universal identification
12certificate program for commercial medical cannabis activity
13authorized by this chapter.

14(v) “Labeling” means any label or other written, printed, or
15graphic matter upon a medical cannabis product, or upon its
16container or wrapper, or that accompanies any medical cannabis
17product.

18(w) “Labor peace agreement” means an agreement between a
19licensee and a bona fide labor organization that, at a minimum,
20protects the state’s proprietary interests by prohibiting labor
21organizations and members from engaging in picketing, work
22stoppages, boycotts, and any other economic interference with the
23applicant’s business. This agreement means that the applicant has
24agreed not to disrupt efforts by the bona fide labor organization
25to communicate with, and attempt to organize and represent, the
26applicant’s employees. The agreement shall provide a bona fide
27labor organization access at reasonable times to areas in which the
28applicant’s employees work, for the purpose of meeting with
29employees to discuss their right to representation, employment
30rights under state law, and terms and conditions of employment.
31This type of agreement shall not mandate a particular method of
32election or certification of the bona fide labor organization.

begin delete

33(x) “Local license, permit, or other authorization” means an
34official document granted by a local jurisdiction that specifically
35authorizes a person to conduct commercial cannabis activity in
36the local jurisdiction.

37(y)

end delete

38begin insert(x)end insert “Licensee” means a person issued a state license under this
39chapter to engage in commercial cannabis activity.

begin delete

40(z)

end delete

P24   1begin insert(y)end insert “Licensing authority” means the state agency responsible
2for the issuance, renewal, or reinstatement of the license.

begin delete

3(aa)

end delete

4begin insert(z)end insert “Live plants” means living medical cannabis flowers and
5plants, including seeds, immature plants, and vegetative stage
6plants.

begin insert

7
(aa) “Local license, permit, or other authorization” means an
8official document granted by a local jurisdiction that specifically
9authorizes a person to conduct commercial cannabis activity in
10the local jurisdiction.

end insert

11(ab) “Lot” means a batch or a specifically identified portion of
12a batch.

13(ac) “Manufactured cannabis” means raw cannabis that has
14 undergone a process whereby the raw agricultural product has
15been transformed into a concentrate, an edible product, or a topical
16product.

17(ad) “Manufacturer” means a person that conducts the
18production, preparation, propagation, or compounding of
19manufactured medical cannabis, as described in subdivision (ae),
20or medical cannabis products either directly or indirectly or by
21extraction methods, or independently by means of chemical
22synthesis or by a combination of extraction and chemical synthesis
23at a fixed location that packages or repackages medical cannabis
24or medical cannabis products or labels or relabels its container.

25(ae) “Manufacturing site” means the premises that produces,
26prepares, propagates, or compounds manufactured medical
27cannabis or medical cannabis products, directly or indirectly, by
28extraction methods, independently by means of chemical synthesis,
29or by a combination of extraction and chemical synthesis, and is
30owned and operated by a licensee for these activities.

31(af) “Medical cannabis,” “medical cannabis product,” or
32“cannabis product” means a product containing cannabis, including,
33but not limited to, concentrates and extractions, intended to be sold
34for use by medical cannabis patients in California pursuant to the
35Compassionate Use Act of 1996 (Proposition 215), found at Section
3611362.5 of the Health and Safety Code. For the purposes of this
37chapter, “medical cannabis” does not include “industrial hemp”
38as defined by Section 81000 of the Food and Agricultural Code
39or Section 11018.5 of the Health and Safety Code.

P25   1(ag) “Nursery” means a licensee that produces only clones,
2immature plants, seeds, and other agricultural products used
3specifically for the planting, propagation, and cultivation of medical
4cannabis.

5(ah) “Person” means an individual, firm, partnership, joint
6venture, association, corporation, limited liability company, estate,
7trust, business trust, receiver, syndicate, or any other group or
8combination acting as a unit and includes the plural as well as the
9singular number.

10(ai) “Primary caregiver” has the same meaning as that term is
11defined in Section 11362.7 of the Health and Safety Code.

12(aj) “State license” or “license ” means a state license issued
13pursuant to this chapter.

14(ak) “Testing laboratory” means the premises where tests are
15performed on medical cannabis or medical cannabis products and
16that holds a valid certificate of accreditation.

17(al) “Topical cannabis” means a product intended for external
18use. A topical cannabis product is not considered a drug as defined
19by Section 109925 of the Health and Safety Code.

20(am) “Transport” means the transfer of medical cannabis or
21medical cannabis products from the permitted business location
22of one licensee to the permitted business location of another
23licensee, for the purposes of conducting commercial cannabis
24activity authorized pursuant to this chapter.

25(an) “Transporter” means a person who holds a license by the
26bureau to transport medical cannabis or medical cannabis products
27in an amount above a threshold determined by the bureau between
28licensees that have been issued a license pursuant to this chapter.

29

SEC. 9.  

Section 19300.7 of the Business and Professions Code
30 is amended to read:

31

19300.7.  

License classifications pursuant to this chapter are as
32follows:

33(a) Type 1 = Cultivation; Specialty outdoor; Small.

34(b) Type 1A = Cultivation; Specialty indoor; Small.

35(c) Type 1B = Cultivation; Specialty mixed-light; Small.

36(d) Type 2 = Cultivation; Outdoor; Small.

37(e) Type 2A = Cultivation; Indoor; Small.

38(f) Type 2B = Cultivation; Mixed-light; Small.

39(g) Type 3 = Cultivation; Outdoor; Medium.

40(h) Type 3A = Cultivation; Indoor; Medium.

P26   1(i) Type 3B = Cultivation; Mixed-light; Medium.

2(j) Type 4 = Cultivation; Nursery.

3(k) Type 6 = Manufacturer 1.

4(l) Type 7 = Manufacturer 2.

5(m) Type 8 = Testing laboratory.

6(n) Type 10 = Dispensary; General.

7(o) Type 10A = Producing Dispensary; No more than three
8retail sites.

9(p) Type 11 = Distributor.

10(q) Type 12 = Transporter.

11

SEC. 10.  

Section 19302 of the Business and Professions Code
12 is amended to read:

13

19302.  

There is in the Department of Consumer Affairs the
14Bureau of Medical Cannabis Regulation, under the supervision
15and control of the director. The director shall administer and
16enforce the provisions of this chapter related to the bureau.

17

SEC. 11.  

Section 19302.1 of the Business and Professions
18Code
is amended to read:

19

19302.1.  

(a) The Governor shall appoint a chief of the bureau,
20subject to confirmation by the Senate, at a salary to be fixed and
21determined by the Director of Consumer Affairs with the approval
22of the Director of Finance. The chief shall serve under the direction
23and supervision of the director and at the pleasure of the Governor.

24(b) Every power granted to or duty imposed upon the Director
25of Consumer Affairs under this chapter may be exercised or
26performed in the name of the director by a deputy or assistant
27director or by the chief, subject to conditions and limitations that
28the director may prescribe. In addition to every power granted or
29duty imposed with this chapter, the director shall have all other
30powers and duties generally applicable in relation to bureaus that
31are part of the Department of Consumer Affairs.

32(c) The Director of Consumer Affairs may employ and appoint
33all employees necessary to properly administer the work of the
34bureau, in accordance with civil service laws and regulations. The
35Governor may also appoint a deputy chief and an assistant chief
36counsel to the bureau. These positions shall hold office at the
37pleasure of the Governor.

38(d) The Department of Consumer Affairs shall have the sole
39authority to create, issue, renew, discipline, suspend, or revoke
40licenses for the transportation, storage unrelated to manufacturing
P27   1activities, testing, distribution, and sale of medical cannabis within
2the state and to collect fees in connection with activities the bureau
3regulates. The bureau shall have the authority to create licenses in
4addition to those identified in this chapter that the bureau deems
5necessary to effectuate its duties under this chapter.

6(e) The Department of Food and Agriculture shall administer
7the provisions of this chapter related to and associated with the
8cultivation of medical cannabis and will serve as lead agency for
9the purpose of fulfilling the requirements of the California
10Environmental Quality Act (Division 13 (commencing with Section
1121000) of the Public Resources Code). The Department of Food
12and Agriculture shall have the authority to create, issue, renew,
13discipline, suspend, or revoke licenses for the cultivation of medical
14cannabis and to collect fees in connection with activities it
15regulates. The Department of Food and Agriculture shall have the
16authority to create licenses in addition to those identified in this
17chapter that it deems necessary to effectuate its duties under this
18chapter.

19(f) The State Department of Public Health shall administer the
20provisions of this chapter related to and associated with the
21manufacturing of medical cannabis. The State Department of Public
22Health shall have the authority to create, issue, renew, discipline,
23suspend, or revoke licenses for the manufacturing of medical
24cannabis and medical cannabis products and to collect fees in
25connection with activities it regulates. The State Department of
26Public Health shall have the authority to create licenses in addition
27to those identified in this chapter that it deems necessary to
28effectuate its duties under this chapter.

29

SEC. 12.  

Section 19303 of the Business and Professions Code
30 is amended to read:

31

19303.  

Protection of the public shall be the highest priority for
32all licensing authorities in exercising its licensing, regulatory, and
33disciplinary functions under this chapter. Whenever the protection
34of the public is inconsistent with other interests sought to be
35promoted, the protection of the public shall be paramount.

36

SEC. 13.  

Section 19304 of the Business and Professions Code
37 is amended to read:

38

19304.  

(a) The licensing authorities shall make and prescribe
39rules and regulations as may be necessary or proper to carry out
40the purposes and intent of this chapter and to enable each licensing
P28   1authority to exercise the powers and duties conferred upon it by
2this chapter, not inconsistent with any statute of this state, including
3particularly this chapter and Chapter 3.5 (commencing with Section
411340) of Part 1 of Division 3 of Title 2 of the Government Code.
5For the performance of its duties, each licensing authority has the
6power conferred by Sections 11180 to 11191, inclusive, of the
7Government Code.

8(b) Each licensing authority may adopt emergency regulations
9to implement this chapter.

10(1) Each licensing authority may readopt any emergency
11regulation authorized by this section that is the same as, or
12substantially equivalent to, an emergency regulation previously
13adopted by this section. Any such readoption shall be limited to
14one time for each regulation.

15(2) Notwithstanding any other law, the initial adoption of
16emergency regulations and the readoption of emergency regulations
17authorized by this section shall be deemed an emergency and
18necessary for the immediate preservation of the public peace,
19health, safety, or general welfare. The initial emergency regulations
20and the readopted emergency regulations authorized by this section
21shall be each submitted to the Office of Administrative Law for
22filing with the Secretary of State and shall remain in effect for no
23more than 180 days, by which time final regulations may be
24adopted.

25

SEC. 14.  

Section 19305 of the Business and Professions Code
26 is amended to read:

27

19305.  

Notice of any action of a licensing authority required
28by this chapter to be given may be signed and given by the director
29of the licensing authority or an authorized employee of the
30licensing authority and may be made personally or in the manner
31prescribed by Section 1013 of the Code of Civil Procedure, or in
32the manner prescribed by Section 124 of this code.

33

SEC. 15.  

Section 19306 of the Business and Professions Code
34 is amended to read:

35

19306.  

(a) The bureau may convene an advisory committee
36to advise the bureau and licensing authorities on the development
37of standards and regulations pursuant to this chapter, including
38best practices and guidelines to ensure qualified patients have
39adequate access to medical cannabis and medical cannabis
P29   1products. The advisory committee members shall be determined
2by the chief.

3(b) The advisory committee members may include, but not be
4limited to, representatives of the medical cannabis industry,
5representatives of medical cannabis cultivators, appropriate local
6and state agencies, appropriate local and state law enforcement,
7physicians, environmental and public health experts, and medical
8cannabis patient advocates.

9

SEC. 16.  

Section 19307 of the Business and Professions Code
10 is amended to read:

11

19307.  

A licensing authority may make or cause to be made
12such investigation as it deems necessary to carry out its duties
13under this chapter. A licensing authority may work with state and
14local law enforcement agencies on investigations and enforcement
15actions pertaining to licenses.

16

SEC. 17.  

Section 19310 of the Business and Professions Code
17 is amended to read:

18

19310.  

A licensing authority may on its own motion at any
19time before a penalty assessment is placed into effect and without
20any further proceedings, review the penalty, but such review shall
21be limited to its reduction.

22

SEC. 18.  

Section 19311 of the Business and Professions Code
23 is amended to read:

24

19311.  

Grounds for disciplinary action include, but are not
25limited to, the following:

26(a) Failure to comply with the provisions of this chapter or any
27rule or regulation adopted pursuant to this chapter.

28(b) Conduct that constitutes grounds for denial of licensure
29pursuant to Chapter 3 (commencing with Section 490) of Division
301.5.

31(c) Any other grounds contained in regulations adopted by a
32licensing authority pursuant to this chapter.

33(d) Failure to comply with any state law, except as provided for
34in this chapter or other California law.

35(e) Failure to maintain safe conditions for inspection by a
36licensing authority.

37(f) Failure to comply with any operating procedure submitted
38to the licensing authority pursuant to subdivision (b) of Section
3919322.

P30   1

SEC. 19.  

Section 19312 of the Business and Professions Code
2 is amended to read:

3

19312.  

(a) (1) Each licensing authority may suspend, revoke,
4place on probation with terms and conditions, or otherwise
5discipline licenses issued by that licensing authority and fine a
6licensee, after proper notice and hearing to the licensee, if the
7licensee is found to have committed any of the acts or omissions
8constituting grounds for disciplinary action.

9(2) A licensing authority may revoke a license when a local
10agency has notified the licensing authority that a licensee or
11applicant within its jurisdiction is in violation of state rules and
12regulation relating to commercial cannabis activities, and the
13licensing authority, through an investigation, has determined that
14the violation is grounds for termination or revocation of the license.

15(b) The disciplinary proceedings under this chapter shall be
16conducted in accordance with Chapter 5 (commencing with Section
1711500) of Part 1 of Division 3 of Title 2 of the Government Code,
18and the director and agency head, as that term is defined in Section
1911405.40 of the Government Code, of each licensing authority
20shall have all the powers granted therein.

21(c) Each licensing authority may take disciplinary action and
22assess fines against its respective licensees for any violation of
23this chapter when the violation was committed by the licensee’s
24agent or employee while acting on behalf of the licensee or engaged
25in commercial cannabis activity.

26(d) A licensing authority may recover the costs of investigation
27and enforcement of a disciplinary proceeding pursuant to Section
28125.3 of this code.

29

SEC. 20.  

Section 19313 of the Business and Professions Code
30 is repealed.

31

SEC. 21.  

Section 19315 of the Business and Professions Code
32 is amended to read:

33

19315.  

(a) Nothing in this chapter shall be interpreted to
34supersede or limit existing local authority for law enforcement
35activity, enforcement of local zoning requirements or local
36ordinances, or enforcement of local license, permit, or other
37authorization requirements.

38(b) Nothing in this chapter shall be interpreted to require a
39licensing authority to undertake local law enforcement
P31   1responsibilities, enforce local zoning requirements, or enforce local
2licensing, permitting, or other authorization requirements.

3(c) Nothing in this chapter shall be interpreted to supersede or
4limit state agencies from exercising their existing enforcement
5authority under the Fish and Game Code, the Water Code, the
6Food and Agricultural Code, or the Health and Safety Code.

7

SEC. 22.  

Section 19318 of the Business and Professions Code
8 is repealed.

9

SEC. 23.  

Section 19320 of the Business and Professions Code,
10as added by Section 4 of Chapter 689 of the Statutes of 2015, is
11amended to read:

12

19320.  

(a) All commercial cannabis activity shall be conducted
13between licensees, except as otherwise provided in this chapter.

14(b)  Licensing authorities administering this chapter may issue
15state licenses only to qualified applicants engaging in commercial
16cannabis activity pursuant to this chapter. Upon the date of
17implementation of regulations by the licensing authority, no person
18shall engage in commercial cannabis activity without possessing
19both a state license and a local permit, license, or other
20authorization. A licensee shall not commence activity under the
21authority of a state license until the applicant has obtained, in
22addition to the state license, a local license, permit, or other
23authorization from the local jurisdiction in which he or she
24proposes to operate, following the requirements of the applicable
25local ordinance.

26(c) Each licensee shall obtain a separate license for each location
27where it engages in commercial medical cannabis activity.
28However, transporters only need to obtain licenses for each
29physical location where the licensee conducts business while not
30in transport or where any equipment that is not currently
31transporting medical cannabis or medical cannabis products
32permanently resides.

33(d) Revocation of a local license, permit, or other authorization
34shall terminate the ability of a medical cannabis business to operate
35within that local jurisdiction until the local jurisdiction reinstates
36or reissues the local license, permit, or other authorization. Local
37authorities shall notify the bureau upon revocation of a local
38license, permit, or other authorization. The bureau shall inform
39relevant licensing authorities.

P32   1(e) Revocation of a state license shall terminate the ability of a
2medical cannabis licensee to operate within California until the
3licensing authority reinstates or reissues the state license.

4(f) In addition to the provisions of this chapter, local jurisdictions
5retain the power to assess fees and taxes, as applicable, on facilities
6that are licensed pursuant to this chapter and the business activities
7of those licensees.

8(g) Nothing in this chapter shall be construed to supersede or
9limit state agencies, including the Department of Food and
10Agriculture, the State Water Resources Control Board, and the
11Department of Fish and Wildlife, from establishing fees to support
12their medical cannabis regulatory programs.

13

SEC. 24.  

Section 19320 of the Business and Professions Code,
14as added by Section 8 of Chapter 719 of the Statutes of 2015, is
15repealed.

16

SEC. 25.  

Section 19321 of the Business and Professions Code
17 is amended to read:

18

19321.  

(a) A license issued pursuant to this chapter shall be
19valid for 12 months from the date of issuance. The license shall
20be renewed annually. Each licensing authority shall establish
21procedures for the renewal of a license.

22(b) Notwithstanding subdivision (b) of Section 19320, the
23premises or person that is operating in compliance with local
24zoning ordinances and other state and local requirements on or
25before January 1, 2018, may continue its operations until its
26application for licensure is approved or denied pursuant to this
27chapter only if (1) a completed application and all required
28documentation and approvals for licensure are submitted to the
29licensing authority no later than the deadline established by the
30licensing authority and (2) the applicant continues to operate in
31compliance with all local and state requirements, except possession
32of a state license pursuant to this chapter. In issuing licenses, the
33licensing authority shall prioritize any premises or person that can
34demonstrate to the authority’s satisfaction that the premises or
35person was in operation and in good standing with the local
36jurisdiction by January 1, 2016.

37(c) Issuance of a state license or a determination of compliance
38with local law by the licensing authority shall in no way limit the
39ability of the City of Los Angeles to prosecute any person or entity
40for a violation of, or otherwise enforce, Proposition D, approved
P33   1by the voters of the City of Los Angeles on the May 21, 2013,
2ballot for the city, or the city’s zoning laws. Nor may issuance of
3a license or determination of compliance with local law by the
4licensing authority be deemed to establish, or be relied upon, in
5determining satisfaction with the immunity requirements of
6Proposition D or local zoning law, in court or in any other context
7or forum.

8

SEC. 26.  

Section 19322 of the Business and Professions Code
9 is amended to read:

10

19322.  

(a) A person shall not submit an application for a state
11license issued by a licensing authority pursuant to this chapter
12unless that person has received a license, permit, or authorization
13from the local jurisdiction. An applicant for any type of state
14license issued pursuant to this chapter shall do all of the following:

15(1) Electronically submit to the Department of Justice fingerprint
16images and related information required by the Department of
17Justice for the purpose of obtaining information as to the existence
18and content of a record of state or federal convictions and arrests,
19and information as to the existence and content of a record of state
20or federal convictions and arrests for which the Department of
21Justice establishes that the person is free on bail or on his or her
22own recognizance, pending trial or appeal.

23(A) The Department of Justice shall provide a response to the
24licensing authority pursuant to paragraph (1) of subdivision (p) of
25Section 11105 of the Penal Code.

26(B) The licensing authority shall request from the Department
27of Justice subsequent notification service, as provided pursuant to
28Section 11105.2 of the Penal Code, for applicants.

29(C) The Department of Justice shall charge the applicant a fee
30sufficient to cover the reasonable cost of processing the requests
31described in this paragraph.

32(2) Provide documentation issued by the local jurisdiction in
33which the proposed business is operating certifying that the
34applicant is or will be in compliance with all local ordinances and
35 regulations.

36(3) Provide evidence of the legal right to occupy and use the
37proposed location. For an applicant seeking a cultivator, distributor,
38manufacturing, testing, transporter, or dispensary license, provide
39a statement from the owner of real property or their agent where
40the cultivation, distribution, manufacturing, testing, transport, or
P34   1dispensing of commercial medical cannabis activities will occur,
2as proof to demonstrate the landowner has acknowledged and
3consented to permit cultivation, distribution, manufacturing, testing,
4transport, or dispensary activities to be conducted on the property
5by the tenant applicant.

6(4) If the application is for a cultivator or a dispensary, provide
7evidence that the proposed location is located beyond at least a
8600-foot radius from a school, as required by Section 11362.768
9of the Health and Safety Code.

10(5) Provide a statement, signed by the applicant under penalty
11of perjury, that the information provided is complete, true, and
12accurate.

13(6) (A) For an applicant with 20 or more employees, provide
14a statement that the applicant will enter into, or demonstrate that
15it has already entered into, and abide by the terms of a labor peace
16agreement.

17(B) For the purposes of this paragraph, “employee” does not
18include a supervisor.

19(C) For purposes of this paragraph, “supervisor” means an
20individual having authority, in the interest of the licensee, to hire,
21transfer, suspend, lay off, recall, promote, discharge, assign,
22reward, or discipline other employees, or responsibility to direct
23them or to adjust their grievances, or effectively to recommend
24such action, if, in connection with the foregoing, the exercise of
25that authority is not of a merely routine or clerical nature, but
26requires the use of independent judgment.

27(7) Provide the applicant’s valid seller’s permit number issued
28pursuant to Part 1 (commencing with Section 6001) of Division 2
29of the Revenue and Taxation Code or indicate that the applicant
30is currently applying for a seller’s permit.

31(8) Provide any other information required by the licensing
32authority.

33(9) For an applicant seeking a cultivation license, provide a
34statement declaring the applicant is an “agricultural employer,” as
35defined in the Alatorre-Zenovich-Dunlap-Berman Agricultural
36Labor Relations Act of 1975 (Part 3.5 (commencing with Section
371140) of Division 2 of the Labor Code), to the extent not prohibited
38by law.

39(10) Pay all applicable fees required for licensure by the
40licensing authority.

P35   1(11) Provide proof of a bond to cover the costs of destruction
2of medical cannabis or medical cannabis products if necessitated
3by a violation of licensing requirements.

4(b) For applicants seeking licensure to cultivate, distribute,
5manufacture, test, or dispense medical cannabis or medical
6cannabis products, the application shall also include a detailed
7description of the applicant’s operating procedures for all of the
8following, as required by the licensing authority:

9(1) Cultivation.

10(2) Extraction and infusion methods.

11(3) The transportation process.

12(4) Inventory procedures.

13(5) Quality control procedures.

14(6) Security protocols.

15

SEC. 27.  

Section 19323 of the Business and Professions Code
16 is amended to read:

17

19323.  

(a) A licensing authority shall deny an application if
18the applicant or the premises for which a state license is applied
19does not qualify for licensure under this chapter or the rules and
20regulations for the state license.

21(b) A licensing authority may deny an application for licensure
22or renewal of a state license, or issue a conditional license, if any
23of the following conditions apply:

24(1) Failure to comply with the provisions of this chapter or any
25rule or regulation adopted pursuant to this chapter, including but
26not limited to, any requirement imposed to protect natural
27resources, instream flow, and water quality pursuant to subdivision
28(a) of Section 19332.

29(2) Conduct that constitutes grounds for denial of licensure
30pursuant to Chapter 2 (commencing with Section 480) of Division
311.5.

32(3) The applicant has failed to provide information required by
33the licensing authority.

34(4) The applicant or licensee has been convicted of an offense
35that is substantially related to the qualifications, functions, or duties
36of the business or profession for which the application is made,
37except that if the licensing authority determines that the applicant
38or licensee is otherwise suitable to be issued a license and granting
39the license would not compromise public safety, the licensing
40authority shall conduct a thorough review of the nature of the
P36   1crime, conviction, circumstances, and evidence of rehabilitation
2of the applicant, and shall evaluate the suitability of the applicant
3or licensee to be issued a license based on the evidence found
4through the review. In determining which offenses are substantially
5related to the qualifications, functions, or duties of the business or
6profession for which the application is made, the licensing authority
7shall include, but not be limited to, the following:

8(A) A felony conviction for the illegal possession for sale, sale,
9manufacture, transportation, or cultivation of a controlled
10substance.

11(B) A violent felony conviction, as specified in subdivision (c)
12of Section 667.5 of the Penal Code.

13(C) A serious felony conviction, as specified in subdivision (c)
14of Section 1192.7 of the Penal Code.

15(D) A felony conviction involving fraud, deceit, or
16embezzlement.

17(5) The applicant, or any of its officers, directors, or owners, is
18a licensed physician making patient recommendations for medical
19cannabis pursuant to Section 11362.7 of the Health and Safety
20Code.

21(6) The applicant or any of its officers, directors, or owners has
22been subject to fines or penalties for cultivation or production of
23a controlled substance on public or private lands pursuant to
24Section 12025 or 12025.1 of the Fish and Game Code.

25(7) The applicant, or any of its officers, directors, or owners,
26has been sanctioned by a licensing authority or a city, county, or
27city and county for unlicensed commercial cannabis activities or
28has had a license revoked under this chapter in the three years
29immediately preceding the date the application is filed with the
30licensing authority.

31(8) Failure to obtain and maintain a valid seller’s permit required
32pursuant to Part 1 (commencing with Section 6001) of Division 2
33of the Revenue and Taxation Code.

34(9) The applicant or any of its officers, directors, owners,
35employees, or authorized agents have failed to comply with any
36operating procedure required pursuant to subdivision (b) of Section
3719322.

38(10) Conduct that constitutes grounds for disciplinary action
39pursuant to this chapter.

P37   1

SEC. 28.  

Section 19326 of the Business and Professions Code
2 is amended to read:

3

19326.  

(a) A person other than a transporter shall not transport
4medical cannabis or medical cannabis products from one licensee
5to another licensee, unless otherwise specified in this chapter.

6(b) (1) All cultivators, manufacturers, and licensees holding a
7producing dispensary license in addition to a cultivation or
8manufacturing license shall send all medical cannabis and medical
9cannabis products cultivated or manufactured to a distributor, as
10defined in Section 19300.5, for presale quality assurance and
11inspection by a distributor and for a batch testing by a testing
12laboratory prior to distribution to a dispensary.

13(2) Notwithstanding paragraph (1), a cultivator shall not be
14 required to send medical cannabis to a distributor if the medical
15cannabis is to be used, sold, or otherwise distributed by methods
16approved pursuant to this chapter by a manufacturer for further
17manufacturing.

18(c) (1) Upon receipt of medical cannabis or medical cannabis
19products from a cultivator, manufacturer, or a licensee holding a
20producing dispensary license in addition to a cultivation or a
21manufacturing license, the distributor shall first inspect the product
22to ensure the identity and quantity of the product and ensure a
23random sample of the medical cannabis or medical cannabis
24product is tested by a testing laboratory.

25(2) Upon issuance of a certificate of analysis by the testing
26laboratory that the product is fit for dispensing medical cannabis
27and medical cannabis products shall undergo a quality assurance
28review by the distributor prior to distribution to ensure the quantity
29and content of the medical cannabis or medical cannabis product,
30and for tracking and taxation purposes by the state.

31(3) This section does not limit the ability of licensed cultivators,
32manufacturers, and dispensaries to directly enter into contracts
33with one another indicating the price and quantity of medical
34cannabis or medical cannabis products to be distributed. However,
35a distributor responsible for executing the contract is authorized
36to collect a fee for the services rendered, including, but not limited
37to, costs incurred by a testing laboratory, as well as applicable state
38or local taxes and fees.

P38   1(d) Medical cannabis and medical cannabis products shall be
2tested by a licensed testing laboratory, prior to dispensing, pursuant
3to Section 19344.

4(e) This chapter shall not prohibit a licensee from performing
5testing on the licensee’s premises for the purposes of quality
6assurance of the product in conjunction with reasonable business
7operations. On-site testing by the licensee shall not be certified by
8the Bureau of Medical Cannabis Regulation.

9

SEC. 29.  

Section 19327 of the Business and Professions Code
10 is amended to read:

11

19327.  

(a) A licensee shall keep accurate records of
12commercial cannabis activity.

13(b) All records related to commercial cannabis activity shall be
14maintained for a minimum of seven years.

15(c) Licensing authorities may examine the records of licensees
16and inspect the premises of a licensee as the licensing authority or
17a state or local agency deems necessary to perform its duties under
18this chapter. All inspections and examination of records shall be
19conducted during standard business hours of the licensed facility
20or at any other reasonable time. Licensees shall provide and deliver
21records to the licensing authority upon request.

22(d) Licensees shall keep records identified by the licensing
23authorities on the premises of the location licensed.

24(e) A licensee or its agent, or employee, that refuses, impedes,
25obstructs, or interferes with an inspection of the premises or records
26of the licensee pursuant to this section has engaged in a violation
27of this chapter.

28(f) If a licensee, its agent, or an employee of a licensee fails to
29maintain or provide the records required pursuant to this section,
30the licensee may be subject to a citation and fine of thirty thousand
31dollars ($30,000) per individual violation.

32

SEC. 30.  

Section 19328 of the Business and Professions Code
33 is amended to read:

34

19328.  

(a) Except as provided in paragraphs (9) and (10), a
35licensee may only hold a state license in up to two separate license
36categories, as follows:

37(1) Type 1, 1A, 1B, 2, 2A, or 2B licensees may also hold either
38a Type 6 or 7 state license.

39(2) Type 6 or 7 licensees, or a combination thereof, may also
40hold either a Type 1, 1A, 1B, 2, 2A, or 2B state license.

P39   1(3) Type 6 or 7 licensees, or a combination thereof, may also
2hold a Type 10A state license.

3(4) Type 10A licensees may also hold either a Type 6 or 7 state
4license, or a combination thereof.

5(5) Type 1, 1A, 1B, 2, 2A, or 2B licensees, or a combination
6thereof, may also hold a Type 10A state license.

7(6) Type 10A licensees may hold a Type 1, 1A, 1B, 2, 2A, or
82B state license, or a combination thereof.

9(7) Type 11 licensees shall also hold a Type 12 state license,
10but shall not hold any other type of state license.

11(8) Type 12 licensees may hold a Type 11 state license.

12(9) A Type 10A licensee may hold a Type 6 or 7 state license
13and may also hold a 1, 1A, 1B, 2, 2A, 2B, 3, 3A, 3B, 4 or
14combination thereof if, under the 1, 1A, 1B, 2, 2A, 2B, 3, 3A, 3B,
154 or combination of licenses thereof, no more than four acres of
16total canopy size of cultivation by the licensee is occurring
17 throughout the state during the period that the respective licenses
18are valid. All cultivation pursuant to this section shall comply with
19local ordinances. This paragraph shall become inoperative on
20January 1, 2026.

