Amended in Senate June 16, 2016

Amended in Assembly May 12, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 2770


Introduced by Assembly Member Nazarian

February 19, 2016


An act to amend Sections 22973 and 22977.1begin delete ofend deletebegin insert of, and to add Sections 22990.5 and 22990.7 to,end insert the Business and Professions Code, relating to cigarette and tobacco product licensing.

LEGISLATIVE COUNSEL’S DIGEST

AB 2770, as amended, Nazarian. Cigarette and tobacco product licensing: fees and funding.

begin insert

The Cigarette and Tobacco Products Licensing Act of 2003 requires the State Board of Equalization to administer a statewide program to license manufacturers, importers, distributors, wholesalers, and retailers of cigarettes and tobacco products, and imposes various licensing fees. That act requires the moneys collected to be deposited in the Cigarette and Tobacco Products Compliance Fund, which are available for expenditure, upon appropriation by the Legislature, solely for the purpose of implementing, enforcing, and administering the licensing program under the act. The act requires the board to report to the Legislature no later than January 1, 2019, regarding the adequacy of funding for the licensing program .

end insert
begin insert

This bill would instead require the board to report to the Legislature on or before January 1, 2019, and on and before January 1 annually thereafter. The bill would also require the report to include information on the board’s compliance with the State Auditor’s recommendation in the State Auditor’s March 2016 report to eliminate the excess fund balance in the Cigarette and Tobacco Tax Compliance Fund, which would be required until the excess fund balance is eliminated.

end insert
begin insert

The Cigarette and Tobacco Products Tax Law imposes a tax on distributors of cigarettes and tobacco products, and authorizes the reimbursement of the State Board of Equalization for expenses incurred in the administration and collection of the tax.

end insert
begin insert

This bill would prohibit, on or after January 1, 2017, the appropriation of revenues derived from the taxes imposed upon the distribution of cigarettes and tobacco products to the board for the purpose of implementing, enforcing, or administering the California Cigarette and Tobacco Products Licensing Act of 2003.

end insert
begin delete

The Cigarette and Tobacco Products Licensing Act of 2003 requires the State Board of Equalization to administer a statewide program to license manufacturers, importers, distributors, wholesalers, and retailers of cigarettes and tobacco products. That act requires retailers of cigarettes and tobacco products to obtain a separate license for each retail location from the board, which is issued upon receipt of a completed application and payment of a one-time fee, unless specified conditions apply.

end delete
begin delete

This bill would require a fee of $265 to be submitted with each license application, as described above. The bill would require, for calendar years beginning on and after January 1, 2017, a retailer to file an application for renewal of a retailer’s license accompanied with a fee of $265 per retail location, in the form and manner prescribed by the board.

end delete
begin delete

The Cigarette and Tobacco Products Licensing Act of 2003 requires a wholesaler or distributor that commences business selling or distributing cigarettes or tobacco products, or that commences doing so at a new or different place of business in the state, to apply for a license accompanied by a required fee of $1,000 for each location. The act also requires a wholesaler or distributor to file an application for a license renewal accompanied by a required fee of $1,000 for each location where cigarettes and tobacco products are sold.

end delete
begin delete

The bill would raise the fees described above to $1,200.

end delete
begin delete

The bill would require the board to report to the Legislature no later than July 1, 2018, regarding the adequacy of funding for the Cigarette and Tobacco Licensing Act of 2003, as specified.

end delete

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

P3    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 22973 of the end insertbegin insertBusiness and Professions
2Code
end insert
begin insert is amended to read:end insert

3

22973.  

(a) An application for a license shall be filed on or
4before April 15, 2004, on a form prescribed by the board and shall
5include the following:

6(1) The name, address, and telephone number of the applicant.

7(2) The business name, address, and telephone number of each
8retail location. For applicants who control more than one retail
9location, an address for receipt of correspondence or notices from
10the board, such as a headquarters or corporate office of the retailer,
11 shall also be included on the application and listed on the license.
12Citations issued to licensees shall be forwarded to all addressees
13on the license.

