AB 2243, as introduced, Wood. Medical cannabis: taxation: cannabis production and environment mitigation.
The Medical Marijuana Regulation and Safety Act, administered by the director of the Bureau of Medical Marijuana Regulation, provides for the licensure of persons engaged in specified activities relating to medical cannabis, including cultivation and distribution.
The Fee Collection Procedures Law, the violation of which is a crime, provides procedures for the collection of certain fees and surcharges.
This bill would impose a tax in specified amounts on the distribution in this state by a licensed cultivator, as defined, of medical cannabis flowers, medical cannabis leaves, and immature medical cannabis plants to a licensed distributor, as specified, and would require the licensed distributor to collect the tax from the cultivator and remit it to the State Board of Equalization. The bill would require the State Board of Equalization to administer and collect the tax pursuant to the procedures set forth in the Fee Collection Procedures Law. The bill would require all moneys, less refunds and costs of administration, to be deposited into the Cannabis Production and Environment Mitigation Fund, which this bill would establish in the State Treasury.
This bill would continuously appropriate the moneys in that fund in specified percentages to fund competitive grants for local law enforcement-related activities pertaining to illegal cannabis cultivation; to fund a competitive grant program for environmental cleanup restoration and protection of public and private lands that have been damaged by illegal cannabis cultivation; to address the environmental impacts of cannabis cultivation on public and private lands in California and fund other state enforcement-related activities pertaining to illegal cannabis cultivation; and to fund ongoing studies and reports of areas that may create challenges to compliance of the Medical Marijuana Regulation Safety Act. This bill would require the bureau or other state agencies and departments to submit reports to the Legislature on the results of those studies funded by this tax by January 1, 2020, and every 2 years thereafter.
By expanding the application of the Fee Collection Procedures Law, which imposes criminal penalties for various acts, this bill would impose a state-mandated local program.
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 no reimbursement is required by this act for a specified reason.
This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of 2⁄3 of the membership of each house of the Legislature.
Vote: 2⁄3. Appropriation: yes. Fiscal committee: yes. State-mandated local program: yes.
The people of the State of California do enact as follows:
Part 13.5 (commencing with Section 31001) is
2added to Division 2 of the Revenue and Taxation Code, to read:
This part shall be known and may be cited as the
9Medical Cannabis Tax Law.
As used in this part, the following terms have the
3(a) “Board” means the State Board of Equalization.
4(b) “Cannabis” has the same meaning as that term is defined in
5Section 19300.5 of the Business and Professions Code.
6(c) “Distribution” has the same meaning as that term is defined
7in Section 19300.5 of the Business and Professions Code.
8(d) “Immature medical cannabis plant” means a plant described
9in subdivision (b) with no observable flowers or buds, that is
10intended to be sold for use by medical cannabis patients in
11California pursuant to the Compassionate Use Act of 1996
12(Proposition 215), found in Section 11362.5 of the Health and
14(e) “Licensed cultivator” means a person that is licensed as a
15cultivator under the Medical Marijuana Regulation and Safety Act
16(Chapter 3.5 (commencing with Section 19300) of Division 8 of
17the Business and Professions Code).
18(f) “Licensed distributor” means “distributor” as defined in
19Section 19300.5 of the Business and Professions Code.
20(g) “Medical cannabis flowers” means the flowers of a plant
21described in subdivision (b), which excludes the leaves and stems,
22that are intended to be sold for use by medical cannabis patients
23in California pursuant to the Compassionate Use Act of 1996
24(Proposition 215), found in Section 11362.5 of the Health and
26(h) “Medical cannabis leaves” means all parts of a plant
27described in subdivision (b), other than cannabis flowers, that are
28intended to be sold for use by medical cannabis patients in
29California pursuant to the Compassionate Use Act of 1996
30(Proposition 215), found in Section 11362.5 of the Health and
32(i) “Sale” means the transfer of title or possession for
33consideration in any manner or by any means whatever.
34(j) “Qualified nonprofit organization” means an organization
35exempt from tax as an organization described in Section 501(c)(3)
36of the Internal Revenue Code .