21(10) All cultivators and manufacturers may hold a Type 12
22transporter license. All cultivators and manufacturers who are
23issued Type 12 transporter licenses shall comply with the
24following:

25(A) Cultivators shall only transport medical cannabis from a
26cultivation site to a manufacturer or a distributor.

27(B) Manufacturers shall only transport medical cannabis and
28medical cannabis products as follows:

29(i) Between a cultivation site and a manufacturing site.

30(ii) Between a manufacturing site and a manufacturing site.

31(iii) Between a manufacturing site and a distributor.

32(b) Except as provided in subdivision (a), a person or entity that
33holds a state license is prohibited from licensure for any other
34activity authorized under this chapter, and is prohibited from
35holding an ownership interest in real property, personal property,
36or other assets associated with or used in any other license category.

37(c) (1) In a jurisdiction that adopted a local ordinance, prior to
38July 1, 2015, requiring qualified businesses to cultivate,
39manufacture, and dispense medical cannabis or medical cannabis
40products, with all commercial cannabis activity being conducted
P40   1by a single qualified business, upon licensure that business shall
2not be subject to subdivision (a) if it meets all of the following
3conditions:

4(A) The business was cultivating, manufacturing, and dispensing
5medical cannabis or medical cannabis products on January 1, 2016,
6and has continuously done so since that date.

7(B) The business has been in full compliance with all applicable
8local ordinances at all times prior to licensure.

9(C) The business is registered with the State Board of
10Equalization for tax purposes.

11(2) A business licensed pursuant to paragraph (1) is not required
12to conduct all cultivation or manufacturing within the bounds of
13a local jurisdiction, but all cultivation and manufacturing shall
14have commenced prior to January 1, 2016, and have been in full
15compliance with applicable local ordinances.

16(d) This section shall remain in effect only until January 1, 2026,
17and as of that date is repealed.

18

SEC. 31.  

Article 6 (commencing with Section 19331) of
19Chapter 3.5 of Division 8 of the Business and Professions Code,
20as added by Section 1 of Chapter 688 of the Statutes of 2015, is
21repealed.

22

SEC. 32.  

Section 19332 of the Business and Professions Code,
23as added by Section 13 of Chapter 719 of the Statutes of 2015, is
24amended to read:

25

19332.  

(a) The Department of Food and Agriculture shall
26promulgate regulations governing the licensing of indoor and
27outdoor commercial cultivation sites.

28(b) The Department of Pesticide Regulation shall develop
29guidelines for the use of pesticides in the cultivation of cannabis
30and residue in harvested cannabis.

31(c) The Department of Food and Agriculture shall serve as the
32lead agency for purposes of the California Environmental Quality
33Act (Division 13 (commencing with Section 21000) of the Public
34Resources Code) related to the licensing of cannabis cultivation.

35(d) Pursuant to Section 13149 of the Water Code, the State
36Water Resources Control Board, in consultation with the
37Department of Fish and Wildlife and the Department of Food and
38Agriculture, shall ensure that individual and cumulative effects of
39water diversion and discharge associated with cultivation of
40cannabis do not affect the instream flows needed for fish spawning,
P41   1migration, and rearing, and the flows needed to maintain natural
2flow variability.

3(e) The Department of Food and Agriculture shall have the
4authority necessary for the implementation of the regulations it
5adopts pursuant to this chapter. The regulations shall do all of the
6following:

7(1) Provide that weighing or measuring devices used in
8connection with the sale or distribution of medical cannabis are
9required to meet standards equivalent to Division 5 (commencing
10with Section 12001).

11(2) Require that cannabis cultivation by licensees is conducted
12in accordance with state and local laws. Nothing in this chapter,
13and no regulation adopted by the department, shall be construed
14to supersede or limit the authority of the State Water Resources
15Control Board, regional water quality control boards, or the
16Department of Fish and Wildlife to implement and enforce their
17statutory obligations or to adopt regulations to protect water quality,
18water supply, and natural resources.

19(3) Establish procedures for the issuance and revocation of
20unique identifiers for activities associated with a cannabis
21cultivation license, pursuant to Article 8 (commencing with Section
2219337). All cannabis shall be labeled with the unique identifier
23issued by the Department of Food and Agriculture.

24(4) Prescribe standards, in consultation with the bureau, for the
25reporting of information as necessary related to unique identifiers,
26 pursuant to Article 8 (commencing with Section 19337).

27(f) The Department of Pesticide Regulation shall require that
28the application of pesticides or other pest control in connection
29with the indoor or outdoor cultivation of medical cannabis complies
30with Division 6 (commencing with Section 11401) of the Food
31and Agricultural Code and its implementing regulations.

32(g) State cultivator license types issued by the Department of
33Food and Agriculture may include:

34(1) Type 1, or “specialty outdoor,” for outdoor cultivation using
35no artificial lighting of less than or equal to 5,000 square feet of
36total canopy size on one premises, or up to 50 mature plants on
37noncontiguous plots.

38(2) Type 1A, or “specialty indoor,” for indoor cultivation using
39exclusively artificial lighting of less than or equal to 5,000 square
40feet of total canopy size on one premises.

P42   1(3) Type 1B, or “specialty mixed-light,” for cultivation using a
2combination of natural and supplemental artificial lighting at a
3maximum threshold to be determined by the licensing authority,
4of less than or equal to 5,000 square feet of total canopy size on
5one premises.

6(4) Type 2, or “small outdoor,” for outdoor cultivation using
7no artificial lighting between 5,001 and 10,000 square feet,
8inclusive, of total canopy size on one premises.

9(5) Type 2A, or “small indoor,” for indoor cultivation using
10exclusively artificial lighting between 5,001 and 10,000 square
11feet, inclusive, of total canopy size on one premises.

12(6) Type 2B, or “small mixed-light,” for cultivation using a
13combination of natural and supplemental artificial lighting at a
14maximum threshold to be determined by the licensing authority,
15between 5,001 and 10,000 square feet, inclusive, of total canopy
16size on one premises.

17(7) Type 3, or “outdoor,” for outdoor cultivation using no
18artificial lighting from 10,001 square feet to one acre, inclusive,
19of total canopy size on one premises. The Department of Food and
20Agriculture shall limit the number of licenses allowed of this type.

21(8) Type 3A, or “indoor,” for indoor cultivation using
22exclusively artificial lighting between 10,001 and 22,000 square
23feet, inclusive, of total canopy size on one premises. The
24Department of Food and Agriculture shall limit the number of
25licenses allowed of this type.

26(9) Type 3B, or “mixed-light,” for cultivation using a
27 combination of natural and supplemental artificial lighting at a
28maximum threshold to be determined by the licensing authority,
29between 10,001 and 22,000 square feet, inclusive, of total canopy
30size on one premises. The Department of Food and Agriculture
31shall limit the number of licenses allowed of this type.

32(10) Type 4, or “nursery,” for cultivation of medical cannabis
33solely as a nursery. Type 4 licensees may transport live plants, if
34the licensee also holds a Type 12 transporter license issued pursuant
35to this chapter.

36

SEC. 33.  

Section 19332.2 is added to the Business and
37Professions Code
, to read:

38

19332.2.  

(a) An application for a license for indoor or outdoor
39cultivation shall identify the source of water supply.

P43   1(1) (A) If water will be supplied by a retail water supplier, as
2defined in Section 13575 of the Water Code, the application shall
3identify the retail water supplier.

4(B) Paragraphs (2) and (3) shall not apply to any water subject
5to subparagraph (A) unless the retail water supplier has 10 or fewer
6customers, the applicant receives 10 percent or more of the water
7supplied by the retail water supplier, 25 percent or more of the
8water delivered by the retail water supplier is used for cannabis
9cultivation, or the applicant and the retail water supplier are
10affiliates, as defined in Section 2814.20 of Title 23 of the California
11Code of Regulations.

12(2) If the water supply includes a diversion within the meaning
13of Section 5100 of the Water Code, the application shall identify
14the point of diversion and maximum amount to be diverted.

15(3) If water will be supplied from a groundwater extraction not
16subject to paragraph (2), the application shall identify the location
17of the extraction and the maximum amount to be diverted for
18cannabis cultivation in any year.

19(b) An application for a license issued by the Department of
20Food and Agriculture before January 1, 2020, shall include one of
21the following:

22(1) A copy of a registration, permit, or license issued under Part
232 (commencing with Section 1200) of Division 2 of the Water
24Code that covers the diversion.

25(2) A copy of a statement of water diversion and use, filed with
26the State Water Resources Control Board before July 1, 2017, that
27covers the diversion and specifies the amount of water used for
28cannabis cultivation.

29(3) A copy of a pending application for a permit to appropriate
30water, filed with the State Water Resources Control before July
311, 2017.

32(4) Documentation, submitted to the State Water Resources
33Control Board before July 1, 2017, establishing that the diversion
34is subject to subdivision (a), (c), (d) or (e) of Section 5101 of the
35Water Code.

36(5) Documentation, submitted to the State Water Resources
37Control Board before July 1, 2017, establishing that the diversion
38is authorized under a riparian right and that no diversion occurred
39after January 1, 2010, and before January 1, 2017.

P44   1(c) An application for a cultivation license issued after December
231, 2019, shall include one of the following:

3(1) A copy of a registration, permit, or license issued under Part
42 (commencing with Section 1200) of Division 2 of the Water
5Code that covers the diversion.

6(2) A copy of a statement of water diversion and use, filed with
7the State Water Resources Control Board, that covers the diversion.

8(3) Documentation, submitted to the State Water Resources
9Control Board, establishing that the diversion is subject to
10subdivision (a), (c), (d) or (e) of Section 5101 of the Water Code.

11(4) Documentation, submitted to the State Water Resources
12Control Board, establishing that the diversion is authorized under
13a riparian right and that no diversion occurred in any calendar year
14between January 1, 2010, and the calendar year in which the
15application is submitted.

16(d) The Department of Food and Agriculture shall include in
17any license for cultivation requirements for compliance with
18applicable principles, guidelines, and requirements established
19under Section 13149 of the Water Code.

20(e) The Department of Food and Agriculture shall include in
21any license for cultivation any relevant mitigation requirements
22the Department of Food and Agriculture identifies as part of its
23approval of the final environmental documentation for the cannabis
24cultivation licensing program as requirements that should be
25included in a license for cultivation. Chapter 3.5 (commencing
26with Section 11340) of Part 1 of Division 3 of Title 2 of the
27Government Code does not apply to the identification of these
28mitigation measures.

29(f) Every license for cultivation shall include a condition that
30the license shall not be effective until the licensee has complied
31with Section 1602 of the Fish and Game Code or receives written
32verification from the Department of Fish and Wildlife that a
33streambed alteration agreement is not required.

34(g) The Department of Food and Agriculture shall consult with
35the State Water Resources Control Board and the Department of
36Fish and Wildlife in the implementation of this section.

37

SEC. 34.  

Section 19332.5 of the Business and Professions
38Code
is amended to read:

39

19332.5.  

(a) Not later than January 1, 2020, the Department
40of Food and Agriculture shall make available a certified organic
P45   1designation and organic certification program for medical cannabis
2cultivation, if permitted under federal law and the National Organic
3Program (Section 6517 of the federal Organic Foods Production
4Act of 1990 (7 U.S.C. Sec. 6501 et seq.)), and Article 7
5(commencing with Section 110810) of Chapter 5 of Part 5 of
6Division 104 of the Health and Safety Code.

7(b) The Department of Food and Agriculture may establish
8appellations of origin for cannabis grown in California.

9(c) It is unlawful for medical cannabis to be marketed, labeled,
10or sold as grown in a California county when the medical cannabis
11was not grown in that county.

12(d) It is unlawful to use the name of a California county in the
13labeling, marketing, or packaging of medical cannabis products
14unless the product was grown in that county.

15

SEC. 35.  

Section 19334 of the Business and Professions Code
16 is amended to read:

17

19334.  

(a) State licenses to be issued by the Department of
18Consumer Affairs are as follows:

19(1) “Dispensary,” Type 10 license as defined in this chapter.
20This license shall allow for delivery pursuant to Section 19340.

21(2) “Distributor,” Type 11 license for the distribution of medical
22cannabis and medical cannabis products from manufacturer to
23dispensary. A distributor licensee shall hold a Type 12 or
24transporter license. Each location where product is stored for the
25purposes of distribution must be individually licensed. A distributor
26licensee shall not hold a license in a cultivation, manufacturing,
27dispensing, or testing license category and shall not own, or have
28an ownership interest in, premises licensed in those categories
29other than a security interest, lien, or encumbrance on property
30that is used by a licensee. A distributor shall be bonded and insured
31at a minimum level established by the licensing authority.

32(3) “Producing dispensary,” Type 10A for dispensers who have
33no more than three licensed dispensary facilities and wish to hold
34either a cultivation or manufacturing license or both. This license
35shall allow for delivery where expressly authorized by local
36ordinance. Each dispensary must be individually licensed.

37(4) “Transport,” Type 12 license for transporters of medical
38cannabis or medical cannabis products between licensees. A Type
3912 licensee shall be bonded and insured at a minimum level
40established by the licensing authority.

P46   1(b) The bureau shall establish minimum security requirements
2for the commercial transportation, storage, and delivery of medical
3cannabis and medical cannabis products.

4(c) The State Department of Public Health shall establish
5minimum security requirements for the storage of medical cannabis
6products at the manufacturing site.

7(d) A licensed dispensary shall implement sufficient security
8measures to both deter and prevent unauthorized entrance into
9areas containing medical cannabis or medical cannabis products
10and theft of medical cannabis or medical cannabis products at the
11dispensary. These security measures shall include, but not be
12limited to, all of the following:

13(1) Preventing individuals from remaining on the premises of
14the dispensary if they are not engaging in activity expressly related
15to the operations of the dispensary.

16(2) Establishing limited access areas accessible only to
17authorized dispensary personnel.

18(3) Storing all finished medical cannabis and medical cannabis
19products in a secured and locked room, safe, or vault, and in a
20manner as to prevent diversion, theft, and loss, except for limited
21amounts of cannabis used for display purposes, samples, or
22immediate sale.

23(e) A dispensary shall notify the licensing authority and the
24appropriate law enforcement authorities within 24 hours after
25discovering any of the following:

26(1) Significant discrepancies identified during inventory. The
27level of significance shall be determined by the bureau.

28(2) Diversion, theft, loss, or any criminal activity pertaining to
29 the operation of the dispensary.

30(3) Diversion, theft, loss, or any criminal activity by any agent
31or employee of the dispensary pertaining to the operation of the
32dispensary.

33(4) The loss or unauthorized alteration of records related to
34medical cannabis or medical cannabis products, registered
35qualifying patients, primary caregivers, or dispensary employees
36or agents.

37(5) Any other breach of security.

38

SEC. 36.  

Section 19335 of the Business and Professions Code
39 is amended to read:

P47   1

19335.  

(a) The Department of Food and Agriculture, in
2consultation with the bureau, shall establish a track and trace
3program for reporting the movement of medical cannabis items
4throughout the distribution chain that utilizes a unique identifier
5pursuant to Section 11362.777 of the Health and Safety Code and
6secure packaging and is capable of providing information that
7captures, at a minimum, all of the following:

8(1) The licensee receiving the product.

9(2) The transaction date.

10(3) The cultivator from which the product originates, including
11the associated unique identifier, pursuant to Section 11362.777 of
12the Health and Safety Code.

13(b) (1) The Department of Food and Agriculture, in consultation
14with the State Board of Equalization, shall create an electronic
15database containing the electronic shipping manifests to facilitate
16the administration of the track and trace program, which shall
17include, but not be limited to, the following information:

18(A) The quantity, or weight, and variety of products shipped.

19(B) The estimated times of departure and arrival.

20(C) The quantity, or weight, and variety of products received.

21(D) The actual time of departure and arrival.

22(E) A categorization of the product.

23(F) The license number and the unique identifier pursuant to
24Section 11362.777 of the Health and Safety Code issued by the
25licensing authority for all licensees involved in the shipping
26process, including, but not limited to, cultivators, manufacturers,
27transporters, distributors, and dispensaries.

28(2) (A) The database shall be designed to flag irregularities for
29all licensing authorities in this chapter to investigate. All licensing
30authorities pursuant to this chapter may access the database and
31share information related to licensees under this chapter, including
32social security and individual taxpayer identifications
33notwithstanding Section 30.

34(B) The Department of Food and Agriculture shall immediately
35inform the bureau upon the finding of an irregularity or suspicious
36finding related to a licensee, applicant, or commercial cannabis
37activity for investigatory purposes.

38(3) Licensing authorities and state and local agencies may, at
39any time, inspect shipments and request documentation for current
40inventory.

P48   1(4) The bureau shall have 24-hour access to the electronic
2database administered by the Department of Food and Agriculture.
3The State Board of Equalization shall have read access to the
4electronic database for the purpose of taxation and regulation of
5medical cannabis and medical cannabis products.

6(5) The Department of Food and Agriculture shall be authorized
7to enter into memoranda of understandings with licensing
8authorities for data sharing purposes, as deemed necessary by the
9Department of Food and Agriculture.

10(6) Information received and contained in records kept by the
11Department of Food and Agriculture or licensing authorities for
12the purposes of administering this chapter are confidential and
13shall not be disclosed pursuant to the California Public Records
14Act (Chapter 3.5 (commencing with Section 6250) of Division 7
15of Title 1 of the Government Code), except as necessary for
16authorized employees of the State of California or any city, county,
17or city and county to perform official duties pursuant to this chapter
18or a local ordinance.

19(7) Upon the request of a state or local law enforcement agency,
20licensing authorities shall allow access to or provide information
21contained within the database to assist law enforcement in their
22duties and responsibilities pursuant to this chapter.

23

SEC. 37.  

Section 19341 of the Business and Professions Code
24 is amended to read:

25

19341.  

The State Department of Public Health shall promulgate
26regulations governing the licensing of manufacturers. The State
27Department of Public Health shall develop standards for the
28manufacturing and labeling of all manufactured medical cannabis
29products. Licenses to be issued are as follows:

30(a) “Manufacturing level 1,” for manufacturing sites that produce
31medical cannabis products using nonvolatile solvents.

32(b) “Manufacturing level 2,” for manufacturing sites that
33produce medical cannabis products using volatile solvents. The
34State Department of Public Health shall limit the number of
35licenses of this type.

36

SEC. 38.  

Section 19342 of the Business and Professions Code
37 is amended to read:

38

19342.  

(a) For the purposes of testing medical cannabis or
39medical cannabis products, licensees shall use a testing laboratory
40that has adopted a standard operating procedure using methods
P49   1consistent with general requirements established by the
2International Organization for Standardization, specifically
3ISO/IEC 17025, to test medical cannabis and medical cannabis
4products. The testing laboratory shall be accredited by a body that
5is a signatory to the International Laboratory Accreditation
6Cooperation Mutual Recognition Arrangement.

7(b) An agent of a testing laboratory shall obtain samples
8according to a statistically valid sampling method for each lot.

9(c) A testing laboratory shall analyze samples according to both
10of the following:

11(1) In the final form that the medical cannabis or medical
12cannabis products will be consumed or used, including moisture
13content and other attributes.

14(2) A scientifically valid methodology, as determined by the
15bureau.

16(d) If a test result falls outside the specifications authorized by
17law or regulation, the testing laboratory shall follow a standard
18operating procedure to confirm or refute the original result.

19(e) A testing laboratory shall destroy the remains of the sample
20of medical cannabis or medical cannabis product upon completion
21of the analysis.

22(f) The State Department of Public Health and the Department
23of Pesticide Regulation shall provide assistance to the bureau in
24developing regulations, as requested by the bureau.

25

SEC. 39.  

Section 19343 of the Business and Professions Code
26 is amended to read:

27

19343.  

A testing laboratory shall not be licensed by the bureau
28unless the laboratory meets all of the following:

29(a) A testing laboratory shall not hold a license in another license
30category under this chapter and shall not own or have an ownership
31interest in any other entity or premises licensed under a different
32category pursuant to this chapter.

33(b) Follows the methodologies, ranges, and parameters that are
34contained in the scope of the accreditation for testing medical
35cannabis or medical cannabis products. The testing laboratory shall
36also comply with any other requirements specified by the bureau.

37(c) Notifies the bureau within one business day after the receipt
38of notice of any kind that its accreditation has been denied,
39suspended, or revoked.

P50   1(d) Has established standard operating procedures that provide
2for adequate chain of custody controls for samples transferred to
3the testing laboratory for testing.

4

SEC. 40.  

Section 19344 of the Business and Professions Code
5 is amended to read:

6

19344.  

(a) A testing laboratory shall issue a certificate of
7analysis for each lot, with supporting data, to report both of the
8following:

9(1) Whether the chemical profile of the lot conforms to the
10specifications of the lot for compounds, including, but not limited
11to, all of the following, unless limited through regulation by the
12bureau:

13(A) Tetrahydrocannabinol (THC).

14(B) Tetrahydrocannabinolic Acid (THCA).

15(C) Cannabidiol (CBD).

16(D) Cannabidiolic Acid (CBDA).

17(E) Terpenes required by the bureau in a regulation.

18(F) Cannabigerol (CBG).

19(G) Cannabinol (CBN).

20(H) Any other compounds or contaminants required by the
21bureau.

22(2) That the presence of contaminants does not exceed the levels
23set by the bureau. In setting the levels, the bureau shall consider
24the American Herbal Pharmacopoeia monograph, guidelines set
25by the Department of Pesticide Regulation pursuant to subdivision
26(b) of Section 19332, and any other relevant sources.

27(A) Residual solvent or processing chemicals.

28(B) Foreign material, including, but not limited to, hair, insects,
29or similar or related adulterant.

30(C) Microbiological impurities as identified by the bureau in
31regulation.

32(b) Residual levels of volatile organic compounds shall be below
33the lesser of either the specifications set by the United States
34Pharmacopeia (U.S.P. Chapter 467) or those set by the bureau.

35

SEC. 41.  

Section 19345 of the Business and Professions Code
36 is amended to read:

37

19345.  

(a) Except as provided in this chapter, a testing
38laboratory shall not acquire or receive medical cannabis or medical
39cannabis products except from a licensee in accordance with this
40chapter, and shall not distribute, sell, deliver, transfer, transport,
P51   1or dispense medical cannabis or medical cannabis products, from
2the licensed premises the medical cannabis or medical cannabis
3products were acquired or received. All transfer or transportation
4shall be performed pursuant to a specified chain of custody
5protocol.

6(b) A testing laboratory may receive and test samples of medical
7cannabis or medical cannabis products from a qualified patient or
8primary caregiver only if he or she presents his or her valid
9recommendation for cannabis for medical purposes from a
10 physician. A testing laboratory shall not certify samples from a
11qualified patient or caregiver for resale or transfer to another party
12or licensee. All tests performed by a testing laboratory for a
13qualified patient or caregiver shall be recorded with the name of
14the qualified patient or caregiver and the amount of medical
15cannabis or medical cannabis product received.

16(c) The bureau shall develop procedures related to all of the
17following:

18(1) Ensuring that testing of medical cannabis and medical
19cannabis products occurs prior to delivery to dispensaries or any
20other business.

21(2) Specifying how often licensees shall test medical cannabis
22and medical cannabis products.

23(3) Requiring the destruction of harvested batches whose testing
24samples indicate noncompliance with health and safety standards
25required by state law, unless remedial measures can bring the
26medical cannabis or medical cannabis products into compliance
27with quality assurance standards as specified by state law.

28(d) Cultivators and manufacturers shall pay all costs related to
29and associated with the testing of medical cannabis and medical
30cannabis products required by this chapter.

31

SEC. 42.  

Section 19347 of the Business and Professions Code
32 is amended to read:

33

19347.  

(a) Prior to delivery by or sale at a dispensary, medical
34cannabis and medical cannabis products shall be labeled and in
35tamper proof packaging and shall include a unique identifier, as
36prescribed by the Department of Food and Agriculture, for the
37purpose of identifying and tracking medical cannabis or medical
38cannabis products. Packages of medical cannabis and medical
39cannabis products shall meet the following requirements:

P52   1(1) Medical cannabis packages and labels shall not be made to
2be attractive to children.

3(2) All medical cannabis and medical cannabis product labels
4shall include the following information, prominently displayed
5and in a clear and legible font:

6(A) Cultivation and manufacture date and source.

7(B) The statement “SCHEDULE I CONTROLLED
8SUBSTANCE.”

9(C) The statement “KEEP OUT OF REACH OF CHILDREN
10AND ANIMALS” in bold print.

11(D) The statement “FOR MEDICAL USE ONLY.”

12(E) The statement “THE INTOXICATING EFFECTS OF THIS
13PRODUCT MAY BE DELAYED BY UP TO TWO HOURS.”

14(F) The statement “THIS PRODUCT MAY IMPAIR THE
15ABILITY TO DRIVE OR OPERATE MACHINERY. PLEASE
16USE EXTREME CAUTION.”

17(G) For packages containing only dried flower, the net weight
18of medical cannabis in the package.

19(H) A warning if nuts or other known allergens are used in the
20manufacturing of the medical cannabis products.

21(I) List of ingredients and pharmacologically active ingredients,
22including, but not limited to, tetrahydrocannabinol (THC),
23cannabidiol (CBD), and other cannabinoid content, the THC, CBD,
24and other cannabinoid amount in milligrams per serving, servings
25per package, and the THC, CBD, and other cannabinoid amount
26in milligrams for the package total.

27(J) Clear indication, in bold type, that the product contains
28medical cannabis.

29(K) Any other requirement set by the bureau or the State
30Department of Public Health.

31(L) Information associated with the unique identifier issued by
32the Department of Food and Agriculture pursuant to Section
3311362.777 of the Health and Safety Code.

34(M) All manufactured and edible medical cannabis products
35shall be sold only in special packaging constructed to be
36child-resistant unless otherwise exempted by regulation.

37(b) Only generic food names may be used to describe edible
38medical cannabis products.

39

SEC. 43.  

Section 19347.1 is added to the Business and
40Professions Code
, to read:

P53   1

19347.1.  

(a) The State Department of Public Health may issue
2a citation, which may contain an order of abatement and an order
3to pay an administrative fine assessed by the department where
4the licensee is in violation of this chapter or any regulation adopted
5pursuant to it.

6(1) Citations shall be in writing and shall describe with
7particularity the nature of the violation, including specific reference
8to the provision of law determined to have been violated.

9(2) Whenever appropriate, the citation shall contain an order of
10abatement fixing a reasonable time for abatement of the violation.

11(3) In no event shall the administrative fine assessed by the State
12Department of Public Health exceed five thousand dollars ($5,000)
13for each violation, unless a different fine amount is expressly
14provided by this chapter. In assessing a fine, the licensing authority
15shall give due consideration to the appropriateness of the amount
16of the fine with respect to factors such as the gravity of the
17violation, the good faith of the licensee, and the history of previous
18violations.

19(4) A citation issued or a fine assessed pursuant to this section
20shall notify the licensee that if the licensee desires a hearing to
21contest the finding of a violation, that hearing shall be requested
22by written notice to the State Department of Public Health within
2330 days of the date of issuance of the citation or fine. If a hearing
24is not requested pursuant to this section, payment of any fine shall
25not constitute an admission of the violation charged. Hearings shall
26be held pursuant to Chapter 5 (commencing with Section 11500)
27of Part 1 of Division 3 of Title 2 of the Government Code.

28(5) Failure of a licensee to pay a fine within 30 days of the date
29of assessment of the fine, unless assessment of the fine or the
30citation is being appealed, may result in further legal action being
31taken by the State Department of Public Health. If a licensee does
32not contest a citation or pay the fine, the full amount of the fine
33shall be added to the fee for renewal of the license. A license shall
34not be renewed without payment of the renewal fee, including the
35amount of the fine.

36(6) A citation may be issued without the assessment of an
37administrative fine.

38(7) The State Department of Public Health may limit the
39assessment of administrative fines to only particular violations of
P54   1the chapter and establish any other requirement for implementation
2of the citation system by regulation.

3(b) Notwithstanding any other law, if a fine is paid to satisfy an
4assessment based on the finding of a violation, payment of the fine
5shall be represented as satisfactory resolution of the matter for
6purposes of public disclosure.

7

SEC. 44.  

Section 19347.2 is added to the Business and
8Professions Code
, to read:

9

19347.2.  

The State Department of Public Health may, in
10addition to the administrative citation system authorized by Section
1119347.1, also establish by regulation a similar system for the
12issuance of an administrative citation to an unlicensed person who
13is acting in the capacity of a licensee under the jurisdiction of the
14State Department of Public Health as pertains to this chapter. The
15administrative citation system authorized by this section shall meet
16the requirements of Section 19347.1 and shall not be applied to
17an unlicensed person who is otherwise exempt from the licensing
18provisions of this chapter. The establishment of an administrative
19citation system for unlicensed activity does not preclude the use
20of other enforcement statutes for unlicensed activities at the
21discretion of the State Department of Public Health.

22

SEC. 45.  

Section 19347.3 is added to the Business and
23Professions Code
, to read:

24

19347.3.  

In determining whether to exercise its discretion when
25enforcing this chapter, the State Department of Public Health may
26consider whether the public interest will be adequately served in
27the circumstances by a suitable written notice or warning. The
28State Department of Public Health may also require licensees to
29provide it with a written plan of correction and correct a violation
30within a timeframe the State Department of Public Health deems
31necessary under the circumstances.

32

SEC. 46.  

Section 19347.4 is added to the Business and
33Professions Code
, to read:

34

19347.4.  

The State Department of Public Health may notify
35the public regarding any medical cannabis product when the State
36Department of Public Health deems it necessary for the protection
37of the health and safety of the consumer or for his or her protection
38from fraud.

39

SEC. 47.  

Section 19347.5 is added to the Business and
40Professions Code
, to read:

P55   1

19347.5.  

(a) A medical cannabis product is misbranded if it
2is any of the following:

3(1) Manufactured, packed, or held in this state in a
4manufacturing site not duly licensed as provided in this chapter.

5(2) Its labeling is false or misleading in any particular.

6(3) Its labeling or packaging does not conform to the
7requirements of Section 19347 or any other labeling or packaging
8requirement established pursuant to this chapter.

9(b) It is unlawful for any person to manufacture, sell, deliver,
10hold, or offer for sale a medical cannabis product that is
11 misbranded.

12(c) It is unlawful for any person to misbrand a medical cannabis
13product.

14(d) It is unlawful for any person to receive in commerce a
15medical cannabis product that is misbranded or to deliver or offer
16for delivery any such medical cannabis product.

17

SEC. 48.  

Section 19347.6 is added to the Business and
18Professions Code
, to read:

19

19347.6.  

(a) A medical cannabis product is adulterated if it is
20any of the following:

21(1) It has been produced, prepared, packed, or held under
22insanitary conditions in which it may have become contaminated
23with filth or in which it may have been rendered injurious.

24(2) It consists in whole or in part of any filthy, putrid, or
25decomposed substance.

