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 upon the distribution of medical cannabis flowers,
begin delete medical cannabis leaves, andend delete immature medical cannabis begin delete plants.end delete 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 a distributor to register for a permit with the board and would allow the board to suspend or revoke a permit. The bill would authorize the board to prescribe by regulation a method and manner for payment of the tax that utilizes tax stamps or state-issued product bags. 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, among other things, fund competitive grants for local law enforcement-related activities pertaining to illegal cannabis cultivation; to fund
begin delete a competitive
grant program forend delete 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 Regional Marijuana Enforcement Officers. begin delete 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.end delete
This bill, except as provided, would become inoperative on January 1, 2018, if the Secretary of State Initiative Number 1762, also known as the Control, Regulate and Tax Adult Use of Marijuana Act, is approved by the voters at the November 8, 2016, statewide general election and takes effect. This bill would repeal all of its provisions as of January 1, 2025.
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 declare that it is to take effect immediately as an urgency statute.
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
12(a) “Board” means the State Board of Equalization.
13(b) “Cannabis” has the same meaning as that term is defined in
14Section 19300.5 of the Business and Professions Code.
15(c) “Cultivator” means a person subject to licensing as a
16cultivator for purposes of the Medical Marijuana Regulation and
17Safety Act (Chapter 3.5 (commencing with Section 19300) of
18Division 8 of the Business and Professions Code).
19(d) “Distribution” means
begin delete allend delete of the following:
20(1) The sale of untaxed medical cannabis flowers,
begin delete medical immature medical cannabis
21cannabis leaves, andend delete
begin delete plantsend delete in this state.
23(2) The use or consumption of untaxed medical cannabis
begin delete medical cannabis leaves, andend delete immature medical cannabis
begin delete plantsend delete in this state.
26(3) The placing in this state of untaxed medical cannabis flowers,
27medical cannabis leaves, or immature medical cannabis plants in
28retail stock for the purpose of selling the medical cannabis flowers,
29medical cannabis leaves, or immature medical cannabis plants.
30(e) “Distributor” has the same meaning as that term is defined
31in Section 19300.5 of the Business and Professions Code.
32(f) “Immature medical cannabis plant” means a plant described
33in subdivision (b) with no observable flowers or buds, that is
34intended to be sold for use by medical cannabis patients in
35California pursuant to the Compassionate Use Act of 1996
P4 1(Proposition 215), found in Section 11362.5 of the Health and
3(g) “Medical cannabis flowers” means the flowers of a plant
4described in subdivision (b), which excludes the leaves and stems,
5that are intended to be sold for use by medical cannabis patients
6in California pursuant to the Compassionate Use Act of 1996
7(Proposition 215), found in Section 11362.5 of the Health and
9(h) “Medical cannabis leaves” means all parts of a plant
10described in subdivision (b), other than cannabis flowers, that are
11intended to be sold for use by medical cannabis patients in
12California pursuant to the Compassionate Use Act of 1996
13(Proposition 215), found in Section 11362.5 of the Health and
16 “Medical cannabis product” means “medical cannabis” as
17defined in Section 19300.5 of the Business and Professions Code.
19 “Qualified nonprofit organization” means an organization
20exempt from tax as an organization described in Section 501(c)(3)
21of the Internal Revenue Code.
23 “Person” includes any individual, firm, partnership, joint
24venture, limited liability company, association, social club, fraternal
25organization, corporation, estate, trust, business trust, receiver,
26 assignee for the benefit of creditors, trustee, trustee in bankruptcy,
27syndicate, or any other group or combination acting as a unit.
29 “Sale” means the transfer of title or possession for
30consideration in any manner or by any means whatever.
32 “Use” includes the
exercise of any right or power over
33medical cannabis flowers,
begin delete medical cannabis leaves, andend delete
34medical cannabis plants, except
35that it does not include the sale of medical cannabis flowers,
begin delete medical cannabis leaves, andend delete immature medical cannabis begin delete plantsend delete
37 in the regular course of
38business. “Use” includes a withdrawal of medical cannabis
begin delete flowers, immature
39medical cannabis leaves, andend delete
P5 1cannabis plants from inventory and use in the manufacture of a
2medical cannabis product.
(a) On and after the operative date set forth in Section
731030, for the privilege of distributing medical cannabis flowers,
begin delete medical cannabis leaves, andend delete immature medical cannabis plants,
9 every distributor shall pay a tax
10upon any distribution of medical cannabis flowers,
begin delete medical immature medical cannabis
11cannabis leaves, andend delete
begin delete plantsend delete at the following rates:
13(1) Nine dollars and twenty-five cents ($9.25) per ounce of
14medical cannabis flowers.
15(2) Two dollars and seventy-five cents ($2.75) per ounce of
16medical cannabis leaves.
30 One dollar and twenty-five cents
($1.25) per immature
31medical cannabis plant.
P6 1(b) The rates of tax imposed by this section shall apply
2proportionately to quantities of less than one ounce.