14(3) A statement by the applicant affirming that the applicant
15has not been convicted of a felony and has not violated and will
16not violate or cause or permit to be violated any of the provisions
17of this division or any rule of the board applicable to the applicant
18or pertaining to the manufacture, sale, or distribution of cigarettes
19or tobacco products. If the applicant is unable to affirm this
20statement, the application shall contain a statement by the applicant
21of the nature of any violation or the reasons that will prevent the
22applicant from complying with the requirements with respect to
23the statement.

24(4) If any other licenses or permits have been issued by the
25board or the Department of Alcoholic Beverage Control to the
26applicant, the license or permit number of those licenses or permits
27then in effect.

28(5) A statement by the applicant that the contents of the
29application are complete, true, and correct. Any person who signs
30a statement pursuant to this subdivision that asserts the truth of
31any material matter that he or she knows to be false is guilty of a
32misdemeanor punishable by imprisonment of up to one year in the
33county jail, or a fine of not more than one thousand dollars
34($1,000), or both the imprisonment and the fine.

35(6) The signature of the applicant.

36(7) Any other information the board may require.

37(b) The board may investigate to determine the truthfulness and
38completeness of the information provided in the application. The
P4    1board may issue a license without further investigation to an
2applicant for a retail location if the applicant holds a valid license
3from the Department of Alcoholic Beverage Control for that same
4location.

5(c) The board shall provide electronic means for applicants to
6download and submit applications.

7(d) A fee of two hundred sixty-five dollars ($265) shall be
8submitted with each application. An applicant that owns or controls
9more than one retail location shall obtain a separate license for
10each retail location, but may submit a single application for those
11licenses with an application license fee of two hundred sixty-five
12dollars ($265) per location.

13(e) For calendar years beginning on and after January 1, 2017,
14every retailer shall file an application for renewal of the license
15prescribed in Section 22972, accompanied with a fee of two
16hundred sixty-five dollars ($265) per retail location, in the form
17and manner prescribed by the board.

begin delete

18(f) (1) The board shall report back to the Legislature no later
19than January 1, 2019, regarding the adequacy of funding for the
20Cigarette and Tobacco Products Licensing Act of 2003. The report
21shall include data and recommendations about whether the annual
22licensing fee funding levels are set at an appropriate level to
23maintain an effective enforcement program.

24(2) The report required by paragraph (1) shall be submitted in
25compliance with Section 9795 of the Government Code.

end delete
26begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 22977.1 of the end insertbegin insertBusiness and Professions Codeend insert
27
begin insert is amended to read:end insert

28

22977.1.  

(a) Every distributor and every wholesaler shall file
29an application, as prescribed in Section 22977, on or before April
3015, 2004. Each application shall be accompanied by a fee of one
31thousand dollars ($1,000) for each location. The fee shall be for a
32calendar year and may not be prorated. Subject to meeting the
33requirements of this section and Section 22977.2, the board shall
34issue a license.

35(b) Every distributor and every wholesaler who commences
36business after the last day of May 2004, or who commences selling
37or distributing cigarettes or tobacco products at a new or different
38place of business in this state after the last day of May 2004, shall
39file with the board an application as prescribed in Section 22977
40at least 30 days prior to commencing such business or commencing
P5    1such sales or distributions; and all distributors and all wholesalers
2that fail to timely file an application for a license under subdivision
3(a) shall file with the board an application as prescribed in Section
422977. Each application shall be accompanied by a fee of one
5thousand two hundred dollars ($1,200) for each location. The fee
6shall be for a calendar year and may not be prorated. Subject to
7Section 22977.2, the board, within 30 days after receipt of an
8application and payment of the proper fee shall issue a license.