26(3) It bears or contains any poisonous or deleterious substance
27that may render it injurious to users under the conditions of use
28suggested in the labeling or under conditions as are customary or
29usual.

30(4) It bears or contains a substance that is restricted or limited
31under this chapter or regulations promulgated pursuant to this
32chapter and the level of substance in the product exceeds the limits
33specified pursuant to this chapter or in regulation.

34(5) Its concentrations differ from, or its purity or quality is
35below, that which it is represented to possess.

36(6) The methods, facilities, or controls used for its manufacture,
37packing, or holding do not conform to or are not operated or
38administered in conformity with practices established by
39regulations adopted under this chapter to ensure that the medical
40cannabis product meets the requirements of this chapter as to safety
P56   1and has the concentrations it purports to have and meets the quality
2and purity characteristics that it purports or is represented to
3possess.

4(7) Its container is composed, in whole or in part, of any
5poisonous or deleterious substance that may render the contents
6injurious to health.

7(8) It is an edible cannabis product and any substance has been
8mixed or packed with it after testing by a testing laboratory so as
9to reduce its quality or concentration or if any substance has been
10substituted, wholly or in part, for the edible cannabis product.

11(b) It is unlawful for a person to manufacture, sell, deliver, hold,
12or offer for sale a medical cannabis product that is adulterated.

13(c) It is unlawful for any person to adulterate a medical cannabis
14product.

15(d) It is unlawful for any person to receive in commerce a
16medical cannabis product that is adulterated or to deliver or proffer
17for delivery any such medical cannabis product.

18

SEC. 49.  

Section 19347.7 is added to the Business and
19Professions Code
, to read:

20

19347.7.  

(a) When the State Department of Public Health has
21evidence that a medical cannabis product is adulterated or
22misbranded, the department shall notify the manufacturer.

23(b) The State Department of Public Health may order a
24manufacturer to immediately cease distribution of a medical
25cannabis product and recall the product if the department
26determines both of the following:

27(1) The manufacture, distribution, or sale of the medical
28cannabis product creates or poses an immediate and serious threat
29to human life or health.

30(2) Other procedures available to the State Department of Public
31Health to remedy or prevent the occurrence of the situation would
32result in an unreasonable delay.

33(c) The State Department of Public Health shall provide the
34manufacturer an opportunity for an informal proceeding on the
35matter, as determined by the department, within five days, on the
36actions required by the order and on why the product should not
37be recalled. Following the proceeding, the order shall be affirmed,
38modified, or set aside as determined appropriate by the State
39Department of Public Health.

P57   1(d) The State Department of Public Health’s powers set forth
2in this section expressly include the power to order movement,
3segregation, isolation, or destruction of medical cannabis products,
4as well as the power to hold those products in place.

5(e) If the State Department of Public Health determines it is
6necessary, it may issue the mandatory recall order and may use all
7appropriate measures to obtain reimbursement from the
8manufacturer for any and all costs associated with these orders.
9All funds obtained by the State Department of Public Health from
10these efforts shall be deposited into a fee account specific to the
11State Department of Public Health, to be established in the Medical
12Cannabis Regulation and Safety Act Fund, and will be available
13for use by the department upon appropriation by the legislature.

14(f) It is unlawful for any person to move or allow to be moved
15a medical cannabis product subject to an order issued pursuant to
16this section unless that person has first obtained written
17authorization from the State Department of Public Health.

18

SEC. 50.  

Section 19347.8 is added to the Business and
19Professions Code
, to read:

20

19347.8.  

(a) Whenever the State Department of Public Health
21finds or has probable cause to believe that any medical cannabis
22product is adulterated or misbranded within the meaning of this
23chapter or the sale of the medical cannabis product would be in
24violation of this chapter, the department shall affix to the medical
25cannabis product, or component thereof, a tag or other appropriate
26marking. The State Department of Public Health shall give notice
27that the medical cannabis product is, or is suspected of being,
28adulterated or misbranded, or the sale of which would be in
29violation of this chapter and has been embargoed and that no person
30shall remove or dispose of the medical cannabis product by sale
31or otherwise until permission for removal or disposal is given by
32the State Department of Public Health or a court.

33(b) It is unlawful for any person to remove, sell, or dispose of
34a detained or embargoed medical cannabis product without written
35permission of the State Department of Public Health or a court. A
36violation of this subdivision is subject to a fine of not more than
37ten thousand dollars ($10,000).

38(c) If the adulteration or misbranding can be corrected by proper
39labeling or additional processing of the medical cannabis product
40and all of the provisions of this chapter can be complied with, the
P58   1claimant or owner may request the State Department of Public
2Health to remove the tag or other marking. If, under the supervision
3of the State Department of Public Health, the adulteration or
4misbranding has been corrected, the department may remove the
5tag or other marking.

6(d) When the State Department of Public Health finds that a
7medical cannabis product that is embargoed is not adulterated,
8misbranded, or whose sale is not otherwise in violation of this
9chapter, the State Department of Public Health may remove the
10tag or other marking.

11(e) The medical cannabis product may be destroyed by the owner
12pursuant to a corrective action plan approved by the State
13Department of Public Health and under the supervision of the
14department. The medical cannabis product shall be destroyed at
15the expense of the claimant or owner.

16(f) A proceeding for condemnation of any medical cannabis
17product under this section shall be subject to appropriate notice
18to, and the opportunity for a hearing with regard to, the person
19affected in accordance with Section 19308.

20(g) Upon a finding by the administrative law judge that the
21medical cannabis product is adulterated, misbranded, or whose
22sale is otherwise in violation of this chapter, the administrative
23law judge may direct the medical cannabis product to be destroyed
24at the expense of the claimant or owner. The administrative law
25judge may also direct a claimant or owner of the affected medical
26cannabis product to pay fees and reasonable costs, including the
27costs of storage and testing, incurred by the bureau or the
28Department of Public Health in investigating and prosecuting the
29action taken pursuant to this section.

30(h) When, under the supervision of the State Department of
31Public Health, the adulteration or misbranding has been corrected
32by proper labeling or additional processing of the medical cannabis
33and medical cannabis product and when all provisions of this
34chapter have been complied with, and after costs, fees, and
35expenses have been paid, the State Department of Public Health
36may release the embargo and remove the tag or other marking and
37the medical cannabis shall no longer be held for sale in violation
38of this chapter.

39(i) The State Department of Public Health may condemn any
40medical cannabis product under provisions of this chapter. The
P59   1medical cannabis product shall be destroyed at the expense of the
2claimant or owner.

3

SEC. 51.  

Section 19350 of the Business and Professions Code
4 is amended to read:

5

19350.  

Each licensing authority shall establish a scale of
6application, licensing, and renewal fees, based upon the cost of
7enforcing this chapter, as follows:

8(a) Each licensing authority shall charge each licensee a
9licensure and renewal fee, as applicable. The licensure and renewal
10fee shall be calculated to cover the costs of administering this
11chapter. The licensure fee may vary depending upon the varying
12costs associated with administering the various regulatory
13requirements of this chapter as they relate to the nature and scope
14of the different licensure activities, including, but not limited to,
15the track and trace program required pursuant to Section 19335,
16but shall not exceed the reasonable regulatory costs to the licensing
17authority.

18(b) The total fees assessed pursuant to this chapter shall be set
19at an amount that will fairly and proportionately generate sufficient
20total revenue to fully cover the total costs of administering this
21chapter.

22(c) All license fees shall be set on a scaled basis by the licensing
23authority, dependent on the size of the business. License fees shall
24cover the costs of administering the track and trace program
25managed by the Department of Food and Agriculture, as identified
26in Article 7.5 (commencing with Section 19335).

27(d) The licensing authority shall deposit all fees collected in a
28fee account specific to that licensing authority, to be established
29in the Medical Cannabis Regulation and Safety Act Fund. Moneys
30in the licensing authority fee accounts shall be used, upon
31appropriation of the Legislature, by the designated licensing
32authority for the administration of this chapter.

33

SEC. 52.  

Section 19351 of the Business and Professions Code
34 is amended to read:

35

19351.  

(a) The Medical Cannabis Regulation and Safety Act
36Fund is hereby established within the State Treasury. Moneys in
37the fund shall be available upon appropriation by the Legislature.
38Notwithstanding Section 16305.7 of the Government Code, the
39fund shall include any interest and dividends earned on the moneys
40in the fund.

P60   1(b) (1) Funds for the establishment and support of the regulatory
2activities pursuant to this chapter shall be advanced as a General
3Fund or special fund loan, and shall be repaid by the initial
4proceeds from fees collected pursuant to this chapter or any rule
5or regulation adopted pursuant to this chapter, by January 1, 2022.
6Should the initial proceeds from fees not be sufficient to repay the
7loan, moneys from the Medical Cannabis Fines and Penalties
8Account shall be made available to the bureau, by appropriation
9of the Legislature, to repay the loan.

10(2) Funds advanced pursuant to this subdivision shall be
11appropriated to the bureau, which shall distribute the moneys to
12the appropriate licensing authorities, as necessary to implement
13the provisions of this chapter.

14(3) The Director of Finance may provide an initial operating
15loan from the General Fund to the Medical Cannabis Regulation
16and Safety Act Fund that does not exceed ten million dollars
17($10,000,000).

18(c) Except as otherwise provided, all moneys collected pursuant
19to this chapter as a result of fines or penalties imposed under this
20chapter shall be deposited directly into the Medical Cannabis Fines
21and Penalties Account, which is hereby established within the
22fund, and shall be available, upon appropriation by the Legislature
23to the bureau, for the purposes of funding the enforcement grant
24program pursuant to subdivision (d).

25(d) (1) The bureau shall establish a grant program to allocate
26moneys from the Medical Cannabis Fines and Penalties Account
27to state and local entities for the following purposes:

28(A) To assist with medical cannabis regulation and the
29enforcement of this chapter and other state and local laws
30applicable to cannabis activities.

31(B) For allocation to state and local agencies and law
32enforcement to remedy the environmental impacts of cannabis
33cultivation.

34(2) The costs of the grant program under this subdivision shall,
35upon appropriation by the Legislature, be paid for with moneys in
36 the Medical Cannabis Fines and Penalties Account.

37(3) The grant program established by this subdivision shall only
38be implemented after the loan specified in this section is repaid.

39

SEC. 53.  

Section 19360 of the Business and Professions Code
40 is amended to read:

P61   1

19360.  

(a) A person engaging in commercial cannabis activity
2without a license and associated unique identifiers required by this
3chapter shall be subject to civil penalties of up to twice the amount
4of the license fee for each violation, and the department, state or
5local authority, or court may order the destruction of medical
6cannabis associated with that violation. A violator shall be
7responsible for the cost of the destruction of medical cannabis
8associated with his or her violation, in addition to any amount
9covered by a bond required as a condition of licensure. Each day
10of operation shall constitute a separate violation of this section.
11All civil penalties imposed and collected pursuant to this section
12by a licensing authority shall be deposited into the Medical
13Cannabis Fines and Penalties Account established pursuant to
14 Section 19351.

15(b) If an action for civil penalties is brought against a licensee
16pursuant to this chapter by the Attorney General on behalf of the
17people, the penalty collected shall be deposited into the Medical
18Cannabis Fines and Penalties Account. If the action is brought by
19a district attorney or county counsel, the penalty collected shall be
20paid to the treasurer of the county in which the judgment was
21entered. If the action is brought by a city attorney or city
22prosecutor, the penalty collected shall be paid to the treasurer of
23the city or city and county in which the judgment was entered. If
24the action is brought by a city attorney and is adjudicated in a
25superior court located in the unincorporated area or another city
26in the same county, the penalty shall be paid one-half to the
27treasurer of the city in which the complaining attorney has
28jurisdiction and one-half to the treasurer of the county in which
29the judgment is entered.

30(c) Notwithstanding subdivision (a), criminal penalties shall
31continue to apply to an unlicensed person or entity engaging in
32cannabis activity in violation of this chapter, including, but not
33limited to, those individuals covered under Section 11362.7 of the
34Health and Safety Code.

35

SEC. 54.  

Section 2154 of the Elections Code is amended to
36read:

37

2154.  

In the event that the county elections official receives
38an affidavit of registration, executed under penalty of perjury, that
39does not include portions of the information for which space is
P62   1provided, the county elections official shall apply the following
2rebuttable presumptions:

3(a) If no middle name or initial is shown, it shall be presumed
4that none exists.

5(b) If no party preference is shown, it shall be presumed that
6the affiant has declined to disclose a party preference. The county
7elections official shall designate the affiant’s party preference as
8“Unknown” on a voter registration index under Article 5
9(commencing with Section 2180) and the affiant shall otherwise
10be treated as a “No Party Preference” voter.

11(c) If no execution date is shown, it shall be presumed that the
12affidavit was executed on or before the 15th day prior to the
13election, provided that (1) the affidavit is received by the county
14elections official on or before the 15th day before the election, or
15(2) the affidavit is postmarked on or before the 15th day before
16the election and received by mail by the county elections official.

17(d) If the affiant fails to identify his or her state of birth within
18the United States, it shall be presumed that the affiant was born in
19a state or territory of the United States if the birthplace of the
20affiant is shown as “United States,” “U.S.A.,” or other recognizable
21term designating the United States. The affiant’s failure to furnish
22his or her place of birth shall not preclude his or her affidavit of
23registration from being deemed complete.

24

SEC. 55.  

Section 2265 of the Elections Code is amended to
25read:

26

2265.  

(a)  The records of a person designated in paragraph (1)
27of subdivision (b) of Section 2263 shall constitute a completed
28affidavit of registration and the Secretary of State shall register
29the person to vote, unless any of the following conditions is
30satisfied:

31(1) The person’s records, as described in Section 2263, reflect
32that he or she affirmatively declined to become registered to vote
33during a transaction with the Department of Motor Vehicles.

34(2) The person’s records, as described in Section 2263, do not
35reflect that he or she has attested to meeting all voter eligibility
36requirements specified in Section 2101.

37(3) The Secretary of State determines that the person is ineligible
38to vote.

39(b) If a person who is registered to vote pursuant to this chapter
40does not provide a party preference, his or her party preference
P63   1shall be designated as “Unknown” on a voter registration index
2under Article 5 (commencing with Section 2180) of Chapter 2,
3and he or she shall otherwise be treated as a “No Party Preference”
4voter.

5

SEC. 56.  

Section 5100 of the Elections Code is amended to
6read:

7

5100.  

A party is qualified to participate in a primary election
8under any of the following conditions:

9(a) (1) At the last preceding gubernatorial primary election, the
10sum of the votes cast for all of the candidates for an office voted
11on throughout the state who disclosed a preference for that party
12on the ballot was at least 2 percent of the entire vote of the state
13for that office.

14(2) Notwithstanding paragraph (1), a party may inform the
15Secretary of State that it declines to have the votes cast for a
16candidate who has disclosed that party as his or her party preference
17on the ballot counted toward the 2-percent qualification threshold.
18If the party wishes to have votes for a candidate not counted in
19 support of its qualification under paragraph (1), the party shall
20notify the secretary in writing of that candidate’s name by the
21seventh day before the gubernatorial primary election.

22(b) (1) On or before the 135th day before a primary election,
23it appears to the Secretary of State, as a result of examining and
24totaling the statement of voters and their declared political
25preference transmitted to him or her by the county elections
26officials, that voters equal in number to at least 0.33 percent of the
27total number of voters registered on the 154th day before the
28primary election have declared their preference for that party.

29(2) A person whose party preference is designated as
30“Unknown” pursuant to Section 2154 or 2265 shall not be counted
31for purposes of determining the total number of voters registered
32on the specified day preceding the election under paragraph (1).

33(c) On or before the 135th day before a primary election, there
34is filed with the Secretary of State a petition signed by voters, equal
35in number to at least 10 percent of the entire vote of the state at
36the last preceding gubernatorial election, declaring that they
37represent a proposed party, the name of which shall be stated in
38the petition, which proposed party those voters desire to have
39participate in that primary election. This petition shall be circulated,
40signed, and verified, and the signatures of the voters on it shall be
P64   1certified to and transmitted to the Secretary of State by the county
2elections officials substantially as provided for initiative petitions.
3Each page of the petition shall bear a caption in 18-point boldface
4type, which caption shall be the name of the proposed party
5followed by the words “Petition to participate in the primary
6election.”

7

SEC. 57.  

Section 5151 of the Elections Code is amended to
8read:

9

5151.  

A party is qualified to participate in a presidential general
10election under any of the following conditions:

11(a) The party qualified to participate and participated in the
12presidential primary election preceding the presidential general
13election pursuant to Section 5100.

14(b) (1) At the last preceding gubernatorial primary election, the
15sum of the votes cast for all of the candidates for an office voted
16on throughout the state who disclosed a preference for that party
17on the ballot was at least 2 percent of the entire vote of the state
18for that office.

19(2) Notwithstanding paragraph (1), a party may inform the
20Secretary of State that it declines to have the votes cast for a
21candidate who has disclosed that party as his or her party preference
22on the ballot counted toward the 2-percent qualification threshold.
23If the party wishes to have votes for a candidate not counted in
24support of its qualification under paragraph (1), the party shall
25notify the secretary in writing of that candidate’s name by the
26seventh day before the gubernatorial primary election.

27(c) (1) If on or before the 102nd day before a presidential
28general election, it appears to the Secretary of State, as a result of
29examining and totaling the statement of voters and their declared
30political preference transmitted to him or her by the county
31elections officials, that voters equal in number to at least 0.33
32percent of the total number of voters registered on the 123rd day
33before the presidential general election have declared their
34preference for that party.

35(2) A person whose party preference is designated as
36“Unknown” pursuant to Section 2154 or 2265 shall not be counted
37for purposes of determining the total number of voters registered
38on the specified day preceding the election under paragraph (1).

39(d) On or before the 135th day before a presidential general
40election, there is filed with the Secretary of State a petition signed
P65   1by voters, equal in number to at least 10 percent of the entire vote
2of the state at the last preceding gubernatorial election, declaring
3that they represent a proposed party, the name of which shall be
4stated in the petition, which proposed party those voters desire to
5have participate in that presidential general election. This petition
6shall be circulated, signed, and verified, and the signatures of the
7voters on it shall be certified to and transmitted to the Secretary
8of State by the county elections officials substantially as provided
9for initiative petitions. Each page of the petition shall bear a caption
10in 18-point boldface type, which caption shall be the name of the
11proposed party followed by the words “Petition to participate in
12the presidential general election.”

13

SEC. 58.  

Section 1602 of the Fish and Game Code is amended
14to read:

15

1602.  

(a) An entity may not substantially divert or obstruct
16the natural flow of, or substantially change or use any material
17from the bed, channel, or bank of, any river, stream, or lake, or
18deposit or dispose of debris, waste, or other material containing
19crumbled, flaked, or ground pavement where it may pass into any
20river, stream, or lake, unless all of the following occur:

21(1) The department receives written notification regarding the
22activity in the manner prescribed by the department. The
23notification shall include, but is not limited to, all of the following:

24(A) A detailed description of the project’s location and a map.

25(B) The name, if any, of the river, stream, or lake affected.

26(C) A detailed project description, including, but not limited to,
27construction plans and drawings, if applicable.

28(D) A copy of any document prepared pursuant to Division 13
29(commencing with Section 21000) of the Public Resources Code.

30(E) A copy of any other applicable local, state, or federal permit
31or agreement already issued.

32(F) Any other information required by the department.

33(2) The department determines the notification is complete in
34accordance with Chapter 4.5 (commencing with Section 65920)
35of Division 1 of Title 7 of the Government Code, irrespective of
36 whether the activity constitutes a development project for the
37purposes of that chapter.

38(3) The entity pays the applicable fees, pursuant to Section 1609.

39(4) One of the following occurs:

P66   1(A) (i) The department informs the entity, in writing, that the
2activity will not substantially adversely affect an existing fish or
3wildlife resource, and that the entity may commence the activity
4without an agreement, if the entity conducts the activity as
5described in the notification, including any measures in the
6notification that are intended to protect fish and wildlife resources.

7(ii) Each region of the department shall log the notifications of
8activities where no agreement is required. The log shall list the
9date the notification was received by the department, a brief
10description of the proposed activity, and the location of the activity.
11Each item shall remain on the log for one year. Upon written
12request by any person, a regional office shall send the log to that
13person monthly for one year. A request made pursuant to this
14clause may be renewed annually.

15(B) The department determines that the activity may
16substantially adversely affect an existing fish or wildlife resource
17and issues a final agreement to the entity that includes reasonable
18measures necessary to protect the resource, and the entity conducts
19the activity in accordance with the agreement.

20(C) A panel of arbitrators issues a final agreement to the entity
21in accordance with subdivision (b) of Section 1603, and the entity
22conducts the activity in accordance with the agreement.

23(D) The department does not issue a draft agreement to the
24entity within 60 days from the date notification is complete, and
25the entity conducts the activity as described in the notification,
26including any measures in the notification that are intended to
27protect fish and wildlife resources.

28(b) (1) If an activity involves the routine maintenance and
29operation of water supply, drainage, flood control, or waste
30treatment and disposal facilities, notice to and agreement with the
31department shall not be required after the initial notification and
32agreement, unless the department determines either of the
33following:

34(A) The work described in the agreement has substantially
35changed.

36(B) Conditions affecting fish and wildlife resources have
37substantially changed, and those resources are adversely affected
38by the activity conducted under the agreement.

39(2) This subdivision applies only if notice to, and agreement
40with, the department was attained prior to January 1, 1977, and
P67   1the department has been provided a copy of the agreement or other
2proof of the existence of the agreement that satisfies the
3department, if requested.

4(c) (1) Notwithstanding subdivision (a), an entity shall not be
5required to obtain an agreement with the department pursuant to
6this chapter for activities authorized by a license or renewed license
7for cannabis cultivation issued by the Department of Food and
8Agriculture for the term of the license or renewed license if all of
9the following occur:

10(A) The entity submits all of the following to the department:

11(i) The written notification described in paragraph (1) of
12subdivision (a).

13(ii) A copy of the license or renewed license for cannabis
14cultivation issued by the Department of Food and Agriculture that
15includes the requirements specified in subdivisions (d), (e), and
16(f) of Section 19332.2 of the Business and Professions Code.

17(iii) The fee specified in paragraph (3) of subdivision (a).

18(B) The department determines in its sole discretion that
19compliance with the requirements specified in subdivisions (d),
20(e), and (f) of Section 19332.2 of the Business and Professions
21Code that are included in the license will adequately protect
22existing fish and wildlife resources that may be substantially
23adversely affected by the cultivation without the need for additional
24 measures that the department would include in a draft streambed
25alteration agreement in accordance with Section 1603.

26(C) The department notifies the entity in writing that the
27exemption applies to the cultivation authorized by the license or
28renewed license.

29(2) The department shall notify the entity in writing whether
30the exemption in paragraph (1) applies to the cultivation authorized
31by the license or renewed license within 60 days from the date that
32the notification is complete and the fee has been paid.

33(3) If an entity receives an exemption pursuant to this
34subdivision and fails to comply with any of the requirements
35described in subdivision (d), (e), or (f) of Section 19332.2 of the
36Business and Professions Code that are included in the license,
37the failure shall constitute a violation under this section, and the
38department shall notify the Department of Food and Agriculture
39of any enforcement action taken.

40(d) It is unlawful for any person to violate this chapter.

P68   1

SEC. 59.  

Section 1617 is added to the Fish and Game Code,
2to read:

3

1617.  

(a) The department may adopt regulations establishing
4the requirements and procedure for the issuance of a general
5agreement in a geographic area for a category or categories of
6activities related to cannabis cultivation.

7(b) A general agreement adopted by the department subsequent
8to adoption of regulations under this section shall be in lieu of an
9individual agreement described in subparagraph (B) of paragraph
10(4) of subdivision (a) of Section 1602.

11(c) Subparagraph (D) of paragraph (4) of subdivision (a) of
12Section 1602 and all other time periods to process agreements
13specified in this chapter do not apply to the issuance of a general
14agreement adopted by the department pursuant to this section.

15(d) The department general agreement issued by the department
16pursuant to this section is a final agreement and is not subject to
17Section 1603 or 1604.

18(e) The department shall charge a fee for a general agreement
19adopted by the department under this section in accordance with
20Section 1609.

21(f) Regulations adopted pursuant to this section, and any
22amendment thereto, shall not be subject to Division 13
23(commencing with Section 21000) of the Public Resources Code.

24

SEC. 60.  

Section 12025.2 of the Fish and Game Code is
25amended to read:

26

12025.2.  

The director or his or her designee may issue a
27complaint to any person or entity in accordance with Section 1055
28of the Water Code alleging a violation for which liability may be
29imposed under Section 1052 or 1847 of the Water Code that harms
30fish and wildlife resources. The complaint is subject to the
31substantive and procedural requirements set forth in Section 1055
32of the Water Code, and the department shall be designated a party
33to any proceeding before the State Water Resources Control Board
34regarding a complaint filed pursuant to this section.

35

SEC. 61.  

Section 12029 of the Fish and Game Code is amended
36to read:

37

12029.  

(a) The Legislature finds and declares all of the
38following:

39(1) The environmental impacts associated with cannabis
40cultivation have increased, and unlawful water diversions for
P69   1cannabis irrigation have a detrimental effect on fish and wildlife
2and their habitat, which are held in trust by the state for the benefit
3of the people of the state.

4(2) The remediation of existing cannabis cultivation sites is
5often complex and the permitting of these sites requires greater
6department staff time and personnel expenditures. The potential
7for cannabis cultivation sites to significantly impact the state’s fish
8and wildlife resources requires immediate action on the part of the
9department’s lake and streambed alteration permitting staff.

10(b) In order to address unlawful water diversions and other
11violations of the Fish and Game Code associated with cannabis
12cultivation, the department shall establish the watershed
13enforcement program to facilitate the investigation, enforcement,
14and prosecution of these offenses.

15(c) The department, in coordination with the State Water
16Resources Control Board and the Department of Food and
17Agriculture, shall establish a permanent multiagency task force to
18address the environmental impacts of cannabis cultivation. The
19multiagency task force, to the extent feasible and subject to
20available resources, shall expand its enforcement efforts on a
21statewide level to ensure the reduction of adverse impacts of
22cannabis cultivation on fish and wildlife and their habitats
23throughout the state.

24(d) In order to facilitate the remediation and permitting of
25cannabis cultivation sites, the department may adopt regulations
26to enhance the fees on any entity subject to Section 1602 for
27cannabis cultivation sites that require remediation. The fee schedule
28established pursuant to this subdivision shall not exceed the fee
29limits in Section 1609.

30

SEC. 62.  

Section 37104 is added to the Food and Agricultural
31Code
, to read:

32

37104.  

Notwithstanding Section 19300.5 of the Business and
33Professions Code, butter purchased from a licensed milk products
34plant or retail location that is subsequently infused or mixed with
35medical cannabis at the premises or location that is not subject to
36licensing as a milk product plant is exempt from the provisions of
37this division.

38

SEC. 63.  

Section 52452 of the Food and Agricultural Code is
39amended to read:

P70   1

52452.  

(a)  Except as otherwise provided in Section 52454,
2each container of agricultural seed that is for sale or sold within
3this state for sowing purposes shall bear upon it or have attached
4to it in a conspicuous place a plainly written or printed label or tag
5in the English language that includes all of the following
6information:

7(1) The commonly accepted name of the kind, kind and variety,
8or kind and type of each agricultural seed component in excess of
95 percent of the whole, and the percentage by weight of each. If
10the aggregate of agricultural seed components, each present in an
11amount not exceeding 5 percent of the whole, exceeds 10 percent
12of the whole, each component in excess of 1 percent of the whole
13shall be named together with the percentage by weight of each. If
14more than one component is required to be named, the names of
15all components shall be shown in letters of the same type and size.

16(2) The lot number or other lot identification.

17(3) The percentage by weight of all weed seeds.

18(4) The name and approximate number of each kind of restricted
19noxious weed seed per pound.

20(5) The percentage by weight of any agricultural seed except
21that which is required to be named on the label.

22(6) The percentage by weight of inert matter. If a percentage
23by weight is required to be shown by any provision of this section,
24that percentage shall be exclusive of any substance that is added
25to the seed as a coating and shown on the label as such.

26(7) For each agricultural seed in excess of 5 percent of the
27whole, stated in accordance with paragraph (1), the percentage of
28germination exclusive of hard seed, the percentage of hard seed,
29if present, and the calendar month and year the test was completed
30to determine the percentages. Following the statement of those
31percentages, the additional statement “total germination and hard
32seed” may be stated.

33(8) The name and address of the person who labeled the seed
34or of the person who sells the seed within this state.

35(b) Subdivision (a) does not apply in the following instances:

36(1) The sale is an occasional sale of seed grain by the producer
37of the seed grain to his or her neighbor for use by the purchaser
38within the county of production.

P71   1(2) Any cannabis seed, as defined in subdivision (f) of Section
219300.5 of the Business and Professions Code, sold or offered for
3sale in the state.

4(c) All determinations of noxious weed seeds are subject to
5tolerances and methods of determination prescribed in the
6regulations that are adopted pursuant to this chapter.

7(d) For purposes of this section, “neighbor” means a person
8who lives in close proximity, not to exceed three miles, to another.

9

SEC. 64.  

Section 15283 is added to the Government Code, 10immediately following Section 15282, to read:

11

15283.  

(a) For purposes of this section, “fund” means the
12Public Safety Communications Revolving Fund.

13(b) The Public Safety Communications Revolving Fund is
14hereby created within the State Treasury. The fund shall be
15administered by the director and shall be used, upon appropriation
16by the Legislature, to pay all costs to the office resulting from this
17chapter or from rendering services to the state or other public
18agencies, which costs include, but are not limited to, costs of
19employing and compensating necessary personnel, expenses such
20as operating or other expenses of the division, and costs associated
21with approved public safety communications projects, and to
22establish reserves. The director, at his or her discretion, may
23establish segregated, dedicated accounts within the fund.

24(c) The fund shall consist of all of the following:

25(1) Revenues from the provision or sale of public safety
26communications services provided for in this chapter or of other
27services rendered by the division.

28(2) Moneys appropriated and made available by the Legislature
29for the purposes of this chapter.

30(3) Any other moneys properly credited or made available to
31the division from any other source, including, but not limited to,
32the return from investments of moneys by the Treasurer.

33(d) Pursuant to Section 11255, the Controller shall, at the request
34of the division and consistent with the annual budget of each state
35department, transfer to the fund any payment authorized to be
36collected by the division from public agencies for the division’s
37services. The division shall notify each affected state agency upon
38requesting the Controller to make any transfer pursuant to this
39subdivision.

P72   1(e) If the balance remaining in the fund at the end of any fiscal
2year exceeds 25 percent of the portion of the division’s budget for
3that fiscal year that is used for supporting public safety
4communications and other client services, the excess amount shall
5be used to reduce the billing rates for services rendered by the
6office during the following fiscal year.

7(f) This section shall become operative on July 1, 2016.

8

SEC. 65.  

Chapter 6.45 (commencing with Section 30035) is
9added to Division 3 of Title 3 of the Government Code, 10immediately preceding Chapter 7, to read:

11 

12Chapter  6.45. Community-Based Transitional Housing
13Program
14

 

15

30035.  

