Amended in Assembly June 12, 2016

Amended in Assembly May 25, 2016

Senate BillNo. 837


Introduced by Committee on Budget and Fiscal Review

January 7, 2016


begin delete An act relating to the Budget Act of 2016. end deletebegin insertAn act to amend Sections 27, 101, 144, 205.1, 19300, 19300.7, 19302, 19302.1, 19303, 19304, 19305, 19306, 19307, 19310, 19311, 19312, 19315, 19321, 19322, 19323, 19326, 19327, 19328, 19332, 19332.5, 19334, 19335, 19341, 19342, 19343, 19344, 19345, 19347, 19350, 19351, and 19360 of, to amend the heading of Chapter 3.5 (commencing with Section 19300) of Division 8 of, to amend and repeal Section 19320 of, to add Sections 19332.2, 19347.1, 19347.2, 19347.3, 19347.4, 19347.5, 19347.6, 19347.7, and 19347.8 to, to repeal Sections 19313 and 19318 of, to repeal Article 6 (commencing with Section 19331) of Chapter 3.5 of Division 8 of, and to repeal and add Section 19300.5 of, the Business and Professions Code, to amend Sections 2154, 2265, 5100, and 5151 of the Elections Code, to amend Sections 1602, 12025.2, and 12029 of, and to add Section 1617 to, the Fish and Game Code, to amend Section 52452 of, and to add Section 37104 to, the Food and Agricultural Code, to add Section 15283 to, and to add Chapter 6.45 (commencing with Section 30035) to Division 3 of Title 3 of, the Government Code, to amend Sections 11362.769, 11362.777, 44559.11, 50800.5, 51341, 51349, 51455, and 51622 of, to amend and renumber Sections 51344 and 51345 of, to amend and repeal Section 11362.775 of, to add Section 44559.14 to, to add Sections 50912.5 and 51511 to, to repeal Sections 51342, 51347, 51348, 51618, and 51619 of, and to add Chapter 19 (commencing with Section 50899.1) to Part 2 of Division 31 of, the Health and Safety Code, to amend Sections 12206, 17058, 18900.24, and 23610.5 of, to add and repeal Sections 17053.88.5 and 23688.5 of, and to repeal Section 31020 of, the Revenue and Taxation Code, and to amend Sections 1058.5, 1525, 1535, 1552, 1831, 1840, 1845, 1846, and 5103 of, and to add Sections 1847, 1848, and 13149 to, the Water Code, relating to state government, and making an appropriation therefor, to take effect immediately, bill related to the budget. end insert

LEGISLATIVE COUNSEL’S DIGEST

SB 837, as amended, Committee on Budget and Fiscal Review. begin deleteBudget Act of 2016. end deletebegin insertState government.end insert

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(1) Existing law, the Medical Marijuana Regulation and Safety Act, regulates and licenses the cultivation, dispensing, distribution, manufacturing, testing, and transportation of medical cannabis through various state agencies, including, among others, the Bureau of Medical Marijuana Regulation, the Department of Food and Agriculture, and the State Department of Public Health, and authorizes the bureau to adopt rules to carry out the provisions of that act, as specified. That act requires a person to obtain both a local and state license to engage in commercial cannabis activities, except that the act authorizes, until January 1, 2018, a facility or entity that is operating in compliance with local laws to continue in operation until its application for licensure is approved or denied. That act requires the State Department of Public Health to regulate cannabis testing laboratories, as specified. That act authorizes the bureau to establish appellations of origin for marijuana grown in the state. That act establishes the Medical Marijuana Regulation Safety Act Fund and provides that moneys in the fund shall be available upon appropriation by the Legislature.

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This bill would, among other things, change the name of the Medical Marijuana Regulation and Safety Act, the Bureau of Medical Marijuana Regulation, and the Medical Marijuana Regulation and Safety Act Fund to the Medical Cannabis Regulation and Safety Act, the Bureau of Medical Cannabis Regulation, and the Medical Cannabis Regulation and Safety Act Fund, and would change references to medical marijuana or marijuana to medical cannabis or cannabis, respectively. The bill would authorize licensing authorities, as defined, to adopt rules and regulations to carry out the purposes of that act and emergency regulations, as specified. The bill would add additional grounds for disciplinary action, including failure to maintain safe conditions for inspection by a licensing authority. The bill would exempt the premises or person from the above-mentioned requirement to obtain both a local and state license only if certain conditions are met, including that the applicant continues to operate in compliance with all local and state laws, except for possession of a state license. The bill would require the State Water Resources Control Board, in consultation with the Department of Fish and Wildlife, to adopt principles and guidelines for diversion and use of water for cannabis cultivation, as specified. The bill would require an applicant for a state license issued by a licensing authority to meet certain requirements, including providing proof of a bond to cover the costs of destruction of medical cannabis or medical cannabis products if necessitated by a violation of the licensing requirements. The bill would require an applicant for a license for indoor or outdoor cultivation to identify the source of water supply, as specified. The bill would authorize the Department of Food and Agriculture to establish appellations of origin for cannabis grown in the state instead of the bureau. The bill would require the bureau to regulate the laboratory testing of cannabis instead of the State Department of Public Health, as specified. The bill would authorize the State Department of Public Health to, among other things, develop standards for the manufacturing and labeling of all manufactured medical cannabis products and would require the State Department of Public Health, when it has evidence that a medical cannabis product is adulterated or misbranded, to notify the manufacturer, and authorizes the department to take certain actions.

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(2) Existing law prohibits an entity from substantially diverting or obstructing the natural flow of, or substantially changing or using any material from the bed, channel, or bank of, any river, stream, or lake, or from depositing certain material where it may pass into any river, stream, or lake, without first notifying the Department of Fish and Wildlife of that activity, and entering into a lake or streambed alteration agreement if required by the department to protect fish and wildlife resources. Existing law exempts certain routine maintenance and operation activities from those requirements after the initial notification and agreement and exempts certain emergency activities from those notification and agreement requirements. Existing law authorizes the director of the department to establish a graduated schedule of fees to be charged to any entity subject to the notification and agreement provisions and requires any fees received to be deposited into the Fish and Game Preservation Fund. Under existing law, it is unlawful for any person to violate those notification and agreement provisions, and a person who violates them is also subject to a civil penalty of not more than $25,000 for each violation.

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Existing law, in order to facilitate the remediation and permitting of marijuana cultivation sites, requires the department to adopt regulations to enhance the fees on any entity subject to lake or streambed alternation agreement provisions for marijuana cultivation sites that require remediation. Existing law prohibits this fee schedule from exceeding the fee limits established for lake or streambed alteration agreements.

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This bill would exempt an entity from the requirement to enter into a lake or streambed alteration agreement with the department for activities authorized by a license or renewed license for cannabis cultivation issued by the Department of Food and Agriculture for the term of the license or renewed license if the entity submits the written notification to the department, a copy of the license or renewed license, and the fee required for a lake or streambed alteration agreement, and the department determines certain requirements are met. If an entity receives an exemption, any failure by the entity to comply with certain requirements contained in the license would constitute a violation of the lake or streambed alteration agreement provisions. Because this violation would be a crime, this bill would impose a state-mandated local program.

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This bill would also authorize the department to adopt regulations establishing the requirements and procedure for the issuance of a general agreement in a geographic area for a category or categories of activities related to cannabis cultivation that would be in lieu of an individual lake or streambed alteration agreement.

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(3) Existing law, with certain exceptions, requires each person who diverts water after December 31, 1965, to file with the State Water Resources Control Board a statement of diversion and use, and to include specified information, including the purpose of the use.

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Existing law requires each person or entity who holds a permit or license to appropriate water, and certain lessors of water, to pay an annual fee according to a schedule established by the board. Existing law requires a person or entity who files a certain application, registration, petition, or request to pay a fee according to a schedule established by the board. Revenues generated from these fees are deposited into the Water Rights Fund, which are available, upon appropriation, for specified purposes.

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This bill would require a statement of diversion and use to also include information regarding the amount of water used, if any, for cannabis cultivation. The bill would require a person who files a statement of diversion and use with the board reporting that water was used for cannabis cultivation to pay a fee according to a fee schedule established by the board. The bill would authorize moneys in the Water Rights Fund, upon appropriation, to be expended by the board for the purposes of carrying out water diversion-related provisions of the Medical Marijuana Regulation and Safety Act.

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(4) Existing law authorizes the State Water Resources Control Board to issue a cease and desist order against a person who is violating, or threatening to violate, certain requirements relating to water use.

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This bill would authorize the board to issue a cease and desist order against a person who is both diverting or using water for cannabis cultivation and violating, or threatening to violate, certain licensing and water diversion-related provisions of the Medical Marijuana Regulation and Safety Act.

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(5) Under existing law, a person who violates a cease and desist order may be liable in an amount not to exceed $1,000 for each day in which the violation occurs and, for a violation occurring in a critically dry year immediately preceded by 2 or more consecutive below normal, dry, or critically dry years or during a period for which the Governor has issued a proclamation of a state of emergency based on drought conditions, may be liable in an amount not to exceed $10,000 for each day in which the violation occurs. Existing law authorizes a person or entity in violation of a term or condition of a permit, license, certificate, or registration issued by, an order adopted by, or regulations adopted by, the state board to be civilly liable for an amount not to exceed $500 for each day in which the violation occurs. Revenue generated from these penalties is deposited in the Water Rights Fund.

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This bill would authorize a person or entity who violates certain licensing and water diversion-related provisions of the Medical Marijuana Regulation and Safety Act to be held liable in an amount not to exceed the sum of (1) $500 dollars for a violation plus $250 for each additional day on which the violation continues if the person fails to correct the violation within 30 days after the board has called the violation to the attention of the person and (2) $2,500 for each acre-foot of water diverted or used in violation of the applicable requirement. Revenue generated from these penalties would be deposited in the Water Rights Fund.

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(6) Existing law requires a person who diverts 10 acre-feet of water per year or more under a permit or license to install and maintain a device or employ a method capable of measuring the rate of direct diversion, rate of collection to storage, and rate of withdrawal or release from storage, as specified, and with certain exceptions. Existing law requires the permittee or licensee to maintain a record of all diversion monitoring and the total amount of water diverted and submit these records to the state board, as prescribed. Existing law requires a person who diverts water under a registration, permit, or license to report to the state board, at least annually, certain information, including the monitoring information, if applicable.

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This bill would require a person who diverts water under a registration, permit, or license to also report to the state board, at least annually, information regarding the amount of water used, if any, for cannabis cultivation.

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(7) Existing law, the California Seed Law, regulates seed sold in California, and requires each container of agricultural seed that is for sale or sold within this state for sowing purposes to be labeled, as specified, unless the sale is an occasional sale of seed grain by the producer of the seed grain to his or her neighbor for use by the purchaser within the county of production.

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This bill would also exclude from the California Seed Law any cannabis seed, as defined, sold or offered for sale in the state.

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(8) Existing law, the Milk and Milk Products Act of 1947, regulates the production of milk and milk products in this state. The act specifies standards for butter. The act requires a license from the Secretary of Food and Agriculture for each separate milk products plant or place of business dealing in, receiving, manufacturing, freezing, or processing milk, or any milk product, or manufacturing, freezing, or processing imitation ice cream or imitation ice milk.

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This bill would exempt from the Milk and Milk Products Act of 1947 butter purchased from a licensed milk products plant or retail location that is subsequently infused or mixed with medical cannabis at the premises or location that is not required to be licensed as a milk products plant.

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(9) The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws, including, for taxable years beginning on or after January 1, 2012, and before January 1, 2017, a credit for a qualified taxpayer, defined as a person responsible for planting a crop, managing the crop, and harvesting the crop from the land, in an amount equal to 10% of the cost that would otherwise be included in, or required to be included in, inventory costs, as specified under federal law, with respect to the donation of fresh fruits or fresh vegetables to a food bank located in California.

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This bill would establish similar credits under the Personal Income Tax Law and the Corporation Tax Law for taxable years beginning on or after January 1, 2017, and before January 1, 2022. The bill would, as compared to the existing credits, modify the credit amount to instead equal 15% of the qualified value, as defined, of the fresh fruits or vegetables. The bill would require the credit to be claimed on a timely filed original return.

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(10) Existing law requires the Department of Housing and Community Development to administer the Emergency Housing and Assistance Program. Under the program, moneys from the continuously appropriated Emergency Housing and Assistance Fund are available for the purposes of providing shelter, as specified, to homeless persons.

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This bill would create the California Emergency Solutions Grants Program, also to be administered by the department. The bill, among other things, would require the department to make grants under the program to qualifying subrecipients to implement activities that address the needs of homeless individuals and families and assist them to regain stability in permanent housing as quickly as possible, as specified. The bill, to the extent funds are made available by the Legislature, would authorize moneys in the Emergency Housing and Assistance Fund to be used for the purposes of the program.

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(11) Existing law establishes a low-income housing tax credit program pursuant to which the California Tax Credit Allocation Committee provides procedures and requirements for the allocation of state insurance, income, and corporation tax credit amounts among low-income housing projects based on federal law.

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This bill, beginning on or after January 1, 2016, and before January 1, 2020, would allow a taxpayer that is allowed a low-income housing tax credit to elect to sell all or a portion of that credit to one or more unrelated parties, as described, for each taxable year in which the credit is allowed for not less than 80% of the amount of the credit to be sold, and would provide for the one-time resale of that credit, as provided. The bill would require the California Tax Credit Allocation Committee to enter into an agreement with the Franchise Tax Board to pay any costs incurred by the Franchise Tax Board in administering these provisions.

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Existing law, in the case of a partnership, requires the allocation of the credits, on or after January 1, 2009, and before January 1, 2016, to partners based upon the partnership agreement, regardless of how the federal low-income housing tax credit, as provided, is allocated to the partners, or whether the allocation of the credit under the terms of the agreement has substantial economic effect, as specified.

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This bill would extend the January 1, 2016, date to January 1, 2020.

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(12) The Public Safety Communications Act of 2013 (act) establishes the Public Safety Communications Division within the Office of Emergency Services and, among other things, requires the division to acquire, install, equip, maintain, and operate new or existing public safety communications systems and facilities for public safety agencies, as specified. Existing law also authorizes the division to aid local public agencies in the formulation of concepts, methods, and procedures that will improve the operation of nonemergency telephone systems, and requires the division to perform certain duties related to local emergency telephone systems.

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This bill, beginning on July 1, 2016, would create the Public Safety Communications Revolving Fund in the State Treasury and require that the fund consist of, among others, revenues from the provision or sale of public safety communications services provided for in the act or of other services rendered by the division, and moneys appropriated and made available by the Legislature for the purposes of the act. The bill would require the Director of Emergency Services to administer the fund and would require the fund to be used, upon appropriation by the Legislature, to pay all costs to the office resulting from the act or from rendering services to the state or public agencies, and to establish reserves, as specified. The bill would require the reduction of the billing rates for services rendered by the office in a fiscal year if the balance in the fund at the end of the prior fiscal year meets certain conditions, and would require the Controller to transfer payments authorized to be collected by the division for the division’s services to the fund, as specified.

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(13) Existing law establishes the Capital Access Loan Program to assist small businesses in financing the costs of complying with environmental mandates and the remediation of contamination on their properties, and also establishes within the program the California Americans with Disabilities Act Small Business Capital Access Loan Program to assist small businesses in financing the costs of projects that alter or retrofit existing small business facilities to comply with the federal Americans with Disabilities Act. Under existing law, both programs are administered by the California Pollution Control Financing Authority (authority).