(a) On and after the operative date set forth in Section
431030, for the privilege of distributing medical cannabis flowers,
5medical cannabis leaves, and immature medical cannabis plants,
6a tax is hereby imposed upon all licensed cultivators at a rate of
7nine dollars and twenty-five cents ($9.25) per ounce of medical
8cannabis flowers, two dollars and seventy-five cents ($2.75) per
9ounce of medical cannabis leaves, and one dollar and twenty-five
10cents ($1.25) per immature medical cannabis plant from the sale
11of all medical cannabis flowers, medical cannabis leaves, and
12immature medical cannabis plants distributed to a licensed
13distributor in this state.
14(b) The licensed distributor shall collect the tax from the licensed
15cultivator and shall separately state the amount of the tax imposed
16under this part on the purchase order, which shall be given by the
17licensed distributor to the licensed cultivator at the time of sale.
18(c) There are exempted from the taxes imposed by this part,
19sales by a licensed cultivator that the state is prohibited from taxing
20under the Constitution or laws of the United States or the
21Constitution of this state. Any claim for exemption from the tax
22imposed by this part shall be made to the board in the manner
23prescribed by the board.
The Legislative Analyst’s Office shall regularly review
25the tax levels established under this part, at a minimum of every
26other year, beginning in 2018, and make recommendations to the
27Legislature, as appropriate, regarding adjustments that would
28further the goal of addressing public safety and the environmental
29impacts caused by the proliferation of cannabis cultivation.
(a) The board shall administer and collect the tax
34imposed by this part pursuant to the Fee Collection Procedures
35Law (Part 30 (commencing with Section 55001) of Division 2 of
36the Revenue and Taxation Code) with those changes as may be
37necessary to conform to this section. For purposes of this part, the
38references in the Fee Collection Procedures Law to “fee” shall
39include the tax imposed by this part, and references to “feepayer”
40shall include a person required to pay the tax imposed by this part.
P5 1(b) The tax that is required to be collected by the licensed
2distributor and any amount unreturned to the licensed cultivator
3that is not owed as part of the tax, but was collected from the
4licensed cultivator under the representation by the licensed
5distributor that it was owed as a tax, constitutes debts owed by the
6licensed distributor to the state.
7(c) A licensed cultivator is liable for the tax until it has been
8paid to the state, except that payment to the licensed distributor
9relieves the licensed cultivator from further liability for the tax.
10Any tax collected from a licensed cultivator that has not been
11remitted to the board shall be a debt owed to the state by the
12licensed distributor required to collect and remit the tax. This part
13does not impose any obligation upon the licensed distributor to
14take any legal action to enforce the collection of the tax imposed
15by this part.
(a) The board may prescribe, adopt, and enforce
17regulations relating to the implementation, administration, and
18enforcement of this part, including, but not limited to, applicant
19requirements, collections, reporting, refunds, and appeals.
20(b) The board may prescribe, adopt, and enforce any emergency
21regulations as necessary to implement this part. Any emergency
22regulation prescribed, adopted, or enforced pursuant to this section
23shall be adopted in accordance with Chapter 3.5 (commencing
24with Section 11340) of Part 1 of Division 3 of Title 2 of the
25Government Code, and, for purposes of that chapter, including
26Section 11349.6 of the Government Code, the adoption of the
27regulation is an emergency and shall be considered by the Office
28of Administrative Law as necessary for the immediate preservation
29of the public peace, health and safety, and general welfare.
(a) The tax is due and payable to the board quarterly
31on or before the last day of the month following each calendar
33(b) On or before the last day of the month following each
34calendar quarter, a return for the preceding calendar quarter shall
35be filed with the board.
36(c) Returns shall be authenticated in a form or pursuant to
37methods as may be prescribed by the board.
(a) The Cannabis Production and Environment
39Mitigation Fund is hereby created in the State Treasury. All taxes,
40interest, penalties, and other amounts collected and paid to the
P6 1board pursuant to this part, less payments of refunds and costs of
2administration, shall be deposited in the fund.