The Legislature finds and declares all of the following:

16(a) Upon release from custody, offenders who are incarcerated
17for felony or misdemeanor convictions generally return to their
18communities of last residence.

19(b) Providing released offenders with transitional housing
20services in tandem with support services that include, but are not
21limited to, employment counseling, job training, continuing
22education, psychological counseling, and substance abuse treatment
23may help these individuals transition into productive roles in their
24communities and reduce the fiscal and operational strain of
25recidivism on state and local law enforcement agencies and the
26courts.

27(c) Research has found that transitional housing, and related
28support services, can be effective when provided to ex-offenders
29in community-based settings that reflect the environments in which
30they will permanently reside.

31(d) For a variety of reasons, local agencies charged with land
32use decisions may be reluctant to approve facilities that provide
33released offenders with community-based services similar to those
34described in subdivision (b).

35(e) It is in the state’s interest to increase the supply of transitional
36housing for ex-offenders. The provision of state grants to cities,
37counties, and cities and counties that agree to approve facilities
38that provide released offenders with community-based services
39can provide incentives to increase the number of those facilities,
40while also providing additional resources to those communities.

P73   1

30035.1.  

(a) There is hereby established the Community-Based
2Transitional Housing Program, to be administered by the
3Department of Finance. As used in this chapter, “program” means
4the Community-Based Transitional Housing Program and
5“department” means the Department of Finance.

6(b) Eligibility to apply to participate in the program shall be
7limited to cities, counties, and cities and counties.

8(c) The program shall be funded with moneys appropriated for
9that purpose in the annual Budget Act or other measure.
10Notwithstanding any other law, the encumbrance period for moneys
11appropriated in a budget act or other measure for the program shall
12be three fiscal years.

13

30035.2.  

In order for a city, county, or city and county to
14receive funds pursuant to the program, the facility for which it has
15approved a conditional use permit or other local entitlement
16pursuant to paragraph (2) of subdivision (a) of Section 30035.3
17shall meet all of the following criteria:

18(a) The facility shall provide transitional housing for a period
19of not less than 10 years to persons who have been released from
20a state prison or county jail after serving a sentence for one or more
21felony or misdemeanor convictions.

22(b) The facility shall provide, or contract with another provider
23for, two or more additional services to residents. These services
24may include, but need not necessarily be limited to, life skills
25training, employment counseling, vocational training, continuing
26education, psychological counseling, anger management training,
27substance abuse treatment and counseling, or cognitive behavioral
28therapy.

29(c) The facility operator, and any entity with which it contracts
30for the provisions of services described in subdivision (b), shall
31be in valid possession of all licenses required by state law and
32local rules, regulations, or ordinances.

33

30035.3.  

(a) (1) Applications for program funding shall be
34submitted to the department, in the form and manner specified by
35the department, no earlier than October 1, 2016, and no later than
36October 1, 2018.

37(2) (A) Each application shall be accompanied by a copy of a
38resolution adopted by the county board of supervisors or the city
39council, as applicable, stating that the board or council has
40approved the issuance of a conditional use permit or other local
P74   1entitlement for a facility that meets the criteria specified in Section
230035.2 and that final issuance of the conditional use permit or
3provision of other local entitlement will be provided within the
4three scheduled public meetings of the county board of supervisors
5or city council, as applicable, following the department’s approval
6of the city’s, county’s, or city and county’s application for program
7funds.

8(B) The conditional use permit or other local entitlement issued
9pursuant to this paragraph shall be valid for a minimum period of
1010 years from the date of issuance.

11(C) Failure of the city, county, or city and county to provide
12final issuance of the conditional use permit or other local
13entitlement within the three scheduled public meetings following
14the department’s approval of the city’s, county’s, or city and
15county’s application shall render the department’s approval of that
16application void. The city, county, or city and county shall
17thereafter be permanently ineligible to submit any future
18application for funding under the program.

19(b) Each application for program funding shall detail all of the
20following:

21(1) The amount of program funding requested.

22(2) The number of offenders for whom the facility will provide
23services.

24(3) The types of offenders for whom the facility will provide
25services.

26(4) The types of services that the facility will provide to
27offenders.

28(5) The purposes for which the city, county, or city and county
29will use the program funds for which it has applied.

30(6) The purposes for which the facility will use program funds
31provided to it by the applicant city, county, or city and county.

32(7) (A) The facility operator’s past in-state experience with
33operating facilities similar to those for which the application has
34been submitted.

35(B) The information required by this paragraph shall include
36detailed information describing each instance in which the facility
37operator was found to be in violation of any state law or local rule,
38regulation, or ordinance, including any applicable state or local
39licensing requirements.

P75   1(8) The facility operator’s program performance measurement
2in reducing recidivism and assisting ex-offenders in transitioning
3back into society.

4(9) (A) A list of all permitted facilities within the applicant
5city’s, county’s, or city and county’s jurisdiction that, in a
6residential setting, provide transitional housing services,
7 psychological counseling, or cognitive behavioral therapy.

8(B) The number of persons residing in each facility described
9in subparagraph (A) and the types of services provided to those
10residents.

11(C) The number of persons residing in each facility described
12in subparagraph (A) who are on probation or parole.

13(10) An agreement, as a condition of receiving program funds,
14that the applicant city, county, or city and county will allow the
15conditional use permit or other local entitlement to remain valid
16throughout the 10-year period for which the conditional use permit
17or other local entitlement required pursuant to paragraph (2) of
18subdivision (a) is valid.

19(11) Two contact persons at the applicant city, county, or city
20and county and two contact persons at the facility provider who
21will be tasked with responding to questions regarding the facility
22if the application for program funding is approved. The applicant
23city, county, or city and county shall promptly notify the
24department of any changes made to the contact information
25required by this paragraph.

26

30035.4.  

(a) The department shall approve or deny each
27application received pursuant to Section 30035.3 within 90 days
28of receipt and, if the application is approved, shall determine the
29amount of funding to be provided to each applicant city, county,
30or city and county, subject to subdivision (a) of Section 30035.5.
31The department’s decision to approve or deny an application and
32the determination of the amount of funding to be provided shall
33be final.

34(b) The criteria specified in paragraphs (1) through (9), inclusive,
35of subdivision (b) of Section 30035.3 shall be the primary basis
36upon which the department determines whether to approve or deny
37an application and the amount of funds to award to an applicant
38city, county, or city and county. The department may consider any
39other criteria it deems appropriate, provided that any additional
P76   1criteria are germane to making an award decision and further the
2purposes of the program.

3(c) The department shall encourage applicant cities, counties,
4and cities and counties to match the requested program funds, to
5the greatest extent possible, using local funds. In the event that the
6department determines that, based on the criteria specified in
7subdivision (b), two or more applications are equal in merit, the
8department shall give priority to those applicant cities, counties,
9or cities and counties that agree to provide the largest amount of
10local matching funds proportionate to the amount of program funds
11for which they have applied.

12(d) If the department approves an application and receives
13subsequent notification that the applicant city, county, or city and
14county has provided final issuance of a conditional use permit or
15other local entitlement as required by paragraph (2) of subdivision
16(a) of Section 30035.3, the Director of Finance, or his or her
17designee, shall direct the State Controller to remit to the applicant
18city, county, or city and county the amount of program funding
19approved by the department from those funds designated for that
20purpose in any budget act or other measure.

21

30035.5.  

(a) The department shall award to a city, county, or
22city and county, the application of which the department has
23approved pursuant to Section 30035.4, up to two million dollars
24($2,000,000). An applicant city, county, or city and county shall
25specify in its application the amount for which they are applying,
26as required by paragraph (1) of subdivision (b) of Section 30035.3.

27(b) Of the funds provided to an applicant pursuant to this section,
2860 percent shall be retained by the city, county, or city and county
29that provided the conditional use permit or other local entitlement
30for the facility and 40 percent shall be provided by the city, county,
31or city and county to the facility operator.

32(1) A city, county, or city and county may use program funds,
33and any matching funds provided pursuant to subdivision (c) of
34Section 30035.4, for the following purposes:

35(A) Discretionary law enforcement services, including efforts
36to enhance public safety in the vicinity of the facility for which
37program funding is provided.

38(B) Community outreach efforts that seek to address the
39concerns of residents and property owners within the one-quarter
40mile radius of the facility for which program funding is provided.

P77   1(C) Any other community-based activities that the board of
2supervisors or city council, as applicable, believes will contribute
3to improved community relations regarding the facility for which
4program funding is provided.

5(2) Facility operators may use program funds provided by the
6applicant city, county, or city and county for the following
7purposes:

8(A) Providing facility residents with the services specified in
9the approved application for program funding.

10(B) Enhancing the security of the facility and its premises.

11(C) Community outreach and communications.

12(D) Start-up costs for the operation of the facility.

13(3) While the program is intended to primarily target offenders
14released from state prison or county jail, nothing in this chapter
15shall be construed as prohibiting the program from serving other
16individuals in the community who may benefit from the program’s
17services.

18(c) No later than August 1, 2017, and each subsequent August
191 for which the program is in effect, each participating city, county,
20or city and county shall report the following to the department in
21the form and manner specified by the department:

22(1) Program funds and matching funds received by the
23participating city, county, or city and county.

24(2) A description of the use of the program funds and matching
25funds.

26(3) A list of permitted facilities within the city’s, county’s, or
27city and county’s jurisdiction.

28(d) No later than August 1, 2017, and each subsequent August
291 for which the program is in effect, each facility operator receiving
30program funds from a participating city, county, or city and county
31shall report the following to the department in the form and manner
32specified by the department:

33(1) Program funds and matching funds received by the facility
34operator.

35(2) The number of ex-offenders currently receiving program
36services.

37(3) A description of the services provided.

38(4) The number of ex-offenders who, over the course of the year
39preceding the report, received treatment and transitioned back into
40society.

P78   1(5) The facility operator’s program performance measurement
2of recidivism reduction.

3

30035.6.  

(a) No later than November 1, 2017, and each
4subsequent November 1 until November 1, 2020, the department
5shall submit a report to the Joint Legislative Budget Committee
6detailing all of the following for the preceding fiscal year:

7(1) The number of applications for program funding received
8by the department.

9(2) The number of applications for program funding approved
10and denied by the department.

11(3) The name of each city, county, or city and county receiving
12program funds and the number of ex-offenders for which each
13recipient city, county, or city and county has received program
14funds.

15(4) The name of each city, county, or city and county whose
16application for program funding was denied and the number of
17ex-offenders for which each denied application requested program
18funding.

19(b) A report submitted pursuant to subdivision (a) shall be
20submitted in compliance with Section 9795.

21

30035.7.  

(a) Of the amount appropriated in the annual Budget
22Act or other measure for the program, the department’s Office of
23State Audits and Evaluations may use up to five hundred thousand
24dollars ($500,000) to conduct a review of the program to determine
25its effectiveness in providing services to offenders released from
26state prison or county jail.

27(b) The department’s Office of State Audits and Evaluations
28shall initiate its review of the program on July 1, 2018. The
29department shall provide a copy of the review to the Joint
30Legislative Budget Committee no later than May 1, 2019. The
31copy of the review shall be submitted in compliance with Section
329795.

33(c) Cities, counties, cities and counties, and facility operators
34that receive program funds shall agree, as a condition of receiving
35program funds, to cooperate fully with the review conducted
36pursuant this section by the department’s Office of State Audits
37and Evaluations.

38

30035.8.  

Any action by the department to adopt and update
39instructions to any state or local agency for the purpose of carrying
40out the department’s obligations pursuant to this chapter constitutes
P79   1a department action to adopt and update instructions for the
2preparation, development, or administration of the state budget
3pursuant to Section 11357 and is exempt from the rulemaking
4provisions of the Administrative Procedure Act (Chapter 3.5
5(commencing with Section 11340) of Part 1 of Division 3 of Title
62).

7

SEC. 66.  

Section 11362.769 of the Health and Safety Code is
8amended to read:

9

11362.769.  

Indoor and outdoor medical cannabis cultivation
10shall be conducted in accordance with state and local laws. State
11agencies, including, but not limited to, the Department of Food
12and Agriculture, the State Board of Forestry and Fire Protection,
13the Department of Fish and Wildlife, the State Water Resources
14Control Board, the California regional water quality control boards,
15and traditional state law enforcement agencies shall address
16environmental impacts of medical cannabis cultivation and shall
17coordinate, when appropriate, with cities and counties and their
18law enforcement agencies in enforcement efforts.

19

SEC. 67.  

Section 11362.775 of the Health and Safety Code is
20amended to read:

21

11362.775.  

(a) Subject to subdivision (b), qualified patients,
22persons with valid identification cards, and the designated primary
23caregivers of qualified patients and persons with identification
24cards, who associate within the State of California in order
25collectively or cooperatively to cultivate cannabis for medical
26purposes, shall not solely on the basis of that fact be subject to
27state criminal sanctions under Section 11357, 11358, 11359, 11360,
2811366, 11366.5, or 11570.

29(b) This section shall remain in effect only until one year after
30the Bureau of Medical Cannabis Regulation posts a notice on its
31Internet Web site that the licensing authorities have commenced
32issuing licenses pursuant to the Medical Cannabis Regulation and
33Safety Act (Chapter 3.5 (commencing with Section 19300) of
34Division 8 of the Business and Professionsbegin delete Code), and is repealed
35upon issuance of licenses.end delete
begin insert Code).end insert

36(c) This section is repealedbegin delete onend deletebegin insert oneend insert year after the date upon which
37the notice is posted pursuant to subdivision (b).

38

SEC. 68.  

Section 11362.777 of the Health and Safety Code is
39amended to read:

P80   1

11362.777.  

(a) The Department of Food and Agriculture shall
2establish a Medical Cannabis Cultivation Program to be
3administered by the secretary and, except as specified in
4subdivision (c), shall administer this section as it pertains to the
5commercial cultivation of medical cannabis. For purposes of this
6section and Chapter 3.5 (commencing with Section 19300) of
7Division 8 of the Business and Professions Code, medical cannabis
8is an agricultural product.

9(b) (1) A person or entity shall not cultivate medical cannabis
10without first obtaining both of the following:

11(A) A license, permit, or other entitlement, specifically
12permitting cultivation pursuant to these provisions, from the city,
13 county, or city and county in which the cultivation will occur.

14(B) A state license issued by the department pursuant to this
15section.

16(2) A person or entity shall not submit an application for a state
17license pursuant to this section unless that person or entity has
18received a license, permit, or other entitlement, specifically
19permitting cultivation pursuant to these provisions, from the city,
20county, or city and county in which the cultivation will occur.

21(3) A person or entity shall not submit an application for a state
22license pursuant to this section if the proposed cultivation of
23cannabis will violate the provisions of any local ordinance or
24regulation, or if medical cannabis is prohibited by the city, county,
25or city and county in which the cultivation is proposed to occur,
26either expressly or otherwise under principles of permissive zoning.

27(c) (1) Except as otherwise specified in this subdivision, and
28without limiting any other local regulation, a city, county, or city
29and county, through its current or future land use regulations or
30ordinance, may issue or deny a permit to cultivate medical cannabis
31pursuant to this section. A city, county, or city and county may
32inspect the intended cultivation site for suitability before issuing
33a permit. After the city, county, or city and county has approved
34a permit, the applicant shall apply for a state medical cannabis
35cultivation license from the department. A locally issued cultivation
36permit shall only become active upon licensing by the department
37and receiving final local approval. A person shall not cultivate
38medical cannabis before obtaining both a permit from the city,
39county, or city and county and a state medical cannabis cultivation
40license from the department.

P81   1(2) A city, county, or city and county that issues or denies
2conditional licenses to cultivate medical cannabis pursuant to this
3section shall notify the department in a manner prescribed by the
4secretary.

5(3) A city, county, or city and county’s locally issued conditional
6permit requirements must be at least as stringent as the
7department’s state licensing requirements.

8(d) (1) The secretary may prescribe, adopt, and enforce
9regulations relating to the implementation, administration, and
10enforcement of this part, including, but not limited to, applicant
11requirements, collections, reporting, refunds, and appeals.

12(2) The secretary may prescribe, adopt, and enforce any
13emergency regulations as necessary to implement this part. Any
14 emergency regulation prescribed, adopted, or enforced pursuant
15to this section shall be adopted in accordance with Chapter 3.5
16(commencing with Section 11340) of Part 1 of Division 3 of Title
172 of the Government Code, and, for purposes of that chapter,
18including Section 11349.6 of the Government Code, the adoption
19of the regulation is an emergency and shall be considered by the
20Office of Administrative Law as necessary for the immediate
21preservation of the public peace, health and safety, and general
22welfare.

23(3) The secretary may enter into a cooperative agreement with
24a county agricultural commissioner to carry out the provisions of
25this chapter, including, but not limited to, administration,
26investigations, inspections, licensing and assistance pertaining to
27the cultivation of medical cannabis. Compensation under the
28cooperative agreement shall be paid from assessments and fees
29collected and deposited pursuant to this chapter and shall provide
30reimbursement to the county agricultural commissioner for
31associated costs.

32(e) (1) The department, in consultation with, but not limited
33to, the Bureau of Medical Cannabis Regulation, the State Water
34Resources Control Board, and the Department of Fish and Wildlife,
35shall implement a unique identification program for medical
36cannabis. In implementing the program, the department shall
37consider issues, including, but not limited to, water use and
38environmental impacts. In implementing the program, the
39department shall ensure compliance with Section 19332.2 of the
40Business and Professions Code.

P82   1(2) The department shall establish a program for the
2identification of permitted medical cannabis plants at a cultivation
3site during the cultivation period. The unique identifier shall be
4attached at the base of each plant. A unique identifier, such as, but
5not limited to, a zip tie, shall be issued for each medical cannabis
6plant.

7(A) Unique identifiers will only be issued to those persons
8appropriately licensed by this section.

9(B) Information associated with the assigned unique identifier
10and licensee shall be included in the trace and track program
11specified in Section 19335 of the Business and Professions Code.

12(C) The department may charge a fee to cover the reasonable
13costs of issuing the unique identifier and monitoring, tracking, and
14inspecting each medical cannabis plant.

15(D) The department may promulgate regulations to implement
16this section.

17(3) The department shall take adequate steps to establish
18protections against fraudulent unique identifiers and limit illegal
19diversion of unique identifiers to unlicensed persons.

20(f) (1) A city, county, or city and county that issues or denies
21licenses, permits, or other entitlements to cultivate medical
22cannabis pursuant to this section shall notify the department in a
23manner prescribed by the secretary.

24(2) Unique identifiers and associated identifying information
25administered by a city, county, or city and county shall adhere to
26the requirements set by the department and be the equivalent to
27those administered by the department.

28(g) This section does not apply to a qualified patient cultivating
29cannabis pursuant to Section 11362.5 if the area he or she uses to
30cultivate cannabis does not exceed 100 square feet and he or she
31cultivates cannabis for his or her personal medical use and does
32not sell, distribute, donate, or provide cannabis to any other person
33or entity. This section does not apply to a primary caregiver
34cultivating cannabis pursuant to Section 11362.5 if the area he or
35she uses to cultivate cannabis does not exceed 500 square feet and
36he or she cultivates cannabis exclusively for the personal medical
37use of no more than five specified qualified patients for whom he
38or she is the primary caregiver within the meaning of Section
3911362.7 and does not receive remuneration for these activities,
40except for compensation provided in full compliance with
P83   1subdivision (c) of Section 11362.765. For purposes of this section,
2the area used to cultivate cannabis shall be measured by the
3aggregate area of vegetative growth of live cannabis plants on the
4premises. Exemption from the requirements of this section does
5not limit or prevent a city, county, or city and county from
6exercising its police authority under Section 7 of Article XI of the
7California Constitution.

8

SEC. 69.  

Section 44559.11 of the Health and Safety Code is
9amended to read:

10

44559.11.  

(a) It is the intent of the Legislature to ensure that
11the state, through the authority, may make maximum, efficient use
12of capital access programs enacted by all federal and state agencies,
13as well as funding available from any governmental program whose
14goals may be advanced by providing funding to the Capital Access
15Loan Program.

16(b) In furtherance of this intent, and notwithstanding any other
17provision of this article, when the contributions required pursuant
18to Section 44559.4 are entirely funded by a public or quasi-public
19entity other than the authority’s fee revenue under Sections 44525
20and 44548, the authority may, by regulation adopted pursuant to
21subdivision (b) of Section 44520 or subdivision (e) of Section
2244559.14, establish alternate provisions as necessary to enable the
23authority to participate in the alternative funding source program,
24including implementing loan loss reserve programs to benefit any
25individual person engaged in qualifying activities in furtherance
26of the public or quasi-public entity’s policy objectives in the state
27that require financing.

28

SEC. 70.  

Section 44559.14 is added to the Health and Safety
29Code
, to read:

30

44559.14.  

(a) (1) It is the intent of the Legislature in enacting
31the act adding this section to create and fund a program to assist
32residential property owners and small business owners in
33seismically retrofitting residences and small businesses with a
34priority on soft-story buildings and unreinforced brick and concrete
35buildings. It is not the intent of the Legislature to assist the physical
36expansion of small businesses and residences.

37(2) The Legislature hereby establishes the California Seismic
38Safety Capital Access Loan Program. The program shall cover
39losses on qualified loans by participating lenders to qualified
40residential property owners or qualified small businesses for
P84   1eligible projects, as specified under this section. The program shall
2be administered by the California Pollution Control Financing
3Authority and follow the terms and conditions for the Capital
4Access Loan Program in this article with the additional program
5requirements specified under this section.

6(b) For purposes of this section, unless the context requires
7otherwise, the following words and terms shall have the following
8meanings:

9(1) “Seismic retrofit construction” means alteration performed
10on or after January 1, 2017, of a qualified building or its
11components to substantially mitigate seismic damage. “Seismic
12retrofit construction” includes, but is not limited to, all of the
13following:

14(A) Anchoring the structure to the foundation.

15(B) Bracing cripple walls.

16(C) Bracing hot water heaters.

17(D) Installing automatic gas shutoff valves.

18(E) Repairing or reinforcing the foundation to improve the
19integrity of the foundation against seismic damage.

20(F) Anchoring fuel storage.

21(G) Installing an earthquake-resistant bracing system for
22mobilehomes that are registered with the Department of Housing
23and Community Development.

24(2) “Eligible costs” means the costs paid or incurred on or after
25January 1, 2017, for an eligible project, including any engineering
26or architectural design work necessary to permit or complete the
27eligible project less the amount of any grant provided by a public
28entity for the eligible project. “Eligible costs” do not include costs
29paid or incurred for any of the following:

30(A) Maintenance, including abatement of deferred or inadequate
31maintenance, and correction of violations unrelated to the seismic
32retrofit construction.

33(B) Repair, including repair of earthquake damage.

34(C) Seismic retrofit construction required by local building
35codes as a result of addition, repair, building relocation, or change
36of use or occupancy.

37(D) Other work or improvement required by local building or
38planning codes as a result of the intended seismic retrofit
39construction.

P85   1(E) Rent reductions or other associated compensation,
2compliance actions, or other related coordination involving the
3qualified residential property owner or qualified small business
4and any other party, including a tenant, insurer, or lender.

5(F) Replacement of existing building components, including
6equipment, except as needed to complete the seismic retrofit
7construction.

8(G) Bracing or securing nonpermanent building contents.

9(H) The offset of costs, reimbursements, or other costs
10transferred from the qualified residential property owner or
11qualified small business to others.

12(3) “Eligible project” means seismic retrofit construction that
13is necessary to ensure that the qualified building is capable of
14substantially mitigating seismic damage, and the financing
15necessary to pay eligible costs of the project.

16(4) “Qualified building” means a building that is certified by
17the appropriate local building code enforcement authority for the
18jurisdiction in which the building is located as hazardous and in
19danger of collapse in the event of a catastrophic earthquake.

20(5) “Qualified loan” means a loan or portion of a loan as defined
21in subdivision (j) of Section 44559.1, where the proceeds of the
22loan or portion of the loan are limited to the eligible costs for an
23eligible project under this program, and where the loan or portion
24of the loan does not exceed two hundred fifty thousand dollars
25($250,000).

26(6) “Qualified small business” means a business referred to in
27subdivisions (i) and (m) of Section 44559.1 that owns and occupies,
28or intends to occupy, a qualified building for the operation of the
29business.

30(7) “Qualified residential property owner” means either an owner
31and occupant of a residential building that is a qualified building
32or a qualified small business that owns one or more residential
33buildings, including a multiunit housing building, that is a qualified
34building.

35(c) (1) The California Seismic Safety Capital Access Loan
36Program Fund is established in the State Treasury and shall be
37administered by the authority pursuant to Sections 44548 and
3844549 for this program. For purposes of this section, the references
39in Sections 44548 and 44549 to “small business” shall include
40“qualified residential property owner,” as defined in this section.
P86   1Notwithstanding Section 13340 of the Government Code, all
2moneys in the fund are continuously appropriated to the authority
3for carrying out this section. The authority may divide the fund
4into separate accounts. All moneys accruing to the authority
5pursuant to this section from any source shall be deposited into
6the fund.

7(2) All moneys in the fund derived from any source shall be
8held in trust for the life of this program, for program expenditures
9and costs of administering this section, as follows:

10(A) Program expenditures shall include both of the following:

11(i) Contributions paid by the authority in support of qualified
12loans.

13(ii) Costs for a qualified expert to validate that the proceeds of
14the loans are eligible costs, as defined under this section.

15(iii) Reasonable costs to educate the small business community,
16residential property owners, and participating lenders about the
17program, including travel within the state.

18(B) Administrative expenditures shall be limited to 5 percent
19of the initial appropriation plus 5 percent of all moneys recaptured,
20and shall include all of the following:

21(i) Personnel costs.

22(ii) Service and vending contracts, other than program
23expenditures described in subparagraph (A), that are necessary to
24carry out the program.

25(iii) Other reasonable direct and indirect administrative costs.

26(3) The authority may direct the Treasurer to invest moneys in
27the fund that are not required for its current needs in the eligible
28securities specified in Section 16430 of the Government Code as
29the authority shall designate. The authority may direct the Treasurer
30to deposit moneys in interest-bearing accounts in state or national
31banks or other financial institutions having principal offices located
32in the state. The authority may alternatively require the transfer of
33moneys in the fund to the Surplus Money Investment Fund for
34investment pursuant to Article 4 (commencing with Section 16470)
35of Chapter 3 of Part 2 of Division 4 of Title 2 of the Government
36Code. All interest or other increment resulting from an investment
37or deposit shall be deposited into the fund, notwithstanding Section
3816305.7 of the Government Code. Moneys in the fund shall not
39be subject to transfer to any other fund pursuant to any provision
40of Part 2 (commencing with Section 16300) of Division 4 of Title
P87   12 of the Government Code, excepting the Surplus Money
2Investment Fund.

3(d) The authority shall adopt regulations pursuant to Section
444520 to implement the program, including, but not limited to,
5provisions to:

6(1) Establish a new loss reserve account for each participating
7lender enrolling loans in this program.

8(2) Obtain a certification from each participating lender and
9qualified small business or qualified residential property owner
10upon enrollment of a qualified loan that the proceeds of the loan
11will be used for the eligible costs of an eligible project.

12(3) Contribute an additional incentive from the fund for each
13loan enrolled for a qualified small business or qualified residential
14property owner located in a severely affected community.

15(4) Restrict the enrollment of a qualified loan in any other
16Capital Access Loan Program for a qualified small business or
17qualified residential property owner offered by the authority as
18long as funds are available for this program.

19(5) Limit the term of loss coverage for each qualified loan to
20no more than 10 years.

21(6) Recapture from the loss reserve account the authority’s
22contribution for each enrolled loan upon the maturation of that
23loan or after 10 years from the date of enrollment, whichever
24happens first, to be deposited in the fund and applied to future
25program and administrative expenditures.

26(e) The authority may adopt regulations relating to residential
27property owner or small business financing as emergency
28regulations in accordance with Chapter 3.5 (commencing with
29Section 11340) of Part 1 of Division 3 of Title 2 of the Government
30Code. For purposes of that Chapter 3.5, including Section 11349.6
31of the Government Code, the adoption of the regulations shall be
32considered by the Office of Administrative Law to be necessary
33for the immediate preservation of the public peace, health and
34safety, and general welfare. The regulations shall be repealed 180
35days after their effective date, unless the adopting authority or
36agency complies with that Chapter 3.5.

37

SEC. 71.  

Section 50800.5 of the Health and Safety Code is
38amended to read:

39

50800.5.  

(a)  There is hereby created in the State Treasury the
40Emergency Housing and Assistance Fund. Notwithstanding Section
P88   113340 of the Government Code, all money in the fund is
2continuously appropriated to the department to carry out the
3purposes of this chapter. Any repayments, interest, or new
4appropriations shall be deposited in the fund, notwithstanding
5Section 16305.7 of the Government Code. Money in the fund shall
6not be subject to transfer to any other fund pursuant to any
7provision of Part 2 (commencing with Section 16300) of Division
84 of Title 2 of the Government Code, except to the Surplus Money
9Investment Fund.

10(b)  All moneys in the Emergency Housing and Assistance Fund,
11created pursuant to Section 50800.5 as it existed prior to the
12effective date of the act that adds this chapter, shall be transferred,
13on the effective date of the act that adds this chapter, to the
14Emergency Housing and Assistance Fund created by subdivision
15(a).

16(c)  The department may require the transfer of moneys in the
17Emergency Housing and Assistance Fund to the Surplus Money
18Investment Fund for investment pursuant to Article 4 (commencing
19with Section 16470) of Chapter 3 of Part 2 of Division 4 of Title
202 of the Government Code. All interest, dividends, and pecuniary
21gains from these investments shall accrue to the Emergency
22Housing and Assistance Fund, notwithstanding Section 16305.7
23of the Government Code.

24(d) To the extent funds are made available by the Legislature,
25moneys in the fund may be used for the purposes of Chapter 19
26(commencing with Section 50899.1) of Part 2 of Division 31 of
27the Health and Safety Code.

28

SEC. 72.  

Chapter 19 (commencing with Section 50899.1) is
29added to Part 2 of Division 31 of the Health and Safety Code, to
30read:

31 

32Chapter  19. California Emergency Solutions Grants
33Program
34

 

35

50899.1.  

This chapter may be cited as the California Emergency
36Solutions Grants Program.

37

50899.2.  

The California Emergency Solutions Grants Program
38shall be administered by the California Department of Housing
39and Community Development.

P89   1

50899.3.  

The following definitions shall apply to all activities
2conducted pursuant to this chapter:

3(a) “Department” means the California Department of Housing
4and Community Development.

5(b) “Homelessness” means the same as defined by the United
6States Department of Housing and Urban Development in the
7federal Emergency Solutions Grants Program at Section 576.2 of
8Title 24 of the Code of Federal Regulations.

9(c) “Continuum of care” means the same as defined by the
10United States Department of Housing and Urban Development at
11Section 586.2 of Title 24 of the Code of Federal Regulations.

12(d) “Continuum of care service area” means the entire
13geographic area within the boundaries of a continuum of care.

14(e) “Subrecipient” means an entity that enters into a written
15agreement with the department to implement activities pursuant
16to this chapter.