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This bill would establish within the Capital Access Loan Program the California Seismic Safety Capital Access Loan Program to assist residential property owners and small business owners in seismically retrofitting residences and small businesses by covering losses on qualified loans for those purposes, as specified. The bill would require the authority to administer the program, including regulations and funds received for the program, as specified. The bill would also authorize the authority to, by regulation, implement loan loss reserve programs to benefit any individual person engaged in qualifying activities that require financing, as specified.

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This bill would establish the California Seismic Safety Capital Access Loan Program Fund and would continuously appropriate that fund to the authority to carry out the purposes of the California Seismic Safety Capital Access Loan Program.

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(14) Existing law authorizes an individual to contribute amounts in excess of his or her income tax liability for the support of specified funds and allows an individual to designate on his or her tax return that a specified amount in excess of his or her tax liability be transferred to the Habitat for Humanity Fund. Existing law requires moneys in the fund, upon appropriation by the Legislature, to be allocated to the Franchise Tax Board, the Controller, and the Department of Housing and Community Development for reimbursement of costs, as provided, and the balance to the Department of Housing and Community Development to distribute grants to Habitat for Humanity affiliates in California that meet certain requirements, including having a specified tax-exempt status. Existing law requires the Department of Housing and Community Development to award grants through a competitive, project-specific grant process and be responsible for overseeing that grant program and prohibits a Habitat for Humanity affiliate from using a grant award for administrative expenses or for any purposes outside of California. Existing law also has administrative provisions applicable to voluntary contributions.

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This bill would instead require the Department of Housing and Community Development to disburse these moneys to Habitat for Humanity of California, Inc., and would require that organization to submit a plan to the department for the use and competitive project-specific distribution of moneys to Habitat for Humanity affiliates in California that meet certain requirements, including having a specified tax-exempt status. The bill would allow Habitat for Humanity of California, Inc., to use a specified amount of moneys for administrative costs and would require the organization to submit an annual audit of the program to the department, as provided.

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(15) Existing law establishes the California Housing Finance Agency with a primary purpose of meeting the housing needs of persons and families of low or moderate income. Under existing law, the California Housing Loan Insurance Fund, a continuously appropriated fund, is established for the purpose of insuring loans and bonds, and defraying administrative expenses incurred by the agency in operating these programs of loan and bond insurance, as specified. Existing law establishes within the agency a Director of Insurance of the fund who is required to manage and conduct the business and affairs of the insurance fund, as specified.

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This bill would repeal provisions relating to the Director of Insurance of the fund. The bill would instead establish the director of enterprise risk management and compliance within the agency, who would be required to assist in the implementation of processes, tools, and systems to identify, assess, measure, manage, monitor, and mitigate risks related to the development of new programs or changes to existing law or regulations that may result in new or increased risk to the agency, as specified.

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Existing law requires the agency to obtain an annual audit of the insurance fund’s books and accounts regarding its activities by an independent certified public accountant, to provide that audit to the Governor, the chairperson and vice-chairperson of the Senate and Assembly housing policy committees, the Senate and Assembly budget committees, and the Joint Legislative Budget Committee, and to make the audit available for review by interested parties no later than November 1 of each year.

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This bill would instead require the agency to obtain an annual agreed-upon procedures engagement of the insurance fund’s books and accounts, to provide that agreed-upon procedures engagement to the to the Governor, the chairperson and vice-chairperson of the Senate and Assembly housing policy committees, the Senate and Assembly budget committees, and the Joint Legislative Budget Committee, and to make the agreed-upon procedures engagement available for review by interested parties no later than November 1 of each year.

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By expanding the purposes of a continuously appropriated fund, this bill would make an appropriation.

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(16) Existing law, known as the Second Chance Program, requires the Board of State and Community Corrections to administer a competitive grant program that focuses on community-based solutions for reducing recidivism using certain funds allocated pursuant to the Safe Neighborhoods and Schools Act, enacted by Proposition 47 at the November 4, 2014, general election.

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This bill would establish the Community-Based Transitional Housing Program, to be administered by the Department of Finance, for the purpose of providing grants to cities, counties, and cities and counties to increase the supply of transitional housing available to persons previously incarcerated for felony and misdemeanor convictions and funded with moneys appropriated for that purpose in the annual Budget Act or other measure. The bill would require an applicant city, county, or city and county to submit an application between October 1, 2016, and October 1, 2018, that includes specified information and to approve the issuance of a conditional use permit or other local entitlement for a transitional housing facility that meets specified criteria, including that the facility provide transitional housing for a period of not less than 10 years and that it provide additional services to residents. If, after approval of its application, the city, county, or city and county fails to issue the conditional use permit or provide other local entitlement within a specified time period, the bill would provide that the approval of the application is void and the city, county, or city and county is permanently ineligible to submit any future application for funding under the program.

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This bill would require the department to approve or deny an application based on specified criteria within 90 days of receipt and determine the amount of funds to award to the applicant city, county, or city and county. The bill would require that the department award up to $2,000,000 to each successful applicant and that 60% of the award be retained by the city, county, or city and county for certain law enforcement and community outreach purposes and 40% of the award be provided to the facility operator to provide services, enhance security, perform community outreach, or cover start-up costs.

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The bill would require the department to submit a report to the Joint Legislative Budget Committee on November 1, 2017, and each November 1 thereafter until November 1, 2020, as provided. In addition, the bill would require the department’s Office of State Audits and Evaluations to conduct a review of the program to determine its effectiveness in providing services to offenders released from state prison or county jail. The bill would authorize the department to use up to $500,000 of the amount appropriated in any budget act or other measure for the program for this review.

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The Administrative Procedure Act governs the procedure for the adoption, amendment, or repeal of regulations by state agencies and for the review of those regulatory actions by the Office of Administrative Law. That act exempts from its provisions actions by the department to adopt and update, as necessary, instructions to any state or local agency for the preparation, development, or administration of the state budget.

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This bill would provide that any action by the department to adopt and update instructions to any state or local agency for the purpose of carrying out the Community-Based Transitional Housing Program constitutes a department action to adopt and update instructions for the preparation, development, or administration of the state budget and is exempt from the Administrative Procedure Act.

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(17) Existing law establishes within the Department of Housing and Community Development the California Housing Finance Agency and provides that the primary purpose of the agency is to meet the housing needs of persons and families of low or moderate income. Existing law requires the California Housing Finance Agency to administer various housing finance assistance programs, including, among others, the California Homebuyer’s Downpayment Assistance Program and the Homebuyer Down Payment Assistance Program of 2002.

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This bill would discontinue those and other specified programs on and after July 1, 2016.

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Existing law also requires the agency to administer the Roberti-Greene Home Purchase Assistance Program, which provides first-time homebuyers with home purchase assistance in the form of interest rate subsidies and downpayment assistance, among others. Existing law establishes the Home Purchase Assistance Fund in the State Treasury and continuously appropriates the fund to the agency for expenditure pursuant to the program and defraying actual administrative costs of the agency.

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This bill, among other things, would modify the program to instead provide home purchase assistance to low- and moderate-income homebuyers to qualify for the purchase of owner-occupied homes and would revise the terms under which that assistance is provided. The bill would authorize the agency, pursuant to specified objectives, to create its own home purchase assistance programs, home purchase assistance products, or both, on such terms and conditions as the agency deems prudent. On and after July 1, 2016, the bill would transfer any obligated amounts from the funds for the programs discontinued by the bill, and any loan receivables, interest, or other amounts accruing to the agency pursuant to those programs, to the Home Purchase Assistance Fund. By expanding the authorized uses of continuously appropriated funds, this bill would make an appropriation.

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(18) Existing law permits a person, at the time of registering to vote, to choose whether or not to disclose the name of a political party that he or she prefers on his or her affidavit of registration. When a county elections official receives an affidavit of registration that does not include a political party preference in the space provided, existing law requires the elections official to presume that the person has declined to disclose a party preference.

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Existing law requires the Secretary of State to register a person to vote based on the person’s motor vehicle records, which constitute a completed affidavit of registration, as specified. If the person does not provide a political party preference in his or her motor vehicle records, existing law requires the person’s political party preference to be designated as “Unknown” and requires the person to be treated as a “No Party Preference” voter.

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This bill would require a county elections official who receives an affidavit of registration that does not include a political party preference to designate the person’s political party preference as “Unknown” on a voter registration index and would require the person to otherwise be treated as a “No Party Preference” voter. This bill would specify that a voter whose political party preference is designated as “Unknown” because he or she did not provide a political party preference in his or her motor voter records is required to be designated as such on a voter registration index.

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Existing law provides that a political party is qualified to participate in a primary election or presidential general election if voters equal in number to at least 0.33% of the total number of voters registered on a specified day before the election have declared their preference for that political party. For purposes determining whether a political party qualified to participate in the presidential general election, existing law prohibits a person who is registered to vote by the Secretary of State through his or her motor vehicle records, and whose party preference is designated as “Unknown” because he or she did not provide a party preference, from being counted in the total number of voters registered before the election.

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This bill would prohibit counting a person in the total number of voters registered before the election for purposes of determining whether a political party qualified to participate in a primary election if that person is registered by a county elections official through an affidavit of registration, or by the Secretary of State through motor vehicle records, and his or her party preference is designated as “Unknown” because he or she did not include a party preference on his or her affidavit.

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By imposing additional duties on the county elections officials, this bill would impose a state-mandated local program.

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(19) 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.

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This bill would provide that with regard to certain mandates no reimbursement is required by this act for a specified reason.

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With regard to any other mandates, this bill would provide that, if the Commission on State Mandates determines that the bill contains costs so mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

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(12) This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.

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This bill would express the intent of the Legislature to enact statutory changes relating to the Budget Act of 2016.

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Vote: majority. Appropriation: begin deleteno end deletebegin insertyesend insert. Fiscal committee: begin deleteno end deletebegin insertyesend insert. State-mandated local program: begin deleteno end deletebegin insertyesend insert.

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

P14   1begin insert

begin insertSECTION 1.end insert  

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begin insertSection 27 of the end insertbegin insertBusiness and Professions Codeend insert
2
begin insert is amended to read:end insert

3

27.  

(a) Each entity specified in subdivisions (c), (d), and (e)
4shall provide on the Internet information regarding the status of
5every license issued by that entity in accordance with the California
6Public Records Act (Chapter 3.5 (commencing with Section 6250)
7of Division 7 of Title 1 of the Government Code) and the
8Information Practices Act of 1977 (Chapter 1 (commencing with
9Section 1798) of Title 1.8 of Part 4 of Division 3 of the Civil Code).
P15   1The public information to be provided on the Internet shall include
2information on suspensions and revocations of licenses issued by
3the entity and other related enforcement action, including
4accusations filed pursuant to the Administrative Procedure Act
5(Chapter 3.5 (commencing with Section 11340) of Part 1 of
6Division 3 of Title 2 of the Government Code) taken by the entity
7relative to persons, businesses, or facilities subject to licensure or
8regulation by the entity. The information may not include personal
9information, including home telephone number, date of birth, or
10social security number. Each entity shall disclose a licensee’s
11address of record. However, each entity shall allow a licensee to
12provide a post office box number or other alternate address, instead
13of his or her home address, as the address of record. This section
14shall not preclude an entity from also requiring a licensee, who
15has provided a post office box number or other alternative mailing
16address as his or her address of record, to provide a physical
17business address or residence address only for the entity’s internal
18administrative use and not for disclosure as the licensee’s address
19of record or disclosure on the Internet.

20(b) In providing information on the Internet, each entity specified
21in subdivisions (c) and (d) shall comply with the Department of
22Consumer Affairs’ guidelines for access to public records.

23(c) Each of the following entities within the Department of
24Consumer Affairs shall comply with the requirements of this
25section:

26(1) The Board for Professional Engineers, Land Surveyors, and
27Geologists shall disclose information on its registrants and
28licensees.

29(2) The Bureau of Automotive Repair shall disclose information
30on its licensees, including auto repair dealers, smog stations, lamp
31and brake stations, smog check technicians, and smog inspection
32certification stations.

33(3) The Bureau of Electronic and Appliance Repair, Home
34Furnishings, and Thermal Insulation shall disclose information on
35its licensees and registrants, including major appliance repair
36dealers, combination dealers (electronic and appliance), electronic
37repair dealers, service contract sellers, and service contract
38administrators.

39(4) The Cemetery and Funeral Bureau shall disclose information
40on its licensees, including cemetery brokers, cemetery salespersons,
P16   1cemetery managers, crematory managers, cemetery authorities,
2crematories, cremated remains disposers, embalmers, funeral
3establishments, and funeral directors.

4(5) The Professional Fiduciaries Bureau shall disclose
5information on its licensees.

6(6) The Contractors’ State License Board shall disclose
7information on its licensees and registrants in accordance with
8Chapter 9 (commencing with Section 7000) of Division 3. In
9addition to information related to licenses as specified in
10subdivision (a), the board shall also disclose information provided
11to the board by the Labor Commissioner pursuant to Section 98.9
12of the Labor Code.

13(7) The Bureau for Private Postsecondary Education shall
14disclose information on private postsecondary institutions under
15its jurisdiction, including disclosure of notices to comply issued
16pursuant to Section 94935 of the Education Code.

17(8) The California Board of Accountancy shall disclose
18information on its licensees and registrants.

19(9) The California Architects Board shall disclose information
20on its licensees, including architects and landscape architects.

21(10) The State Athletic Commission shall disclose information
22on its licensees and registrants.

23(11) The State Board of Barbering and Cosmetology shall
24disclose information on its licensees.

25(12) The State Board of Guide Dogs for the Blind shall disclose
26information on its licensees and registrants.

27(13) The Acupuncture Board shall disclose information on its
28licensees.

29(14) The Board of Behavioral Sciences shall disclose
30information on its licensees, including licensed marriage and family
31therapists, licensed clinical social workers, licensed educational
32psychologists, and licensed professional clinical counselors.

33(15) The Dental Board of California shall disclose information
34on its licensees.

35(16) The State Board of Optometry shall disclose information
36regarding certificates of registration to practice optometry,
37statements of licensure, optometric corporation registrations, branch
38office licenses, and fictitious name permits of its licensees.

P17   1(17) The Board of Psychology shall disclose information on its
2licensees, including psychologists, psychological assistants, and
3registered psychologists.

4(d) The State Board of Chiropractic Examiners shall disclose
5information on its licensees.

6(e) The Structural Pest Control Board shall disclose information
7on its licensees, including applicators, field representatives, and
8operators in the areas of fumigation, general pest and wood
9destroying pests and organisms, and wood roof cleaning and
10treatment.

11(f) The Bureau of Medicalbegin delete Marijuanaend deletebegin insert Cannabisend insert Regulation shall
12disclose information on its licensees.

13(g) “Internet” for the purposes of this section has the meaning
14set forth in paragraph (6) of subdivision (f) of Section 17538.

15begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 101 of the end insertbegin insertBusiness and Professions Codeend insertbegin insert is
16amended to read:end insert

17

101.  

The department is comprised of the following:

18(a) The Dental Board of California.

19(b) The Medical Board of California.

20(c) The State Board of Optometry.

21(d) The California State Board of Pharmacy.

22(e) The Veterinary Medical Board.

23(f) The California Board of Accountancy.

24(g) The California Architects Board.

25(h) The Bureau of Barbering and Cosmetology.

