AB 2243, as amended, 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
6Medical Cannabis Tax Law.
As used in this part, the following terms have the
9(a) “Board” means the State Board of Equalization.
10(b) “Cannabis” has the same meaning as that term is defined in
11Section 19300.5 of the Business and Professions Code.
12(c) “Distribution” has the same meaning as that term is defined
13in Section 19300.5 of the Business and Professions Code.
14(d) “Immature medical cannabis plant” means a plant described
15in subdivision (b) with no observable flowers or buds, that is
16intended to be sold for use by medical cannabis patients in
17California pursuant to the Compassionate Use Act of 1996
18(Proposition 215), found in Section 11362.5 of the Health and
20(e) “Licensed cultivator” means a person that is licensed as a
21cultivator under the Medical Marijuana Regulation and Safety Act
22(Chapter 3.5 (commencing with Section 19300) of Division 8 of
23the Business and Professions Code).
24(f) “Licensed distributor” means “distributor” as defined in
25Section 19300.5 of the Business and Professions Code.
26(g) “Medical cannabis flowers” means the flowers of a plant
27described in subdivision (b), which excludes the leaves and stems,
28that are intended to be sold for use by medical cannabis patients
29in California pursuant to the Compassionate Use Act of 1996
30(Proposition 215), found in Section 11362.5 of the Health and
32(h) “Medical cannabis leaves” means all parts of a plant
33described in subdivision (b), other than cannabis flowers, that are
34intended to be sold for use by medical cannabis patients in
35California pursuant to the Compassionate Use Act of 1996
36(Proposition 215), found in Section 11362.5 of the Health and
38(i) “Sale” means the transfer of title or possession for
39consideration in any manner or by any means whatever.
P4 1(j) “Qualified nonprofit organization” means an organization
2exempt from tax as an organization described in Section 501(c)(3)
3of the Internal Revenue Code .
(a) On and after the operative date set forth in Section
831030, for the privilege of distributing medical cannabis flowers,
9medical cannabis leaves, and immature medical cannabis plants,
10a tax is hereby imposed upon all licensed cultivators at a rate of
11nine dollars and twenty-five cents ($9.25) per ounce of medical
12cannabis flowers, two dollars and seventy-five cents ($2.75) per
13ounce of medical cannabis leaves, and one dollar and twenty-five
14cents ($1.25) per immature medical cannabis plant from the sale
15of all medical cannabis flowers, medical cannabis leaves, and
16immature medical cannabis plants distributed to a licensed
17distributor in this state.
18(b) The licensed
distributor shall collect the tax from the licensed
19cultivator and shall separately state the amount of the tax imposed
20under this part on the purchase order, which shall be given by the
21licensed distributor to the licensed cultivator at the time of sale.
22(c) There are exempted from the taxes imposed by this part,
23sales by a licensed cultivator that the state is prohibited from taxing
24under the Constitution or laws of the United States or the
25Constitution of this state. Any claim for exemption from the tax
26imposed by this part shall be made to the board in the manner
27prescribed by the board.
The Legislative Analyst’s Office shall regularly review
29the tax levels established under this part, at a minimum of every
30other year, beginning in 2018, and make recommendations to the
31Legislature, as appropriate, regarding adjustments that would
32further the goal of addressing public safety and the environmental
33impacts caused by the proliferation of cannabis cultivation.
(a) The board shall administer and collect the tax
38imposed by this part pursuant to the Fee Collection Procedures
39Law (Part 30 (commencing with Section 55001) of Division 2 of
40the Revenue and Taxation Code) with those changes as may be
P5 1necessary to conform to this section. For purposes of this part, the
2references in the Fee Collection Procedures Law to “fee” shall
3include the tax imposed by this part, and references to “feepayer”
4shall include a person required to pay the tax imposed by this part.
5(b) The tax that is required to be collected by the licensed
6distributor and any amount unreturned to the licensed cultivator
7that is not owed as part of the tax, but was collected from the
8licensed cultivator under the representation by the licensed
9distributor that it was owed as a tax, constitutes debts owed by the
10licensed distributor to the state.
11(c) A licensed cultivator is liable for the tax until it has been
12paid to the state, except that payment to the licensed distributor
13relieves the licensed cultivator from further liability for the tax.
14Any tax collected from a licensed cultivator that has not been
15remitted to the board shall be a debt owed to the state by the
16licensed distributor required to collect and remit the tax. This part
17does not impose any obligation upon the licensed distributor to
18take any legal action to enforce the collection of the tax imposed
19by this part.
(a) The board may prescribe, adopt, and enforce
21regulations relating to the implementation, administration, and
22enforcement of this part, including, but not limited to, applicant
23requirements, collections, reporting, refunds, and appeals.
24(b) The board may prescribe, adopt, and enforce any emergency
25regulations as necessary to implement this part. Any emergency
26regulation prescribed, adopted, or enforced pursuant to this section
27shall be adopted in accordance with Chapter 3.5 (commencing
28with Section 11340) of Part 1 of Division 3 of Title 2 of the
29Government Code, and, for purposes of that chapter, including
30Section 11349.6 of the Government Code, the adoption of the
31regulation is an emergency and shall be considered by the Office
32of Administrative Law as necessary for the immediate preservation
33of the public peace, health and safety, and general welfare.