17(f) “California ESG Regulations” means the regulations set forth
18in Section 8400 and following of Title 25 of the California Code
19of Regulations, pertaining to the administration of the Federal
20Emergency Shelter Grants Program.

21(g) “Federal ESG Program” means collectively the California
22ESG Regulations and the federal laws in connection with which
23the California ESG Regulations were adopted, including Title IV
24of the McKinney-Vento Homeless Assistance Act (42 U.S.C. Secs.
2511371-11378, incl.), and any amendments thereto, the Homeless
26Emergency Assistance and Rapid Transition to Housing
27(HEARTH) Act of 2009 (42 U.S.C. Secs. 11302-11304, incl. and
2811360-11378, incl.), and any amendments and any implementing
29federal regulations thereto.

30

50899.4.  

Funding for the California Emergency Solutions
31Grants Program shall be made available upon appropriation to the
32department for the purpose of addressing the crisis of homelessness
33in California. In furtherance of this purpose, the department shall
34make grants to qualifying subrecipients throughout the state to
35implement activities that address the needs of homeless individuals
36and families and assist them to regain stability in permanent
37housing as quickly as possible. Funded activities may include
38without limitation activities eligible under the Federal ESG
39Program, including (a) engaging homeless individuals and families
40living on the street; (b) operating homeless shelters and providing
P90   1essential services to shelter residents; (c) rapidly rehousing
2homeless individuals and families; and (d) preventing families and
3 individuals from becoming homeless. In addition, the California
4Emergency Solutions Grants Program may facilitate technical
5assistance activities to improve the capacity of subrecipients and
6the continuum of care to end homelessness.

7

50899.5.  

Any moneys appropriated and made available for the
8purposes of this chapter, and all moneys received by the department
9pursuant to this chapter, shall be used for the purposes of this
10chapter, including the administration of the California Emergency
11Solutions Grants Program. The administrative expenses of the
12department in administering the California Emergency Solutions
13Grants Program shall not exceed 5 percent of the funds
14appropriated for the purposes of this chapter. Notwithstanding any
15other provision of law, the department may provide an additional
16amount, not to exceed 5 percent of the moneys appropriated and
17made available for the purposes of this chapter, for technical
18assistance to subrecipients and continuums of care to develop,
19implement, carry out, or improve implementation of activities
20pursuant to this chapter. Notwithstanding any other provision of
21law, the department may also allocate an amount, not to exceed 5
22percent of the funding provided to a subrecipient, for the general
23administration costs of those subrecipients that are cities, counties,
24or other political subdivisions of the State of California, in
25furthering the purposes of this chapter.

26

50899.6.  

The California Emergency Solutions Grants Program
27generally will be administered by the department in a manner
28consistent with the Federal ESG Program. However, the department
29may administer the California Emergency Solutions Grants
30Program differently from the Federal ESG Program, and include
31such modifications as the department may determine are necessary
32to address the purposes of this chapter or to improve the
33effectiveness or efficiency of the California Emergency Solutions
34Grants Program, including but not limited to:

35(a) The participation of all continuum of care service areas
36within California, using a formula distribution that reflects the
37entire continuum of care service area.

38(b) The modification of formula factors in the Federal ESG
39Program for use in the California Emergency Solutions Grants
40Program.

P91   1

50899.7.  

The department shall review, adopt, amend, and repeal
2guidelines to implement this chapter. Any guidelines adopted to
3implement this chapter shall not be subject to Chapter 3.5
4(commencing with Section 11340) of Part 1 of Division 3 of Title
52 of the Government Code. In the event of any inconsistency
6between such guidelines or terms and the Federal ESG Program,
7the guidelines shall prevail for the purposes of this chapter.

8begin insert

begin insertSEC. 73.end insert  

end insert

begin insertSection 50912.5 is added to the end insertbegin insertHealth and Safety
9Code
end insert
begin insert, to read:end insert

begin insert
10

begin insert50912.5.end insert  

There shall be within the agency a director of
11enterprise risk management and compliance appointed by the
12Governor and serving at the pleasure of the executive director of
13the agency. The director of enterprise risk management and
14compliance shall assist in the implementation of processes, tools,
15and systems to identify, assess, measure, manage, monitor, and
16mitigate risks related to the development of new programs or
17changes to existing law or regulations that may result in new or
18increased risk to the agency, as well as other duties as may be
19required by the executive director.

end insert
20

SEC. 74.  

Section 51341 of the Health and Safety Code is
21amended to read:

22

51341.  

The Legislature finds and declares that:

23(a) There is a continuing and urgent need to provide affordable
24mortgage financing to meet the increasingly unfulfilled housing
25needs of citizens of this state.

26(b) There is a need to develop financial mechanisms to make
27homes affordable to low- and moderate-income buyers who intend
28to occupy the homes as their primary residences.

29(c) The high cost of housing impedes the ability of California
30employers to compete in the national marketplace for employees.

31(d) Affordable housing enhances the quality of life for California
32residents and provides fuel for the state’s economic engine.

33(e) Housing is a critical component of the California economy,
34both as an income producing sector and a principal factor in
35economic development.

36(f) California’s housing crisis severely impacts families
37struggling to provide safe, stable homes for their children to grow
38and learn and the workers who are the backbone of many of the
39state’s most important industries.

P92   1(g) The percentage of Californians able to purchase their own
2homes continues to decline.

3(h) There is a need to streamline the agency’s homeownership
4assistance programs to make them more efficient and effective.

5(i) Therefore, this chapter is enacted to make home purchases
6more affordable to low- and moderate-income Californians seeking
7the opportunity to own and occupy their own homes.

8

SEC. 75.  

Section 51342 of the Health and Safety Code is
9repealed.

10

SEC. 76.  

Section 51344 of the Health and Safety Code is
11amended and renumbered to read:

12

51342.  

(a) There is hereby continued in the State Treasury a
13Home Purchase Assistance Fund. “Fund,” as used in this chapter,
14means the Home Purchase Assistance Fund. Notwithstanding
15Section 13340 of the Government Code, all moneys in the fund
16are continuously appropriated to the agency, without regard to
17fiscal years, for expenditure pursuant to this chapter and defraying
18administrative costs of the agency. Notwithstanding Section
1916305.7 of the Government Code, any interest earned or other
20increment derived from investments made from moneys in the
21fund shall be deposited in the fund.

22(b) On and after July 1, 2016, all of the following shall apply:

23(1) Any unobligated amounts remaining in any fund established
24for the purposes of Chapter 9 (commencing with Section 51450)
25or Chapter 11 (commencing with Section 51500), including, but
26not limited to, the California Homebuyer’s Downpayment
27Assistance Program, the School Facility Fee Program, and the
28Extra Credit Teacher Program, shall be transferred to the Home
29Purchase Assistance Fund for expenditure by the agency for the
30purposes of this chapter.

31(2) The agency shall have no obligation to continue
32administering loan programs authorized by Chapter 9 (commencing
33with Section 51450) or Chapter 11 (commencing with Section
3451500).

35(3) Notwithstanding Section 16305.7 of the Government Code,
36any interest earned, or other increment derived, from investments
37made from moneys transferred to the fund pursuant to paragraph
38(1), and any loan receivables, repayments made, or other sums
39accruing to the agency pursuant to Chapter 9 (commencing with
40Section 51450) or Chapter 11 (commencing with Section 51500)
P93   1shall be deposited into the fund for expenditure by the agency for
2the purposes of this chapter.

3

SEC. 77.  

Section 51345 of the Health and Safety Code is
4amended and renumbered to read:

5

51343.  

(a) The agency shall administer a home purchase
6assistance program in accordance with this chapter. The purpose
7of the home purchase assistance program is to assist low- and
8moderate-income homebuyers to qualify for the purchase of
9owner-occupied homes. The agency shall make assistance to
10first-time homebuyers a priority use of these funds.

11(b) Homeownership assistance under this chapter may be
12provided for any purposes authorized under Section 51402,
13including, but not limited to, all of the following:

14(1) An interest rate subsidy to reduce the interest rate.

15(2) A deferred-payment, low-interest, subordinate mortgage
16loan, including downpayment assistance, closing cost assistance,
17or both, to make financing affordable to low- and moderate-income
18homebuyers.

19(3) Buying down the cost of mortgage insurance.

20(c) The amount of home purchase assistance shall be available
21only in conjunction with first mortgage loan financing provided
22by the agency or the Department of Veterans Affairs.

23(d) The term of the home purchase assistance shall not exceed
24the term of the primary loan.

25(e) Assistance under this chapter is available only for
26owner-occupied residential structures.

27(f) (1) The agency may, in its discretion, permit the lien of the
28downpayment assistance loan to be subordinated to refinancing if
29it determines that one of the following applies:

30(A) The borrower has demonstrated hardship and subordination
31is required to avoid foreclosure.

32(B) The borrower has acquired subordinate financing to build
33an accessory dwelling on the property.

34(C) The borrower has acquired subordinate financing to make
35the property compliant with the federal Americans with Disabilities
36Act of 1990 (Public Law 101-336), facilitate rehabilitation needed
37to allow the owner to age in place, or both.

38(D) The new loan meets the agency’s underwriting requirements.

39(2) The agency may permit subordination on those terms and
40conditions as it determines are reasonable.

P94   1(3) The amount of home purchase assistance shall not be due
2and payable upon the sale of the home if the first mortgage loan
3is insured by the Federal Housing Administration (FHA) or if the
4first mortgage loan is, or has been, transferred to the FHA, or if
5the requirement is otherwise contrary to the regulations of the
6United States Department of Housing and Urban Development
7governing FHA insured first mortgage loans.

8(g) All repayments shall be deposited in the fund for ongoing
9use in this downpayment assistance program.

10

SEC. 78.  

Section 51347 of the Health and Safety Code is
11repealed.

12

SEC. 79.  

Section 51348 of the Health and Safety Code is
13repealed.

14

SEC. 80.  

Section 51349 of the Health and Safety Code is
15amended to read:

16

51349.  

(a) The agency shall have all the powers conferred
17upon it by this part and Part 4 (commencing with Section 51600)
18in administering this chapter.

19(b) The authority provided by this section shall be conferred
20upon the Department of Veterans Affairs by any contract executed
21pursuant to Section 51346, with respect to the assistance being
22provided pursuant to the contract.

23(c) Notwithstanding any other law, the agency, pursuant to the
24objectives specified in Section 50952, may, with its own funds or
25from funds derived from other sources, create its own home
26purchase assistance programs, home purchase assistance products,
27or both, on such terms and conditions as the agency deems prudent.
28Nothing in this chapter shall be deemed to prohibit the agency
29from exercising its discretion pursuant to this subdivision.

30

SEC. 81.  

Section 51455 of the Health and Safety Code is
31amended to read:

32

51455.  

(a) Except as provided in subdivision (b), Sections
3351450, 51451, 51452, and 51454 shall not be operative on and
34after January 1, 2002.

35(b) Except as provided in Section 51453 and 51453.5, until July
361, 2016, the School Facilities Fee Assistance Fund established by
37Section 51452 and the programmatic authority necessary to operate
38the programs authorized by Section 51451 shall continue on and
39after January 1, 2002, only with respect to any repayment
P95   1obligation pertaining to that assistance or to any regulatory
2agreement imposed as a condition of that assistance.

3(c) Sections 51451.5, 51453, and 51453.5 shall not be operative
4on and after July 1, 2016.

5(d) On and after July 1, 2016, any unobligated amounts
6remaining in the School Facilities Fee Assistance Fund, including
7the repayment of disbursed moneys, or any interest earned from
8the investment of those moneys or any other moneys accruing to
9the fund from any source, shall be transferred to the Home Purchase
10Assistance Fund and are continuously appropriated to the agency
11for the purposes described in Section 51342.

12

SEC. 82.  

Section 51511 is added to the Health and Safety Code,
13to read:

14

51511.  

(a) This chapter, except for this section, shall not be
15operative on and after July 1, 2016.

16(b) On and after July 1, 2016, any unobligated amounts
17remaining in any fund established for the purposes of this chapter,
18including the repayment of disbursed moneys, or any interest
19earned from the investment of those moneys or any other moneys
20accruing to the fund from any source, shall be transferred to the
21Home Purchase Assistance Fund and are continuously appropriated
22to the agency for the purposes described in Section 51342.

23

SEC. 83.  

Section 51618 of the Health and Safety Code is
24repealed.

25

SEC. 84.  

Section 51619 of the Health and Safety Code is
26repealed.

27

SEC. 85.  

Section 51622 of the Health and Safety Code is
28amended to read:

29

51622.  

(a)  The agency may contract with any private person
30or public agency for review of the administration of this part and
31for assistance in implementing this part.

32(b)  The agency shall prepare a biennial report on the condition
33of the program of loan and bond insurance authorized by this part.
34The report of the evaluation shall include an evaluation of program
35effectiveness in relation to cost and shall include recommendations
36and suggested legislation for the improvement of the program, if
37any. The agency shall obtain an annual agreed-upon procedures
38engagement of the insurance fund’s books and accounts with
39respect to its activities under this part to be made at least once for
40each calendar year by an independent certified public accountant.
P96   1A copy of the annual agreed-upon procedures engagement and
2biennial report shall be transmitted to the Governor, to the
3chairperson and vice-chairperson of the Senate and Assembly
4housing policy committees, the Senate and Assembly budget
5committees, and the Joint Legislative Budget Committee, and
6made available for review by interested parties no later than
7November 1 of each year for the annual agreed-upon procedures
8engagement and November 1 biennially for the program evaluation
9report.

10(c) For purposes of this section, the agreed-upon procedures
11engagement shall be conducted in accordance with the Statements
12on Standards for Attestation Engagements Number 10, as issued
13by the American Institute of Certified Public Accountants.

14

SEC. 86.  

Section 12206 of the Revenue and Taxation Code is
15amended to read:

16

12206.  

(a) (1) There shall be allowed as a credit against the
17“tax,” described by Section 12201, a state low-income housing
18tax credit in an amount equal to the amount determined in
19subdivision (c), computed in accordance with Section 42 of the
20Internal Revenue Code, relating to low-income housing credit,
21except as otherwise provided in this section.

22(2) “Taxpayer,” for purposes of this section, means the sole
23owner in the case of a “C” corporation, the partners in the case of
24a partnership, and the shareholders in the case of an “S”
25corporation.

26(3) “Housing sponsor,” for purposes of this section, means the
27sole owner in the case of a “C” corporation, the partnership in the
28case of a partnership, and the “S” corporation in the case of an “S”
29corporation.

30(b) (1) The amount of the credit allocated to any housing
31sponsor shall be authorized by the California Tax Credit Allocation
32Committee, or any successor thereof, based on a project’s need
33for the credit for economic feasibility in accordance with the
34requirements of this section.

35(A) Except for projects to provide farmworker housing, as
36defined in subdivision (h) of Section 50199.7 of the Health and
37Safety Code, that are allocated credits solely under the set-aside
38described in subdivision (c) of Section 50199.20 of the Health and
39Safety Code, the low-income housing project shall be located in
40California and shall meet either of the following requirements:

P97   1(i) The project’s housing sponsor has been allocated by the
2 California Tax Credit Allocation Committee a credit for federal
3income tax purposes under Section 42 of the Internal Revenue
4Code, relating to low-income housing credit.

5(ii) It qualifies for a credit under Section 42(h)(4)(B) of the
6Internal Revenue Code, relating to special rule where 50 percent
7or more of building is financed with tax-exempt bonds subject to
8volume cap.

9(B) The California Tax Credit Allocation Committee shall not
10require fees for the credit under this section in addition to those
11fees required for applications for the tax credit pursuant to Section
1242 of the Internal Revenue Code, relating to low-income housing
13credit. The committee may require a fee if the application for the
14credit under this section is submitted in a calendar year after the
15year the application is submitted for the federal tax credit.

16(C) (i) For a project that receives a preliminary reservation of
17the state low-income housing tax credit, allowed pursuant to
18subdivision (a), on or after January 1, 2009, and before January 1,
192020, the credit shall be allocated to the partners of a partnership
20owning the project in accordance with the partnership agreement,
21regardless of how the federal low-income housing tax credit with
22respect to the project is allocated to the partners, or whether the
23allocation of the credit under the terms of the agreement has
24substantial economic effect, within the meaning of Section 704(b)
25of the Internal Revenue Code, relating to determination of
26distributive share.

27(ii) This subparagraph does not apply to a project that receives
28a preliminary reservation of state low-income housing tax credits
29under the set-aside described in subdivision (c) of Section 50199.20
30of the Health and Safety Code unless the project also receives a
31preliminary reservation of federal low-income housing tax credits.

32(2) (A) The California Tax Credit Allocation Committee shall
33certify to the housing sponsor the amount of tax credit under this
34section allocated to the housing sponsor for each credit period.

35(B) In the case of a partnership or an “S” corporation, the
36housing sponsor shall provide a copy of the California Tax Credit
37Allocation Committee certification to the taxpayer.

38(C) The taxpayer shall attach a copy of the certification to any
39return upon which a tax credit is claimed under this section.

P98   1(D) In the case of a failure to attach a copy of the certification
2for the year to the return in which a tax credit is claimed under this
3section, no credit under this section shall be allowed for that year
4until a copy of that certification is provided.

5(E) All elections made by the taxpayer pursuant to Section 42
6of the Internal Revenue Code, relating to low-income housing
7credit, shall apply to this section.

8(F) (i) Except as described in clause (ii), for buildings located
9in designated difficult development areas (DDAs) or qualified
10census tracts (QCTs), as defined in Section 42(d)(5)(B) of the
11Internal Revenue Code, relating to increase in credit for buildings
12in high-cost areas, credits may be allocated under this section in
13the amounts prescribed in subdivision (c), provided that the amount
14of credit allocated under Section 42 of the Internal Revenue Code,
15relating to low-income housing credit, is computed on 100 percent
16of the qualified basis of the building.

17(ii) Notwithstanding clause (i), the California Tax Credit
18Allocation Committee may allocate the credit for buildings located
19in DDAs or QCTs that are restricted to having 50 percent of its
20occupants be special needs households, as defined in the California
21Code of Regulations by the California Tax Credit Allocation
22Committee, even if the taxpayer receives federal credits pursuant
23to Section 42(d)(5)(B) of the Internal Revenue Code, relating to
24increase in credit for buildings in high-cost areas, provided that
25the credit allowed under this section shall not exceed 30 percent
26of the eligible basis of the building.

27(G) (i) The California Tax Credit Allocation Committee may
28allocate a credit under this section in exchange for a credit allocated
29pursuant to Section 42(d)(5)(B) of the Internal Revenue Code,
30relating to increase in credit for buildings in high-cost areas, in
31amounts up to 30 percent of the eligible basis of a building if the
32credits allowed under Section 42 of the Internal Revenue Code,
33relating to low-income housing credit, are reduced by an equivalent
34amount.

35(ii) An equivalent amount shall be determined by the California
36Tax Credit Allocation Committee based upon the relative amount
37required to produce an equivalent state tax credit to the taxpayer.

38(c) Section 42(b) of the Internal Revenue Code, relating to
39applicable percentage: 70 percent present value credit for certain
P99   1new buildings; 30 percent present value credit for certain other
2buildings, shall be modified as follows:

3(1) In the case of any qualified low-income building that receives
4an allocation after 1989 and is a new building not federally
5subsidized, the term “applicable percentage” means the following:

6(A) For each of the first three years, the percentage prescribed
7by the Secretary of the Treasury for new buildings that are not
8federally subsidized for the taxable year, determined in accordance
9with the requirements of Section 42(b)(2) of the Internal Revenue
10Code, relating to temporary minimum credit rate for nonfederally
11subsidized new buildings, in lieu of the percentage prescribed in
12Section 42(b)(1)(A) of the Internal Revenue Code.

13(B) For the fourth year, the difference between 30 percent and
14the sum of the applicable percentages for the first three years.

15(2) In the case of any qualified low-income building that receives
16an allocation after 1989 and that is a new building that is federally
17subsidized or that is an existing building that is “at risk of
18conversion,” the term “applicable percentage” means the following:

19(A) For each of the first three years, the percentage prescribed
20by the Secretary of the Treasury for new buildings that are federally
21subsidized for the taxable year.

22(B) For the fourth year, the difference between 13 percent and
23the sum of the applicable percentages for the first three years.

24(3) For purposes of this section, the term “at risk of conversion,”
25with respect to an existing property means a property that satisfies
26all of the following criteria:

27(A) The property is a multifamily rental housing development
28in which at least 50 percent of the units receive governmental
29assistance pursuant to any of the following:

30(i) New construction, substantial rehabilitation, moderate
31rehabilitation, property disposition, and loan management set-aside
32programs, or any other program providing project-based assistance
33pursuant to Section 8 of the United States Housing Act of 1937,
34Section 1437f of Title 42 of the United States Code, as amended.

35(ii) The Below-Market-Interest-Rate Program pursuant to
36Section 221(d)(3) of the National Housing Act, Sections
371715l(d)(3) and (5) of Title 12 of the United States Code.

38(iii) Section 236 of the National Housing Act, Section 1715z-1
39of Title 12 of the United States Code.

P100  1(iv) Programs for rent supplement assistance pursuant to Section
2101 of the Housing and Urban Development Act of 1965, Section
31701s of Title 12 of the United States Code, as amended.

4(v) Programs pursuant to Section 515 of the Housing Act of
51949, Section 1485 of Title 42 of the United States Code, as
6amended.

7(vi) The low-income housing credit program set forth in Section
842 of the Internal Revenue Code, relating to low-income housing
9credit.

10(B) The restrictions on rent and income levels will terminate or
11the federally insured mortgage on the property is eligible for
12prepayment any time within five years before or after the date of
13application to the California Tax Credit Allocation Committee.

14(C) The entity acquiring the property enters into a regulatory
15agreement that requires the property to be operated in accordance
16with the requirements of this section for a period equal to the
17greater of 55 years or the life of the property.

18(D) The property satisfies the requirements of Section 42(e) of
19the Internal Revenue Code, relating to rehabilitation expenditures
20treated as separate new building, except that the provisions of
21Section 42(e)(3)(A)(ii)(I) shall not apply.

22(d) The term “qualified low-income housing project” as defined
23in Section 42(c)(2) of the Internal Revenue Code, relating to
24qualified low-income building, is modified by adding the following
25requirements:

26(1) The taxpayer shall be entitled to receive a cash distribution
27from the operations of the project, after funding required reserves,
28that, at the election of the taxpayer, is equal to:

29(A) An amount not to exceed 8 percent of the lesser of:

30(i) The owner equity, which shall include the amount of the
31 capital contributions actually paid to the housing sponsor and shall
32not include any amounts until they are paid on an investor note.

33(ii) Twenty percent of the adjusted basis of the building as of
34the close of the first taxable year of the credit period.

35(B) The amount of the cashflow from those units in the building
36that are not low-income units. For purposes of computing cashflow
37under this subparagraph, operating costs shall be allocated to the
38low-income units using the “floor space fraction,” as defined in
39Section 42 of the Internal Revenue Code, relating to low-income
40housing credit.

P101  1(C) Any amount allowed to be distributed under subparagraph
2(A) that is not available for distribution during the first five years
3of the compliance period may be accumulated and distributed any
4time during the first 15 years of the compliance period but not
5thereafter.

6(2) The limitation on return applies in the aggregate to the
7partners if the housing sponsor is a partnership and in the aggregate
8to the shareholders if the housing sponsor is an “S” corporation.

9(3) The housing sponsor shall apply any cash available for
10distribution in excess of the amount eligible to be distributed under
11paragraph (1) to reduce the rent on rent-restricted units or to
12increase the number of rent-restricted units subject to the tests of
13Section 42(g)(1) of the Internal Revenue Code, relating to in
14general.

15(e) The provisions of Section 42(f) of the Internal Revenue
16Code, relating to definition and special rules relating to credit
17period, shall be modified as follows:

18(1) The term “credit period” as defined in Section 42(f)(1) of
19the Internal Revenue Code, relating to credit period defined, is
20modified by substituting “four taxable years” for “10 taxable
21years.”

22(2) The special rule for the first taxable year of the credit period
23under Section 42(f)(2) of the Internal Revenue Code, relating to
24special rule for 1st year of credit period, shall not apply to the tax
25credit under this section.

26(3) Section 42(f)(3) of the Internal Revenue Code, relating to
27determination of applicable percentage with respect to increases
28in qualified basis after 1st year of credit period, is modified to
29read:

30If, as of the close of any taxable year in the compliance period,
31after the first year of the credit period, the qualified basis of any
32building exceeds the qualified basis of that building as of the close
33of the first year of the credit period, the housing sponsor, to the
34extent of its tax credit allocation, shall be eligible for a credit on
35the excess in an amount equal to the applicable percentage
36determined pursuant to subdivision (c) for the four-year period
37beginning with the later of the taxable years in which the increase
38in qualified basis occurs.

P102  1(f) The provisions of Section 42(h) of the Internal Revenue
2Code, relating to limitation on aggregate credit allowable with
3respect to projects located in a state, shall be modified as follows:

4(1) Section 42(h)(2) of the Internal Revenue Code, relating to
5allocated credit amount to apply to all taxable years ending during
6or after credit allocation year, does not apply and instead the
7following provisions apply:

8The total amount for the four-year credit period of the housing
9credit dollars allocated in a calendar year to any building shall
10reduce the aggregate housing credit dollar amount of the California
11Tax Credit Allocation Committee for the calendar year in which
12the allocation is made.

13(2) Paragraphs (3), (4), (5), (6)(E)(i)(II), (6)(F), (6)(G), (6)(I),
14(7), and (8) of Section 42(h) of the Internal Revenue Code, relating
15to limitation on aggregate credit allowable with respect to projects
16located in a state, do not apply to this section.

17(g) The aggregate housing credit dollar amount that may be
18allocated annually by the California Tax Credit Allocation
19Committee pursuant to this section, Section 17058, and Section
2023610.5 shall be an amount equal to the sum of all the following:

21(1) Seventy million dollars ($70,000,000) for the 2001 calendar
22year, and, for the 2002 calendar year and each calendar year
23thereafter, seventy million dollars ($70,000,000) increased by the
24percentage, if any, by which the Consumer Price Index for the
25preceding calendar year exceeds the Consumer Price Index for the
262001 calendar year. For the purposes of this paragraph, the term
27“Consumer Price Index” means the last Consumer Price Index for
28All Urban Consumers published by the federal Department of
29Labor.

30(2) The unused housing credit ceiling, if any, for the preceding
31calendar years.

32(3) The amount of housing credit ceiling returned in the calendar
33year. For purposes of this paragraph, the amount of housing credit
34dollar amount returned in the calendar year equals the housing
35credit dollar amount previously allocated to any project that does
36not become a qualified low-income housing project within the
37period required by this section or to any project with respect to
38which an allocation is canceled by mutual consent of the California
39Tax Credit Allocation Committee and the allocation recipient.

P103  1(4) Five hundred thousand dollars ($500,000) per calendar year
2for projects to provide farmworker housing, as defined in
3subdivision (h) of Section 50199.7 of the Health and Safety Code.

4(5) The amount of any unallocated or returned credits under
5former Sections 17053.14, 23608.2, and 23608.3, as those sections
6read prior to January 1, 2009, until fully exhausted for projects to
7provide farmworker housing, as defined in subdivision (h) of
8Section 50199.7 of the Health and Safety Code.

9(h) The term “compliance period” as defined in Section 42(i)(1)
10of the Internal Revenue Code, relating to compliance period, is
11modified to mean, with respect to any building, the period of 30
12consecutive taxable years beginning with the first taxable year of
13 the credit period with respect thereto.

14(i) (1) Section 42(j) of the Internal Revenue Code, relating to
15recapture of credit, shall not be applicable and the provisions in
16paragraph (2) shall be substituted in its place.

17(2) The requirements of this section shall be set forth in a
18regulatory agreement between the California Tax Credit Allocation
19Committee and the housing sponsor, and this agreement shall be
20subordinated, when required, to any lien or encumbrance of any
21banks or other institutional lenders to the project. The regulatory
22agreement entered into pursuant to subdivision (f) of Section
2350199.14 of the Health and Safety Code, shall apply, provided that
24the agreement includes all of the following provisions:

25(A) A term not less than the compliance period.

26(B) A requirement that the agreement be recorded in the official
27records of the county in which the qualified low-income housing
28project is located.

29(C) A provision stating which state and local agencies can
30enforce the regulatory agreement in the event the housing sponsor
31fails to satisfy any of the requirements of this section.

32(D) A provision that the regulatory agreement shall be deemed
33a contract enforceable by tenants as third-party beneficiaries thereto
34and that allows individuals, whether prospective, present, or former
35occupants of the building, who meet the income limitation
36applicable to the building, the right to enforce the regulatory
37agreement in any state court.

38(E) A provision incorporating the requirements of Section 42
39of the Internal Revenue Code, relating to low-income housing
40credit, as modified by this section.

P104  1(F) A requirement that the housing sponsor notify the California
2Tax Credit Allocation Committee or its designee and the local
3agency that can enforce the regulatory agreement if there is a
4determination by the Internal Revenue Service that the project is
5not in compliance with Section 42(g) of the Internal Revenue Code,
6relating to qualified low-income housing project.

7(G) A requirement that the housing sponsor, as security for the
8performance of the housing sponsor’s obligations under the
9regulatory agreement, assign the housing sponsor’s interest in rents
10that it receives from the project, provided that until there is a
11default under the regulatory agreement, the housing sponsor is
12entitled to collect and retain the rents.

13(H) A provision that the remedies available in the event of a
14default under the regulatory agreement that is not cured within a
15reasonable cure period include, but are not limited to, allowing
16any of the parties designated to enforce the regulatory agreement
17to collect all rents with respect to the project; taking possession of
18the project and operating the project in accordance with the
19regulatory agreement until the enforcer determines the housing
20sponsor is in a position to operate the project in accordance with
21the regulatory agreement; applying to any court for specific
22performance; securing the appointment of a receiver to operate
23the project; or any other relief as may be appropriate.

24(j) (1) The committee shall allocate the housing credit on a
25regular basis consisting of two or more periods in each calendar
26year during which applications may be filed and considered. The
27committee shall establish application filing deadlines, the maximum
28percentage of federal and state low-income housing tax credit
29ceiling that may be allocated by the committee in that period, and
30the approximate date on which allocations shall be made. If the
31enactment of federal or state law, the adoption of rules or
32regulations, or other similar events prevent the use of two allocation
33periods, the committee may reduce the number of periods and
34adjust the filing deadlines, maximum percentage of credit allocated,
35and the allocation dates.

36(2) The committee shall adopt a qualified allocation plan, as
37provided in Section 42(m)(1) of the Internal Revenue Code, relating
38to plans for allocation of credit among projects. In adopting this
39plan, the committee shall comply with the provisions of Sections
4042(m)(1)(B) and 42(m)(1)(C) of the Internal Revenue Code,
P105  1relating to qualified allocation plan and relating to certain selection
2criteria must be used, respectively.