26(i) The Board for Professional Engineers and Land Surveyors.

27(j) The Contractors’ State License Board.

28(k) The Bureau for Private Postsecondary Education.

29(l) The Bureau of Electronic and Appliance Repair, Home
30Furnishings, and Thermal Insulation.

31(m) The Board of Registered Nursing.

32(n) The Board of Behavioral Sciences.

33(o) The State Athletic Commission.

34(p) The Cemetery and Funeral Bureau.

35(q) The State Board of Guide Dogs for the Blind.

36(r) The Bureau of Security and Investigative Services.

37(s) The Court Reporters Board of California.

38(t) The Board of Vocational Nursing and Psychiatric
39Technicians.

40(u) The Landscape Architects Technical Committee.

P18   1(v) The Division of Investigation.

2(w) The Bureau of Automotive Repair.

3(x) The Respiratory Care Board of California.

4(y) The Acupuncture Board.

5(z) The Board of Psychology.

6(aa) The California Board of Podiatric Medicine.

7(ab) The Physical Therapy Board of California.

8(ac) The Arbitration Review Program.

9(ad) The Physician Assistant Committee.

10(ae) The Speech-Language Pathology and Audiology Board.

11(af) The California Board of Occupational Therapy.

12(ag) The Osteopathic Medical Board of California.

13(ah) The Naturopathic Medicine Committee.

14(ai) The Dental Hygiene Committee of California.

15(aj) The Professional Fiduciaries Bureau.

16(ak) The State Board of Chiropractic Examiners.

17(al) The Bureau of Real Estate.

18(am) The Bureau of Real Estate Appraisers.

19(an) The Structural Pest Control Board.

20(ao) The Bureau of Medicalbegin delete Marijuanaend deletebegin insert Cannabisend insert Regulation.

21(ap) Any other boards, offices, or officers subject to its
22jurisdiction by law.

23begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 144 of the end insertbegin insertBusiness and Professions Codeend insertbegin insert is
24amended to read:end insert

25

144.  

(a) Notwithstanding any otherbegin delete provision ofend delete law, an agency
26designated in subdivision (b) shall require an applicant to furnish
27to the agency a full set of fingerprints for purposes of conducting
28criminal history record checks. Any agency designated in
29subdivision (b) may obtain and receive, at its discretion, criminal
30history information from the Department of Justice and the United
31States Federal Bureau of Investigation.

32(b) Subdivision (a) applies to the following:

33(1) California Board of Accountancy.

34(2) State Athletic Commission.

35(3) Board of Behavioral Sciences.

36(4) Court Reporters Board of California.

37(5) State Board of Guide Dogs for the Blind.

38(6) California State Board of Pharmacy.

39(7) Board of Registered Nursing.

40(8) Veterinary Medical Board.

P19   1(9) Board of Vocational Nursing and Psychiatric Technicians.

2(10) Respiratory Care Board of California.

3(11) Physical Therapy Board of California.

4(12) Physician Assistant Committee of the Medical Board of
5California.

6(13) Speech-Language Pathology and Audiology and Hearing
7Aid Dispenser Board.

8(14) Medical Board of California.

9(15) State Board of Optometry.

10(16) Acupuncture Board.

11(17) Cemetery and Funeral Bureau.

12(18) Bureau of Security and Investigative Services.

13(19) Division of Investigation.

14(20) Board of Psychology.

15(21) California Board of Occupational Therapy.

16(22) Structural Pest Control Board.

17(23) Contractors’ State License Board.

18(24) Naturopathic Medicine Committee.

19(25) Professional Fiduciaries Bureau.

20(26) Board for Professional Engineers, Land Surveyors, and
21Geologists.

22(27) Bureau of Medicalbegin delete Marijuanaend deletebegin insert Cannabisend insert Regulation.

23(c) For purposes of paragraph (26) of subdivision (b), the term
24“applicant” shall be limited to an initial applicant who has never
25been registered or licensed by the board or to an applicant for a
26new licensure or registration category.

27begin insert

begin insertSEC. 4.end insert  

end insert

begin insertSection 205.1 of the end insertbegin insertBusiness and Professions Codeend insert
28
begin insert is amended to read:end insert

29

205.1.  

Notwithstanding subdivision (a) of Section 205, the
30Medicalbegin delete Marijuanaend deletebegin insert Cannabisend insert Regulation and Safety Act Fund is
31a special fund within the Professions and Vocations Fund, and is
32subject to subdivision (b) of Section 205.

33begin insert

begin insertSEC. 5.end insert  

end insert

begin insertThe heading of Chapter 3.5 (commencing with Section
3419300) of Division 8 of the end insert
begin insertBusiness and Professions Codeend insertbegin insert is
35amended to read:end insert

36 

37Chapter  3.5. Medicalbegin delete Marijuanaend deletebegin insert Cannabisend insert Regulation
38and Safety act
39

 

P20   1begin insert

begin insertSEC. 6.end insert  

end insert

begin insertSection 19300 of the end insertbegin insertBusiness and Professions Codeend insert
2
begin insert is amended to read:end insert

3

19300.  

This act shall be known and may be cited as the Medical
4begin delete Marijuanaend deletebegin insert Cannabisend insert Regulation and Safety Act.

5begin insert

begin insertSEC. 7.end insert  

end insert

begin insertSection 19300.5 of the end insertbegin insertBusiness and Professions Codeend insert
6
begin insert is repealed.end insert

begin delete
7

19300.5.  

For purposes of this chapter, the following definitions
8shall apply:

9(a) “Accrediting body” means a nonprofit organization that
10requires conformance to ISO/IEC 17025 requirements and is a
11signatory to the International Laboratory Accreditation Cooperation
12Mutual Recognition Arrangement for Testing.

13(b) “Applicant,” for purposes of Article 4 (commencing with
14Section 19319), means the following:

15(1) Owner or owners of a proposed facility, including all persons
16or entities having ownership interest other than a security interest,
17lien, or encumbrance on property that will be used by the facility.

18(2) If the owner is an entity, “owner” includes within the entity
19each person participating in the direction, control, or management
20of, or having a financial interest in, the proposed facility.

21(3) If the applicant is a publicly traded company, “owner” means
22the chief executive officer or any person or entity with an aggregate
23ownership interest of 5 percent or more.

24(c) “Batch” means a specific quantity of medical cannabis or
25medical cannabis products that is intended to have uniform
26character and quality, within specified limits, and is produced
27according to a single manufacturing order during the same cycle
28of manufacture.

29(d) “Bureau” means the Bureau of Medical Marijuana
30Regulation within the Department of Consumer Affairs.

31(e) “Cannabinoid” or “phytocannabinoid” means a chemical
32compound that is unique to and derived from cannabis.

33(f) “Cannabis” means all parts of the plant Cannabis sativa
34Linnaeus, Cannabis indica, or Cannabis ruderalis, whether growing
35or not; the seeds thereof; the resin, whether crude or purified,
36extracted from any part of the plant; and every compound,
37manufacture, salt, derivative, mixture, or preparation of the plant,
38its seeds, or resin. “Cannabis” also means the separated resin,
39whether crude or purified, obtained from marijuana. “Cannabis”
40also means marijuana as defined by Section 11018 of the Health
P21   1and Safety Code as enacted by Chapter 1407 of the Statutes of
21972. “Cannabis” does not include the mature stalks of the plant,
3fiber produced from the stalks, oil or cake made from the seeds of
4the plant, any other compound, manufacture, salt, derivative,
5mixture, or preparation of the mature stalks (except the resin
6extracted therefrom), fiber, oil, or cake, or the sterilized seed of
7the plant which is incapable of germination. For the purpose of
8this chapter, “cannabis” does not mean “industrial hemp” as defined
9by Section 81000 of the Food and Agricultural Code or Section
1011018.5 of the Health and Safety Code.

11(g) “Cannabis concentrate” means manufactured cannabis that
12has undergone a process to concentrate the cannabinoid active
13ingredient, thereby increasing the product’s potency. An edible
14medical cannabis product is not considered food, as defined by
15Section 109935 of the Health and Safety Code, or a drug, as defined
16by Section 109925 of the Health and Safety Code.

17(h) “Caregiver” or “primary caregiver” has the same meaning
18as that term is defined in Section 11362.7 of the Health and Safety
19 Code.

20(i) “Certificate of accreditation” means a certificate issued by
21an accrediting body to a licensed testing laboratory, entity, or site
22to be registered in the state.

23(j) “Chief” means Chief of the Bureau of Medical Marijuana
24Regulation within the Department of Consumer Affairs.

25(k) “Commercial cannabis activity” includes cultivation,
26possession, manufacture, processing, storing, laboratory testing,
27labeling, transporting, distribution, or sale of medical cannabis or
28a medical cannabis product, except as set forth in Section 19319,
29related to qualifying patients and primary caregivers.

30(l) “Cultivation” means any activity involving the planting,
31growing, harvesting, drying, curing, grading, or trimming of
32cannabis.

33(m) “Delivery” means the commercial transfer of medical
34cannabis or medical cannabis products from a dispensary, up to
35an amount determined by the bureau to a primary caregiver or
36qualified patient as defined in Section 11362.7 of the Health and
37Safety Code, or a testing laboratory. “Delivery” also includes the
38use by a dispensary of any technology platform owned and
39controlled by the dispensary, or independently licensed under this
40chapter, that enables qualified patients or primary caregivers to
P22   1arrange for or facilitate the commercial transfer by a licensed
2dispensary of medical cannabis or medical cannabis products.

3(n) “Dispensary” means a facility where medical cannabis,
4medical cannabis products, or devices for the use of medical
5cannabis or medical cannabis products are offered, either
6individually or in any combination, for retail sale, including an
7establishment that delivers, pursuant to express authorization by
8local ordinance, medical cannabis and medical cannabis products
9as part of a retail sale.

10(o) “Dispensing” means any activity involving the retail sale of
11medical cannabis or medical cannabis products from a dispensary.

12(p) “Distribution” means the procurement, sale, and transport
13of medical cannabis and medical cannabis products between entities
14licensed pursuant to this chapter.

15(q) “Distributor” means a person licensed under this chapter to
16engage in the business of purchasing medical cannabis from a
17licensed cultivator, or medical cannabis products from a licensed
18manufacturer, for sale to a licensed dispensary.

19(r) “Dried flower” means all dead medical cannabis that has
20been harvested, dried, cured, or otherwise processed, excluding
21leaves and stems.

22(s) “Edible cannabis product” means manufactured cannabis
23that is intended to be used, in whole or in part, for human
24consumption, including, but not limited to, chewing gum. An edible
25medical cannabis product is not considered food as defined by
26Section 109935 of the Health and Safety Code or a drug as defined
27by Section 109925 of the Health and Safety Code.

28(t) “Fund” means the Medical Marijuana Regulation and Safety
29Act Fund established pursuant to Section 19351.

30(u) “Identification program” means the universal identification
31certificate program for commercial medical cannabis activity
32authorized by this chapter.

33(v) “Labor peace agreement” means an agreement between a
34licensee and a bona fide labor organization that, at a minimum,
35protects the state’s proprietary interests by prohibiting labor
36organizations and members from engaging in picketing, work
37stoppages, boycotts, and any other economic interference with the
38applicant’s business. This agreement means that the applicant has
39agreed not to disrupt efforts by the bona fide labor organization
40to communicate with, and attempt to organize and represent, the
P23   1applicant’s employees. The agreement shall provide a bona fide
2labor organization access at reasonable times to areas in which the
3applicant’s employees work, for the purpose of meeting with
4employees to discuss their right to representation, employment
5rights under state law, and terms and conditions of employment.
6This type of agreement shall not mandate a particular method of
7election or certification of the bona fide labor organization.

8(w) “Licensing authority” means the state agency responsible
9for the issuance, renewal, or reinstatement of the license, or the
10state agency authorized to take disciplinary action against the
11license.

12(x) “Cultivation site” means a facility where medical cannabis
13is planted, grown, harvested, dried, cured, graded, or trimmed, or
14that does all or any combination of those activities, that holds a
15valid state license pursuant to this chapter, and that holds a valid
16local license or permit.

17(y) “Manufacturer” means a person that conducts the production,
18preparation, propagation, or compounding of manufactured medical
19cannabis, as described in subdivision (ae), or medical cannabis
20products either directly or indirectly or by extraction methods, or
21independently by means of chemical synthesis or by a combination
22of extraction and chemical synthesis at a fixed location that
23packages or repackages medical cannabis or medical cannabis
24products or labels or relabels its container, that holds a valid state
25license pursuant to this chapter, and that holds a valid local license
26or permit.

27(z) “Testing laboratory” means a facility, entity, or site in the
28state that offers or performs tests of medical cannabis or medical
29cannabis products and that is both of the following:

30(1) Accredited by an accrediting body that is independent from
31all other persons involved in the medical cannabis industry in the
32state.

33(2) Registered with the State Department of Public Health.

34(aa) “Transporter” means a person issued a state license by the
35bureau to transport medical cannabis or medical cannabis products
36in an amount above a threshold determined by the bureau between
37facilities that have been issued a state license pursuant to this
38 chapter.

39(ab) “Licensee” means a person issued a state license under this
40chapter to engage in commercial cannabis activity.

P24   1(ac) “Live plants” means living medical cannabis flowers and
2plants, including seeds, immature plants, and vegetative stage
3plants.

4(ad) “Lot” means a batch, or a specifically identified portion of
5a batch, having uniform character and quality within specified
6limits. In the case of medical cannabis or a medical cannabis
7product produced by a continuous process, “lot” means a
8specifically identified amount produced in a unit of time or a
9quantity in a manner that ensures its having uniform character and
10quality within specified limits.

11(ae) “Manufactured cannabis” means raw cannabis that has
12undergone a process whereby the raw agricultural product has
13been transformed into a concentrate, an edible product, or a topical
14product.

15(af) “Manufacturing site” means a location that produces,
16prepares, propagates, or compounds manufactured medical
17cannabis or medical cannabis products, directly or indirectly, by
18extraction methods, independently by means of chemical synthesis,
19or by a combination of extraction and chemical synthesis, and is
20owned and operated by a licensee for these activities.

21(ag) “Medical cannabis,” “medical cannabis product,” or
22“cannabis product” means a product containing cannabis, including,
23but not limited to, concentrates and extractions, intended to be sold
24for use by medical cannabis patients in California pursuant to the
25Compassionate Use Act of 1996 (Proposition 215), found at Section
2611362.5 of the Health and Safety Code. For the purposes of this
27chapter, “medical cannabis” does not include “industrial hemp”
28as defined by Section 81000 of the Food and Agricultural Code
29or Section 11018.5 of the Health and Safety Code.

30(ah) “Nursery” means a licensee that produces only clones,
31immature plants, seeds, and other agricultural products used
32specifically for the planting, propagation, and cultivation of medical
33cannabis.

34(ai) “Permit,” “local license,” or “local permit” means an official
35document granted by a local jurisdiction that specifically authorizes
36a person to conduct commercial cannabis activity in the local
37jurisdiction.

38(aj) “Person” means an individual, firm, partnership, joint
39venture, association, corporation, limited liability company, estate,
40trust, business trust, receiver, syndicate, or any other group or
P25   1combination acting as a unit and includes the plural as well as the
2 singular number.

3(ak) “State license,” “license,” or “registration” means a state
4license issued pursuant to this chapter.