(a) The tax is due and payable to the board quarterly
35on or before the last day of the month following each calendar
37(b) On or before the last day of the month following each
38calendar quarter, a return for the preceding calendar quarter shall
39be filed with the board.
P6 1(c) Returns shall be authenticated in a form or pursuant to
2methods as may be prescribed by the board.
(a) The Cannabis Production and Environment
4Mitigation Fund is hereby created in the State Treasury. All taxes,
5interest, penalties, and other amounts collected and paid to the
6board pursuant to this part, less payments of refunds and costs of
7administration, shall be deposited in the fund.
8(b) Notwithstanding Section 13340 of the Government Code,
9all moneys deposited in the Cannabis Production and Environment
10Mitigation Fund are hereby continuously appropriated, without
11regard to fiscal years, in the following manner:
12(1) Thirty percent to the
begin delete ____end delete for disbursement for local law enforcement-related
14activities pertaining to illegal cannabis cultivation. Funds allocated
15pursuant to this paragraph shall be allocated on a competitive grant
16application process administered by the
begin delete ____.end delete Applicants may include local entities that
18support enforcement activities related to unpermitted activity. The
begin delete ____end delete shall promulgate
20guidelines for the grant process as soon as administratively
22(2) Thirty percent to the Natural Resources Agency to fund a
23competitive grant program for environmental cleanup restoration
24and protection of public and private lands that have been damaged
25by illegal cannabis cultivation. Where appropriate, the agency may
26administer funds using programs established pursuant to Chapter
273.8 (commencing with Section 5750) of Division 5 of the Public
28Resources Code and described in subdivision (a) and paragraph
29(1) of subdivision (l) of Section 75050 of the Public Resources
30Code. Funds allocated pursuant to this paragraph shall be
31prioritized to restoration and cleanup projects, on public or private
32lands, based on the level of damages that have occurred. Not less
33than 35 percent of the funds shall be used for these purposes related
34to public lands, including, but not limited to, parks managed by
begin delete Californiaend delete
Department of Parks and Recreation, and not less
36than 20 percent of the funds shall be used for these purposes related
37to private lands. The agency shall consult and partner with counties,
38cities, or cities and counties and may partner with qualified
39nonprofit organizations, other appropriate state agencies, and the
40appropriate federal entities, including, but not limited to, the United
P7 1States Department of Agriculture and the United States Department
2of the Interior, for the purposes of awarding grants to state or local
3government entities and qualified nonprofit organizations that
4engage in environmental cleanup and restoration. The agency shall
5promulgate guidelines for the grant process as soon as
7(3) Thirty percent to the multiagency task force, the Department
8of Fish and Wildlife and State Water Resources Control Board, to
9address the environmental impacts of cannabis cultivation on public
10and private lands in California and fund other state
11enforcement-related activities pertaining to illegal cannabis
13(4) Ten percent to the Bureau of Medical Marijuana Regulations,
14and other state agencies or departments that the bureau determines
15is appropriate, to conduct ongoing studies of areas that may create
16challenges to compliance of the Medical Marijuana Regulation
17Safety Act (Chapter 3.5 (commencing with Section 19300) of
18Division 8 of the Business and Professions Code), including, but
19not limited to, financial transactions, allowable tax deductions,
20and the public safety implications of a cash industry. The bureau
21 or other state agencies or departments shall prepare reports on the
22results of those studies and submit those report to the Legislature,
23in compliance with Section 9795 of the Government Code, on or
24before January 1, 2020, and on or before January 1, every two
(a) The board shall submit a report to the Legislature
30on the total amount of revenue that was collected for the two-year
31period commencing on the operative date of this part. The report
32is due to the Legislature on or before the last day of the month
33commencing 180 days after the two-year period commencing on
34the operative date of this part.
35(b) The report required by this section shall be submitted in
36compliance with Section 9795 of the Government Code.
This part shall become operative on or after the first
4day of the first calendar quarter commencing more than 270 days
5after adequate funding has been received by the board to implement
6and administer this part. The board shall post a notice on its Internet
7Web site when this condition has been satisfied.
Funds for the establishment and support of the activities
9required pursuant to this part shall be advanced as a General Fund
10or special fund loan, and shall be repaid by the board from the
11initial proceeds from taxes collected pursuant to this part, no later
12than six months after the operative date specified in Section 31030.
No reimbursement is required by this act pursuant to
14Section 6 of Article XIII B of the California Constitution because
15the only costs that may be incurred by a local agency or school
16district will be incurred because this act creates a new crime or
17infraction, eliminates a crime or infraction, or changes the penalty
18for a crime or infraction, within the meaning of Section 17556 of
19the Government Code, or changes the definition of a crime within
20the meaning of Section 6 of Article XIII B of the California