3(3) Notwithstanding Section 42(m) of the Internal Revenue
4Code, relating to responsibilities of housing credit agencies, the
5California Tax Credit Allocation Committee shall allocate housing
6credits in accordance with the qualified allocation plan and
7regulations, which shall include the following provisions:

8(A) All housing sponsors, as defined by paragraph (3) of
9subdivision (a), shall demonstrate at the time the application is
10filed with the committee that the project meets the following
11threshold requirements:

12(i) The housing sponsor shall demonstrate that there is a need
13and demand for low-income housing in the community or region
14for which it is proposed.

15(ii) The project’s proposed financing, including tax credit
16proceeds, shall be sufficient to complete the project and that the
17proposed operating income shall be adequate to operate the project
18for the extended use period.

19(iii) The project shall have enforceable financing commitments,
20either construction or permanent financing, for at least 50 percent
21of the total estimated financing of the project.

22(iv) The housing sponsor shall have and maintain control of the
23site for the project.

24(v) The housing sponsor shall demonstrate that the project
25complies with all applicable local land use and zoning ordinances.

26(vi) The housing sponsor shall demonstrate that the project
27development team has the experience and the financial capacity
28to ensure project completion and operation for the extended use
29period.

30(vii) The housing sponsor shall demonstrate the amount of tax
31credit that is necessary for the financial feasibility of the project
32and its viability as a qualified low-income housing project
33throughout the extended use period, taking into account operating
34expenses, a supportable debt service, reserves, funds set aside for
35rental subsidies and required equity, and a development fee that
36does not exceed a specified percentage of the eligible basis of the
37project prior to inclusion of the development fee in the eligible
38basis, as determined by the committee.

P106  1(B) The committee shall give a preference to those projects
2satisfying all of the threshold requirements of subparagraph (A)
3if both of the following apply:

4(i) The project serves the lowest income tenants at rents
5affordable to those tenants.

6(ii) The project is obligated to serve qualified tenants for the
7longest period.

8(C) In addition to the provisions of subparagraphs (A) and (B),
9the committee shall use the following criteria in allocating housing
10credits:

11(i) Projects serving large families in which a substantial number,
12as defined by the committee, of all residential units are low-income
13units with three and more bedrooms.

14(ii) Projects providing single-room occupancy units serving
15very low income tenants.

16(iii) Existing projects that are “at risk of conversion,” as defined
17by paragraph (3) of subdivision (c).

18(iv) Projects for which a public agency provides direct or indirect
19long-term financial support for at least 15 percent of the total
20project development costs or projects for which the owner’s equity
21constitutes at least 30 percent of the total project development
22costs.

23(v) Projects that provide tenant amenities not generally available
24to residents of low-income housing projects.

25(4) For purposes of allocating credits pursuant to this section,
26the committee shall not give preference to any project by virtue
27of the date of submission of its application except to break a tie
28when two or more of the projects have an equal rating.

29(k) Section 42(l) of the Internal Revenue Code, relating to
30certifications and other reports to secretary, shall be modified as
31follows:

32The term “secretary” shall be replaced by the term “Franchise
33 Tax Board.”

34(l) In the case in which the credit allowed under this section
35exceeds the “tax,” the excess may be carried over to reduce the
36“tax” in the following year, and succeeding years if necessary,
37until the credit has been exhausted.

38(m) The provisions of Section 11407(a) of Public Law 101-508,
39relating to the effective date of the extension of the low-income
40housing credit, apply to calendar years after 1993.

P107  1(n) The provisions of Section 11407(c) of Public Law 101-508,
2relating to election to accelerate credit, do not apply.

3(o) (1) For a project that receives a preliminary reservation
4under this section beginning on or after January 1, 2016, and before
5January 1, 2020, a taxpayer may make an irrevocable election in
6 its application to the California Tax Credit Allocation Committee
7to sell all or any portion of any credit allowed under this section
8to one or more unrelated parties for each taxable year in which the
9credit is allowed subject to both of the following conditions:

10(A) The credit is sold for consideration that is not less than 80
11percent of the amount of the credit.

12(B) The unrelated party or parties purchasing any or all of the
13credit pursuant to this subdivision is a taxpayer allowed the credit
14under this section for the taxable year of the purchase or any prior
15taxable year or is a taxpayer allowed the federal credit under
16Section 42 of the Internal Revenue Code, relating to low-income
17housing credit, for the taxable year of the purchase or any prior
18taxable year in connection with any project located in this state.
19For purposes of this subparagraph, “taxpayer allowed the credit
20under this section” means a taxpayer that is allowed the credit
21under this section without regard to the purchase of a credit
22pursuant to this subdivision.

23(2) (A) The taxpayer that originally received the credit shall
24report to the California Tax Credit Allocation Committee within
2510 days of the sale of the credit, in the form and manner specified
26by the California Tax Credit Allocation Committee, all required
27information regarding the purchase and sale of the credit, including
28the social security or other taxpayer identification number of the
29unrelated party or parties to whom the credit has been sold, the
30face amount of the credit sold, and the amount of consideration
31received by the taxpayer for the sale of the credit.

32(B) The California Tax Credit Allocation Committee shall
33provide an annual listing to the Franchise Tax Board, in a form
34and manner agreed upon by the California Tax Credit Allocation
35Committee and the Franchise Tax Board, of the taxpayers that
36have sold or purchased a credit pursuant to this subdivision.

37(3) (A) A credit may be sold pursuant to this subdivision to
38more than one unrelated party.

39(B) (i) Except as provided in clause (ii), a credit shall not be
40resold by the unrelated party to another taxpayer or other party.

P108  1(ii) All or any portion of any credit allowed under this section
2may be resold once by an original purchaser to one or more
3unrelated parties, subject to all of the requirements of this
4 subdivision.

5(4) Notwithstanding any other law, the taxpayer that originally
6received the credit that is sold pursuant to paragraph (1) shall
7remain solely liable for all obligations and liabilities imposed on
8the taxpayer by this section with respect to the credit, none of
9which shall apply to a party to whom the credit has been sold or
10subsequently transferred. Parties that purchase credits pursuant to
11paragraph (1) shall be entitled to utilize the purchased credits in
12the same manner in which the taxpayer that originally received
13the credit could utilize them.

14(5) A taxpayer shall not sell a credit allowed by this section if
15the taxpayer was allowed the credit on any tax return of the
16taxpayer.

17(6) Notwithstanding paragraph (1), the taxpayer, with the
18approval of the Executive Director of the California Tax Credit
19Allocation Committee, may rescind the election to sell all or any
20portion of the credit allowed under this section if the consideration
21for the credit falls below 80 percent of the amount of the credit
22after the California Tax Credit Allocation Committee reservation.

23(p) The California Tax Credit Allocation Committee may
24prescribe rules, guidelines, or procedures necessary or appropriate
25to carry out the purposes of this section, including any guidelines
26regarding the allocation of the credit allowed under this section.
27Chapter 3.5 (commencing with Section 11340) of Part 1 of Division
283 of Title 2 of the Government Code shall not apply to any rule,
29guideline, or procedure prescribed by the California Tax Credit
30Allocation Committee pursuant to this section.

31(q) This section shall remain in effect for as long as Section 42
32of the Internal Revenue Code, relating to low-income housing
33credit, remains in effect.

34

SEC. 87.  

Section 17053.88.5 is added to the Revenue and
35Taxation Code
, to read:

36

17053.88.5.  

(a) In the case of a qualified taxpayer who donates
37fresh fruits or fresh vegetables to a food bank located in California
38under Chapter 5 (commencing with Section 58501) of Part 1 of
39Division 21 of the Food and Agricultural Code, for taxable years
40beginning on or after January 1, 2017, and before January 1, 2022,
P109  1there shall be allowed as a credit against the “net tax,” defined by
2Section 17039, an amount equal to 15 percent of the qualified
3value of those fresh fruits or fresh vegetables.

4(b) For purposes of this section:

5(1) “Qualified taxpayer” means the person responsible for
6planting a crop, managing the crop, and harvesting the crop from
7the land.

8(2) (A) “Qualified value” shall be calculated by using the
9weighted average wholesale price based on the qualified taxpayer’s
10total like grade wholesale sales of the donated item sold within
11the calendar month of the qualified taxpayer’s donation.

12(B) If no wholesale sales of the donated item have occurred in
13the calendar month of the qualified taxpayer’s donation, the
14“qualified value” shall be equal to the nearest regional wholesale
15market price for the calendar month of the donation based upon
16the same grade products as published by the United States
17Department of Agriculture’s Agricultural Marketing Service or its
18successor.

19(c) If the credit allowed by this section is claimed by the
20qualified taxpayer, any deduction otherwise allowed under this
21part for that amount of the cost paid or incurred by the qualified
22taxpayer that is eligible for the credit shall be reduced by the
23amount of the credit provided in subdivision (a).

24(d) The donor shall provide to the nonprofit organization the
25qualified value of the donated fresh fruits or fresh vegetables and
26information regarding the origin of where the donated fruits or
27vegetables were grown, and upon receipt of the donated fresh fruits
28or fresh vegetables, the nonprofit organization shall provide a
29certificate to the donor. The certificate shall contain a statement
30signed and dated by a person authorized by that organization that
31the product is donated under Chapter 5 (commencing with Section
3258501) of Part 1 of Division 21 of the Food and Agricultural Code.
33The certificate shall also contain the type and quantity of product
34donated, the name of donor or donors, the name and address of
35the donee nonprofit organization, and, as provided by the donor,
36the qualified value of the donated fresh fruits or fresh vegetables
37and its origins. Upon the request of the Franchise Tax Board, the
38qualified taxpayer shall provide a copy of the certification to the
39Franchise Tax Board.

P110  1(e) The credit allowed by this section may be claimed only on
2a timely filed original return.

3(f) In the case where the credit allowed by this section exceeds
4the “net tax,” the excess may be carried over to reduce the “net
5tax” in the following year, and for the six succeeding years if
6necessary, until the credit has been exhausted.

7(g) In accordance with Section 41, the purpose of the credit is
8to increase fresh fruits and vegetable donations to food banks.
9Using the information available to the Franchise Tax Board from
10the certificates required under subdivision (d) and subdivision (d)
11of Section 23688.5, the Franchise Tax Board shall report to the
12Legislature on or before December 1, 2019, and each December
131 thereafter until the inoperative date specified in subdivision (h),
14regarding the utilization of the credit authorized by this section
15and Section 23688.5. The Franchise Tax Board shall also include
16in the report the qualified value of the fresh fruits and fresh
17vegetables donated, the county in which the products originated,
18and the month the donation was made.

19(h) (1) A report required to be submitted pursuant to subdivision
20(g) shall be submitted in compliance with Section 9795 of the
21Government Code.

22(2) The requirement for submitting a report imposed under
23subdivision (g) is inoperative on January 1, 2021, pursuant to
24Section 10231.5 of the Government Code.

25(i) This section shall be repealed on December 1, 2022.

26

SEC. 88.  

Section 17058 of the Revenue and Taxation Code is
27amended to read:

28

17058.  

(a) (1) There shall be allowed as a credit against the
29“net tax,” defined by Section 17039, a state low-income housing
30tax credit in an amount equal to the amount determined in
31subdivision (c), computed in accordance with Section 42 of the
32Internal Revenue Code, relating to low-income housing credit,
33except as otherwise provided in this section.

34(2) “Taxpayer,” for purposes of this section, means the sole
35owner in the case of an individual, the partners in the case of a
36partnership, and the shareholders in the case of an “S” corporation.

37(3) “Housing sponsor,” for purposes of this section, means the
38sole owner in the case of an individual, the partnership in the case
39of a partnership, and the “S” corporation in the case of an “S”
40corporation.

P111  1(b) (1) The amount of the credit allocated to any housing
2sponsor shall be authorized by the California Tax Credit Allocation
3Committee, or any successor thereof, based on a project’s need
4for the credit for economic feasibility in accordance with the
5requirements of this section.

6(A) The low-income housing project shall be located in
7California and shall meet either of the following requirements:

8(i) Except for projects to provide farmworker housing, as defined
9in subdivision (h) of Section 50199.7 of the Health and Safety
10Code, that are allocated credits solely under the set-aside described
11in subdivision (c) of Section 50199.20 of the Health and Safety
12Code, the project’s housing sponsor has been allocated by the
13 California Tax Credit Allocation Committee a credit for federal
14income tax purposes under Section 42 of the Internal Revenue
15Code, relating to low-income housing credit.

16(ii) It qualifies for a credit under Section 42(h)(4)(B) of the
17Internal Revenue Code, relating to special rule where 50 percent
18or more of building is financed with tax-exempt bonds subject to
19volume cap.

20(B) The California Tax Credit Allocation Committee shall not
21require fees for the credit under this section in addition to those
22fees required for applications for the tax credit pursuant to Section
2342 of the Internal Revenue Code, relating to low-income housing
24credit. The committee may require a fee if the application for the
25credit under this section is submitted in a calendar year after the
26year the application is submitted for the federal tax credit.

27(C) (i) For a project that receives a preliminary reservation of
28the state low-income housing tax credit, allowed pursuant to
29subdivision (a), on or after January 1, 2009, and before January 1,
302020, the credit shall be allocated to the partners of a partnership
31owning the project in accordance with the partnership agreement,
32regardless of how the federal low-income housing tax credit with
33respect to the project is allocated to the partners, or whether the
34allocation of the credit under the terms of the agreement has
35substantial economic effect, within the meaning of Section 704(b)
36of the Internal Revenue Code, relating to determination of
37distributive share.

38(ii) To the extent the allocation of the credit to a partner under
39this section lacks substantial economic effect, any loss or deduction
40otherwise allowable under this part that is attributable to the sale
P112  1or other disposition of that partner’s partnership interest made prior
2to the expiration of the federal credit shall not be allowed in the
3taxable year in which the sale or other disposition occurs, but shall
4instead be deferred until and treated as if it occurred in the first
5taxable year immediately following the taxable year in which the
6federal credit period expires for the project described in clause (i).

7(iii) This subparagraph does not apply to a project that receives
8a preliminary reservation of state low-income housing tax credits
9under the set-aside described in subdivision (c) of Section 50199.20
10of the Health and Safety Code unless the project also receives a
11preliminary reservation of federal low-income housing tax credits.

12(2) (A) The California Tax Credit Allocation Committee shall
13certify to the housing sponsor the amount of tax credit under this
14 section allocated to the housing sponsor for each credit period.

15(B) In the case of a partnership or an “S” corporation, the
16housing sponsor shall provide a copy of the California Tax Credit
17Allocation Committee certification to the taxpayer.

18(C) The taxpayer shall, upon request, provide a copy of the
19certification to the Franchise Tax Board.

20(D) All elections made by the taxpayer pursuant to Section 42
21of the Internal Revenue Code, relating to low-income housing
22credit, apply to this section.

23(E) (i) Except as described in clause (ii), for buildings located
24in designated difficult development areas (DDAs) or qualified
25census tracts (QCTs), as defined in Section 42(d)(5)(B) of the
26Internal Revenue Code, relating to increase in credit for buildings
27in high-cost areas, credits may be allocated under this section in
28the amounts prescribed in subdivision (c), provided that the amount
29of credit allocated under Section 42 of the Internal Revenue Code,
30relating to low-income housing credit, is computed on 100 percent
31of the qualified basis of the building.

32(ii) Notwithstanding clause (i), the California Tax Credit
33Allocation Committee may allocate the credit for buildings located
34in DDAs or QCTs that are restricted to having 50 percent of its
35occupants be special needs households, as defined in the California
36Code of Regulations by the California Tax Credit Allocation
37Committee, even if the taxpayer receives federal credits pursuant
38to Section 42(d)(5)(B) of the Internal Revenue Code, relating to
39increase in credit for buildings in high-cost areas, provided that
P113  1the credit allowed under this section shall not exceed 30 percent
2of the eligible basis of the building.

3(F) (i) The California Tax Credit Allocation Committee may
4allocate a credit under this section in exchange for a credit allocated
5pursuant to Section 42(d)(5)(B) of the Internal Revenue Code,
6relating to increase in credit for buildings in high-cost areas, in
7amounts up to 30 percent of the eligible basis of a building if the
8credits allowed under Section 42 of the Internal Revenue Code,
9relating to low-income housing credit, are reduced by an equivalent
10amount.

11(ii) An equivalent amount shall be determined by the California
12Tax Credit Allocation Committee based upon the relative amount
13required to produce an equivalent state tax credit to the taxpayer.

14(c) Section 42(b) of the Internal Revenue Code, relating to
15applicable percentage: 70 percent present value credit for certain
16new buildings; 30 percent present value credit for certain other
17buildings, shall be modified as follows:

18(1) In the case of any qualified low-income building placed in
19service by the housing sponsor during 1987, the term “applicable
20percentage” means 9 percent for each of the first three years and
213 percent for the fourth year for new buildings (whether or not the
22building is federally subsidized) and for existing buildings.

23(2) In the case of any qualified low-income building that receives
24an allocation after 1989 and is a new building not federally
25subsidized, the term “applicable percentage” means the following:

26(A) For each of the first three years, the percentage prescribed
27by the Secretary of the Treasury for new buildings that are not
28federally subsidized for the taxable year, determined in accordance
29with the requirements of Section 42(b)(2) of the Internal Revenue
30Code, relating to temporary minimum credit rate for nonfederally
31subsidized new buildings, in lieu of the percentage prescribed in
32Section 42(b)(1)(A) of the Internal Revenue Code.

33(B) For the fourth year, the difference between 30 percent and
34the sum of the applicable percentages for the first three years.

35(3) In the case of any qualified low-income building that receives
36an allocation after 1989 and that is a new building that is federally
37subsidized or that is an existing building that is “at risk of
38conversion,” the term “applicable percentage” means the following:

P114  1(A) For each of the first three years, the percentage prescribed
2by the Secretary of the Treasury for new buildings that are federally
3subsidized for the taxable year.

4(B) For the fourth year, the difference between 13 percent and
5the sum of the applicable percentages for the first three years.

6(4) For purposes of this section, the term “at risk of conversion,”
7with respect to an existing property means a property that satisfies
8all of the following criteria:

9(A) The property is a multifamily rental housing development
10in which at least 50 percent of the units receive governmental
11assistance pursuant to any of the following:

12(i) New construction, substantial rehabilitation, moderate
13rehabilitation, property disposition, and loan management set-aside
14programs, or any other program providing project-based assistance
15pursuant to Section 8 of the United States Housing Act of 1937,
16Section 1437f of Title 42 of the United States Code, as amended.

17(ii) The Below-Market-Interest-Rate Program pursuant to
18Section 221(d)(3) of the National Housing Act, Sections
191715l(d)(3) and (5) of Title 12 of the United States Code.

20(iii) Section 236 of the National Housing Act, Section 1715z-1
21of Title 12 of the United States Code.

22(iv) Programs for rent supplement assistance pursuant to Section
23101 of the Housing and Urban Development Act of 1965, Section
241701s of Title 12 of the United States Code, as amended.

25(v) Programs pursuant to Section 515 of the Housing Act of
261949, Section 1485 of Title 42 of the United States Code, as
27amended.

28(vi) The low-income housing credit program set forth in Section
2942 of the Internal Revenue Code, relating to low-income housing
30credit.

31(B) The restrictions on rent and income levels will terminate or
32the federally insured mortgage on the property is eligible for
33prepayment any time within five years before or after the date of
34application to the California Tax Credit Allocation Committee.

35(C) The entity acquiring the property enters into a regulatory
36agreement that requires the property to be operated in accordance
37with the requirements of this section for a period equal to the
38greater of 55 years or the life of the property.

39(D) The property satisfies the requirements of Section 42(e) of
40the Internal Revenue Code, relating to rehabilitation expenditures
P115  1treated as separate new building, except that the provisions of
2Section 42(e)(3)(A)(ii)(I) shall not apply.

3(d) The term “qualified low-income housing project” as defined
4in Section 42(c)(2) of the Internal Revenue Code, relating to
5qualified low-income building, is modified by adding the following
6requirements:

7(1) The taxpayer shall be entitled to receive a cash distribution
8from the operations of the project, after funding required reserves,
9that, at the election of the taxpayer, is equal to:

10(A) An amount not to exceed 8 percent of the lesser of:

11(i) The owner equity, which shall include the amount of the
12capital contributions actually paid to the housing sponsor and shall
13not include any amounts until they are paid on an investor note.

14(ii) Twenty percent of the adjusted basis of the building as of
15the close of the first taxable year of the credit period.

16(B) The amount of the cashflow from those units in the building
17that are not low-income units. For purposes of computing cashflow
18under this subparagraph, operating costs shall be allocated to the
19low-income units using the “floor space fraction,” as defined in
20Section 42 of the Internal Revenue Code, relating to low-income
21housing credit.

22(C) Any amount allowed to be distributed under subparagraph
23(A) that is not available for distribution during the first five years
24of the compliance period may be accumulated and distributed any
25time during the first 15 years of the compliance period but not
26thereafter.

27(2) The limitation on return applies in the aggregate to the
28partners if the housing sponsor is a partnership and in the aggregate
29to the shareholders if the housing sponsor is an “S” corporation.

30(3) The housing sponsor shall apply any cash available for
31distribution in excess of the amount eligible to be distributed under
32paragraph (1) to reduce the rent on rent-restricted units or to
33increase the number of rent-restricted units subject to the tests of
34Section 42(g)(1) of the Internal Revenue Code, relating to in
35general.

36(e) The provisions of Section 42(f) of the Internal Revenue
37Code, relating to definition and special rules relating to credit
38period, shall be modified as follows:

39(1) The term “credit period” as defined in Section 42(f)(1) of
40the Internal Revenue Code, relating to credit period defined, is
P116  1modified by substituting “four taxable years” for “10 taxable
2years.”

3(2) The special rule for the first taxable year of the credit period
4under Section 42(f)(2) of the Internal Revenue Code, relating to
5special rules for 1st year of credit period, shall not apply to the tax
6credit under this section.

7(3) Section 42(f)(3) of the Internal Revenue Code, relating to
8determination of applicable percentage with respect to increases
9in qualified basis after 1st year of credit period, is modified to
10read:

11If, as of the close of any taxable year in the compliance period,
12after the first year of the credit period, the qualified basis of any
13building exceeds the qualified basis of that building as of the close
14of the first year of the credit period, the housing sponsor, to the
15extent of its tax credit allocation, shall be eligible for a credit on
16the excess in an amount equal to the applicable percentage
17determined pursuant to subdivision (c) for the four-year period
18beginning with the taxable year in which the increase in qualified
19basis occurs.

20(f) The provisions of Section 42(h) of the Internal Revenue
21Code, relating to limitation on aggregate credit allowable with
22respect to projects located in a state, shall be modified as follows:

23(1) Section 42(h)(2) of the Internal Revenue Code, relating to
24allocated credit amount to apply to all taxable years ending during
25or after credit allocation year, does not apply and instead the
26following provisions apply:

27The total amount for the four-year credit period of the housing
28credit dollars allocated in a calendar year to any building shall
29reduce the aggregate housing credit dollar amount of the California
30Tax Credit Allocation Committee for the calendar year in which
31the allocation is made.

32(2) Paragraphs (3), (4), (5), (6)(E)(i)(II), (6)(F), (6)(G), (6)(I),
33(7), and (8) of Section 42(h) of the Internal Revenue Code, relating
34to limitation on aggregate credit allowable with respect to projects
35located in a state, do not apply to this section.

36(g) The aggregate housing credit dollar amount that may be
37allocated annually by the California Tax Credit Allocation
38Committee pursuant to this section, Section 12206, and Section
3923610.5 shall be an amount equal to the sum of all the following:

P117  1(1) Seventy million dollars ($70,000,000) for the 2001 calendar
2year, and, for the 2002 calendar year and each calendar year
3thereafter, seventy million dollars ($70,000,000) increased by the
4percentage, if any, by which the Consumer Price Index for the
5preceding calendar year exceeds the Consumer Price Index for the
62001 calendar year. For the purposes of this paragraph, the term
7“Consumer Price Index” means the last Consumer Price Index for
8All Urban Consumers published by the federal Department of
9Labor.

10(2) The unused housing credit ceiling, if any, for the preceding
11calendar years.

12(3) The amount of housing credit ceiling returned in the calendar
13year. For purposes of this paragraph, the amount of housing credit
14dollar amount returned in the calendar year equals the housing
15credit dollar amount previously allocated to any project that does
16not become a qualified low-income housing project within the
17period required by this section or to any project with respect to
18which an allocation is canceled by mutual consent of the California
19Tax Credit Allocation Committee and the allocation recipient.

20(4) Five hundred thousand dollars ($500,000) per calendar year
21for projects to provide farmworker housing, as defined in
22 subdivision (h) of Section 50199.7 of the Health and Safety Code.

23(5) The amount of any unallocated or returned credits under
24former Sections 17053.14, 23608.2, and 23608.3, as those sections
25read prior to January 1, 2009, until fully exhausted for projects to
26provide farmworker housing, as defined in subdivision (h) of
27Section 50199.7 of the Health and Safety Code.

28(h) The term “compliance period” as defined in Section 42(i)(1)
29of the Internal Revenue Code, relating to compliance period, is
30modified to mean, with respect to any building, the period of 30
31consecutive taxable years beginning with the first taxable year of
32the credit period with respect thereto.

33(i) Section 42(j) of the Internal Revenue Code, relating to
34recapture of credit, does not apply and the following requirements
35of this section shall be set forth in a regulatory agreement between
36the California Tax Credit Allocation Committee and the housing
37sponsor, and this agreement shall be subordinated, when required,
38to any lien or encumbrance of any banks or other institutional
39lenders to the project. The regulatory agreement entered into
40pursuant to subdivision (f) of Section 50199.14 of the Health and
P118  1Safety Code shall apply, provided that the agreement includes all
2of the following provisions:

3(1) A term not less than the compliance period.

4(2) A requirement that the agreement be recorded in the official
5records of the county in which the qualified low-income housing
6project is located.

7(3) A provision stating which state and local agencies can
8enforce the regulatory agreement in the event the housing sponsor
9fails to satisfy any of the requirements of this section.

10(4) A provision that the regulatory agreement shall be deemed
11a contract enforceable by tenants as third-party beneficiaries thereto
12and that allows individuals, whether prospective, present, or former
13occupants of the building, who meet the income limitation
14applicable to the building, the right to enforce the regulatory
15agreement in any state court.

16(5) A provision incorporating the requirements of Section 42
17of the Internal Revenue Code, relating to low-income housing
18credit, as modified by this section.

19(6) A requirement that the housing sponsor notify the California
20Tax Credit Allocation Committee or its designee if there is a
21determination by the Internal Revenue Service that the project is
22not in compliance with Section 42(g) of the Internal Revenue Code,
23relating to qualified low-income housing project.

24(7) A requirement that the housing sponsor, as security for the
25performance of the housing sponsor’s obligations under the
26regulatory agreement, assign the housing sponsor’s interest in rents
27that it receives from the project, provided that until there is a
28default under the regulatory agreement, the housing sponsor is
29entitled to collect and retain the rents.

30(8) A provision that the remedies available in the event of a
31default under the regulatory agreement that is not cured within a
32reasonable cure period include, but are not limited to, allowing
33any of the parties designated to enforce the regulatory agreement
34to collect all rents with respect to the project; taking possession of
35the project and operating the project in accordance with the
36regulatory agreement until the enforcer determines the housing
37sponsor is in a position to operate the project in accordance with
38 the regulatory agreement; applying to any court for specific
39performance; securing the appointment of a receiver to operate
40the project; or any other relief as may be appropriate.

P119  1(j) (1) The committee shall allocate the housing credit on a
2regular basis consisting of two or more periods in each calendar
3year during which applications may be filed and considered. The
4committee shall establish application filing deadlines, the maximum
5percentage of federal and state low-income housing tax credit
6ceiling that may be allocated by the committee in that period, and
7the approximate date on which allocations shall be made. If the
8enactment of federal or state law, the adoption of rules or
9regulations, or other similar events prevent the use of two allocation
10periods, the committee may reduce the number of periods and
11adjust the filing deadlines, maximum percentage of credit allocated,
12and the allocation dates.

13(2) The committee shall adopt a qualified allocation plan, as
14provided in Section 42(m)(1) of the Internal Revenue Code, relating
15to plans for allocation of credit among projects. In adopting this
16plan, the committee shall comply with the provisions of Sections
1742(m)(1)(B) and 42(m)(1)(C) of the Internal Revenue Code,
18relating to qualified allocation plan and relating to certain selection
19criteria must be used, respectively.

20(3) Notwithstanding Section 42(m) of the Internal Revenue
21Code, relating to responsibilities of housing credit agencies, the
22California Tax Credit Allocation Committee shall allocate housing
23credits in accordance with the qualified allocation plan and
24regulations, which shall include the following provisions:

25(A) All housing sponsors, as defined by paragraph (3) of
26subdivision (a), shall demonstrate at the time the application is
27filed with the committee that the project meets the following
28threshold requirements:

29(i) The housing sponsor shall demonstrate that there is a need
30and demand for low-income housing in the community or region
31for which it is proposed.

32(ii) The project’s proposed financing, including tax credit
33proceeds, shall be sufficient to complete the project and that the
34proposed operating income shall be adequate to operate the project
35for the extended use period.

36(iii) The project shall have enforceable financing commitments,
37either construction or permanent financing, for at least 50 percent
38of the total estimated financing of the project.

39(iv) The housing sponsor shall have and maintain control of the
40site for the project.

P120  1(v) The housing sponsor shall demonstrate that the project
2complies with all applicable local land use and zoning ordinances.

3(vi) The housing sponsor shall demonstrate that the project
4development team has the experience and the financial capacity
5to ensure project completion and operation for the extended use
6period.

7(vii) The housing sponsor shall demonstrate the amount of tax
8credit that is necessary for the financial feasibility of the project
9and its viability as a qualified low-income housing project
10throughout the extended use period, taking into account operating
11expenses, a supportable debt service, reserves, funds set aside for
12rental subsidies and required equity, and a development fee that
13does not exceed a specified percentage of the eligible basis of the
14project prior to inclusion of the development fee in the eligible
15basis, as determined by the committee.

16(B) The committee shall give a preference to those projects
17satisfying all of the threshold requirements of subparagraph (A)
18if both of the following apply:

19(i) The project serves the lowest income tenants at rents
20affordable to those tenants.

21(ii) The project is obligated to serve qualified tenants for the
22longest period.

23(C) In addition to the provisions of subparagraphs (A) and (B),
24the committee shall use the following criteria in allocating housing
25credits:

26(i) Projects serving large families in which a substantial number,
27as defined by the committee, of all residential units are low-income
28units with three and more bedrooms.

29(ii) Projects providing single-room occupancy units serving
30very low income tenants.

31(iii) Existing projects that are “at risk of conversion,” as defined
32by paragraph (4) of subdivision (c).

33(iv) Projects for which a public agency provides direct or indirect
34long-term financial support for at least 15 percent of the total
35project development costs or projects for which the owner’s equity
36constitutes at least 30 percent of the total project development
37costs.

38(v) Projects that provide tenant amenities not generally available
39to residents of low-income housing projects.

P121  1(4) For purposes of allocating credits pursuant to this section,
2the committee shall not give preference to any project by virtue
3of the date of submission of its application.