5(al) “Topical cannabis” means a product intended for external
6use. A topical cannabis product is not considered a drug as defined
7by Section 109925 of the Health and Safety Code.

8(am) “Transport” means the transfer of medical cannabis or
9medical cannabis products from the permitted business location
10of one licensee to the permitted business location of another
11licensee, for the purposes of conducting commercial cannabis
12activity authorized pursuant to this chapter.

end delete
13begin insert

begin insertSEC. 8.end insert  

end insert

begin insertSection 19300.5 is added to the end insertbegin insertBusiness and
14Professions Code
end insert
begin insert, to read:end insert

begin insert
15

begin insert19300.5.end insert  

For purposes of this chapter, the following definitions
16shall apply:

17
(a) “Accrediting body” means a nonprofit organization that
18requires conformance to ISO/IEC 17025 requirements and is a
19signatory to the International Laboratory Accreditation
20Cooperation Mutual Recognition Arrangement for Testing.

21
(b) “Applicant,” for purposes of Article 4 (commencing with
22Section 19320), includes the following:

23
(1) Owner or owners of the proposed premises, including all
24persons or entities having ownership interest other than a security
25interest, lien, or encumbrance on property that will be used by the
26premises.

27
(2) If the owner is an entity, “owner” includes within the entity
28each person participating in the direction, control, or management
29of, or having a financial interest in, the proposed premises.

30
(3) If the applicant is a publicly traded company, “owner”
31means the chief executive officer or any person or entity with an
32aggregate ownership interest of 5 percent or more.

33
(c) “Batch” means a specific quantity of homogeneous medical
34cannabis or medical cannabis product and is one of the following
35types:

36
(1) “Harvest batch” means a specifically identified quantity of
37dried flower or trim, leaves, and other cannabis plant matter that
38is uniform in strain, harvested at the same time, and, if applicable,
39cultivated using the same pesticides and other agricultural
40chemicals, and harvested at the same time.

P26   1
(2) “Manufactured cannabis batch” means either:

2
(A) An amount of cannabis concentrate or extract produced in
3one production cycle using the same extraction methods and
4standard operating procedures, and is from the same harvest batch.

5
(B) An amount of a type of manufactured cannabis produced
6in one production cycle using the same formulation and standard
7operating procedures.

8
(d) “Bureau” means the Bureau of Medical Cannabis
9Regulation within the Department of Consumer Affairs.

10
(e) “Cannabinoid” or “phytocannabinoid” means a chemical
11compound that is unique to and derived from cannabis.

12
(f) “Cannabis” means all parts of the plant Cannabis sativa
13Linnaeus, Cannabis indica, or Cannabis ruderalis, whether
14growing or not; the seeds thereof; the resin, whether crude or
15purified, extracted from any part of the plant; and every compound,
16manufacture, salt, derivative, mixture, or preparation of the plant,
17its seeds, or resin. “Cannabis” also means the separated resin,
18whether crude or purified, obtained from cannabis. “Cannabis”
19also means marijuana as defined by Section 11018 of the Health
20and Safety Code as enacted by Chapter 1407 of the Statutes of
211972. “Cannabis” does not include the mature stalks of the plant,
22fiber produced from the stalks, oil or cake made from the seeds of
23the plant, any other compound, manufacture, salt, derivative,
24mixture, or preparation of the mature stalks (except the resin
25extracted therefrom), fiber, oil, or cake, or the sterilized seed of
26the plant which is incapable of germination. For the purpose of
27this chapter, “cannabis” does not mean “industrial hemp” as
28defined by Section 81000 of the Food and Agricultural Code or
29Section 11018.5 of the Health and Safety Code.

30
(g) “Cannabis concentrate” means manufactured cannabis that
31has undergone a process to concentrate one or more active
32cannabinoids, thereby increasing the product’s potency. Resin
33from granular trichomes from a cannabis plant is a concentrate
34for purposes of this chapter. A cannabis concentrate is not
35considered food, as defined by Section 109935 of the Health and
36Safety Code, or a drug, as defined by Section 109925 of the Health
37and Safety Code.

38
(h) “Certificate of accreditation” means a certificate issued by
39an accrediting body to a testing laboratory .

P27   1
(i) “Chief” means Chief of the Bureau of Medical Cannabis
2Regulation within the Department of Consumer Affairs.

3
(j) “Commercial cannabis activity” includes cultivation,
4possession, manufacture, processing, storing, laboratory testing,
5labeling, transporting, distribution, delivery, or sale of medical
6cannabis or a medical cannabis product, except as set forth in
7Section 19319, related to qualifying patients and primary
8caregivers.

9
(k) “Cultivation” means any activity involving the planting,
10growing, harvesting, drying, curing, grading, or trimming of
11medical cannabis.

12
(l) “Cultivation site” means a location where medical cannabis
13is planted, grown, harvested, dried, cured, graded, or trimmed, or
14that does all or any combination of those activities.

15
(m) “Delivery” means the commercial transfer of medical
16cannabis or medical cannabis products from a dispensary, up to
17an amount determined by the bureau to a primary caregiver or
18qualified patient as defined in Section 11362.7 of the Health and
19Safety Code, or a testing laboratory. “Delivery” also includes the
20use by a dispensary of any technology platform owned and
21controlled by the dispensary, or independently licensed under this
22chapter, that enables qualified patients or primary caregivers to
23arrange for or facilitate the commercial transfer by a licensed
24dispensary of medical cannabis or medical cannabis products.

25
(n) “Dispensary” means a premises where medical cannabis,
26medical cannabis products, or devices for the use of medical
27cannabis or medical cannabis products are offered, either
28individually or in any combination, for retail sale, including an
29establishment that delivers, pursuant to Section 19340, medical
30cannabis and medical cannabis products as part of a retail sale.

31
(o) “Dispensing” means any activity involving the retail sale
32of medical cannabis or medical cannabis products from a
33dispensary.

34
(p) “Distribution” means the procurement, sale, and transport
35of medical cannabis and medical cannabis products between
36entities licensed pursuant to this chapter.

37
(q) “Distributor” means a person licensed under this chapter
38to engage in the business of purchasing medical cannabis from a
39licensed cultivator, or medical cannabis products from a licensed
40manufacturer, for sale to a licensed dispensary.

P28   1
(r) “Dried flower” means all dead medical cannabis that has
2been harvested, dried, cured, or otherwise processed, excluding
3leaves and stems.

4
(s) “Edible cannabis product” means manufactured cannabis
5that is intended to be used, in whole or in part, for human
6consumption, including, but not limited to, chewing gum, but
7excluding products set forth in Division 15 (commencing with
8Section 32501) of the Food and Agricultural Code. An edible
9medical cannabis product is not considered food as defined by
10Section 109935 of the Health and Safety Code or a drug as defined
11by Section 109925 of the Health and Safety Code.

12
(t) “Fund” means the Medical Cannabis Regulation and Safety
13Act Fund established pursuant to Section 19351.

14
(u) “Identification program” means the universal identification
15certificate program for commercial medical cannabis activity
16authorized by this chapter.

17
(v) “Labeling” means any label or other written, printed, or
18graphic matter upon a medical cannabis product, or upon its
19container or wrapper, or that accompanies any medical cannabis
20product.

21
(w) “Labor peace agreement” means an agreement between a
22licensee and a bona fide labor organization that, at a minimum,
23protects the state’s proprietary interests by prohibiting labor
24organizations and members from engaging in picketing, work
25stoppages, boycotts, and any other economic interference with the
26applicant’s business. This agreement means that the applicant has
27agreed not to disrupt efforts by the bona fide labor organization
28to communicate with, and attempt to organize and represent, the
29applicant’s employees. The agreement shall provide a bona fide
30labor organization access at reasonable times to areas in which
31the applicant’s employees work, for the purpose of meeting with
32employees to discuss their right to representation, employment
33rights under state law, and terms and conditions of employment.
34This type of agreement shall not mandate a particular method of
35election or certification of the bona fide labor organization.

36
(x) “Licensee” means a person issued a state license under this
37chapter to engage in commercial cannabis activity.

38
(y) “Licensing authority” means the state agency responsible
39for the issuance, renewal, or reinstatement of the license.

P29   1
(z) “Live plants” means living medical cannabis flowers and
2plants, including seeds, immature plants, and vegetative stage
3plants.

4
(aa) “Local license, permit, or other authorization” means an
5official document granted by a local jurisdiction that specifically
6authorizes a person to conduct commercial cannabis activity in
7the local jurisdiction.

8
(ab) “Lot” means a batch or a specifically identified portion
9of a batch.

10
(ac) “Manufactured cannabis” means raw cannabis that has
11undergone a process whereby the raw agricultural product has
12been transformed into a concentrate, an edible product, or a topical
13 product.

14
(ad) “Manufacturer” means a person that conducts the
15production, preparation, propagation, or compounding of
16manufactured medical cannabis, as described in subdivision (ae),
17or medical cannabis products either directly or indirectly or by
18extraction methods, or independently by means of chemical
19synthesis or by a combination of extraction and chemical synthesis
20at a fixed location that packages or repackages medical cannabis
21or medical cannabis products or labels or relabels its container.

22
(ae) “Manufacturing site” means the premises that produces,
23prepares, propagates, or compounds manufactured medical
24cannabis or medical cannabis products, directly or indirectly, by
25extraction methods, independently by means of chemical synthesis,
26or by a combination of extraction and chemical synthesis, and is
27owned and operated by a licensee for these activities.

28
(af) “Medical cannabis,” “medical cannabis product,” or
29“cannabis product” means a product containing cannabis,
30including, but not limited to, concentrates and extractions, intended
31to be sold for use by medical cannabis patients in California
32pursuant to the Compassionate Use Act of 1996 (Proposition 215),
33found at Section 11362.5 of the Health and Safety Code. For the
34purposes of this chapter, “medical cannabis” does not include
35“industrial hemp” as defined by Section 81000 of the Food and
36Agricultural Code or Section 11018.5 of the Health and Safety
37Code.

38
(ag) “Nursery” means a licensee that produces only clones,
39immature plants, seeds, and other agricultural products used
P30   1specifically for the planting, propagation, and cultivation of
2medical cannabis.

3
(ah) “Person” means an individual, firm, partnership, joint
4venture, association, corporation, limited liability company, estate,
5trust, business trust, receiver, syndicate, or any other group or
6combination acting as a unit and includes the plural as well as
7the singular number.

8
(ai) “Primary caregiver” has the same meaning as that term
9is defined in Section 11362.7 of the Health and Safety Code.

10
(aj) “State license” or “license ” means a state license issued
11pursuant to this chapter.

12
(ak) “Testing laboratory” means the premises where tests are
13performed on medical cannabis or medical cannabis products and
14that holds a valid certificate of accreditation.

15
(al) “Topical cannabis” means a product intended for external
16use. A topical cannabis product is not considered a drug as defined
17by Section 109925 of the Health and Safety Code.

18
(am) “Transport” means the transfer of medical cannabis or
19medical cannabis products from the permitted business location
20of one licensee to the permitted business location of another
21licensee, for the purposes of conducting commercial cannabis
22activity authorized pursuant to this chapter.

23
(an) “Transporter” means a person who holds a license by the
24bureau to transport medical cannabis or medical cannabis products
25in an amount above a threshold determined by the bureau between
26licensees that have been issued a license pursuant to this chapter.

end insert
27begin insert

begin insertSEC. 9.end insert  

end insert

begin insertSection 19300.7 of the end insertbegin insertBusiness and Professions Codeend insert
28
begin insert is amended to read:end insert

29

19300.7.  

License classifications pursuant to this chapter are as
30follows:

31(a) Type 1 = Cultivation; Specialty outdoor; Small.

32(b) Type 1A = Cultivation; Specialty indoor; Small.

33(c) Type 1B = Cultivation; Specialty mixed-light; Small.

34(d) Type 2 = Cultivation; Outdoor; Small.

35(e) Type 2A = Cultivation; Indoor; Small.

36(f) Type 2B = Cultivation; Mixed-light; Small.

37(g) Type 3 = Cultivation; Outdoor; Medium.

38(h) Type 3A = Cultivation; Indoor; Medium.

39(i) Type 3B = Cultivation; Mixed-light; Medium.

40(j) Type 4 = Cultivation; Nursery.

P31   1(k) Type 6 = Manufacturer 1.

2(l) Type 7 = Manufacturer 2.

3(m) Type 8 =begin delete Testing.end deletebegin insert Testing laboratory.end insert

4(n) Type 10 = Dispensary; General.

5(o) Type 10A =begin insert Producingend insert Dispensary; No more than three
6retail sites.

7(p) Type 11 =begin delete Distribution.end deletebegin insert Distributor.end insert

8(q) Type 12 = Transporter.

9begin insert

begin insertSEC. 10.end insert  

end insert

begin insertSection 19302 of the end insertbegin insertBusiness and Professions Codeend insert
10
begin insert is amended to read:end insert

11

19302.  

There is in the Department of Consumer Affairs the
12Bureau of Medicalbegin delete Marijuanaend deletebegin insert Cannabisend insert Regulation, under the
13supervision and control of the director. The director shall
14administer and enforce the provisions of thisbegin delete chapter.end deletebegin insert chapter
15related to the bureau.end insert

16begin insert

begin insertSEC. 11.end insert  

end insert

begin insertSection 19302.1 of the end insertbegin insertBusiness and Professions Codeend insert
17
begin insert is amended to read:end insert

18

19302.1.  

(a) The Governor shall appoint a chief of the bureau,
19subject to confirmation by the Senate, at a salary to be fixed and
20determined by thebegin delete directorend deletebegin insert Director of Consumer Affairsend insert with the
21approval of the Director of Finance. The chief shall serve under
22the direction and supervision of the director and at the pleasure of
23the Governor.

24(b) Every power granted to or duty imposed upon thebegin delete directorend delete
25begin insert Director of Consumer Affairsend insert under this chapter may be exercised
26or performed in the name of the director by a deputy or assistant
27director or by the chief, subject to conditions and limitations that
28the director may prescribe. In addition to every power granted or
29duty imposed with this chapter, the director shall have all other
30powers and duties generally applicable in relation to bureaus that
31are part of the Department of Consumer Affairs.

32(c) Thebegin delete directorend deletebegin insert Director of Consumer Affairsend insert may employ and
33appoint all employees necessary to properly administer the work
34of the bureau, in accordance with civil service laws and regulations.
35
begin insert The Governor may also appoint a deputy chief and an assistant
36chief counsel to the bureau. These positions shall hold office at
37the pleasure of the Governor. end insert

38(d) The Department of Consumer Affairs shall have the sole
39authority to create, issue, renew, discipline, suspend, or revoke
40licenses for the transportation, storage unrelated to manufacturing
P32   1activities,begin insert testing,end insert distribution, and sale of medicalbegin delete marijuanaend delete
2begin insert cannabisend insert within the state and to collect fees in connection with
3activities the bureau regulates. The bureaubegin delete mayend deletebegin insert shall have the
4authority toend insert
create licenses in addition to those identified in this
5chapter that the bureau deems necessary to effectuate its duties
6under this chapter.

