BILL ANALYSIS Ó
AB 2149
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Date of Hearing: May 11, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2149 (Bonilla) - As Amended May 4, 2016
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill establishes the Medical Marijuana State Payment
Collection Law, which allows the Board of Equalization (BOE) to
collect cash from medical cannabis-related businesses on behalf
AB 2149
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of specified state agencies. Specifically, this bill:
1)Allows the BOE to enter into an agreement with a state agency
to collect cash payments for any fee, fine, penalty, or other
charge payable to the agency by a medical cannabis-related
business.
2)Specifies that "state agencies" that can contract with the BOE
include the Department of Consumer Affairs (DCA), the
California Department of Food and Agriculture (CDFA), the
Department of Public Health (DPH), the Employment Development
Department (EDD), the State water Resources Control Board
(SWRCB), and the Franchise Tax Board (FTB).
3)Requires certain provisions to be included in the agreement
between BOE and a state agency, as specified, including that
BOE will be reimbursed for costs not to exceed 10% of the
moneys collected.
FISCAL EFFECT:
1)Costs of approximately $1.2 million for BOE to expand cash
collection infrastructure and operations across district
offices if BOE enters into an agreement with a state agency.
This bill allows BOE to be reimbursed for up to 10% of the
moneys collected. Since most cannabis-related fees have not
yet been established, it is unknown whether this cap is
sufficient to cover BOE costs.
2)Potential unknown, ongoing administrative cost savings to
state agencies that otherwise would collect fee payments
themselves. BOE, by being the primary point of cash
collection, can specialize and develop procedures that apply
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universally to collecting cash for different agencies. In
contrast, each individual agency that imposes a fee on medical
marijuana-related businesses would incur substantial costs to
develop the infrastructure and security needed to collect cash
payments.
COMMENTS:
1)Purpose and background. Many medical marijuana-related
businesses in California find it difficult to obtain banking
services because of federal drug laws. At the same time,
marijuana-related businesses in California must still find a
way to remit sales taxes, income taxes, applicable government
fines, and soon-to-be-determined licensing fees. AB 2149
attempts to solve this problem by authorizing the BOE to
accept cash payments from marijuana-related businesses on
behalf of other state entities that may not have the built-in
infrastructure to handle large quantities of cash.
2)Centralizing cash collections. BOE raised a number of concerns
about AB 2149 in its analysis of the introduced version of the
bill. Specifically, accepting such large amounts of cash
creates understandable safety concerns - both for the public
and for BOE staff. If the BOE were to accept cash payments on
behalf of other state agencies, these safety concerns would
only be exacerbated. BOE also notes that in the event of
disputes over fees or reimbursements, the agency's role is
unclear.
At the same time, centralizing cash collections so that
multiple state agencies are not required to count and verify
cash payments, purchase safes to store cash, contract with
armored cars, employ armed guards, and install new or
additional surveillance, may result in additional efficiencies
and result in overall state savings.
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For example, CDFA is expected to incur additional costs of
approximately $215,000 in FY 2016-17 and $380,000 annually
thereafter to develop and maintain cash-collection processes
and to ensure safety of licensees and staff. These costs would
instead be replaced by the costs of reimbursing BOE, which
would be established by an agreement with the two agencies.
3)The BOE's current policy on cash payments. The BOE notes that,
since early 2014, all of its field offices have stopped
accepting cash from taxpayers attempting to pay their SUT
liabilities. This "No Cash Policy" was implemented both to
reduce administrative costs and to ensure the safety of BOE
employees. The BOE does allow an exception, however, when a
taxpayer demonstrates that it is unable to obtain a bank
account. According to the Assembly Revenue and Taxation
Committee staff analysis of this bill, this exception is
mainly applied to marijuana dispensaries. As a result, certain
BOE district offices receive hundreds of thousands of dollars
in cash payments from medical marijuana-related businesses
already.
4)Who goes first? Under AB 2149, BOE can enter into an agreement
that allows BOE to be reimbursed for up to 10% of the money it
collects on behalf of another agency. However, the initial
costs to collect on behalf of another agency will be
substantial. One unresolved question is whether a state agency
would enter into an agreement if they are reimbursing for
those initial upfront costs.
5)Related legislation. AB 821 (Gipson) would authorize the BOE,
until January 1, 2022, to allow medical marijuana dispensaries
to remit tax liability due in a method other than an
electronic funds transfer. AB 821 is currently pending hearing
by the Senate Committee on Governance and Finance.
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Analysis Prepared by:Luke Reidenbach / APPR. / (916)
319-2081