9(c) For calendar years beginning on and after January 1, 2005,
10and before January 1, 2017, every distributor and every wholesaler
11shall file an application for renewal of the license prescribed in
12Section 22977, accompanied with a fee of one thousand dollars
13($1,000) for each location where cigarettes and tobacco products
14are sold, in the form and manner as prescribed by the board. For
15calendar years beginning on and after January 1, 2017, the fee
16accompanying an application for renewal of the license prescribed
17in Section 22977 shall be one thousand two hundred dollars
18($1,200) for each location where cigarettes and tobacco products
19are sold.

begin delete

20(d) (1) The board shall report back to the Legislature no later
21than January 1, 2019, regarding the adequacy of funding for the
22Cigarette and Tobacco Products Licensing Act of 2003. The report
23shall include data and recommendations about whether the annual
24licensing fee funding levels are set at an appropriate level to
25maintain an effective enforcement program.

26(2) The report required by paragraph (1) shall be submitted in
27compliance with Section 9795 of the Government Code.

end delete
28begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 22990.5 is added to the end insertbegin insertBusiness and
29Professions Code
end insert
begin insert, to read:end insert

begin insert
30

begin insert22990.5.end insert  

Notwithstanding Sections 30124 and 30131.3 or any
31other law, on or after January 1, 2017, no revenues derived from
32the taxes imposed upon the distribution of cigarettes and tobacco
33products by Article 1 (commencing with Section 30101), Article
342 (commencing with Sections 30121), and Article 3 (commencing
35with Section 30131) of Chapter 2 of Part 13 of Division 2 of the
36Revenue and Taxation Code shall be appropriated to the State
37Board of Equalization for the purpose of implementing, enforcing,
38or administering the California Cigarette and Tobacco Products
39Licensing Act of 2003.

end insert
P6    1begin insert

begin insertSEC. 4.end insert  

end insert

begin insertSection 22990.7 is added to the end insertbegin insertBusiness and
2Professions Code
end insert
begin insert, to read:end insert

begin insert
3

begin insert22990.7.end insert  

(a) The board shall report to the Legislature on or
4before January 1, 2019, and on and before January 1 annually
5thereafter, regarding the adequacy of funding for the Cigarette
6and Tobacco Products Licensing Act of 2003. The report shall
7include data and recommendations about whether the annual
8licensing fee funding levels are set at an appropriate level to
9maintain an effective enforcement program. The report shall also
10include information on the board’s compliance with the State
11Auditor’s recommendation in the State Auditor’s March 2016
12report to eliminate the excess fund balance in the Cigarette and
13Tobacco Tax Compliance Fund, which shall be required until the
14excess fund balance is eliminated.

15
(b) The report required by subdivision (a) shall be submitted
16in compliance with Section 9795 of the Government Code.

end insert
begin delete
17

SECTION 1.  

Section 22973 of the Business and Professions
18Code
is amended to read:

19

22973.  

(a) An application for a license shall be filed on or
20before April 15, 2004, on a form prescribed by the board and shall
21include the following:

22(1) The name, address, and telephone number of the applicant.

23(2) The business name, address, and telephone number of each
24retail location. For applicants who control more than one retail
25location, an address for receipt of correspondence or notices from
26the board, such as a headquarters or corporate office of the retailer,
27shall also be included on the application and listed on the license.
28Citations issued to licensees shall be forwarded to all addressees
29on the license.

30(3) A statement by the applicant affirming that the applicant
31has not been convicted of a felony and has not violated and will
32not violate or cause or permit to be violated any of the provisions
33of this division or any rule of the board applicable to the applicant
34or pertaining to the manufacture, sale, or distribution of cigarettes
35or tobacco products. If the applicant is unable to affirm this
36statement, the application shall contain a statement by the applicant
37of the nature of any violation or the reasons that will prevent the
38applicant from complying with the requirements with respect to
39the statement.

P7    1(4) If any other licenses or permits have been issued by the
2board or the Department of Alcoholic Beverage Control to the
3applicant, the license or permit number of those licenses or permits
4then in effect.

5(5) A statement by the applicant that the contents of the
6application are complete, true, and correct. Any person who signs
7a statement pursuant to this subdivision that asserts the truth of
8any material matter that he or she knows to be false is guilty of a
9misdemeanor punishable by imprisonment of up to one year in the
10county jail, or a fine of not more than one thousand dollars
11($1,000), or both the imprisonment and the fine.