4(k) Section 42(l) of the Internal Revenue Code, relating to
5certifications and other reports to secretary, shall be modified as
6follows:

7The term “secretary” shall be replaced by the term “Franchise
8Tax Board.”

9(l) In the case in which the credit allowed under this section
10exceeds the net tax, the excess may be carried over to reduce the
11net tax in the following year, and succeeding years, if necessary,
12until the credit has been exhausted.

13(m) A project that received an allocation of a 1989 federal
14housing credit dollar amount shall be eligible to receive an
15allocation of a 1990 state housing credit dollar amount, subject to
16all of the following conditions:

17(1) The project was not placed in service prior to 1990.

18(2) To the extent the amendments made to this section by the
19Statutes of 1990 conflict with any provisions existing in this section
20prior to those amendments, the prior provisions of law shall prevail.

21(3) Notwithstanding paragraph (2), a project applying for an
22allocation under this subdivision is subject to the requirements of
23paragraph (3) of subdivision (j).

24(n) The credit period with respect to an allocation of credit in
251989 by the California Tax Credit Allocation Committee of which
26any amount is attributable to unallocated credit from 1987 or 1988
27shall not begin until after December 31, 1989.

28(o) The provisions of Section 11407(a) of Public Law 101-508,
29relating to the effective date of the extension of the low-income
30housing credit, apply to calendar years after 1989.

31(p) The provisions of Section 11407(c) of Public Law 101-508,
32relating to election to accelerate credit, do not apply.

33(q) (1) For a project that receives a preliminary reservation
34under this section beginning on or after January 1, 2016, and before
35Janaury 1, 2020, a taxpayer may make an irrevocable election in
36its application to the California Tax Credit Allocation Committee
37to sell all or any portion of any credit allowed under this section
38to one or more unrelated parties for each taxable year in which the
39credit is allowed subject to both of the following conditions:

P122  1(A) The credit is sold for consideration that is not less than 80
2percent of the amount of the credit.

3(B) The unrelated party or parties purchasing any or all of the
4credit pursuant to this subdivision is a taxpayer allowed the credit
5under this section for the taxable year of the purchase or any prior
6taxable year or is a taxpayer allowed the federal credit under
7Section 42 of the Internal Revenue Code, relating to low-income
8housing credit, for the taxable year of the purchase or any prior
9taxable year in connection with any project located in this state.
10For purposes of this subparagraph, “taxpayer allowed the credit
11under this section” means a taxpayer that is allowed the credit
12under this section without regard to the purchase of a credit
13pursuant to this subdivision.

14(2) (A) The taxpayer that originally received the credit shall
15report to the California Tax Credit Allocation Committee within
1610 days of the sale of the credit, in the form and manner specified
17by the California Tax Credit Allocation Committee, all required
18information regarding the purchase and sale of the credit, including
19the social security or other taxpayer identification number of the
20unrelated party or parties to whom the credit has been sold, the
21face amount of the credit sold, and the amount of consideration
22received by the taxpayer for the sale of the credit.

23(B) The California Tax Credit Allocation Committee shall
24provide an annual listing to the Franchise Tax Board, in a form
25and manner agreed upon by the California Tax Credit Allocation
26Committee and the Franchise Tax Board, of the taxpayers that
27have sold or purchased a credit pursuant to this subdivision.

28(3) (A) A credit may be sold pursuant to this subdivision to
29more than one unrelated party.

30(B) (i) Except as provided in clause (ii), a credit shall not be
31resold by the unrelated party to another taxpayer or other party.

32(ii) All or any portion of any credit allowed under this section
33may be resold once by an original purchaser to one or more
34unrelated parties, subject to all of the requirements of this
35subdivision.

36(4) Notwithstanding any other law, the taxpayer that originally
37received the credit that is sold pursuant to paragraph (1) shall
38remain solely liable for all obligations and liabilities imposed on
39the taxpayer by this section with respect to the credit, none of
40which shall apply to a party to whom the credit has been sold or
P123  1subsequently transferred. Parties that purchase credits pursuant to
2paragraph (1) shall be entitled to utilize the purchased credits in
3the same manner in which the taxpayer that originally received
4the credit could utilize them.

5(5) A taxpayer shall not sell a credit allowed by this section if
6the taxpayer was allowed the credit on any tax return of the
7taxpayer.

8(6) Notwithstanding paragraph (1), the taxpayer, with the
9approval of the Executive Director of the California Tax Credit
10Allocation Committee, may rescind the election to sell all or any
11portion of the credit allowed under this section if the consideration
12for the credit falls below 80 percent of the amount of the credit
13after the California Tax Credit Allocation Committee reservation.

14(r) The California Tax Credit Allocation Committee may
15prescribe rules, guidelines, or procedures necessary or appropriate
16to carry out the purposes of this section, including any guidelines
17regarding the allocation of the credit allowed under this section.
18Chapter 3.5 (commencing with Section 11340) of Part 1 of Division
193 of Title 2 of the Government Code shall not apply to any rule,
20guideline, or procedure prescribed by the California Tax Credit
21Allocation Committee pursuant to this section.

22(s) The amendments to this section made by Chapter 1222 of
23the Statutes of 1993 apply only to taxable years beginning on or
24after January 1, 1994.

25(t) This section shall remain in effect on and after December 1,
261990, for as long as Section 42 of the Internal Revenue Code,
27relating to low-income housing credit, remains in effect. Any
28unused credit may continue to be carried forward, as provided in
29subdivision (l), until the credit has been exhausted.

30

SEC. 89.  

Section 18900.24 of the Revenue and Taxation Code
31 is amended to read:

32

18900.24.  

All money transferred to the Habitat for Humanity
33Fund, upon appropriation by the Legislature, shall be allocated as
34follows:

35(a) To the Franchise Tax Board, the Controller, and the
36Department of Housing and Community Development for
37reimbursement of all costs incurred by the Franchise Tax Board,
38the Controller, and the Department of Housing and Community
39Development in connection with their duties under this article.

P124  1(b) (1) To the Department of Housing and Community
2Development for disbursement to Habitat for Humanity of
3California, Inc., a California nonprofit public benefit corporation
4representing and supporting California Habitat for Humanity
5affiliates as a state-support organization.

6(2) Habitat for Humanity of California, Inc., shall submit a plan
7to the Department of Housing and Community Development,
8within 60 calendar days of receiving a disbursement, for the use
9and competitive project-specific distribution of moneys pursuant
10to this article to Habitat for Humanity affiliates in California that
11are in active status, as described on the Business Search page of
12the Secretary of State’s Internet Web site, and that are exempt
13from federal income taxation as an organization described in
14Section 501(c)(3) of the Internal Revenue Code.

15(c) Habitat for Humanity of California, Inc., shall not use more
16than 5 percent of the moneys received pursuant to this article for
17administrative expenses.

18(d) A Habitat for Humanity affiliate shall not use the moneys
19received pursuant to this article for administrative expenses or for
20purposes outside of California.

21(e) Habitat for Humanity of California, Inc., shall submit an
22annual audit of the program to the Department of Housing and
23Community Development within 60 calendar days of the
24completion of the audit.

25

SEC. 90.  

Section 23610.5 of the Revenue and Taxation Code
26 is amended to read:

27

23610.5.  

(a) (1) There shall be allowed as a credit against the
28“tax,” defined by Section 23036, a state low-income housing tax
29credit in an amount equal to the amount determined in subdivision
30(c), computed in accordance with Section 42 of the Internal
31Revenue Code, relating to low-income housing credit, except as
32otherwise provided in this section.

33(2) “Taxpayer,” for purposes of this section, means the sole
34owner in the case of a “C” corporation, the partners in the case of
35a partnership, and the shareholders in the case of an “S”
36corporation.

37(3) “Housing sponsor,” for purposes of this section, means the
38sole owner in the case of a “C” corporation, the partnership in the
39case of a partnership, and the “S” corporation in the case of an “S”
40corporation.

P125  1(b) (1) The amount of the credit allocated to any housing
2sponsor shall be authorized by the California Tax Credit Allocation
3Committee, or any successor thereof, based on a project’s need
4for the credit for economic feasibility in accordance with the
5requirements of this section.

6(A) The low-income housing project shall be located in
7California and shall meet either of the following requirements:

8(i) Except for projects to provide farmworker housing, as defined
9in subdivision (h) of Section 50199.7 of the Health and Safety
10Code, that are allocated credits solely under the set-aside described
11in subdivision (c) of Section 50199.20 of the Health and Safety
12Code, the project’s housing sponsor has been allocated by the
13 California Tax Credit Allocation Committee a credit for federal
14income tax purposes under Section 42 of the Internal Revenue
15Code, relating to low-income housing credit.

16(ii) It qualifies for a credit under Section 42(h)(4)(B) of the
17Internal Revenue Code, relating to special rule where 50 percent
18or more of building is financed with tax-exempt bonds subject to
19volume cap.

20(B) The California Tax Credit Allocation Committee shall not
21require fees for the credit under this section in addition to those
22fees required for applications for the tax credit pursuant to Section
2342 of the Internal Revenue Code, relating to low-income housing
24credit. The committee may require a fee if the application for the
25credit under this section is submitted in a calendar year after the
26year the application is submitted for the federal tax credit.

27(C) (i) For a project that receives a preliminary reservation of
28the state low-income housing tax credit, allowed pursuant to
29subdivision (a), on or after January 1, 2009, and before January 1,
302020, the credit shall be allocated to the partners of a partnership
31owning the project in accordance with the partnership agreement,
32regardless of how the federal low-income housing tax credit with
33respect to the project is allocated to the partners, or whether the
34allocation of the credit under the terms of the agreement has
35substantial economic effect, within the meaning of Section 704(b)
36of the Internal Revenue Code, relating to determination of
37distributive share.

38(ii) To the extent the allocation of the credit to a partner under
39this section lacks substantial economic effect, any loss or deduction
40otherwise allowable under this part that is attributable to the sale
P126  1or other disposition of that partner’s partnership interest made prior
2to the expiration of the federal credit shall not be allowed in the
3taxable year in which the sale or other disposition occurs, but shall
4instead be deferred until and treated as if it occurred in the first
5taxable year immediately following the taxable year in which the
6federal credit period expires for the project described in clause (i).

7(iii) This subparagraph does not apply to a project that receives
8a preliminary reservation of state low-income housing tax credits
9under the set-aside described in subdivision (c) of Section 50199.20
10of the Health and Safety Code unless the project also receives a
11preliminary reservation of federal low-income housing tax credits.

12(2) (A) The California Tax Credit Allocation Committee shall
13certify to the housing sponsor the amount of tax credit under this
14 section allocated to the housing sponsor for each credit period.

15(B) In the case of a partnership or an “S” corporation, the
16housing sponsor shall provide a copy of the California Tax Credit
17Allocation Committee certification to the taxpayer.

18(C) The taxpayer shall, upon request, provide a copy of the
19certification to the Franchise Tax Board.

20(D) All elections made by the taxpayer pursuant to Section 42
21of the Internal Revenue Code, relating to low-income housing
22credit, apply to this section.

23(E) (i) Except as described in clause (ii), for buildings located
24in designated difficult development areas (DDAs) or qualified
25census tracts (QCTs), as defined in Section 42(d)(5)(B) of the
26Internal Revenue Code, relating to increase in credit for buildings
27in high-cost areas, credits may be allocated under this section in
28the amounts prescribed in subdivision (c), provided that the amount
29of credit allocated under Section 42 of the Internal Revenue Code,
30relating to low-income housing credit, is computed on 100 percent
31of the qualified basis of the building.

32(ii) Notwithstanding clause (i), the California Tax Credit
33Allocation Committee may allocate the credit for buildings located
34in DDAs or QCTs that are restricted to having 50 percent of its
35occupants be special needs households, as defined in the California
36Code of Regulations by the California Tax Credit Allocation
37Committee, even if the taxpayer receives federal credits pursuant
38to Section 42(d)(5)(B) of the Internal Revenue Code, relating to
39increase in credit for buildings in high cost areas, provided that
P127  1the credit allowed under this section shall not exceed 30 percent
2of the eligible basis of the building.

3(F) (i) The California Tax Credit Allocation Committee may
4allocate a credit under this section in exchange for a credit allocated
5pursuant to Section 42(d)(5)(B) of the Internal Revenue Code,
6relating to increase in credit for buildings in high cost areas, in
7amounts up to 30 percent of the eligible basis of a building if the
8credits allowed under Section 42 of the Internal Revenue Code,
9relating to low-income housing credit, are reduced by an equivalent
10amount.

11(ii) An equivalent amount shall be determined by the California
12Tax Credit Allocation Committee based upon the relative amount
13required to produce an equivalent state tax credit to the taxpayer.

14(c) Section 42(b) of the Internal Revenue Code, relating to
15applicable percentage: 70 percent present value credit for certain
16new buildings; 30 percent present value credit for certain other
17buildings, shall be modified as follows:

18(1) In the case of any qualified low-income building placed in
19service by the housing sponsor during 1987, the term “applicable
20percentage” means 9 percent for each of the first three years and
213 percent for the fourth year for new buildings (whether or not the
22building is federally subsidized) and for existing buildings.

23(2) In the case of any qualified low-income building that receives
24an allocation after 1989 and is a new building not federally
25subsidized, the term “applicable percentage” means the following:

26(A) For each of the first three years, the percentage prescribed
27by the Secretary of the Treasury for new buildings that are not
28federally subsidized for the taxable year, determined in accordance
29with the requirements of Section 42(b)(2) of the Internal Revenue
30Code, relating to temporary minimum credit rate for nonfederally
31subsidized new buildings, in lieu of the percentage prescribed in
32Section 42(b)(1)(A) of the Internal Revenue Code.

33(B) For the fourth year, the difference between 30 percent and
34the sum of the applicable percentages for the first three years.

35(3) In the case of any qualified low-income building that receives
36an allocation after 1989 and that is a new building that is federally
37subsidized or that is an existing building that is “at risk of
38conversion,” the term “applicable percentage” means the following:

P128  1(A) For each of the first three years, the percentage prescribed
2by the Secretary of the Treasury for new buildings that are federally
3subsidized for the taxable year.

4(B) For the fourth year, the difference between 13 percent and
5the sum of the applicable percentages for the first three years.

6(4) For purposes of this section, the term “at risk of conversion,”
7with respect to an existing property means a property that satisfies
8all of the following criteria:

9(A) The property is a multifamily rental housing development
10in which at least 50 percent of the units receive governmental
11assistance pursuant to any of the following:

12(i) New construction, substantial rehabilitation, moderate
13rehabilitation, property disposition, and loan management set-aside
14programs, or any other program providing project-based assistance
15pursuant to Section 8 of the United States Housing Act of 1937,
16Section 1437f of Title 42 of the United States Code, as amended.

17(ii) The Below-Market-Interest-Rate Program pursuant to
18Section 221(d)(3) of the National Housing Act, Sections
191715l(d)(3) and (5) of Title 12 of the United States Code.

20(iii) Section 236 of the National Housing Act, Section 1715z-1
21of Title 12 of the United States Code.

22(iv) Programs for rent supplement assistance pursuant to Section
23101 of the Housing and Urban Development Act of 1965, Section
241701s of Title 12 of the United States Code, as amended.

25(v) Programs pursuant to Section 515 of the Housing Act of
261949, Section 1485 of Title 42 of the United States Code, as
27amended.

28(vi) The low-income housing credit program set forth in Section
2942 of the Internal Revenue Code, relating to low-income housing
30credit.

31(B) The restrictions on rent and income levels will terminate or
32the federally insured mortgage on the property is eligible for
33prepayment any time within five years before or after the date of
34application to the California Tax Credit Allocation Committee.

35(C) The entity acquiring the property enters into a regulatory
36agreement that requires the property to be operated in accordance
37with the requirements of this section for a period equal to the
38greater of 55 years or the life of the property.

39(D) The property satisfies the requirements of Section 42(e) of
40the Internal Revenue Code, relating to rehabilitation expenditures
P129  1treated as separate new building, except that the provisions of
2Section 42(e)(3)(A)(ii)(I) shall not apply.

3(d) The term “qualified low-income housing project” as defined
4in Section 42(c)(2) of the Internal Revenue Code, relating to
5qualified low-income building, is modified by adding the following
6requirements:

7(1) The taxpayer shall be entitled to receive a cash distribution
8from the operations of the project, after funding required reserves,
9that, at the election of the taxpayer, is equal to:

10(A) An amount not to exceed 8 percent of the lesser of:

11(i) The owner equity, which shall include the amount of the
12capital contributions actually paid to the housing sponsor and shall
13not include any amounts until they are paid on an investor note.

14(ii) Twenty percent of the adjusted basis of the building as of
15the close of the first taxable year of the credit period.

16(B) The amount of the cashflow from those units in the building
17that are not low-income units. For purposes of computing cashflow
18under this subparagraph, operating costs shall be allocated to the
19low-income units using the “floor space fraction,” as defined in
20Section 42 of the Internal Revenue Code, relating to low-income
21housing credit.

22(C) Any amount allowed to be distributed under subparagraph
23(A) that is not available for distribution during the first five years
24of the compliance period may be accumulated and distributed any
25time during the first 15 years of the compliance period but not
26thereafter.

27(2) The limitation on return applies in the aggregate to the
28partners if the housing sponsor is a partnership and in the aggregate
29to the shareholders if the housing sponsor is an “S” corporation.

30(3) The housing sponsor shall apply any cash available for
31distribution in excess of the amount eligible to be distributed under
32paragraph (1) to reduce the rent on rent-restricted units or to
33increase the number of rent-restricted units subject to the tests of
34Section 42(g)(1) of the Internal Revenue Code, relating to in
35general.

36(e) The provisions of Section 42(f) of the Internal Revenue
37Code, relating to definition and special rules relating to credit
38period, shall be modified as follows:

39(1) The term “credit period” as defined in Section 42(f)(1) of
40the Internal Revenue Code, relating to credit period defined, is
P130  1modified by substituting “four taxable years” for “10 taxable
2years.”

3(2) The special rule for the first taxable year of the credit period
4under Section 42(f)(2) of the Internal Revenue Code, relating to
5special rule for 1st year of credit period, shall not apply to the tax
6credit under this section.

7(3) Section 42(f)(3) of the Internal Revenue Code, relating to
8determination of applicable percentage with respect to increases
9in qualified basis after 1st year of credit period, is modified to
10read:

11If, as of the close of any taxable year in the compliance period,
12after the first year of the credit period, the qualified basis of any
13building exceeds the qualified basis of that building as of the close
14of the first year of the credit period, the housing sponsor, to the
15extent of its tax credit allocation, shall be eligible for a credit on
16the excess in an amount equal to the applicable percentage
17determined pursuant to subdivision (c) for the four-year period
18beginning with the later of the taxable years in which the increase
19in qualified basis occurs.

20(f) The provisions of Section 42(h) of the Internal Revenue
21Code, relating to limitation on aggregate credit allowable with
22respect to projects located in a state, shall be modified as follows:

23(1) Section 42(h)(2) of the Internal Revenue Code, relating to
24allocated credit amount to apply to all taxable years ending during
25or after credit allocation year, does not apply and instead the
26following provisions apply:

27The total amount for the four-year credit period of the housing
28credit dollars allocated in a calendar year to any building shall
29reduce the aggregate housing credit dollar amount of the California
30Tax Credit Allocation Committee for the calendar year in which
31the allocation is made.

32(2) Paragraphs (3), (4), (5), (6)(E)(i)(II), (6)(F), (6)(G), (6)(I),
33(7), and (8) of Section 42(h) of the Internal Revenue Code, relating
34to limitation on aggregate credit allowable with respect to projects
35located in a state, do not apply to this section.

36(g) The aggregate housing credit dollar amount that may be
37allocated annually by the California Tax Credit Allocation
38Committee pursuant to this section, Section 12206, and Section
3917058 shall be an amount equal to the sum of all the following:

P131  1(1) Seventy million dollars ($70,000,000) for the 2001 calendar
2year, and, for the 2002 calendar year and each calendar year
3thereafter, seventy million dollars ($70,000,000) increased by the
4percentage, if any, by which the Consumer Price Index for the
5preceding calendar year exceeds the Consumer Price Index for the
62001 calendar year. For the purposes of this paragraph, the term
7“Consumer Price Index” means the last Consumer Price Index for
8All Urban Consumers published by the federal Department of
9Labor.

10(2) The unused housing credit ceiling, if any, for the preceding
11calendar years.

12(3) The amount of housing credit ceiling returned in the calendar
13year. For purposes of this paragraph, the amount of housing credit
14dollar amount returned in the calendar year equals the housing
15credit dollar amount previously allocated to any project that does
16not become a qualified low-income housing project within the
17period required by this section or to any project with respect to
18which an allocation is canceled by mutual consent of the California
19Tax Credit Allocation Committee and the allocation recipient.

20(4) Five hundred thousand dollars ($500,000) per calendar year
21for projects to provide farmworker housing, as defined in
22 subdivision (h) of Section 50199.7 of the Health and Safety Code.

23(5) The amount of any unallocated or returned credits under
24former Sections 17053.14, 23608.2, and 23608.3, as those sections
25read prior to January 1, 2009, until fully exhausted for projects to
26provide farmworker housing, as defined in subdivision (h) of
27Section 50199.7 of the Health and Safety Code.

28(h) The term “compliance period” as defined in Section 42(i)(1)
29of the Internal Revenue Code, relating to compliance period, is
30modified to mean, with respect to any building, the period of 30
31consecutive taxable years beginning with the first taxable year of
32the credit period with respect thereto.

33(i) Section 42(j) of the Internal Revenue Code, relating to
34recapture of credit, does not apply and the following shall be
35substituted in its place:

36The requirements of this section shall be set forth in a regulatory
37agreement between the California Tax Credit Allocation Committee
38and the housing sponsor, and this agreement shall be subordinated,
39when required, to any lien or encumbrance of any banks or other
40institutional lenders to the project. The regulatory agreement
P132  1entered into pursuant to subdivision (f) of Section 50199.14 of the
2Health and Safety Code shall apply, provided that the agreement
3includes all of the following provisions:

4(1) A term not less than the compliance period.

5(2) A requirement that the agreement be recorded in the official
6records of the county in which the qualified low-income housing
7project is located.

8(3) A provision stating which state and local agencies can
9enforce the regulatory agreement in the event the housing sponsor
10fails to satisfy any of the requirements of this section.

11(4) A provision that the regulatory agreement shall be deemed
12a contract enforceable by tenants as third-party beneficiaries thereto
13and that allows individuals, whether prospective, present, or former
14occupants of the building, who meet the income limitation
15applicable to the building, the right to enforce the regulatory
16agreement in any state court.

17(5) A provision incorporating the requirements of Section 42
18of the Internal Revenue Code, relating to low-income housing
19credit, as modified by this section.

20(6) A requirement that the housing sponsor notify the California
21Tax Credit Allocation Committee or its designee if there is a
22determination by the Internal Revenue Service that the project is
23not in compliance with Section 42(g) of the Internal Revenue Code,
24relating to qualified low-income housing project.

25(7) A requirement that the housing sponsor, as security for the
26performance of the housing sponsor’s obligations under the
27regulatory agreement, assign the housing sponsor’s interest in rents
28that it receives from the project, provided that until there is a
29default under the regulatory agreement, the housing sponsor is
30entitled to collect and retain the rents.

31(8) A provision that the remedies available in the event of a
32default under the regulatory agreement that is not cured within a
33reasonable cure period include, but are not limited to, allowing
34any of the parties designated to enforce the regulatory agreement
35to collect all rents with respect to the project; taking possession of
36the project and operating the project in accordance with the
37regulatory agreement until the enforcer determines the housing
38sponsor is in a position to operate the project in accordance with
39the regulatory agreement; applying to any court for specific
P133  1performance; securing the appointment of a receiver to operate
2the project; or any other relief as may be appropriate.

3(j) (1) The committee shall allocate the housing credit on a
4regular basis consisting of two or more periods in each calendar
5year during which applications may be filed and considered. The
6committee shall establish application filing deadlines, the maximum
7percentage of federal and state low-income housing tax credit
8ceiling that may be allocated by the committee in that period, and
9the approximate date on which allocations shall be made. If the
10enactment of federal or state law, the adoption of rules or
11regulations, or other similar events prevent the use of two allocation
12periods, the committee may reduce the number of periods and
13adjust the filing deadlines, maximum percentage of credit allocated,
14and the allocation dates.

15(2) The committee shall adopt a qualified allocation plan, as
16provided in Section 42(m)(1) of the Internal Revenue Code, relating
17to plans for allocation of credit among projects. In adopting this
18plan, the committee shall comply with the provisions of Sections
1942(m)(1)(B) and 42(m)(1)(C) of the Internal Revenue Code,
20relating to qualified allocation plan and relating to certain selection
21criteria must be used, respectively.

22(3) Notwithstanding Section 42(m) of the Internal Revenue
23Code, relating to responsibilities of housing credit agencies, the
24California Tax Credit Allocation Committee shall allocate housing
25credits in accordance with the qualified allocation plan and
26regulations, which shall include the following provisions:

27(A) All housing sponsors, as defined by paragraph (3) of
28subdivision (a), shall demonstrate at the time the application is
29filed with the committee that the project meets the following
30threshold requirements:

31(i) The housing sponsor shall demonstrate that there is a need
32for low-income housing in the community or region for which it
33is proposed.

34(ii) The project’s proposed financing, including tax credit
35proceeds, shall be sufficient to complete the project and shall be
36adequate to operate the project for the extended use period.

37(iii) The project shall have enforceable financing commitments,
38either construction or permanent financing, for at least 50 percent
39of the total estimated financing of the project.

P134  1(iv) The housing sponsor shall have and maintain control of the
2site for the project.

3(v) The housing sponsor shall demonstrate that the project
4complies with all applicable local land use and zoning ordinances.

5(vi) The housing sponsor shall demonstrate that the project
6development team has the experience and the financial capacity
7to ensure project completion and operation for the extended use
8period.

9(vii) The housing sponsor shall demonstrate the amount of tax
10credit that is necessary for the financial feasibility of the project
11and its viability as a qualified low-income housing project
12throughout the extended use period, taking into account operating
13expenses, a supportable debt service, reserves, funds set aside for
14rental subsidies and required equity, and a development fee that
15does not exceed a specified percentage of the eligible basis of the
16project prior to inclusion of the development fee in the eligible
17basis, as determined by the committee.

18(B) The committee shall give a preference to those projects
19satisfying all of the threshold requirements of subparagraph (A)
20if both of the following apply:

21(i) The project serves the lowest income tenants at rents
22affordable to those tenants.

23(ii) The project is obligated to serve qualified tenants for the
24longest period.

25(C) In addition to the provisions of subparagraphs (A) and (B),
26the committee shall use the following criteria in allocating housing
27credits:

28(i) Projects serving large families in which a substantial number,
29as defined by the committee, of all residential units are low-income
30units with three and more bedrooms.

31(ii) Projects providing single-room occupancy units serving
32very low income tenants.

33(iii) Existing projects that are “at risk of conversion,” as defined
34by paragraph (4) of subdivision (c).

35(iv) Projects for which a public agency provides direct or indirect
36long-term financial support for at least 15 percent of the total
37project development costs or projects for which the owner’s equity
38constitutes at least 30 percent of the total project development
39costs.

P135  1(v) Projects that provide tenant amenities not generally available
2to residents of low-income housing projects.

3(4) For purposes of allocating credits pursuant to this section,
4the committee shall not give preference to any project by virtue
5of the date of submission of its application except to break a tie
6when two or more of the projects have an equal rating.

7(5) Not less than 20 percent of the low-income housing tax
8credits available annually under this section, Section 12206, and
9Section 17058 shall be set aside for allocation to rural areas as
10defined in Section 50199.21 of the Health and Safety Code. Any
11amount of credit set aside for rural areas remaining on or after
12October 31 of any calendar year shall be available for allocation
13to any eligible project. No amount of credit set aside for rural areas
14shall be considered available for any eligible project so long as
15there are eligible rural applications pending on October 31.

16(k) Section 42(l) of the Internal Revenue Code, relating to
17certifications and other reports to secretary, shall be modified as
18follows:

19The term “secretary” shall be replaced by the term “Franchise
20Tax Board.”

21(l) In the case in which the credit allowed under this section
22exceeds the “tax,” the excess may be carried over to reduce the
23“tax” in the following year, and succeeding years if necessary,
24until the credit has been exhausted.

25(m) A project that received an allocation of a 1989 federal
26housing credit dollar amount shall be eligible to receive an
27allocation of a 1990 state housing credit dollar amount, subject to
28all of the following conditions:

29(1) The project was not placed in service prior to 1990.

30(2) To the extent the amendments made to this section by the
31Statutes of 1990 conflict with any provisions existing in this section
32prior to those amendments, the prior provisions of law shall prevail.

33(3) Notwithstanding paragraph (2), a project applying for an
34allocation under this subdivision is subject to the requirements of
35paragraph (3) of subdivision (j).

36(n) The credit period with respect to an allocation of credit in
371989 by the California Tax Credit Allocation Committee of which
38any amount is attributable to unallocated credit from 1987 or 1988
39shall not begin until after December 31, 1989.

P136  1(o) The provisions of Section 11407(a) of Public Law 101-508,
2relating to the effective date of the extension of the low-income
3housing credit, apply to calendar years after 1989.

4(p) The provisions of Section 11407(c) of Public Law 101-508,
5relating to election to accelerate credit, do not apply.

6(q) (1) A corporation may elect to assign any portion of any
7credit allowed under this section to one or more affiliated
8corporations for each taxable year in which the credit is allowed.
9For purposes of this subdivision, “affiliated corporation” has the
10meaning provided in subdivision (b) of Section 25110, as that
11section was amended by Chapter 881 of the Statutes of 1993, as
12of the last day of the taxable year in which the credit is allowed,
13except that “100 percent” is substituted for “more than 50 percent”
14wherever it appears in the section, as that section was amended by
15Chapter 881 of the Statutes of 1993, and “voting common stock”
16is substituted for “voting stock” wherever it appears in the section,
17as that section was amended by Chapter 881 of the Statutes of
181993.

19(2) The election provided in paragraph (1):

20(A) May be based on any method selected by the corporation
21that originally receives the credit.

22(B) Shall be irrevocable for the taxable year the credit is allowed,
23once made.

24(C) May be changed for any subsequent taxable year if the
25election to make the assignment is expressly shown on each of the
26returns of the affiliated corporations that assign and receive the
27credits.

28(r) (1) For a project that receives a preliminary reservation
29under this section beginning on or after January 1, 2016, and before
30January 1, 2020, a taxpayer may make an irrevocable election in
31its application to the California Tax Credit Allocation Committee
32to sell all or any portion of any credit allowed under this section
33to one or more unrelated parties for each taxable year in which the
34credit is allowed subject to both of the following conditions:

35(A) The credit is sold for consideration that is not less than 80
36percent of the amount of the credit.

37(B) (i) The unrelated party or parties purchasing any or all of
38the credit pursuant to this subdivision is a taxpayer allowed the
39credit under this section for the taxable year of the purchase or any
40prior taxable year or is a taxpayer allowed the federal credit under
P137  1Section 42 of the Internal Revenue Code, relating to low-income
2housing credit, for the taxable year of the purchase or any prior
3taxable year in connection with any project located in this state.