3(b) Notwithstanding Section 13340 of the Government Code,
4all moneys deposited in the Cannabis Production and Environment
5Mitigation Fund are hereby continuously appropriated, without
6regard to fiscal years, in the following manner:
7(1) Thirty percent to the ____ for disbursement for local law
8enforcement-related activities pertaining to illegal cannabis
9cultivation. Funds allocated pursuant to this paragraph shall be
10allocated on a competitive grant application process administered
11by the ____. Applicants may include local entities that support
12enforcement activities related to unpermitted activity. The ____
13shall promulgate guidelines for the grant process as soon as
15(2) Thirty percent to the Natural Resources Agency to fund a
16competitive grant program for environmental cleanup restoration
17and protection of public and private lands that have been damaged
18by illegal cannabis cultivation. Where appropriate, the agency may
19administer funds using programs established pursuant to Chapter
203.8 (commencing with Section 5750) of Division 5 of the Public
21Resources Code and described in subdivision (a) and paragraph
22(1) of subdivision (l) of Section 75050 of the Public Resources
23Code. Funds allocated pursuant to this paragraph shall be
24prioritized to restoration and cleanup projects, on public or private
25lands, based on the level of damages that have occurred. Not less
26than 35 percent of the funds shall be used for these purposes related
27to public lands, including, but not limited to, parks managed by
28the California Department of Parks and Recreation, and not less
29than 20 percent of the funds shall be used for these purposes related
30to private lands. The agency shall consult and partner with counties,
31cities, or cities and counties and may partner with qualified
32nonprofit organizations, other appropriate state agencies, and the
33appropriate federal entities, including, but not limited to, the United
34States Department of Agriculture and the United States Department
35of the Interior, for the purposes of awarding grants to state or local
36government entities and qualified nonprofit organizations that
37engage in environmental cleanup and restoration. The agency shall
38promulgate guidelines for the grant process as soon as
P7 1(3) Thirty
percent to the multiagency task force, the Department
2of Fish and Wildlife and State Water Resources Control Board, to
3address the environmental impacts of cannabis cultivation on public
4and private lands in California and fund other state
5enforcement-related activities pertaining to illegal cannabis
7(4) Ten percent to the Bureau of Medical Marijuana Regulations,
8and other state agencies or departments that the bureau determines
9is appropriate, to conduct ongoing studies of areas that may create
10challenges to compliance of the Medical Marijuana Regulation
11Safety Act (Chapter 3.5 (commencing with Section 19300) of
12Division 8 of the Business and Professions Code), including, but
13not limited to, financial transactions, allowable tax deductions,
14and the public safety implications of a cash industry. The bureau
15 or other state agencies or departments shall prepare reports on the
16results of those studies and submit those report to the Legislature,
17in compliance with Section 9795 of the Government Code, on or
18before January 1, 2020, and on or before January 1, every two
(a) The board shall submit a report to the Legislature
24on the total amount of revenue that was collected for the two-year
25period commencing on the operative date of this part. The report
26is due to the Legislature on or before the last day of the month
27commencing 180 days after the two-year period commencing on
28the operative date of this part.
29(b) The report required by this section shall be submitted in
30compliance with Section 9795 of the Government Code.
This part shall become operative on or after the first
35day of the first calendar quarter commencing more than 270 days
36after adequate funding has been received by the board to implement
37and administer this part. The board shall post a notice on its Internet
38Web site when this condition has been satisfied.
Funds for the establishment and support of the activities
40required pursuant to this part shall be advanced as a General Fund
P8 1or special fund loan, and shall be repaid by the board from the
2initial proceeds from taxes collected pursuant to this part, no later
3than six months after the operative date specified in Section 31030.
No reimbursement is required by this act pursuant to
5Section 6 of Article XIII B of the California Constitution because
6the only costs that may be incurred by a local agency or school
7district will be incurred because this act creates a new crime or
8infraction, eliminates a crime or infraction, or changes the penalty
9for a crime or infraction, within the meaning of Section 17556 of
10the Government Code, or changes the definition of a crime within
11the meaning of Section 6 of Article XIII B of the California