Amended in Senate August 15, 2016

Amended in Senate June 16, 2016

Amended in Assembly May 12, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2770

Introduced by Assembly Member Nazarian

February 19, 2016

An act to amend Sections begin delete 22973 end delete begin insert 22972, 22973, 22973.3, end insert and 22977.1 of, and to add Sections 22990.5 and 22990.7 to, 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 a retailer to have a license to engage in the sale of cigarette and tobacco products, and requires a separate license for each retail location. Existing law imposes a fee for each license and provides that the license is valid for a 12-month period. On and after January 1, 2017, existing law requires a license to be renewed annually and imposes a renewal fee.

end insert begin insert

This bill would require a retailer that adds an additional retail location to renew the license for that location based on a 12-month period beginning in the month the retailer obtained its license for its first retail location. This bill would prohibit any license fee or renewal fee from being prorated.

end insert

The Cigarette and Tobacco Products Licensing Act of 2003 begin delete 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 end delete requires the moneys collected begin insert pursuant to the act end insert 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 .

This bill would instead require the board to report to the begin delete Legislature end delete begin insert Legislature, Governor, and Department of Finance end insert on or before January 1, 2019, and on and before January 1 annually thereafter. begin delete 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 delete

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.

This bill would prohibit, on or after begin delete January 1, 2017, end delete begin insert July 1, 2019, end insert 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.

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

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

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 22972 of the end insert begin insert Business and Professions
Code end insert begin insert is amended to read: end insert

22972.  

(a) Commencing June 30, 2004, a retailer shall have
in place and maintain a license to engage in the sale of cigarettes
or tobacco products. A retailer that owns or controls more than
one retail location shall obtain a separate license for each retail
location, but may submit a single application for those licenses.

(b) The retailer shall conspicuously display the license at each
retail location in a manner visible to the public.

(c) A license is not assignable or transferable. A person who
obtains a license as a retailer who ceases to do business as specified
in the license, or who never commenced business, or whose license
is suspended or revoked, shall immediately surrender the license
to the board.

(d) A license shall be valid for a 12-month period, and shall be
renewed annually. begin insert A retailer that adds an additional retail location
shall renew the license for that location based on a 12-month
period beginning in the month the retailer obtained its license for
its first retail location. end insert

begin delete SECTION 1. end delete

begin insert SEC. 2. end insert   

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

22973.  

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

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

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

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

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

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

(6) The signature of the applicant.

(7) Any other information the board may require.

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

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

(d) A fee of two hundred sixty-five dollars ($265) shall be
submitted with each application. An applicant that owns or controls
more than one retail location shall obtain a separate license for
each retail location, but may submit a single application for those
licenses with an application license fee of two hundred sixty-five
dollars ($265) per location. begin insert The fee shall be for the period provided
in subdivision (d) of Section 22972 and shall not be prorated. end insert

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

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 22973.3 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

22973.3.  

(a) Notwithstanding any other law, an application
for a license for the sale of a tobacco product, as defined in
subdivision (d) of Section 22950.5, that is not subject to a tax
imposed by the Cigarette and Tobacco Products Tax Law pursuant
to Part 13 (commencing with Section 30001) of Division 2 of the
Revenue and Taxation Code shall be filed on a form prescribed
by the board and shall include the following:

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

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

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

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

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

(6) The signature of the applicant.

(7) Any other information the board may require.

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

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

(d) A fee of two hundred sixty-five dollars ($265) shall be
submitted with each application. An applicant that owns or controls
more than one retail location shall obtain a separate license for
each retail location, but may submit a single application for those
licenses with an application license fee of two hundred sixty-five
dollars ($265) per location. begin insert The fee shall be for the period provided
in subdivision (d) of Section 22972 and shall not be prorated. end insert

(e) Every retailer shall file an application for renewal of its
license, accompanied with a fee of two hundred sixty-five dollars
($265) per retail location in the form and manner prescribed by
the board.

(f) (1) The board shall report back to the Legislature no later
than January 1, 2019, regarding the adequacy of funding for the
Cigarette and Tobacco Products Licensing Act of 2003 with regard
to tobacco products for which a license is required by this section.
The report shall include data and recommendations about whether
the annual licensing fee funding levels are set at an appropriate
level to maintain an effective enforcement program.

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

(g) (1) This section shall apply to a retailer who sells a tobacco
product, as defined in subdivision (d) of Section 22950.5, that is
not subject to a tax imposed by the Cigarette and Tobacco Products
Tax Law pursuant to Part 13 (commencing with Section 30001)
of Division 2 of the Revenue and Taxation Code, and who does
not already possess a valid license to sell cigarettes or tobacco
products issued pursuant to Section 22972.

(2) A retailer that possesses a valid license to sell cigarettes and
tobacco products issued pursuant to Section 22972 may also sell
under that license a tobacco product, as defined in subdivision (d)
of Section 22950.5, that is not subject to a tax imposed by the
Cigarette and Tobacco Products Tax Law pursuant to Part 13
(commencing with Section 30001) of Division 2 of the Revenue
and Taxation Code.

(h) This section shall become operative January 1, 2017.

begin delete SEC. 2. end delete

begin insert SEC. 4. end insert   

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

22977.1.  

(a) Every distributor and every wholesaler shall file
an application, as prescribed in Section 22977, on or before April
15, 2004. Each application shall be accompanied by a fee of one
thousand dollars ($1,000) for each location. The fee shall be for a
calendar year and may not be prorated. Subject to meeting the
requirements of this section and Section 22977.2, the board shall
issue a license.

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

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

begin delete SEC. 3. end delete

begin insert SEC. 5. end insert   

Section 22990.5 is added to the Business and
Professions Code, to read:

22990.5.  

Notwithstanding Sections 30124 and 30131.3 begin insert of the
Revenue and Taxation Code end insert or any other law, on or after begin delete January
1, 2017, end delete begin insert July 1, 2019, end insert no revenues derived from the taxes imposed
upon the distribution of cigarettes and tobacco products by Article
1 (commencing with Section 30101), Article 2 (commencing with
Sections 30121), and Article 3 (commencing with Section 30131)
of Chapter 2 of Part 13 of Division 2 of the Revenue and Taxation
Code shall be appropriated to the begin delete State Board of Equalization end delete
begin insert board end insert for the purpose of implementing, enforcing, or administering
the California Cigarette and Tobacco Products Licensing Act of
2003.

begin delete SEC. 4. end delete

begin insert SEC. 6. end insert   

Section 22990.7 is added to the Business and
Professions Code, to read:

22990.7.  

(a) The board shall report to the begin delete Legislature end delete
begin insert Legislature, Governor, and Department of Finance end insert on or before
January 1, 2019, and on and before January 1 annually thereafter,
regarding the adequacy of funding for the Cigarette and Tobacco
Products Licensing Act of 2003. The report shall include data and
recommendations about whether the annual licensing fee funding
levels are set at an appropriate level to maintain an effective
enforcement program. begin delete The report shall also 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 shall be required until the excess
fund balance is eliminated. end delete

(b) The report begin insert to the Legislature end insert required by subdivision (a)
shall be submitted in compliance with Section 9795 of the
Government Code.