4(ii) For purposes of this subparagraph, “taxpayer allowed the
5credit under this section” means a taxpayer that is allowed the
6credit under this section without regard to the purchase of a credit
7pursuant to this subdivision without regard to any of the following:

8(I) The purchase of a credit under this section pursuant to this
9subdivision.

10(II) The assignment of a credit under this section pursuant to
11subdivision (q).

12(III) The assignment of a credit under this section pursuant to
13Section 23363.

14(2) (A) The taxpayer that originally received the credit shall
15report to the California Tax Credit Allocation Committee within
1610 days of the sale of the credit, in the form and manner specified
17by the California Tax Credit Allocation Committee, all required
18information regarding the purchase and sale of the credit, including
19the social security or other taxpayer identification number of the
20unrelated party or parties to whom the credit has been sold, the
21face amount of the credit sold, and the amount of consideration
22received by the taxpayer for the sale of the credit.

23(B) The California Tax Credit Allocation Committee shall
24provide an annual listing to the Franchise Tax Board, in a form
25and manner agreed upon by the California Tax Credit Allocation
26Committee and the Franchise Tax Board, of the taxpayers that
27have sold or purchased a credit pursuant to this subdivision.

28(3) (A) A credit may be sold pursuant to this subdivision to
29more than one unrelated party.

30(B) (i) Except as provided in clause (ii), a credit shall not be
31resold by the unrelated party to another taxpayer or other party.

32(ii) All or any portion of any credit allowed under this section
33may be resold once by an original purchaser to one or more
34unrelated parties, subject to all of the requirements of this
35subdivision.

36(4) Notwithstanding any other law, the taxpayer that originally
37received the credit that is sold pursuant to paragraph (1) shall
38remain solely liable for all obligations and liabilities imposed on
39the taxpayer by this section with respect to the credit, none of
40which shall apply to a party to whom the credit has been sold or
P138  1subsequently transferred. Parties that purchase credits pursuant to
2paragraph (1) shall be entitled to utilize the purchased credits in
3the same manner in which the taxpayer that originally received
4the credit could utilize them.

5(5) A taxpayer shall not sell a credit allowed by this section if
6the taxpayer was allowed the credit on any tax return of the
7taxpayer.

8(6) Notwithstanding paragraph (1), the taxpayer, with the
9approval of the Executive Director of the California Tax Credit
10Allocation Committee, may rescind the election to sell all or any
11portion of the credit allowed under this section if the consideration
12for the credit falls below 80 percent of the amount of the credit
13after the California Tax Credit Allocation Committee reservation.

14(s) The California Tax Credit Allocation Committee may
15prescribe rules, guidelines, or procedures necessary or appropriate
16to carry out the purposes of this section, including any guidelines
17regarding the allocation of the credit allowed under this section.
18Chapter 3.5 (commencing with Section 11340) of Part 1 of Division
193 of Title 2 of the Government Code shall not apply to any rule,
20guideline, or procedure prescribed by the California Tax Credit
21Allocation Committee pursuant to this section.

22(t) Any unused credit may continue to be carried forward, as
23provided in subdivision (l), until the credit has been exhausted.

24(u) This section shall remain in effect on and after December
251, 1990, for as long as Section 42 of the Internal Revenue Code,
26relating to low-income housing credit, remains in effect.

27(v) The amendments to this section made by Chapter 1222 of
28the Statutes of 1993 shall apply only to taxable years beginning
29on or after January 1, 1994, except that paragraph (1) of subdivision
30(q), as amended, shall apply to taxable years beginning on or after
31January 1, 1993.

32

SEC. 91.  

Section 23688.5 is added to the Revenue and Taxation
33Code
, to read:

34

23688.5.  

(a) In the case of a qualified taxpayer who donates
35fresh fruits or fresh vegetables to a food bank located in California
36under Chapter 5 (commencing with Section 58501) of Part 1 of
37Division 21 of the Food and Agricultural Code, for taxable years
38beginning on or after January 1, 2017, and before January 1, 2022,
39there shall be allowed as a credit against the “tax,” defined by
P139  1Section 23036, an amount equal to 15 percent of the qualified
2value of those fresh fruits or fresh vegetables.

3(b) For purposes of this section:

4(1) “Qualified taxpayer” means the person responsible for
5planting a crop, managing the crop, and harvesting the crop from
6the land.

7(2) (A) “Qualified value” shall be calculated by using the
8weighted average wholesale price based on the qualified taxpayer’s
9total like grade wholesale sales of the donated item sold within
10the calendar month of the qualified taxpayer’s donation.

11(B) If no wholesale sales of the donated item have occurred in
12the calendar month of the qualified taxpayer’s donation, the
13“qualified value” shall be equal to the nearest regional wholesale
14market price for the calendar month of the donation based upon
15the same grade products as published by the United States
16Department of Agriculture’s Agricultural Marketing Service or its
17successor.

18(c) If the credit allowed by this section is claimed by the
19qualified taxpayer, any deduction otherwise allowed under this
20part for that amount of the cost paid or incurred by the qualified
21taxpayer that is eligible for the credit shall be reduced by the
22amount of the credit provided in subdivision (a).

23(d) The donor shall provide to the nonprofit organization the
24qualified value of the donated fresh fruits or fresh vegetables and
25information regarding the origin of where the donated fruits or
26vegetables were grown, and upon receipt of the donated fresh fruits
27or fresh vegetables, the nonprofit organization shall provide a
28certificate to the donor. The certificate shall contain a statement
29signed and dated by a person authorized by that organization that
30the product is donated under Chapter 5 (commencing with Section
3158501) of Part 1 of Division 21 of the Food and Agricultural Code.
32The certificate shall also contain the type and quantity of product
33donated, the name of donor or donors, the name and address of
34the donee nonprofit organization, and, as provided by the donor,
35the qualified value of the donated fresh fruits or fresh vegetables
36and its origins. Upon the request of the Franchise Tax Board, the
37qualified taxpayer shall provide a copy of the certification to the
38Franchise Tax Board.

39(e) The credit allowed by this section may be claimed only on
40a timely filed original return.

P140  1(f) In the case where the credit allowed by this section exceeds
2the “tax,” the excess may be carried over to reduce the “tax” in
3the following year, and for the six succeeding years if necessary,
4until the credit has been exhausted.

5(g) This section shall be repealed on December 1, 2022.

6

SEC. 92.  

Section 31020 of the Revenue and Taxation Code is
7repealed.

8

SEC. 93.  

Section 1058.5 of the Water Code is amended to read:

9

1058.5.  

(a) This section applies to any emergency regulation
10adopted by the board for which the board makes both of the
11following findings:

12(1) The emergency regulation is adopted to prevent the waste,
13unreasonable use, unreasonable method of use, or unreasonable
14method of diversion, of water, to promote water recycling or water
15conservation, to require curtailment of diversions when water is
16not available under the diverter’s priority of right, or in furtherance
17of any of the foregoing, to require reporting of diversion or use or
18the preparation of monitoring reports.

19(2) The emergency regulation is adopted in response to
20conditions which exist, or are threatened, in a critically dry year
21immediately preceded by two or more consecutive below normal,
22dry, or critically dry years or during a period for which the
23Governor has issued a proclamation of a state of emergency under
24the California Emergency Services Act (Chapter 7 (commencing
25with Section 8550) of Division 1 of Title 2 of the Government
26Code) based on drought conditions.

27(b) Notwithstanding Sections 11346.1 and 11349.6 of the
28Government Code, any findings of emergency adopted by the
29board, in connection with the adoption of an emergency regulation
30under this section, are not subject to review by the Office of
31Administrative Law.

32(c) An emergency regulation adopted by the board under this
33section may remain in effect for up to 270 days, as determined by
34the board, and is deemed repealed immediately upon a finding by
35the board that due to changed conditions it is no longer necessary
36for the regulation to remain in effect. An emergency regulation
37adopted by the board under this section may be renewed if the
38board determines that the conditions specified in paragraph (2) of
39subdivision (a) are still in effect.

P141  1(d) In addition to any other applicable civil or criminal penalties,
2any person or entity who violates a regulation adopted by the board
3pursuant to this section is guilty of an infraction punishable by a
4fine of up to five hundred dollars ($500) for each day in which the
5violation occurs.

6(e) (1) Notwithstanding subdivision (b) of Section 1551 or
7subdivision (e) of Section 1848, a civil liability imposed under
8Chapter 12 (commencing with Section 1825) of Part 2 of Division
92 by the board or a court for a violation of an emergency
10conservation regulation adopted pursuant to this section shall be
11deposited, and separately accounted for, in the Water Rights Fund.
12 Funds deposited in accordance with this subdivision shall be
13available, upon appropriation, for water conservation activities
14and programs.

15(2) For purposes of this subdivision, an “emergency conservation
16regulation” means an emergency regulation that requires an end
17user of water, a water retailer, or a water wholesaler to conserve
18water or report to the board on water conservation. Water
19conservation includes restrictions or limitations on particular uses
20of water or a reduction in the amount of water used or served, but
21does not include curtailment of diversions when water is not
22available under the diverter’s priority of right or reporting
23requirements related to curtailments.

24

SEC. 94.  

Section 1525 of the Water Code is amended to read:

25

1525.  

(a) Each person or entity who holds a permit or license
26to appropriate water, and each lessor of water leased under Chapter
271.5 (commencing with Section 1020) of Part 1, shall pay an annual
28fee according to a fee schedule established by the board.

29(b) Each person or entity who files any of the following shall
30pay a fee according to a fee schedule established by the board:

31(1) An application for a permit to appropriate water.

32(2) A registration of appropriation for a small domestic use,
33small irrigation use, or livestock stockpond use.

34(3) A petition for an extension of time within which to begin
35construction, to complete construction, or to apply the water to
36full beneficial use under a permit.

37(4) A petition to change the point of diversion, place of use, or
38purpose of use, under a permit, license, or registration.

P142  1(5) A petition to change the conditions of a permit or license,
2requested by the permittee or licensee, that is not otherwise subject
3to paragraph (3) or (4).

4(6) A petition to change the point of discharge, place of use, or
5purpose of use, of treated wastewater, requested pursuant to Section
61211.

7(7) An application for approval of a water lease agreement.

8(8) A request for release from priority pursuant to Section 10504.

9(9) An application for an assignment of a state-filed application
10pursuant to Section 10504.

11(10) A statement of water diversion and use pursuant to Part
125.1 (commencing with Section 5100) that reports that water was
13used for cannabis cultivation.

14(c) The board shall set the fee schedule authorized by this section
15so that the total amount of fees collected pursuant to this section
16equals that amount necessary to recover costs incurred in
17connection with the issuance, administration, review, monitoring,
18and enforcement of permits, licenses, certificates, and registrations
19to appropriate water, water leases, statements of water diversion
20and use for cannabis cultivation, and orders approving changes in
21point of discharge, place of use, or purpose of use of treated
22wastewater. The board may include, as recoverable costs, but is
23not limited to including, the costs incurred in reviewing
24applications, registrations, statements of water diversion and use
25for cannabis cultivation, petitions and requests, prescribing terms
26of permits, licenses, registrations, and change orders, enforcing
27and evaluating compliance with permits, licenses, certificates,
28registrations, change orders, and water leases, inspection,
29monitoring, planning, modeling, reviewing documents prepared
30for the purpose of regulating the diversion and use of water,
31applying and enforcing the prohibition set forth in Section 1052
32against the unauthorized diversion or use of water subject to this
33division and the water diversion related provisions of Article 6
34(commencing with Section 19331) of Chapter 3.5 of Division 8
35of the Business and Professions Code, and the administrative costs
36incurred in connection with carrying out these actions.

37(d) (1) The board shall adopt the schedule of fees authorized
38under this section as emergency regulations in accordance with
39Section 1530.

P143  1(2) For filings subject to subdivision (b), the schedule may
2provide for a single filing fee or for an initial filing fee followed
3by an annual fee, as appropriate to the type of filing involved, and
4may include supplemental fees for filings that have already been
5made but have not yet been acted upon by the board at the time
6the schedule of fees takes effect.

7(3) The board shall set the amount of total revenue collected
8each year through the fees authorized by this section at an amount
9equal to the amounts appropriated by the Legislature for
10expenditure for support of water rights program activities from
11the Water Rights Fund established under Section 1550, taking into
12account the reserves in the Water Rights Fund. The board shall
13review and revise the fees each fiscal year as necessary to conform
14with the amounts appropriated. If the board determines that the
15revenue collected during the preceding year was greater than, or
16less than, the amounts appropriated, the board may further adjust
17the annual fees to compensate for the over or under collection of
18revenue.

19(e) Annual fees imposed pursuant to this section for the 2003-04
20fiscal year shall be assessed for the entire 2003-04 fiscal year.

21

SEC. 95.  

Section 1535 of the Water Code is amended to read:

22

1535.  

(a) Any fee subject to this chapter that is required in
23connection with the filing of an application, registration, request,
24statement, or proof of claim, other than an annual fee required after
25the period covered by the initial filing fee, shall be paid to the
26board.

27(b) If a fee established under subdivision (b) of Section 1525,
28Section 1528, or Section 13160.1 is not paid when due, the board
29may cancel the application, registration, petition, request, statement,
30or claim, or may refer the matter to the State Board of Equalization
31for collection of the unpaid fee.

32

SEC. 96.  

Section 1552 of the Water Code is amended to read:

33

1552.  

Except as provided in subdivision (e) of Section 1058.5,
34moneys in the Water Rights Fund are available for expenditure,
35upon appropriation by the Legislature, for the following purposes:

36(a) For expenditure by the State Board of Equalization in the
37administration of this chapter and the Fee Collection Procedures
38Law (Part 30 (commencing with Section 55001) of Division 2 of
39the Revenue and Taxation Code) in connection with any fee or
40expense subject to this chapter.

P144  1(b) For the payment of refunds, pursuant to Part 30 (commencing
2with Section 55001) of Division 2 of the Revenue and Taxation
3Code, of fees or expenses collected pursuant to this chapter.

4(c) For expenditure by the board for the purposes of carrying
5out this division, Division 1 (commencing with Section 100), Part
62 (commencing with Section 10500) and Chapter 11 (commencing
7with Section 10735) of Part 2.74 of Division 6, Article 7
8(commencing with Section 13550) of Chapter 7 of Division 7, and
9the water diversion related provisions of Article 6 (commencing
10with Section 19331) of Chapter 3.5 of Division 8 of the Business
11and Professions Code.

12(d) For expenditures by the board for the purposes of carrying
13out Sections 13160 and 13160.1 in connection with activities
14involving hydroelectric power projects subject to licensing by the
15Federal Energy Regulatory Commission.

16(e) For expenditures by the board for the purposes of carrying
17out Sections 13140 and 13170 in connection with plans and policies
18that address the diversion or use of water.

19

SEC. 97.  

Section 1831 of the Water Code is amended to read:

20

1831.  

(a) When the board determines that any person is
21violating, or threatening to violate, any requirement described in
22subdivision (d), the board may issue an order to that person to
23cease and desist from that violation.

24(b) The cease and desist order shall require that person to comply
25forthwith or in accordance with a time schedule set by the board.

26(c) The board may issue a cease and desist order only after
27notice and an opportunity for hearing pursuant to Section 1834.

28(d) The board may issue a cease and desist order in response to
29a violation or threatened violation of any of the following:

30(1) The prohibition set forth in Section 1052 against the
31unauthorized diversion or use of water subject to this division.

32(2) Any term or condition of a permit, license, certification, or
33registration issued under this division.

34(3) Any decision or order of the board issued under this part,
35Section 275, Chapter 11 (commencing with Section 10735) of Part
362.74 of Division 6, or Article 7 (commencing with Section 13550)
37of Chapter 7 of Division 7, in which decision or order the person
38to whom the cease and desist order will be issued, or a predecessor
39in interest to that person, was named as a party directly affected
40by the decision or order.

P145  1(4) A regulation adopted under Section 1058.5.

2(5) Any extraction restriction, limitation, order, or regulation
3adopted or issued under Chapter 11 (commencing with Section
410735) of Part 2.74 of Division 6.

5(6) Any diversion or use of water for cannabis cultivation if any
6of the following applies:

7(A) A license is required, but has not been obtained, under
8Article 6 (commencing with Section 19331) of Chapter 3.5 of
9Division 8 of the Business and Professions Code.

10(B) The diversion is not in compliance with an applicable
11limitation or requirement established by the board or the
12Department of Fish and Wildlife under Section 13149.

13(C) The diversion or use is not in compliance with a requirement
14imposed under subdivision (d) or (e) of Section 19332.2 of the
15Business and Professions Code.

16(e) This article does not alter the regulatory authority of the
17board under other provisions of law.

18

SEC. 98.  

Section 1840 of the Water Code is amended to read:

19

1840.  

(a) (1) Except as provided in subdivision (b), a person
20who, on or after January 1, 2016, diverts 10 acre-feet of water per
21year or more under a permit or license shall install and maintain
22a device or employ a method capable of measuring the rate of
23direct diversion, rate of collection to storage, and rate of withdrawal
24or release from storage. The measurements shall be made using
25the best available technologies and best professional practices, as
26defined in Section 5100, using a device or methods satisfactory to
27the board, as follows:

28(A) A device shall be capable of continuous monitoring of the
29rate and quantity of water diverted and shall be properly
30maintained. The permittee or licensee shall provide the board with
31evidence that the device has been installed with the first report
32submitted after installation of the device. The permittee or licensee
33shall provide the board with evidence demonstrating that the device
34is functioning properly as part of the reports submitted at five-year
35intervals after the report documenting installation of the device,
36or upon request of the board.

37(B) In developing regulations pursuant to Section 1841, the
38board shall consider devices and methods that provide accurate
39measurement of the total amount diverted and the rate of diversion.
40The board shall consider devices and methods that provide accurate
P146  1measurements within an acceptable range of error, including the
2following:

3(i) Electricity records dedicated to a pump and recent pump test.

4(ii) Staff gage calibrated with an acceptable streamflow rating
5curve.

6(iii) Staff gage calibrated for a flume or weir.

7(iv) Staff gage calibrated with an acceptable storage capacity
8curve.

9(v) Pressure transducer and acceptable storage capacity curve.

10(2) The permittee or licensee shall maintain a record of all
11diversion monitoring that includes the date, time, and diversion
12rate at time intervals of one hour or less, and the total amount of
13water diverted. These records shall be included with reports
14submitted under the permit or license, as required under subdivision
15(c), or upon request of the board.

16(b) (1) The board may modify the requirements of subdivision
17(a) upon finding either of the following:

18(A) That strict compliance is infeasible, is unreasonably
19expensive, would unreasonably affect public trust uses, or would
20result in the waste or unreasonable use of water.

21(B) That the need for monitoring and reporting is adequately
22addressed by other conditions of the permit or license.

23(2) The board may increase the 10-acre-foot reporting threshold
24of subdivision (a) in a watershed or subwatershed, after considering
25the diversion reporting threshold in relation to quantity of water
26within the watershed or subwatershed. The board may increase
27the 10-acre-foot reporting threshold to 25 acre-feet or above if it
28finds that the benefits of the additional information within the
29watershed or subwatershed are substantially outweighed by the
30cost of installing measuring devices or employing methods for
31measurement for diversions at the 10-acre-foot threshold.

32(c) At least annually, a person who diverts water under a
33registration, permit, or license shall report to the board the
34following information:

35(1) The quantity of water diverted by month.

36(2) The maximum rate of diversion by months in the preceding
37calendar year.

38(3) The information required by subdivision (a), if applicable.

39(4) The amount of water used, if any, for cannabis cultivation.

P147  1(d) Compliance with the applicable requirements of this section
2is a condition of every registration, permit, or license.

3

SEC. 99.  

Section 1845 of the Water Code is amended to read:

4

1845.  

(a) Upon the failure of any person to comply with a
5cease and desist order issued by the board pursuant to this chapter,
6the Attorney General, upon the request of the board, shall petition
7the superior court for the issuance of prohibitory or mandatory
8injunctive relief as appropriate, including a temporary restraining
9order, preliminary injunction, or permanent injunction.

10(b) (1) A person or entity who violates a cease and desist order
11issued pursuant to this chapter may be liable in an amount not to
12exceed the following:

13(A) If the violation occurs in a critically dry year immediately
14preceded by two or more consecutive below normal, dry, or
15critically dry years or during a period for which the Governor has
16issued a proclamation of a state of emergency under the California
17Emergency Services Act (Chapter 7 (commencing with Section
188550) of Division 1 of Title 2 of the Government Code) based on
19drought conditions, ten thousand dollars ($10,000) for each day
20in which the violation occurs.

21(B) If the violation is not described by subparagraph (A), one
22thousand dollars ($1,000) for each day in which the violation
23occurs.

24(2) Civil liability may be imposed by the superior court. The
25Attorney General, upon the request of the board, shall petition the
26superior court to impose, assess, and recover those sums.

27(3) Civil liability may be imposed administratively by the board
28pursuant to Section 1055.

29

SEC. 100.  

Section 1846 of the Water Code is amended to read:

30

1846.  

(a) A person or entity may be liable for a violation of
31any of the following in an amount not to exceed five hundred
32dollars ($500) for each day in which the violation occurs:

33(1) A term or condition of a permit, license, certificate, or
34registration issued under this division.

35(2) A regulation or order adopted by the board.

36(b) Civil liability may be imposed by the superior court. The
37Attorney General, upon the request of the board, shall petition the
38superior court to impose, assess, and recover those sums.

39(c) Civil liability may be imposed administratively by the board
40 pursuant to Section 1055.

P148  1

SEC. 101.  

Section 1847 is added to the Water Code, to read:

2

1847.  

(a) A person or entity may be liable for a violation of
3any of the requirements of subdivision (b) in an amount not to
4exceed the sum of the following:

5(1) Five hundred dollars ($500), plus two hundred fifty dollars
6($250) for each additional day on which the violation continues if
7the person fails to correct the violation within 30 days after the
8board has called the violation to the attention of that person.

9(2) Two thousand five hundred dollars ($2,500) for each
10acre-foot of water diverted or used in violation of the applicable
11requirement.

12(b) Liability may be imposed for any of the following violations:

13(1) Violation of a limitation or requirement established by the
14board or the Department of Fish and Wildlife under Section 13149.

15(2) Failure to submit information, or making a material
16misstatement in information submitted, under subdivision (a), (b),
17or (c) of Section 19332.2 of the Business and Professions Code.

18(3) Violation of any requirement imposed under subdivision (e)
19of Section 19332.2 of the Business and Professions Code.

20(4) Diversion or use of water for cannabis cultivation for which
21a license is required, but has not been obtained, under Article 6
22(commencing with Section 19331) of Chapter 3.5 of Division 8
23of the Business and Professions Code.

24(c) Civil liability may be imposed by the superior court. The
25Attorney General, upon the request of the board, shall petition the
26superior court to impose, assess, and recover those sums.

27(d) Civil liability may be imposed administratively by the board
28pursuant to Section 1055.

29

SEC. 102.  

Section 1848 is added to the Water Code, to read:

30

1848.  

(a) Except as provided in subdivisions (b) and (c),
31 remedies under this chapter are in addition to, and do not supersede
32or limit, any other remedy, civil or criminal.

33(b) Civil liability shall not be imposed both administratively
34and by the superior court for the same violation.

35(c) No liability shall be recoverable under Section 1846 or 1847
36for a violation for which liability is recovered under Section 1052.

37(d) In determining the appropriate amount, the court, or the
38board, as the case may be, shall take into consideration all relevant
39circumstances, including, but not limited to, the extent of harm
40caused by the violation, the nature and persistence of the violation,
P149  1the length of time over which the violation occurs, and the
2corrective action, if any, taken by the violator.

3(e) All funds recovered pursuant to this article shall be deposited
4in the Water Rights Fund established pursuant to Section 1550.

5

SEC. 103.  

Section 5103 of the Water Code is amended to read:

6

5103.  

Each statement shall be prepared on a form provided by
7the board. The statement shall include all of the following
8information:

9(a) The name and address of the person who diverted water and
10of the person filing the statement.

11(b) The name of the stream or other source from which water
12was diverted, and the name of the next major stream or other body
13of water to which the source is tributary.

14(c) The place of diversion. The location of the diversion works
15shall be depicted on a specific United States Geological Survey
16topographic map, or shall be identified using the California
17Coordinate System, or latitude and longitude measurements. If
18assigned, the public land description to the nearest 40-acre
19subdivision and the assessor’s parcel number shall also be provided.

20(d) The capacity of the diversion works and of the storage
21reservoir, if any, and the months in which water was used during
22the preceding calendar year.

23(e) (1) (A) At least monthly records of water diversions. The
24measurements of the diversion shall be made in accordance with
25Section 1840.

26(B) (i) On and after July 1, 2016, the measurement of a
27diversion of 10 acre-feet or more per year shall comply with
28regulations adopted by the board pursuant to Article 3
29(commencing with Section 1840) of Chapter 12 of Part 2.

30(ii) The requirement of clause (i) is extended to January 1, 2017,
31 for any statement filer that enters into a voluntary agreement that
32is acceptable to the board to reduce the statement filer’s diversions
33during the 2015 irrigation season.

34(2) (A) The terms of, and eligibility for, any grant or loan
35awarded or administered by the department, the board, or the
36California Bay-Delta Authority on behalf of a person that is subject
37to paragraph (1) shall be conditioned on compliance with that
38paragraph.

P150  1(B) Notwithstanding subparagraph (A), the board may determine
2that a person is eligible for a grant or loan even though the person
3is not complying with paragraph (1), if both of the following apply:

4(i) The board determines that the grant or loan will assist the
5grantee or loan recipient in complying with paragraph (1).

6(ii) The person has submitted to the board a one-year schedule
7for complying with paragraph (1).

8(C) It is the intent of the Legislature that the requirements of
9this subdivision shall complement and not affect the scope of
10authority granted to the board by provisions of law other than this
11article.

12(f) (1) The purpose of use.

13(2) The amount of water used, if any, for cannabis cultivation.

14(g) A general description of the area in which the water was
15used. The location of the place of use shall be depicted on a specific
16United States Geological Survey topographic map and on any other
17maps with identifiable landmarks. If assigned, the public land
18description to the nearest 40-acre subdivision and the assessor’s
19parcel number shall also be provided.

20(h) The year in which the diversion was commenced as near as
21is known.

22

SEC. 104.  

Section 13149 is added to the Water Code, to read:

23

13149.  

(a) (1) (A) The board, in consultation with the
24Department of Fish and Wildlife, shall adopt principles and
25guidelines for diversion and use of water for cannabis cultivation
26in areas where cannabis cultivation may have the potential to
27substantially affect instream flows. The principles and guidelines
28adopted under this section may include, but are not limited to,
29instream flow objectives, limits on diversions, and requirements
30for screening of diversions and elimination of barriers to fish
31passage. The principles and guidelines may include requirements
32that apply to groundwater extractions where the board determines
33those requirements are reasonably necessary for purposes of this
34section.

35(B) Prior to adopting principles and guidelines under this section,
36the board shall allow for public comment and hearing, pursuant
37to Section 13147. The board shall provide an opportunity for the
38public to review and comment on the proposal for at least 60 days
39and shall consider the public comments before adopting the
40principles and guidelines.

P151  1(2) The board, in consultation with the Department of Fish and
2Wildlife, shall adopt principles and guidelines pending the
3development of long-term principles and guidelines under
4paragraph (1). The principles and guidelines, including the interim
5principles and guidelines, shall include measures to protect springs,
6wetlands, and aquatic habitats from negative impacts of cannabis
7cultivation. The board may update the interim principles and
8guidelines as it determines to be reasonably necessary for purposes
9of this section.

10(3) The Department of Fish and Wildlife, in consultation with
11the board, may establish interim requirements to protect fish and
12wildlife from the impacts of diversions for cannabis cultivation
13pending the adoption of long-term principles and guidelines by
14the board under paragraph (1). The requirements may also include
15measures to protect springs, wetlands, and aquatic habitats from
16negative impacts of cannabis cultivation.

17(b) (1) Notwithstanding Section 15300.2 of Title 14 of the
18California Code of Regulations, actions of the board and the
19Department of Fish and Wildlife under this section shall be deemed
20to be within Section 15308 of Title 14 of the California Code of
21regulations, provided that those actions do not involve relaxation
22of existing streamflow standards.

23(2) The board shall adopt principles and guidelines under this
24section as part of state policy for water quality control adopted
25pursuant to Article 3 (commencing with Section 13140) of Chapter
263 of Division 7.

27(3) If the Department of Fish and Wildlife establishes interim
28requirements under this section, it shall do so as emergency
29regulations in accordance with Chapter 3.5 (commencing with
30Section 11340) of Part 1 of Division 3 of Title 2 of the Government
31Code. The adoption of those interim requirements is an emergency
32and shall be considered by the Office of Administrative Law as
33necessary for the immediate preservation of the public peace,
34health, safety, and general welfare. Notwithstanding Chapter 3.5
35(commencing with Section 11340) of Part 1 of Division 3 of Title
362 of the Government Code, the emergency regulations shall remain
37in effect until revised by the Department of Fish and Wildlife,
38provided that the emergency regulations shall not apply after
39long-term principles and guidelines adopted by the board under
P152  1this section take effect for the stream or other body of water where
2the diversion is located.

3(4) A diversion for cannabis cultivation is subject to both the
4interim principles and guidelines and the interim requirements in
5the period before final principles and guidelines are adopted by
6the board.

7(5) The board shall have primary enforcement responsibility
8for principles and guidelines adopted under this section, and shall
9notify the Department of Food and Agriculture of any enforcement
10action taken.

11

SEC. 105.  

The California Tax Credit Allocation Committee
12shall enter into an agreement with the Franchise Tax Board to pay
13any costs incurred by the Franchise Tax Board in the administration
14of subdivision (o) of Section 12206, subdivision (q) of Section
1517058, and subdivision (r) of Section 23610.5 of the Revenue and
16Taxation Code.

17

SEC. 106.  

No reimbursement is required by this act pursuant
18to Section 6 of Article XIII B of the California Constitution for
19certain costs that may be incurred by a local agency or school
20district because, in that regard, this act creates a new crime or
21infraction, eliminates a crime or infraction, or changes the penalty
22for a crime or infraction, within the meaning of Section 17556 of
23the Government Code, or changes the definition of a crime within
24the meaning of Section 6 of Article XIII B of the California
25Constitution.

26However, if the Commission on State Mandates determines that
27this act contains other costs mandated by the state, reimbursement
28to local agencies and school districts for those costs shall be made
29pursuant to Part 7 (commencing with Section 17500) of Division
304 of Title 2 of the Government Code.

31

SEC. 107.  

This act is a bill providing for appropriations related
32to the Budget Bill within the meaning of subdivision (e) of Section
3312 of Article IV of the California Constitution, has been identified
34as related to the budget in the Budget Bill, and shall take effect
35immediately.


CORRECTIONS:

Heading--Lines 1, 2, 3, 4, and 5.




O

Corrected 6-15-16—See last page.     96