7(e) The Department of Food and Agriculture shall administer
8the provisions of this chapter related to and associated with the
9cultivation of medicalbegin delete cannabis.end deletebegin insert cannabis and will serve as lead
10agency for the purpose of fulfilling the requirements of the
11California Environmental Quality Act (Division 13 (commencing
12with Section 21000) of the Public Resources Code).end insert
The
13Department of Food and Agriculture shall have the authority to
14create, issue,begin delete and suspendend deletebegin insert renew, discipline, suspend,end insert or revoke
15begin delete cultivationend delete licenses forbegin delete violations of this chapter. Theend deletebegin insert the
16cultivation of medical cannabis and to collect fees in connection
17with activities it regulates. The Department of Food and
18Agriculture shall have the authority to create licenses in addition
19to those identified in this chapter that it deems necessary to
20effectuate its duties under this chapter.end insert

21begin insert(f)end insertbegin insertend insertbegin insertTheend insert State Department of Public Health shall administer the
22provisions of this chapter related to and associated with the
23manufacturingbegin delete and testingend delete of medical cannabis.begin insert The State
24Department of Public Health shall have the authority to create,
25issue, renew, discipline, suspend, or revoke licenses for the
26manufacturing of medical cannabis and medical cannabis products
27and to collect fees in connection with activities it regulates. The
28State Department of Public Health shall have the authority to
29create licenses in addition to those identified in this chapter that
30it deems necessary to effectuate its duties under this chapter.end insert

31begin insert

begin insertSEC. 12.end insert  

end insert

begin insertSection 19303 of the end insertbegin insertBusiness and Professions Codeend insert
32
begin insert is amended to read:end insert

33

19303.  

Protection of the public shall be the highest priority for
34begin delete the bureauend deletebegin insert all licensing authoritiesend insert in exercising its licensing,
35regulatory, and disciplinary functions under this chapter. Whenever
36the protection of the public is inconsistent with other interests
37sought to be promoted, the protection of the public shall be
38paramount.

39begin insert

begin insertSEC. 13.end insert  

end insert

begin insertSection 19304 of the end insertbegin insertBusiness and Professions Codeend insert
40
begin insert is amended to read:end insert

P33   1

19304.  

begin insert(a)end insertbegin insertend insertThebegin delete bureauend deletebegin insert licensing authoritiesend insert shall make and
2prescribebegin delete reasonableend delete rulesbegin insert and regulationsend insert as may be necessary or
3proper to carry out the purposes and intent of this chapter and to
4enablebegin delete itend deletebegin insert each licensing authorityend insert to exercise the powers and duties
5conferred upon it by this chapter, not inconsistent with any statute
6of this state, including particularly this chapter and Chapter 3.5
7(commencing with Section 11340) of Part 1 of Division 3 of Title
82 of the Government Code. For the performance of its duties,begin delete the
9bureauend delete
begin insert each licensing authorityend insert has the power conferred by
10Sections 11180 to 11191, inclusive, of the Government Code.

begin insert

11
(b) Each licensing authority may adopt emergency regulations
12to implement this chapter.

end insert
begin insert

13
(1) Each licensing authority may readopt any emergency
14regulation authorized by this section that is the same as, or
15substantially equivalent to, an emergency regulation previously
16adopted by this section. Any such readoption shall be limited to
17one time for each regulation.

end insert
begin insert

18
(2) Notwithstanding any other law, the initial adoption of
19emergency regulations and the readoption of emergency
20regulations authorized by this section shall be deemed an
21emergency and necessary for the immediate preservation of the
22public peace, health, safety, or general welfare. The initial
23emergency regulations and the readopted emergency regulations
24authorized by this section shall be each submitted to the Office of
25Administrative Law for filing with the Secretary of State and shall
26remain in effect for no more than 180 days, by which time final
27regulations may be adopted.

end insert
28begin insert

begin insertSEC. 14.end insert  

end insert

begin insertSection 19305 of the end insertbegin insertBusiness and Professions Codeend insert
29
begin insert is amended to read:end insert

30

19305.  

Notice of any action ofbegin delete theend deletebegin insert aend insert licensing authority required
31by this chapter to be given may be signed and given by the director
32begin insert of the licensing authorityend insert or an authorized employee of the
33begin delete departmentend deletebegin insert licensing authorityend insert and may be made personally or in
34the manner prescribed by Section 1013 of the Code of Civil
35
begin delete Procedure.end deletebegin insert Procedure, or in the manner prescribed by Section 124
36of this code.end insert

37begin insert

begin insertSEC. 15.end insert  

end insert

begin insertSection 19306 of the end insertbegin insertBusiness and Professions Codeend insert
38
begin insert is amended to read:end insert

39

19306.  

(a) The bureau may convene an advisory committee
40to advise the bureau and licensing authorities on the development
P34   1of standards and regulations pursuant to this chapter, including
2best practices and guidelines to ensure qualified patients have
3adequate access to medical cannabis and medical cannabis
4products. The advisory committee members shall be determined
5by the chief.

6(b) The advisory committee members may include, but not be
7limited to, representatives of the medicalbegin delete marijuanaend deletebegin insert cannabisend insert
8 industry, representatives of medicalbegin delete marijuanaend deletebegin insert cannabisend insert cultivators,
9appropriate local and state agencies, appropriate local and state
10law enforcement, physicians, environmental and public health
11experts, and medicalbegin delete marijuanaend deletebegin insert cannabisend insert patient advocates.

12begin insert

begin insertSEC. 16.end insert  

end insert

begin insertSection 19307 of the end insertbegin insertBusiness and Professions Codeend insert
13
begin insert is amended to read:end insert

14

19307.  

A licensing authority may make or cause to be made
15such investigation as it deems necessary to carry out its duties
16under this chapter.begin insert A licensing authority may work with state and
17local law enforcement agencies on investigations and enforcement
18actions pertaining to licenses.end insert

19begin insert

begin insertSEC. 17.end insert  

end insert

begin insertSection 19310 of the end insertbegin insertBusiness and Professions Codeend insert
20
begin insert is amended to read:end insert

21

19310.  

begin deleteThe department end deletebegin insertA licensing authority end insertmay on its own
22motion at any time before a penalty assessment is placed into effect
23and without any further proceedings, review the penalty, but such
24review shall be limited to its reduction.

25begin insert

begin insertSEC. 18.end insert  

end insert

begin insertSection 19311 of the end insertbegin insertBusiness and Professions Codeend insert
26
begin insert is amended to read:end insert

27

19311.  

Grounds for disciplinary actionbegin delete include:end deletebegin insert include, but
28are not limited to, the following:end insert

29(a) Failure to comply with the provisions of this chapter or any
30rule or regulation adopted pursuant to this chapter.

31(b) Conduct that constitutes grounds for denial of licensure
32pursuant to Chapter 3 (commencing with Section 490) of Division
331.5.

34(c) Any other grounds contained in regulations adopted by a
35licensing authority pursuant to this chapter.

36(d) Failure to comply with any state law, except as provided for
37in this chapter or other California law.

begin insert

38
(e) Failure to maintain safe conditions for inspection by a
39licensing authority.

end insert
begin insert

P35   1
(f) Failure to comply with any operating procedure submitted
2to the licensing authority pursuant to subdivision (b) of Section
319322.

end insert
4begin insert

begin insertSEC. 19.end insert  

end insert

begin insertSection 19312 of the end insertbegin insertBusiness and Professions Codeend insert
5
begin insert is amended to read:end insert

6

19312.  

begin insert(a)end insertbegin insertend insertbegin insert(1)end insertbegin insertend insertEach licensing authority maybegin delete suspend or revoke
7licenses,end delete
begin insert suspend, revoke, place on probation with terms and
8conditions, or otherwise discipline licenses issued by that licensing
9authority and fine a licensee,end insert
after proper notice and hearing to
10the licensee, if the licensee is found to have committed any of the
11acts or omissions constituting grounds for disciplinary action.begin delete Theend delete

begin insert

12
(2) A licensing authority may revoke a license when a local
13agency has notified the licensing authority that a licensee or
14applicant within its jurisdiction is in violation of state rules and
15regulation relating to commercial cannabis activities, and the
16licensing authority, through an investigation, has determined that
17the violation is grounds for termination or revocation of the license.

end insert

18begin insert(b)end insertbegin insertend insertbegin insertTheend insert disciplinary proceedings under this chapter shall be
19conducted in accordance with Chapter 5 (commencing with Section
2011500) of Part 1 of Division 3 of Title 2 of the Government Code,
21and the directorbegin insert and agency head, as that term is defined in Section
2211405.40 of the Government Code,end insert
of each licensing authority
23shall have all the powers granted therein.

begin insert

24
(c) Each licensing authority may take disciplinary action and
25assess fines against its respective licensees for any violation of
26this chapter when the violation was committed by the licensee’s
27agent or employee while acting on behalf of the licensee or
28engaged in commercial cannabis activity.

end insert
begin insert

29
(d) A licensing authority may recover the costs of investigation
30and enforcement of a disciplinary proceeding pursuant to Section
31125.3 of this code.

end insert
32begin insert

begin insertSEC. 20.end insert  

end insert

begin insertSection 19313 of the end insertbegin insertBusiness and Professions Codeend insert
33
begin insert is repealed.end insert

begin delete
34

19313.  

Each licensing authority may take disciplinary action
35against a licensee for any violation of this chapter when the
36violation was committed by the licensee’s agent or employee while
37acting on behalf of the licensee or engaged in commercial cannabis
38activity.

end delete
39begin insert

begin insertSEC. 21.end insert  

end insert

begin insertSection 19315 of the end insertbegin insertBusiness and Professions Codeend insert
40
begin insert is amended to read:end insert

P36   1

19315.  

(a) Nothing in this chapter shall be interpreted to
2supersede or limit existing local authority for law enforcement
3activity, enforcement of local zoning requirements or local
4ordinances, or enforcement ofbegin delete local permit or licensingend deletebegin insert local
5license, permit, or other authorizationend insert
requirements.

6(b) Nothing in this chapter shall be interpreted to requirebegin delete the
7Department of Consumer Affairsend delete
begin insert a licensing authorityend insert to undertake
8local law enforcement responsibilities, enforce local zoning
9requirements, or enforce localbegin delete licensingend deletebegin insert licensing, permitting, or
10other authorizationend insert
requirements.

11(c) Nothing in this chapter shall be interpreted to supersede or
12limit state agencies from exercising their existing enforcement
13authority under the Fish and Game Code, the Water Code, the
14Food and Agricultural Code, or the Health and Safety Code.

15begin insert

begin insertSEC. 22.end insert  

end insert

begin insertSection 19318 of the end insertbegin insertBusiness and Professions Codeend insert
16
begin insert is repealed.end insert

begin delete
17

19318.  

(a) A person engaging in commercial cannabis activity
18without a license required by this chapter shall be subject to civil
19penalties of up to twice the amount of the license fee for each
20violation, and the court may order the destruction of medical
21cannabis associated with that violation in accordance with Section
2211479 of the Health and Safety Code. Each day of operation shall
23constitute a separate violation of this section. All civil penalties
24imposed and collected pursuant to this section by a licensing
25authority shall be deposited into the Medical Cannabis Fines and
26Penalties Account established pursuant to Section 19351.

27(b) If an action for civil penalties is brought against a licensee
28pursuant to this chapter by the Attorney General on behalf of the
29people, the penalty collected shall be deposited into the Medical
30Cannabis Fines and Penalties Account established pursuant to
31Section 19351. If the action is brought by a district attorney or
32county counsel, the penalty collected shall be paid to the treasurer
33of the county in which the judgment was entered. If the action is
34brought by a city attorney or city prosecutor, the penalty collected
35shall be paid to the treasurer of the city or city and county in which
36the judgment was entered. If the action is brought by a city attorney
37and is adjudicated in a superior court located in the unincorporated
38area or another city in the same county, the penalty shall be paid
39one-half to the treasurer of the city in which the complaining
P37   1attorney has jurisdiction and one-half to the treasurer of the county
2in which the judgment is entered.

3(c) Notwithstanding subdivision (a), criminal penalties shall
4continue to apply to an unlicensed person engaging in commercial
5cannabis activity in violation of this chapter, including, but not
6limited to, those individuals covered under Section 11362.7 of the
7Health and Safety Code.

end delete
8begin insert

begin insertSEC. 23.end insert  

end insert

begin insertSection 19320 of the end insertbegin insertBusiness and Professions Codeend insertbegin insert,
9as added by Section 4 of Chapter 689 of the Statutes of 2015, is
10amended to read:end insert

11

19320.  

(a) begin deleteLicensing end deletebegin insertAll commercial cannabis activity shall
12be conducted between licensees, except as otherwise provided in
13this chapter.end insert

14begin insert(b) end insertbegin insertend insertbegin insertLicensingend insert authorities administering this chapter may issue
15state licenses only to qualified applicants engaging in commercial
16cannabis activity pursuant to this chapter. Upon the date of
17implementation of regulations by the licensing authority, no person
18shall engage in commercial cannabis activity without possessing
19both a state license and a local permit, license, or other
20authorization. A licensee shall not commence activity under the
21authority of a state license until the applicant has obtained, in
22addition to the state license, abegin delete license or permitend deletebegin insert local license,
23permit, or other authorizationend insert
from the local jurisdiction in which
24he or she proposes to operate, following the requirements of the
25applicable local ordinance.

begin delete

26(b) Revocation of a local license, permit, or other authorization
27shall terminate the ability of a medical cannabis business to operate
28within that local jurisdiction until the local jurisdiction reinstates
29or reissues the local license, permit, or other required authorization.
30Local authorities shall notify the bureau upon revocation of a local
31license. The bureau shall inform relevant licensing authorities.

end delete
begin insert

32
(c) Each licensee shall obtain a separate license for each
33location where it engages in commercial medical cannabis activity.
34However, transporters only need to obtain licenses for each
35physical location where the licensee conducts business while not
36in transport or where any equipment that is not currently
37transporting medical cannabis or medical cannabis products
38permanently resides.

end insert
begin insert

39
(d) Revocation of a local license, permit, or other authorization
40shall terminate the ability of a medical cannabis business to
P38   1 operate within that local jurisdiction until the local jurisdiction
2reinstates or reissues the local license, permit, or other
3authorization. Local authorities shall notify the bureau upon
4revocation of a local license, permit, or other authorization. The
5bureau shall inform relevant licensing authorities.

end insert
begin delete

6(c)

end delete

7begin insert(e)end insert Revocation of a state license shall terminate the ability of a
8medical cannabis licensee to operate within California until the
9licensing authority reinstates or reissues the state license.begin delete Each
10licensee shall obtain a separate license for each location where it
11engages in commercial medical cannabis activity. However,
12transporters only need to obtain licenses for each physical location
13where the licensee conducts business while not in transport, or any
14equipment that is not currently transporting medical cannabis or
15medical cannabis products, permanently resides.end delete

begin delete

16(d)

end delete

17begin insert(f)end insert In addition to the provisions of this chapter, local jurisdictions
18retain the power to assess fees and taxes, as applicable, on facilities
19that are licensed pursuant to this chapter and the business activities
20of those licensees.

begin delete

21(e)

end delete

22begin insert(g)end insert Nothing in this chapter shall be construed to supersede or
23limit state agencies, including thebegin insert Department of Food and
24Agriculture, theend insert
State Water Resources Controlbegin delete Boardend deletebegin insert Board,end insert and
25begin insert theend insert Department of Fish and Wildlife, from establishing fees to
26support their medical cannabis regulatory programs.

27begin insert

begin insertSEC. 24.end insert  

end insert

begin insertSection 19320 of the end insertbegin insertBusiness and Professions Codeend insertbegin insert,
28as added by Section 8 of Chapter 719 of the Statutes of 2015, is
29repealed.end insert

begin delete
30

19320.  