12(6) The signature of the applicant.

13(7) Any other information the board may require.

14(b) The board may investigate to determine the truthfulness and
15completeness of the information provided in the application. The
16board may issue a license without further investigation to an
17applicant for a retail location if the applicant holds a valid license
18from the Department of Alcoholic Beverage Control for that same
19location.

20(c) The board shall provide electronic means for applicants to
21download and submit applications.

22(d) A fee of two hundred sixty-five dollars ($265) shall be
23submitted with each application. An applicant that owns or controls
24more than one retail location shall obtain a separate license for
25each retail location, but may submit a single application for those
26licenses with an application license fee of two hundred sixty-five
27dollars ($265) per location.

28(e) For calendar years beginning on and after January 1, 2017,
29every retailer shall file an application for renewal of the license
30prescribed in Section 22972, accompanied with a fee of two
31hundred sixty-five dollars ($265) per retail location, in the form
32and manner prescribed by the board.

33(f) (1) The board shall report to the Legislature no later than
34July 1, 2018, regarding the adequacy of funding for the Cigarette
35and Tobacco Products Licensing Act of 2003. The report shall
36include data and recommendations about whether the annual
37licensing fee funding levels are set at an appropriate level to
38maintain an effective enforcement program. The report shall also
39include information on the board’s compliance with the State
40Auditor’s recommendation in the State Auditor’s March 2016
P8    1report to eliminate the excess fund balance in the Cigarette and
2Tobacco Tax Compliance Fund.

3(2) The report required by paragraph (1) shall be submitted in
4compliance with Section 9795 of the Government Code.

5

SEC. 2.  

Section 22977.1 of the Business and Professions Code
6 is amended to read:

7

22977.1.  

(a) Every distributor and every wholesaler shall file
8an application, as prescribed in Section 22977, on or before April
915, 2004. Each application shall be accompanied by a fee of one
10thousand dollars ($1,000) for each location. The fee shall be for a
11calendar year and may not be prorated. Subject to meeting the
12requirements of this section and Section 22977.2, the board shall
13issue a license.

14(b) Every distributor and every wholesaler who commences
15business after the last day of May 2004, or who commences selling
16or distributing cigarettes or tobacco products at a new or different
17place of business in this state after the last day of May 2004, shall
18file with the board an application as prescribed in Section 22977
19at least 30 days prior to commencing such business or commencing
20such sales or distributions; and all distributors and all wholesalers
21that fail to timely file an application for a license under subdivision
22(a) shall file with the board an application as prescribed in Section
2322977. Each application shall be accompanied by a fee of one
24thousand two hundred dollars ($1,200) for each location. The fee
25shall be for a calendar year and may not be prorated. Subject to
26Section 22977.2, the board, within 30 days after receipt of an
27application and payment of the proper fee shall issue a license.

28(c) For calendar years beginning on and after January 1, 2005,
29and before January 1, 2017, every distributor and every wholesaler
30shall file an application for renewal of the license prescribed in
31Section 22977, accompanied with a fee of one thousand dollars
32($1,000) for each location where cigarettes and tobacco products
33are sold, in the form and manner as prescribed by the board. For
34calendar years beginning on and after January 1, 2017, the fee
35accompanying an application for renewal of the license prescribed
36in Section 22977 shall be one thousand two hundred dollars
37($1,200) for each location where cigarettes and tobacco products
38are sold.

39(d) (1) The board shall report to the Legislature no later than
40July 1, 2018, regarding the adequacy of funding for the Cigarette
P9    1and Tobacco Products Licensing Act of 2003. The report shall
2include data and recommendations about whether the annual
3licensing fee funding levels are set at an appropriate level to
4maintain an effective enforcement program. The report shall also
5include information on the board’s compliance with the State
6Auditor’s recommendation in the State Auditor’s March 2016
7report to eliminate the excess fund balance in the Cigarette and
8Tobacco Tax Compliance Fund.

9(2) The report required by paragraph (1) shall be submitted in
10compliance with Section 9795 of the Government Code.

end delete


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