3(c) The tax imposed by this part shall not apply to the sale of
begin delete flowers, medical cannabis leaves,end delete and
5immature medical cannabis plants by a cultivator to the distributor.
The board may prescribe by regulation a method and
7manner for payment of the tax imposed by this part that utilizes
8tax stamps or state-issued product bags that indicate that all
9required tax has been paid on the distribution of the medical
begin delete medical cannabis leaves, andend delete immature medical
begin delete plantsend delete to which
12the tax stamp is affixed or in which the medical cannabis flowers,
begin delete medical cannabis leaves, andend delete
immature medical cannabis begin delete plantsend delete
14 are packaged.
The Legislative Analyst’s Office shall regularly review
16the tax levels established under this part, at a minimum of every
17other year, beginning in 2020, and make recommendations to the
18Legislature, as appropriate, regarding adjustments that would
19further the goal of addressing public safety and the environmental
20impacts caused by the proliferation of cannabis cultivation.
The board shall administer and collect the tax imposed
25by this part pursuant to the Fee Collection Procedures Law (Part
2630 (commencing with Section 55001)), except that Article 1.1
27(commencing with Section 55050) of Chapter 3 of Part 30 shall
28not apply. For purposes of this part, the references in the Fee
29Collection Procedures Law to “fee” shall include the tax imposed
30by this part, and references to “feepayer” shall include a person
31required to pay the tax imposed by this part.
(a) The board may prescribe, adopt, and enforce
33regulations relating to the implementation, administration, and
34enforcement of this part, including, but not limited to, applicant
35requirements, collections, reporting, refunds, and appeals.
36(b) The board may prescribe, adopt, and enforce any emergency
37regulations as necessary to implement this part. Any emergency
38regulation prescribed, adopted, or enforced pursuant to this section
39shall be adopted in accordance with Chapter 3.5 (commencing
40with Section 11340) of Part 1 of Division 3 of Title 2 of the
P7 1Government Code, and, for purposes of that chapter, including
2Section 11349.6 of the Government Code, the adoption of the
3regulation is an emergency and shall be considered by the Office
4of Administrative Law as necessary for the immediate preservation
5of the public peace, health and safety, and general welfare.
(a) The tax is due and payable to the board quarterly
7on or before the last day of the month following each calendar
9(b) On or before the last day of the month following each
10calendar quarter, a return for the preceding calendar quarter shall
11be filed with the board using electronic media.
12(c) Returns shall be authenticated in a form or pursuant to
13methods as may be prescribed by the board.
(a) A distributor required to pay the tax imposed
15under this part shall register for a permit with the board. Every
16application for registration shall be made in a form prescribed by
17the board and shall set forth the name under which the applicant
18transacts or intends to transact business, the location of the
19distributor’s place or places of business, and any other information
20that the board may require. An application for registration shall
21be authenticated in a form or pursuant to methods as may be
22prescribed by the board.
23(b) The board shall grant and issue to each applicant that
24complies with subdivision (a) a separate permit for each place of
25business within the state.
26(c) A permit issued pursuant to this section is not assignable
27and is valid only for the person in whose name it is issued and for
28the transaction of business at the place designated therein. It shall
29at all times be conspicuously displayed at the place for which it is
Whenever any distributor fails to comply with any
32provision of this part or any rule or regulation of the board
33prescribed and adopted under this part, the board upon hearing,
34after giving the distributor at least 10 days’ notice in writing
35specifying the time and place of the hearing and requiring the
36distributor to show cause why the permit should not be suspended
37or revoked, may suspend or revoke the permit held by the
38distributor. The board shall give to the distributor written notice
39of the suspension or revocation of any of the distributor’s permits.
40The notices herein required may be served personally or by mail
P8 1in the manner prescribed for service of notice of a deficiency
2determination. The board shall not issue a new permit after the
3revocation of a permit unless it is satisfied that the former holder
4of the permit will comply with the provisions of this part and the
5regulations of the board prescribed and adopted under this part.
(a) The Cannabis Production and Environment
7Mitigation Fund is hereby created in the State Treasury. All taxes,
8interest, penalties, and other amounts collected and paid to the
9board pursuant to this part, less payments of refunds and costs of
10administration, shall be deposited in the fund.
11(b) Notwithstanding Section 13340 of the Government Code,
12all moneys deposited in the Cannabis Production and Environment
13Mitigation Fund are hereby continuously appropriated, without
14regard to fiscal years, in the following manner:
15(1) Thirty percent to the Board of State and Community
16Corrections for disbursement for local law enforcement-related
17activities pertaining to illegal cannabis cultivation. The Board of
18State and Community Corrections shall give priority of funds to
19applicants that demonstrate that the area within the applicant’s
20jurisdiction has a high rate of criminal activity from organized
21crime as defined by Section 186.2 of the Penal Code related to
22illegal cannabis cultivation. Funds allocated pursuant to this
23paragraph shall be allocated on a competitive grant application
24process administered by the Board of State and Community
25Corrections. Applicants may include local entities that support
26enforcement activities related to unpermitted activity. The Board
27of State and Community Corrections shall promulgate guidelines
28for the grant process as soon as administratively possible.