(a) Licensing authorities administering this chapter
31may issue state licenses only to qualified applicants engaging in
32commercial cannabis activity pursuant to this chapter. Upon the
33date of implementation of regulations by the licensing authority,
34no person shall engage in commercial cannabis activity without
35possessing both a state license and a local permit, license, or other
36authorization. A licensee shall not commence activity under the
37authority of a state license until the applicant has obtained, in
38addition to the state license, a license or permit from the local
39jurisdiction in which he or she proposes to operate, following the
40requirements of the applicable local ordinance.

P39   1(b) Revocation of a local license, permit, or other authorization
2shall terminate the ability of a medical cannabis business to operate
3within that local jurisdiction until the local jurisdiction reinstates
4or reissues the local license, permit, or other required authorization.
5Local authorities shall notify the bureau upon revocation of a local
6license. The bureau shall inform relevant licensing authorities.

7(c) Revocation of a state license shall terminate the ability of a
8medical cannabis licensee to operate within California until the
9licensing authority reinstates or reissues the state license. Each
10licensee shall obtain a separate license for each location where it
11engages in commercial medical cannabis activity. However,
12transporters only need to obtain licenses for each physical location
13where the licensee conducts business while not in transport, or any
14equipment that is not currently transporting medical cannabis or
15medical cannabis products, permanently resides.

16(d) In addition to the provisions of this chapter, local
17jurisdictions retain the power to assess fees and taxes, as applicable,
18on facilities that are licensed pursuant to this chapter and the
19business activities of those licensees.

20(e) Nothing in this chapter shall be construed to supersede or
21limit state agencies, including the State Water Resources Control
22Board and Department of Fish and Wildlife, from establishing fees
23to support their medical cannabis regulatory programs.

end delete
24begin insert

begin insertSEC. 25.end insert  

end insert

begin insertSection 19321 of the end insertbegin insertBusiness and Professions Codeend insert
25
begin insert is amended to read:end insert

begin delete
26

19321.  

(a) The Department of Consumer Affairs, the
27Department of Food and Agriculture, and the State Department of
28Public Health shall promulgate regulations for implementation of
29their respective responsibilities in the administration of this chapter.

30(b) 

end delete
31begin insert

begin insert19321.end insert  

end insert

begin insert(a)end insertbegin insertend insertA license issued pursuant to thisbegin delete sectionend deletebegin insert chapterend insert
32 shall be valid for 12 months from the date of issuance. The license
33shall be renewed annually. Each licensing authority shall establish
34procedures for the renewal of a license.

begin delete

35(c)

end delete

36begin insert(b)end insert Notwithstanding subdivisionbegin delete (a)end deletebegin insert (b)end insert of Section 19320,begin delete a
37facility or entityend delete
begin insert the premises or personend insert that is operating in
38compliance with local zoning ordinances and other state and local
39requirements on or before January 1, 2018, may continue its
40operations until its application for licensure is approved or denied
P40   1pursuant to thisbegin delete chapter.end deletebegin insert chapter only if (1) a completed application
2and all required documentation and approvals for licensure are
3submitted to the licensing authority no later than the deadline
4established by the licensing authority and (2) the applicant
5continues to operate in compliance with all local and state
6requirements, except possession of a state license pursuant to this
7chapter.end insert
In issuing licenses, the licensing authority shall prioritize
8anybegin delete facility or entityend deletebegin insert premises or personend insert that can demonstrate to
9the authority’s satisfaction thatbegin delete itend deletebegin insert the premises or personend insert was in
10operation and in good standing with the local jurisdiction by
11January 1, 2016.

begin delete

12(d)

end delete

13begin insert(c)end insert Issuance of a state license or a determination of compliance
14with local law by the licensing authority shall in no way limit the
15ability of the City of Los Angeles to prosecute any person or entity
16for a violation of, or otherwise enforce, Proposition D, approved
17by the voters of the City of Los Angeles on the May 21, 2013,
18ballot for the city, or the city’s zoning laws. Nor may issuance of
19a license or determination of compliance with local law by the
20licensing authority be deemed to establish, or be relied upon, in
21determining satisfaction with the immunity requirements of
22Proposition D or local zoning law, in court or in any other context
23or forum.

24begin insert

begin insertSEC. 26.end insert  

end insert

begin insertSection 19322 of the end insertbegin insertBusiness and Professions Codeend insert
25
begin insert is amended to read:end insert

26

19322.  

(a) A personbegin delete or entityend delete shall not submit an application
27for a state license issued bybegin delete the departmentend deletebegin insert a licensing authorityend insert
28 pursuant to this chapter unless that personbegin delete or entityend delete has received
29a license, permit, or authorizationbegin delete by aend deletebegin insert from theend insert local jurisdiction.
30An applicant for any type of state license issued pursuant to this
31chapter shall do all of the following:

32(1) Electronically submit to the Department of Justice fingerprint
33images and related information required by the Department of
34Justice for the purpose of obtaining information as to the existence
35and content of a record of state or federal convictions and arrests,
36and information as to the existence and content of a record of state
37or federal convictions and arrests for which the Department of
38Justice establishes that the person is free on bail or on his or her
39own recognizance, pending trial or appeal.

P41   1(A) The Department of Justice shall provide a response to the
2licensing authority pursuant to paragraph (1) of subdivision (p) of
3Section 11105 of the Penal Code.

4(B) The licensing authority shall request from the Department
5of Justice subsequent notification service, as provided pursuant to
6Section 11105.2 of the Penal Code, for applicants.

7(C) The Department of Justice shall charge the applicant a fee
8sufficient to cover the reasonable cost of processing the requests
9described in this paragraph.

10(2) Provide documentation issued by the local jurisdiction in
11which the proposed business is operating certifying that the
12applicant is or will be in compliance with all local ordinances and
13regulations.

14(3) Provide evidence of the legal right to occupy and use the
15proposed location. For an applicant seeking a cultivator, distributor,
16manufacturing,begin insert testing, transporter,end insert or dispensary license, provide
17a statement from the owner of real property or their agent where
18the cultivation, distribution, manufacturing,begin insert testing, transport,end insert or
19dispensingbegin insert ofend insert commercial medical cannabis activities will occur,
20as proof to demonstrate the landowner has acknowledged and
21consented to permit cultivation, distribution, manufacturing,begin insert testing,
22transport,end insert
or dispensary activities to be conducted on the property
23by the tenant applicant.

24(4) If the application is for a cultivator or a dispensary, provide
25evidence that the proposed location is located beyond at least a
26600-foot radius from a school, as required by Section 11362.768
27of the Health and Safety Code.

28(5) Provide a statement, signed by the applicant under penalty
29of perjury, that the information provided is complete, true, and
30accurate.

31(6) (A) For an applicant with 20 or more employees, provide
32a statement that the applicant will enter into, or demonstrate that
33it has already entered into, and abide by the terms of a labor peace
34agreement.

35(B) For the purposes of this paragraph, “employee” does not
36include a supervisor.

37(C) For purposes of this paragraph, “supervisor” means an
38individual having authority, in the interest of the licensee, to hire,
39transfer, suspend, lay off, recall, promote, discharge, assign,
40reward, or discipline other employees, or responsibility to direct
P42   1them or to adjust their grievances, or effectively to recommend
2such action, if, in connection with the foregoing, the exercise of
3that authority is not of a merely routine or clerical nature, but
4requires the use of independent judgment.

5(7) Provide the applicant’sbegin insert validend insert seller’s permit number issued
6pursuant to Part 1 (commencing with Section 6001) of Division 2
7of the Revenue and Taxation Code or indicate that the applicant
8is currently applying for a seller’s permit.

9(8) Provide any other information required by the licensing
10authority.

11(9) For an applicant seeking a cultivation license, provide a
12statement declaring the applicant is an “agricultural employer,” as
13defined in the Alatorre-Zenovich-Dunlap-Berman Agricultural
14Labor Relations Act of 1975 (Part 3.5 (commencing with Section
151140) of Division 2 of the Labor Code), to the extent not prohibited
16by law.

begin delete

17(10) For an applicant seeking licensure as a testing laboratory,
18register with the State Department of Public Health and provide
19any information required by the State Department of Public Health.

20(11)

end delete

21begin insert(10)end insert Pay all applicable fees required for licensure by the
22licensing authority.

begin insert

23
(11) Provide proof of a bond to cover the costs of destruction
24of medical cannabis or medical cannabis products if necessitated
25by a violation of licensing requirements.

end insert

26(b) For applicants seeking licensure to cultivate, distribute,begin delete or
27manufactureend delete
begin insert manufacture, test, or dispenseend insert medicalbegin delete cannabis,end delete
28begin insert cannabis or medical cannabis products,end insert the application shall also
29include a detailed description of the applicant’s operating
30procedures for all of the following, as required by the licensing
31authority:

32(1) Cultivation.

33(2) Extraction and infusion methods.

34(3) The transportation process.

35(4) Inventory procedures.

36(5) Quality control procedures.

begin insert

37
(6) Security protocols.

end insert
38begin insert

begin insertSEC. 27.end insert  

end insert

begin insertSection 19323 of the end insertbegin insertBusiness and Professions Codeend insert
39
begin insert is amended to read:end insert

P43   1

19323.  

(a) begin deleteThe end deletebegin insertA end insertlicensing authority shall deny an application
2ifbegin delete eitherend delete the applicant or the premises for which a state license is
3appliedbegin delete doend deletebegin insert doesend insert not qualify for licensure under thisbegin delete chapter.end deletebegin insert chapter
4or the rules and regulations for the state license.end insert

5(b) begin deleteThe end deletebegin insertA end insertlicensing authority may denybegin delete theend deletebegin insert anend insert application for
6licensure or renewal of a statebegin delete licenseend deletebegin insert license, or issue a conditional
7license,end insert
if any of the following conditions apply:

8(1) Failure to comply with the provisions of this chapter or any
9rule or regulation adopted pursuant to this chapter, including but
10not limited to, any requirement imposed to protect natural
11resources, instream flow, and water quality pursuant to subdivision
12(a) of Section 19332.

13(2) Conduct that constitutes grounds for denial of licensure
14pursuant to Chapter 2 (commencing with Section 480) of Division
151.5.

begin delete

16(3) A local agency has notified the licensing authority that a
17licensee or applicant within its jurisdiction is in violation of state
18rules and regulation relating to commercial cannabis activities,
19and the licensing authority, through an investigation, has
20determined that the violation is grounds for termination or
21revocation of the license. The licensing authority shall have the
22authority to collect reasonable costs, as determined by the licensing
23authority, for investigation from the licensee or applicant.

end delete
begin delete

24(4)

end delete

25begin insert(3)end insert The applicant has failed to provide information required by
26the licensing authority.

begin delete

27(5)

end delete

28begin insert(4)end insert The applicant or licensee has been convicted of an offense
29that is substantially related to the qualifications, functions, or duties
30of the business or profession for which the application is made,
31except that if the licensing authority determines that the applicant
32or licensee is otherwise suitable to be issued a license and granting
33the license would not compromise public safety, the licensing
34authority shall conduct a thorough review of the nature of the
35crime, conviction, circumstances, and evidence of rehabilitation
36of the applicant, and shall evaluate the suitability of the applicant
37or licensee to be issued a license based on the evidence found
38through the review. In determining which offenses are substantially
39related to the qualifications, functions, or duties of the business or
P44   1profession for which the application is made, the licensing authority
2shall include, but not be limited to, the following:

3(A) A felony conviction for the illegal possession for sale, sale,
4manufacture, transportation, or cultivation of a controlled
5substance.

6(B) A violent felony conviction, as specified in subdivision (c)
7of Section 667.5 of the Penal Code.

8(C) A serious felony conviction, as specified in subdivision (c)
9of Section 1192.7 of the Penal Code.

10(D) A felony conviction involving fraud, deceit, or
11embezzlement.

begin delete

12(6)

end delete

13begin insert(5)end insert The applicant, or any of its officers, directors, or owners, is
14a licensed physician making patient recommendations for medical
15cannabis pursuant to Section 11362.7 of the Health and Safety
16Code.

begin delete

17(7)

end delete

18begin insert(6)end insert The applicant or any of its officers, directors, or owners has
19been subject to fines or penalties for cultivation or production of
20a controlled substance on public or private lands pursuant to
21Section 12025 or 12025.1 of the Fish and Game Code.

begin delete

22(8)

end delete

23begin insert(7)end insert The applicant, or any of its officers, directors, or owners,
24has been sanctioned by a licensing authority or a city, county, or
25city and county for unlicensed commercialbegin delete medicalend delete cannabis
26activities or has had a license revoked under this chapter in the
27three years immediately preceding the date the application is filed
28with the licensing authority.

begin delete

29(9)

end delete

30begin insert(8)end insert Failure to obtain and maintain a valid seller’s permit required
31pursuant to Part 1 (commencing with Section 6001) of Division 2
32of the Revenue and Taxation Code.

begin insert

33
(9) The applicant or any of its officers, directors, owners,
34employees, or authorized agents have failed to comply with any
35operating procedure required pursuant to subdivision (b) of Section
3619322.

end insert
begin insert

37
(10) Conduct that constitutes grounds for disciplinary action
38pursuant to this chapter.

end insert
39begin insert

begin insertSEC. 28.end insert  

end insert

begin insertSection 19326 of the end insertbegin insertBusiness and Professions Codeend insert
40
begin insert is amended to read:end insert

P45   1

19326.  

(a) A person other than abegin delete licensedend delete transporter shall not
2transport medical cannabis or medical cannabis products from one
3licensee to another licensee, unless otherwise specified in this
4chapter.

5(b) begin insert(1)end insertbegin insertend insertAllbegin delete licensees holding cultivation or manufacturing
6licensesend delete
begin insert cultivators, manufacturers, and licensees holding a
7producing dispensary license in addition to a cultivation or
8manufacturing licenseend insert
shall send all medical cannabis and medical
9cannabis products cultivated or manufactured to a distributor, as
10defined in Section 19300.5, forbegin insert presaleend insert quality assurance and
11inspection bybegin delete the Type 11 licenseeend deletebegin insert a distributorend insert and for a batch
12testing by abegin delete Type 8 licenseeend deletebegin insert testing laboratoryend insert prior to distribution
13to a dispensary. begin delete Those licensees holding a Type 10A license in
14addition to a cultivation license or a manufacturing license shall
15send all medical cannabis and medical cannabis products to a Type
1611 licensee for presale inspection and for a batch testing by a Type
178 licensee prior to dispensing any product. The licensing authority
18shall fine a licensee who violates this subdivision in an amount
19determined by the licensing authority to be reasonable.end delete

begin insert

20
(2) Notwithstanding paragraph (1), a cultivator shall not be
21required to send medical cannabis to a distributor if the medical
22cannabis is to be used, sold, or otherwise distributed by methods
23approved pursuant to this chapter by a manufacturer for further
24manufacturing.

end insert

25(c) (1) Upon receipt of medical cannabis or medical cannabis
26productsbegin delete by a holder of a cultivation or manufacturing license,end delete
27begin insert from a cultivator, manufacturer, or a licensee holding a producing
28dispensary license in addition to a cultivation or a manufacturing
29license,end insert
thebegin delete Type 11 licenseeend deletebegin insert distributorend insert shall first inspect the
30product to ensure the identity and quantity of the product andbegin delete thenend delete
31 ensure a random sample of the medical cannabis or medical
32cannabis product is tested by abegin delete Type 8 licensee prior to distributing
33the batch of medical cannabis or medical cannabis products.end delete
begin insert testing
34laboratory.end insert

35(2) Upon issuance of a certificate of analysis by thebegin delete Type 8
36licenseeend delete
begin insert testing laboratoryend insert that the product is fit forbegin delete manufacturing
37or retail, allend delete
begin insert dispensingend insert medical cannabis and medical cannabis
38products shall undergo a quality assurance review by thebegin delete Type 11
39licenseeend delete
begin insert distributorend insert prior to distribution to ensure the quantity and
40content of the medical cannabis or medical cannabis product, and
P46   1for tracking and taxation purposes by the state. begin delete and manufacturers
2shall package or seal all medical cannabis and medical cannabis
3products in tamper-evident packaging and use a unique identifier,
4as prescribed by the Department of Food and Agriculture, for the
5purpose of identifying and tracking medical cannabis or medical
6cannabis products. Medical cannabis and medical cannabis products
7shall be labeled as required by Section 19347. All packaging and
8sealing shall be completed prior to medical cannabis or medical
9cannabis products being transported or delivered to a licensee,
10qualified patient, or caregiver.end delete

11(3) This section does not limit the ability of licensed cultivators,
12manufacturers, and dispensaries to directly enter into contracts
13with one another indicating the price and quantity of medical
14cannabis or medical cannabis products to be distributed. However,
15abegin delete Type 11 licenseeend deletebegin insert distributorend insert responsible for executing the
16contract is authorized to collect a fee for the services rendered,
17including, but not limited to, costs incurred by abegin delete Type 8 licensee,end delete
18begin insert testing laboratory,end insert as well as applicable state or local taxes and
19fees.

20(d) Medical cannabis and medical cannabis products shall be
21tested by abegin delete registeredend deletebegin insert licensedend insert testing laboratory, prior tobegin delete retail
22sale or dispensing, as follows:end delete
begin insert dispensing, pursuant to Section
2319344.end insert

begin delete

24(1) Medical cannabis from dried flower shall, at a minimum,
25be tested for concentration, pesticides, mold, and other
26contaminants.

end delete
begin delete

27(2) Medical cannabis extracts shall, at a minimum, be tested for
28concentration and purity of the product.

end delete
begin delete

29(3)

end delete

30begin insert(e)end insert This chapter shall not prohibit a licensee from performing
31begin delete on-siteend delete testingbegin insert on the licensee’s premisesend insert for the purposes of quality
32assurance of the product in conjunction with reasonable business
33operations. On-site testing by the licensee shall not be certified by
34thebegin delete State Department of Public Health.end deletebegin insert Bureau of Medical
35Cannabis Regulation.end insert

begin delete

36(e) All commercial cannabis activity shall be conducted between
37licensees, when these are available.

end delete
38begin insert

begin insertSEC. 29.end insert  

end insert

begin insertSection 19327 of the end insertbegin insertBusiness and Professions Codeend insert
39
begin insert is amended to read:end insert

P47   1

19327.  

(a) A licensee shall keep accurate records of
2commercial cannabis activity.

3(b) All records related to commercial cannabis activitybegin delete as
4defined by the licensing authoritiesend delete
shall be maintained for a
5minimum of seven years.

6(c) begin deleteThe bureau end deletebegin insertLicensing authorities end insertmay examine thebegin delete books
7andend delete
records ofbegin delete a licenseeend deletebegin insert licenseesend insert and inspect the premises of a
8licensee as the licensing authority or a state or local agency deems
9necessary to perform its duties under this chapter. All inspections
10begin insert and examination of recordsend insert shall be conducted during standard
11business hours of the licensed facility or at any other reasonable
12time.begin insert Licensees shall provide and deliver records to the licensing
13authority upon request.end insert

14(d) Licensees shall keep records identified by the licensing
15authorities on the premises of the location licensed.begin delete The licensing
16authorities may make any examination of the records of any
17licensee. Licensees shall also provide and deliver copies of
18documents to the licensing agency upon request.end delete

19(e) A licensee or its agent, or employee, that refuses, impedes,
20obstructs, or interferes with an inspection of the premises or records
21of the licensee pursuant to this section has engaged in a violation
22of this chapter.

23(f) If abegin delete licenseeend deletebegin insert licensee, its agent,end insert or an employee of a licensee
24fails to maintain or provide the records required pursuant to this
25section, the licenseebegin delete shallend deletebegin insert mayend insert be subject to a citation and fine of
26thirty thousand dollars ($30,000) per individual violation.

27begin insert

begin insertSEC. 30.end insert  

end insert

begin insertSection 19328 of the end insertbegin insertBusiness and Professions Codeend insert
28
begin insert is amended to read:end insert

29

19328.  

(a) begin deleteA end deletebegin insertExcept as provided in paragraphs (9) and (10),
30a end insert
licensee may only hold a state license in up to two separate
31license categories, as follows:

32(1) Type 1, 1A, 1B, 2, 2A, or 2B licensees may also hold either
33a Type 6 or 7 state license.

34(2) Type 6 or 7 licensees, or a combination thereof, may also
35hold either a Type 1, 1A, 1B, 2, 2A, or 2B state license.

36(3) Type 6 or 7 licensees, or a combination thereof, may also
37hold a Type 10A state license.

38(4) Type 10A licensees may also hold either a Type 6 or 7 state
39license, or a combination thereof.

P48   1(5) Type 1, 1A, 1B, 2, 2A, or 2B licensees, or a combination
2thereof, may also hold a Type 10A state license.

3(6) Type 10A licensees maybegin delete apply forend deletebegin insert hold aend insert Type 1, 1A, 1B,
42, 2A, or 2B state license, or a combination thereof.

5(7) Type 11 licensees shallbegin delete apply forend deletebegin insert also holdend insert a Type 12 state
6license, but shall notbegin delete apply forend deletebegin insert holdend insert any other type of state license.

7(8) Type 12 licensees maybegin delete apply forend deletebegin insert holdend insert a Type 11 state license.

8(9) A Type 10A licensee maybegin delete apply forend deletebegin insert holdend insert a Type 6 or 7 state
9license andbegin insert may alsoend insert hold a 1, 1A, 1B, 2, 2A, 2B, 3, 3A, 3B, 4 or
10combination thereof if, under the 1, 1A, 1B, 2, 2A, 2B, 3, 3A, 3B,
114 or combination of licenses thereof, no more than four acres of
12total canopy size of cultivation by the licensee is occurring
13throughout the state during the period that the respective licenses
14are valid. All cultivation pursuant to this section shall comply with
15local ordinances. This paragraph shall become inoperative on
16January 1, 2026.

begin insert

17
(10) All cultivators and manufacturers may hold a Type 12
18transporter license. All cultivators and manufacturers who are
19issued Type 12 transporter licenses shall comply with the
20following:

end insert
begin insert

21
(A) Cultivators shall only transport medical cannabis from a
22cultivation site to a manufacturer or a distributor.

end insert
begin insert

23
(B) Manufacturers shall only transport medical cannabis and
24medical cannabis products as follows:

end insert
begin insert

25
(i) Between a cultivation site and a manufacturing site.

end insert
begin insert

26
(ii) Between a manufacturing site and a manufacturing site.

end insert
begin insert

27
(iii) Between a manufacturing site and a distributor.

end insert

28(b) Except as provided in subdivision (a), a person or entity that
29holds a state license is prohibited from licensure for any other
30activity authorized under this chapter, and is prohibited from
31holding an ownership interest in real property, personal property,
32or other assets associated with or used in any other license category.

33(c) (1) In a jurisdiction that adopted a local ordinance, prior to
34July 1, 2015,begin delete allowing orend delete requiring qualified businesses to cultivate,
35manufacture, and dispense medical cannabis or medical cannabis
36products, with all commercial cannabis activity being conducted
37by a single qualified business, upon licensure that business shall
38not be subject to subdivision (a) if it meets all of the following
39conditions:

P49   1(A) The business was cultivating, manufacturing, and dispensing
2medical cannabis or medical cannabis products onbegin delete July 1, 2015,end delete
3begin insert January 1, 2016,end insert and has continuously done so since that date.

4(B) The business has been in full compliance with all applicable
5local ordinances at all times prior to licensure.

6(C) The business is registered with the State Board of
7
begin delete Equalization.end deletebegin insert Equalization for tax purposes.end insert

8(2) A business licensed pursuant to paragraph (1) is not required
9to conduct all cultivation or manufacturing within the bounds of
10a local jurisdiction, but all cultivation and manufacturing shall
11have commenced prior tobegin delete July 1, 2015,end deletebegin insert January 1, 2016,end insert and have
12been in full compliance with applicable local ordinances.

13(d) This section shall remain in effect only until January 1, 2026,
14and as of that date is repealed.

15begin insert

begin insertSEC. 31.end insert  

end insert

begin insertArticle 6 (commencing with Section 19331) of Chapter
163.5 of Division 8 of the end insert
begin insertBusiness and Professions Codeend insertbegin insert, as added
17by Section 1 of Chapter 688 of the Statutes of 2015, is repealed.end insert

18begin insert

begin insertSEC. 32.end insert  

end insert

begin insertSection 19332 of the end insertbegin insertBusiness and Professions Codeend insertbegin insert,
19as added by Section 13 of Chapter 719 of the Statutes of 2015, is
20amended to read:end insert

21

19332.  

(a) The Department of Food and Agriculture shall
22promulgate regulations governing the licensing of indoor and
23outdoorbegin insert commercialend insert cultivation sites.

24(b) The Department of Pesticidebegin delete Regulation, in consultation
25with the Department of Food and Agriculture,end delete
begin insert Regulationend insert shall
26developbegin delete standardsend deletebegin insert guidelinesend insert for the use of pesticides inbegin delete cultivation,
27and maximum tolerances for pesticides and other foreign objectend delete

28begin insert the cultivation of cannabis andend insert residue in harvested cannabis.

begin delete

29(c) The State Department of Public Health shall develop
30standards for the production and labeling of all edible medical
31cannabis products.

end delete
begin delete

32(d)

end delete

33begin insert(c)end insert The Department of Food andbegin delete Agriculture, inend deletebegin insert Agriculture
34shall serve as the lead agency for purposes of the California
35Environmental Quality Act (Division 13 (commencing with Section
3621000) of the Public Resources Code) related to the licensing of
37cannabis cultivation.end insert

38begin insert(d)end insertbegin insertend insertbegin insertPursuant to Section 13149 of the Water Code, the State
39Water Resources Control Board, inend insert
consultation with the
40Department of Fish and Wildlife and thebegin delete State Water Resources
P50   1Control Board,end delete
begin insert Department of Food and Agriculture,end insert shall ensure
2that individual and cumulative effects of water diversion and
3discharge associated with cultivationbegin insert of cannabisend insert do not affect the
4instream flows needed for fish spawning, migration, and rearing,
5and the flows needed to maintain natural flow variability.

6(e) The Department of Food and Agriculture shall have the
7authority necessary for the implementation of the regulations it
8adopts pursuant to this chapter. The regulations shall do all of the
9following:

10(1) Provide that weighing or measuring devices used in
11connection with the sale or distribution of medical cannabis are
12required to meet standards equivalent to Division 5 (commencing
13with Section 12001).

14(2) Require that cannabis cultivation by licensees is conducted
15in accordance with state and local begin delete laws related to land conversion,
16grading, electricity usage, water usage, agricultural discharges,
17and similar matters.end delete
begin insert laws.end insert Nothing in this chapter, and no regulation
18adopted by the department, shall be construed to supersede or limit
19the authority of the State Water Resources Control Board, regional
20water quality control boards, or the Department of Fish and
21Wildlife to implement and enforce their statutory obligations or
22to adopt regulations to protect water quality, water supply, and
23natural resources.

24(3) Establish procedures for the issuance and revocation of
25unique identifiers for activities associated with a cannabis
26cultivation license, pursuant to Article 8 (commencing with Section
2719337). All cannabis shall be labeled with the unique identifier
28issued by the Department of Food and Agriculture.

29(4) Prescribe standards, in consultation with the bureau, for the
30reporting of information as necessary related to unique identifiers,
31pursuant to Article 8 (commencing with Section 19337).

32(f) The Department of Pesticidebegin delete Regulation, in consultation with
33the State Water Resources Control Board,end delete
begin insert Regulationend insert shall
34begin delete promulgate regulations thatend delete require that the application of pesticides
35or other pest control in connection with the indoor or outdoor
36cultivation of medical cannabisbegin delete meets standards equivalent toend delete
37begin insert complies withend insert Division 6 (commencing with Section 11401) of
38the Food and Agricultural Code and its implementing regulations.

39(g) State cultivator license types issued by the Department of
40Food and Agriculturebegin insert mayend insert include:

P51   1(1) Type 1, or “specialty outdoor,” for outdoor cultivation using
2no artificial lighting of less than or equal to 5,000 square feet of
3total canopy size on one premises, or up to 50 mature plants on
4noncontiguous plots.

5(2) Type 1A, or “specialty indoor,” for indoor cultivation using
6exclusively artificial lighting of less than or equal to 5,000 square
7feet of total canopy size on one premises.

8(3) Type 1B, or “specialty mixed-light,” for cultivation using a
9combination of natural and supplemental artificial lighting at a
10maximum threshold to be determined by the licensing authority,
11of less than or equal to 5,000 square feet of total canopy size on
12one premises.

13(4) Type 2, or “small outdoor,” for outdoor cultivation using
14no artificial lighting between 5,001 and 10,000 square feet,
15inclusive, of total canopy size on one premises.

16(5) Type 2A, or “small indoor,” for indoor cultivation using
17exclusively artificial lighting between 5,001 and 10,000 square
18feet, inclusive, of total canopy size on one premises.

19(6) Type 2B, or “small mixed-light,” for cultivation using a
20combination of natural and supplemental artificial lighting at a
21maximum threshold to be determined by the licensing authority,
22between 5,001 and 10,000 square feet, inclusive, of total canopy
23size on one premises.

24(7) Type 3, or “outdoor,” for outdoor cultivation using no
25artificial lighting from 10,001 square feet to one acre, inclusive,
26of total canopy size on one premises. The Department of Food and
27Agriculture shall limit the number of licenses allowed of this type.

28(8) Type 3A, or “indoor,” for indoor cultivation using
29exclusively artificial lighting between 10,001 and 22,000 square
30feet, inclusive, of total canopy size on one premises. The
31Department of Food and Agriculture shall limit the number of
32licenses allowed of this type.

33(9) Type 3B, or “mixed-light,” for cultivation using a
34combination of natural and supplemental artificial lighting at a
35maximum threshold to be determined by the licensing authority,
36between 10,001 and 22,000 square feet, inclusive, of total canopy
37size on one premises. The Department of Food and Agriculture
38shall limit the number of licenses allowed of this type.

39(10) Type 4, or “nursery,” for cultivation of medical cannabis
40solely as a nursery. Type 4 licensees may transport livebegin delete plants.end delete
P52   1
begin insert plants, if the licensee also holds a Type 12 transporter license
2issued pursuant to this chapter.end insert

3begin insert

begin insertSEC. 33.end insert  

end insert

begin insertSection 19332.2 is added to the end insertbegin insertBusiness and
4Professions Code
end insert
begin insert, to read:end insert

begin insert
5

begin insert19332.2.end insert  

(a) An application for a license for indoor or outdoor
6cultivation shall identify the source of water supply.