29(2) Two percent to the Department of Justice to fund and
30Regional Marijuana Enforcement Officers who shall coordinate
31enforcement efforts, related to illegal cannabis cultivation, between
32the Department of Fish and Wildlife’s Marijuana Enforcement
33Team, the Department of Justice’s Bureau of Narcotic
34Enforcement, the United States Drug Enforcement Administration,
35and local law enforcement. The Department of Justice shall
36prioritize creation of Regional Marijuana Enforcement Officers
37in counties that have demonstrated that the area within the county’s
38jurisdiction has a high rate of criminal activity from organized
39crime, as defined by Section 186.2 of the Penal Code, related to
40illegal cannabis cultivation.
P9 1(3) Thirty percent to the Natural Resources Agency
begin delete to fund a for
environmental cleanup restoration
2competitive grant programend delete
3and protection of public and private lands that have been damaged
4by illegal cannabis cultivation. Where appropriate, the agency may
5administer funds using programs established
6pursuant to Chapter 3.8 (commencing with Section 5750) of
7Division 5 of the Public Resources Code and described in
8subdivision (a) and paragraph (1) of subdivision (l) of Section
975050 of the Public Resources Code. Funds allocated pursuant to
10this paragraph shall be prioritized to restoration and cleanup
11projects, on public or private lands, based on the level of damages
12that have occurred. Not less than 35 percent of the funds shall be
13used for these purposes related to public lands, including, but not
14limited to, parks managed by the Department of Parks and
15Recreation, and not less than 20 percent of the funds shall be used
16for these purposes related to private lands. The agency shall consult
17and partner with counties, cities, or cities and counties and may
18partner with qualified nonprofit organizations, other appropriate
19state agencies, and the appropriate federal entities, including, but
20not limited to, the United States Department of Agriculture and
21the United States Department of the Interior, for the purposes of
22awarding grants to state or local government entities and qualified
23nonprofit organizations that engage in environmental cleanup and
24restoration. The agency shall promulgate guidelines for the grant
25process as soon as administratively possible.
30(4) Eight percent to the Open Space Subvention Payment
31Account of the California Land Conservation Act of 1965 (Chapter
327 (commencing with Section 51200) of Part 1 of Division 1 of
33Title 5 of the Government Code). Administrative costs to the
34Department of Conservation shall be no more than the reasonable
35costs to administer the program and shall be no more than 0.5
36percent of the 8 percent.
37(5) Thirty percent to the multiagency task force, the Department
38of Fish and Wildlife and the State Water Resources Control Board,
39to address the environmental impacts of cannabis cultivation on
40public and private lands in California and fund other state
P10 1enforcement-related activities pertaining to illegal cannabis
(a) The board shall submit a report to the Legislature
7on the total amount of revenue that was collected for the two-year
8period commencing on the operative date of this part. The report
9is due to the Legislature on or before the last day of the month
10commencing 180 days after the two-year period commencing on
11the operative date of this part.
12(b) The report required by this section shall be submitted in
13compliance with Section 9795 of the Government Code.
This part shall become operative on or after the first
18day of the first calendar quarter commencing more than 270 days
19after adequate funding has been received by the board to implement
20and administer this part. The board shall post a notice on its Internet
21Web site when this condition has been satisfied.
Funds for the establishment and support of the activities
23required pursuant to this part shall be advanced as a General Fund
24or special fund loan, and shall be repaid by the board from the
25initial proceeds from taxes collected pursuant to this part, no later
26than six months after the operative date specified in Section 31030.
(a) Except as provided in subdivision (b), this part shall
28become inoperative on January 1, 2018, if the Secretary of State
29Initiative Number 1762, also known as the Control, Regulate and
30Tax Adult Use of Marijuana Act, is approved by the voters at the
31November 8, 2016, statewide general election and takes effect.
32(b) The provisions of this part relating to the collection of the
33tax, refunds, allowance for credits, disposition of moneys deposited
34into the Cannabis Production and Environment Mitigation Fund,
35and the commencement of an action or proceeding shall remain
36operative with respect to taxes for which the liability accrued before
37January 1, 2018.
38(c) This part shall remain in effect only until January 1, 2025,
39and as of that date is repealed.
The tax shall be in addition to, and shall not limit, any
4taxes or fees imposed by a county or city and county.
No reimbursement is required by this act pursuant to
6Section 6 of Article XIII B of the California Constitution because
7the only costs that may be incurred by a local agency or school
8district will be incurred because this act creates a new crime or
9infraction, eliminates a crime or infraction, or changes the penalty
10for a crime or infraction, within the meaning of Section 17556 of
11the Government Code, or changes the definition of a crime within
12the meaning of Section 6 of Article XIII B of the California
This act is an urgency statute necessary for the
15immediate preservation of the public peace, health, or safety within
16the meaning of Article IV of the Constitution and shall go into
17immediate effect. The facts constituting the necessity are:
18In order to address the damage done by illegal cannabis
19cultivation at the earliest time possible, it is necessary that this act
20take effect immediately.