7
(1) (A) If water will be supplied by a retail water supplier, as
8defined in Section 13575 of the Water Code, the application shall
9identify the retail water supplier.

10
(B) Paragraphs (2) and (3) shall not apply to any water subject
11to subparagraph (A) unless the retail water supplier has 10 or
12fewer customers, the applicant receives 10 percent or more of the
13water supplied by the retail water supplier, 25 percent or more of
14the water delivered by the retail water supplier is used for cannabis
15cultivation, or the applicant and the retail water supplier are
16affiliates, as defined in Section 2814.20 of Title 23 of the California
17Code of Regulations.

18
(2) If the water supply includes a diversion within the meaning
19of Section 5100 of the Water Code, the application shall identify
20the point of diversion and maximum amount to be diverted.

21
(3) If water will be supplied from a groundwater extraction not
22subject to paragraph (2), the application shall identify the location
23of the extraction and the maximum amount to be diverted for
24cannabis cultivation in any year.

25
(b) An application for a license issued by the Department of
26Food and Agriculture before January 1, 2020, shall include one
27of the following:

28
(1) A copy of a registration, permit, or license issued under Part
292 (commencing with Section 1200) of Division 2 of the Water Code
30that covers the diversion.

31
(2) A copy of a statement of water diversion and use, filed with
32the State Water Resources Control Board before July 1, 2017, that
33covers the diversion and specifies the amount of water used for
34cannabis cultivation.

35
(3) A copy of a pending application for a permit to appropriate
36water, filed with the State Water Resources Control before July
371, 2017.

38
(4) Documentation, submitted to the State Water Resources
39Control Board before July 1, 2017, establishing that the diversion
P53   1is subject to subdivision (a), (c), (d) or (e) of Section 5101 of the
2Water Code.

3
(5) Documentation, submitted to the State Water Resources
4Control Board before July 1, 2017, establishing that the diversion
5is authorized under a riparian right and that no diversion occurred
6after January 1, 2010, and before January 1, 2017.

7
(c) An application for a cultivation license issued after
8December 31, 2019, shall include one of the following:

9
(1) A copy of a registration, permit, or license issued under Part
102 (commencing with Section 1200) of Division 2 of the Water Code
11that covers the diversion.

12
(2) A copy of a statement of water diversion and use, filed with
13the State Water Resources Control Board, that covers the diversion.

14
(3) Documentation, submitted to the State Water Resources
15Control Board, establishing that the diversion is subject to
16subdivision (a), (c), (d) or (e) of Section 5101 of the Water Code.

17
(4) Documentation, submitted to the State Water Resources
18Control Board, establishing that the diversion is authorized under
19a riparian right and that no diversion occurred in any calendar
20year between January 1, 2010, and the calendar year in which the
21application is submitted.

22
(d) The Department of Food and Agriculture shall include in
23any license for cultivation requirements for compliance with
24applicable principles, guidelines, and requirements established
25under Section 13149 of the Water Code.

26
(e) The Department of Food and Agriculture shall include in
27any license for cultivation any relevant mitigation requirements
28the Department of Food and Agriculture identifies as part of its
29approval of the final environmental documentation for the cannabis
30cultivation licensing program as requirements that should be
31included in a license for cultivation. Chapter 3.5 (commencing
32with Section 11340) of Part 1 of Division 3 of Title 2 of the
33Government Code does not apply to the identification of these
34mitigation measures.

35
(f) Every license for cultivation shall include a condition that
36the license shall not be effective until the licensee has complied
37with Section 1602 of the Fish and Game Code or receives written
38verification from the Department of Fish and Wildlife that a
39streambed alteration agreement is not required.

P54   1
(g) The Department of Food and Agriculture shall consult with
2the State Water Resources Control Board and the Department of
3Fish and Wildlife in the implementation of this section.

end insert
4begin insert

begin insertSEC. 34.end insert  

end insert

begin insertSection 19332.5 of the end insertbegin insertBusiness and Professions Codeend insert
5
begin insert is amended to read:end insert

6

19332.5.  

(a) Not later than January 1, 2020, the Department
7of Food and Agriculturebegin delete in conjunction with the bureau,end delete shall make
8available a certified organic designation and organic certification
9program for medicalbegin delete marijuana,end deletebegin insert cannabis cultivation,end insert if permitted
10under federal law and the National Organic Program (Section 6517
11of the federal Organic Foods Production Act of 1990 (7 U.S.C.
12Sec. 6501 et seq.)), and Article 7 (commencing with Section
13110810) of Chapter 5 of Part 5 of Division 104 of the Health and
14Safety Code.

15(b) Thebegin delete bureauend deletebegin insert end insertbegin insertDepartment of Food and Agricultureend insert may
16establish appellations of origin forbegin delete marijuanaend deletebegin insert cannabisend insert grown in
17California.

18(c) It is unlawful for medicalbegin delete marijuanaend deletebegin insert cannabisend insert to be marketed,
19labeled, or sold as grown in a California county when the medical
20begin delete marijuanaend deletebegin insert cannabisend insert was not grown in that county.

21(d) It is unlawful to use the name of a California county in the
22labeling, marketing, or packaging of medicalbegin delete marijuanaend deletebegin insert cannabisend insert
23 products unless the product was grown in that county.

24begin insert

begin insertSEC. 35.end insert  

end insert

begin insertSection 19334 of the end insertbegin insertBusiness and Professions Codeend insert
25
begin insert is amended to read:end insert

26

19334.  

(a) State licenses to be issued by the Department of
27Consumer Affairs are as follows:

28(1) “Dispensary,”begin insert Type 10 licenseend insert as defined in this chapter.
29This license shall allow for delivery pursuant to Section 19340.

30(2) “Distributor,”begin insert Type 11 licenseend insert for the distribution of medical
31cannabis and medical cannabis products from manufacturer to
32dispensary. Abegin delete Type 11end deletebegin insert distributorend insert licensee shall hold a Typebegin delete 12,end delete
33begin insert 12end insert orbegin delete transporter, license and register eachend deletebegin insert transporter license.
34Eachend insert
location where product is stored for the purposes of
35begin delete distribution.end deletebegin insert distribution must be individually licensed.end insert Abegin delete Type 11end delete
36begin insert distributorend insert licensee shall not hold a license in a cultivation,
37manufacturing, dispensing, or testing license category and shall
38not own, or have an ownership interest in,begin delete a facilityend deletebegin insert premisesend insert
39 licensed in those categories other than a security interest, lien, or
40encumbrance on property that is used by a licensee. Abegin delete Type 11
P55   1licenseeend delete
begin insert distributorend insert shall be bonded and insured at a minimum
2level established by the licensing authority.

begin insert

3
(3) “Producing dispensary,” Type 10A for dispensers who have
4no more than three licensed dispensary facilities and wish to hold
5either a cultivation or manufacturing license or both. This license
6shall allow for delivery where expressly authorized by local
7ordinance. Each dispensary must be individually licensed.

end insert
begin delete

8(3)

end delete

9begin insert(4)end insert “Transport,”begin insert Type 12 licenseend insert for transporters of medical
10cannabis or medical cannabis products between licensees. A Type
1112 licensee shall be bonded and insured at a minimum level
12established by the licensing authority.

begin delete

13(4) “Special dispensary status” for dispensers who have no more
14than three licensed dispensary facilities. This license shall allow
15for delivery where expressly authorized by local ordinance.

end delete

16(b) The bureau shall establish minimum security requirements
17for the commercialbegin delete transportationend deletebegin insert transportation, storage,end insert and
18delivery of medical cannabis andbegin insert medical cannabisend insert products.

begin insert

19
(c) The State Department of Public Health shall establish
20minimum security requirements for the storage of medical cannabis
21products at the manufacturing site.

end insert
begin delete

22(c)

end delete

23begin insert(d)end insert A licensed dispensary shall implement sufficient security
24measures to both deter and prevent unauthorized entrance into
25areas containing medical cannabis or medical cannabis products
26and theft of medical cannabis or medical cannabis products at the
27dispensary. These security measures shall include, but not be
28limited to, all of the following:

29(1) Preventing individuals from remaining on the premises of
30the dispensary if they are not engaging in activity expressly related
31to the operations of the dispensary.

32(2) Establishing limited access areas accessible only to
33authorized dispensary personnel.

34(3) Storing all finished medical cannabis and medical cannabis
35products in a secured and locked room, safe, or vault, and in a
36manner as to prevent diversion, theft, and loss, except for limited
37amounts of cannabis used for display purposes, samples, or
38immediate sale.

begin delete

39(d)

end delete

P56   1begin insert(e)end insert A dispensary shall notify the licensing authority and the
2appropriate law enforcement authorities within 24 hours after
3discovering any of the following:

4(1) Significant discrepancies identified during inventory. The
5level of significance shall be determined by the bureau.

6(2) Diversion, theft, loss, or any criminal activitybegin delete involving the
7dispensary or any agent or employee of the dispensary.end delete
begin insert pertaining
8to the operation of the dispensary.end insert

begin insert

9
(3) Diversion, theft, loss, or any criminal activity by any agent
10or employee of the dispensary pertaining to the operation of the
11dispensary.

end insert
begin delete

12(3)

end delete

13begin insert(4)end insert The loss or unauthorized alteration of records related to
14begin delete cannabis,end deletebegin insert medical cannabis or medical cannabis products,end insert
15 registered qualifying patients, primary caregivers, or dispensary
16employees or agents.

begin delete

17(4)

end delete

18begin insert(5)end insert Any other breach of security.

19begin insert

begin insertSEC. 36.end insert  

end insert

begin insertSection 19335 of the end insertbegin insertBusiness and Professions Codeend insert
20
begin insert is amended to read:end insert

21

19335.  

(a) The Department of Food and Agriculture, in
22consultation with the bureau, shall establish a track and trace
23program for reporting the movement of medicalbegin delete marijuanaend deletebegin insert cannabisend insert
24 items throughout the distribution chain that utilizes a unique
25identifier pursuant to Section 11362.777 of the Health and Safety
26Code and secure packaging and is capable of providing information
27that captures, at a minimum, all of the following:

28(1) The licensee receiving the product.

29(2) The transaction date.

30(3) The cultivator from which the product originates, including
31the associated unique identifier, pursuant to Section 11362.777 of
32the Health and Safety Code.

33(b) (1) The Department of Food andbegin delete Agricultureend deletebegin insert Agriculture,
34in consultation with the State Board of Equalization,end insert
shall create
35an electronic database containing the electronic shipping manifests
36begin insert to facilitate the administration of the track and trace program,end insert
37 which shall include, but not be limited to, the following
38information:

39(A) The quantity, or weight, and variety of products shipped.

40(B) The estimated times of departure and arrival.

P57   1(C) The quantity, or weight, and variety of products received.

2(D) The actual time of departure and arrival.

3(E) A categorization of the product.

4(F) The license number and the unique identifier pursuant to
5Section 11362.777 of the Health and Safety Code issued by the
6licensing authority for all licensees involved in the shipping
7process,begin delete includingend deletebegin insert including, but not limited to,end insert cultivators,
8begin insert manufacturers,end insert transporters, distributors, and dispensaries.

9(2) (A) The database shall be designed to flag irregularities for
10all licensing authorities in this chapter to investigate. All licensing
11authorities pursuant to this chapter may access the database and
12share information related to licensees under this chapter, including
13social security and individual taxpayer identifications
14notwithstanding Section 30.

15(B) The Department of Food and Agriculture shall immediately
16inform the bureau upon the finding of an irregularity or suspicious
17finding related to a licensee, applicant, or commercial cannabis
18activity for investigatory purposes.

19(3) Licensing authorities and state and local agencies may, at
20any time, inspect shipments and request documentation for current
21inventory.

22(4) The bureau shall have 24-hour access to the electronic
23database administered by the Department of Food and Agriculture.
24
begin insert The State Board of Equalization shall have read access to the
25electronic database for the purpose of taxation and regulation of
26medical cannabis and medical cannabis products.end insert

27(5) The Department of Food and Agriculture shall be authorized
28to enter into memoranda of understandings with licensing
29authorities for data sharing purposes, as deemed necessary by the
30Department of Food and Agriculture.

31(6) Information received and contained in records kept by the
32Department of Food and Agriculture or licensing authorities for
33the purposes of administering thisbegin delete sectionend deletebegin insert chapterend insert are confidential
34and shall not be disclosed pursuant to the California Public Records
35Act (Chapter 3.5 (commencing with Section 6250) of Division 7
36of Title 1 of the Government Code), except as necessary for
37authorized employees of the State of California or any city, county,
38or city and county to perform official duties pursuant to this chapter
39or a local ordinance.

P58   1(7) Upon the request of a state or local law enforcement agency,
2licensing authorities shall allow access to or provide information
3contained within the database to assist law enforcement in their
4duties and responsibilities pursuant to this chapter.

5begin insert

begin insertSEC. 37.end insert  

end insert

begin insertSection 19341 of the end insertbegin insertBusiness and Professions Codeend insert
6
begin insert is amended to read:end insert

7

19341.  

The State Department of Public Health shall promulgate
8regulations governing the licensing ofbegin delete cannabis manufacturers and
9testing laboratories.end delete
begin insert manufacturers. The State Department of Public
10Health shall develop standards for the manufacturing and labeling
11of all manufactured medical cannabis products.end insert
Licenses to be
12issued are as follows:

13(a) “Manufacturing level 1,” for manufacturing sites that produce
14medical cannabis products using nonvolatile solvents.

15(b) “Manufacturing level 2,” for manufacturing sites that
16produce medical cannabis products using volatile solvents. The
17State Department of Public Health shall limit the number of
18licenses of this type.

begin delete

19(c) “Testing,” for testing of medical cannabis and medical
20cannabis products. Testing licensees shall have their facilities
21licensed according to regulations set forth by the division. A testing
22licensee shall not hold a license in another license category of this
23chapter and shall not own or have ownership interest in a facility
24licensed pursuant to this chapter.

end delete
25begin insert

begin insertSEC. 38.end insert  

end insert

begin insertSection 19342 of the end insertbegin insertBusiness and Professions Codeend insert
26
begin insert is amended to read:end insert

27

19342.  

(a) For the purposes of testing medical cannabis or
28medical cannabis products, licensees shall use abegin delete licensedend delete testing
29laboratory that has adopted a standard operating procedure using
30methods consistent with general requirementsbegin delete for the competence
31of testing and calibration activities, including sampling, using
32standard methodsend delete
established by the International Organization
33for Standardization, specificallybegin delete ISO/IEC 17020 andend delete ISO/IEC
34begin delete 17025end deletebegin insert 17025,end insert to test medical cannabis and medical cannabis
35begin delete products that are approved by an accrediting bodyend deletebegin insert products. The
36testing laboratory shall be accredited by a bodyend insert
that is a signatory
37to the International Laboratory Accreditation Cooperation Mutual
38Recognition Arrangement.

39(b) An agent of abegin delete licensedend delete testing laboratory shall obtain samples
40according to a statistically valid sampling method for each lot.

P59   1(c) Abegin delete licensedend delete testing laboratory shall analyze samples according
2tobegin delete eitherend deletebegin insert bothend insert of the following:

3(1) begin deleteThe most current version of the cannabis inflorescence
4monograph published by the American Herbal Pharmacopoeia. end delete
begin insertIn
5the final form that the medical cannabis or medical cannabis
6products will be consumed or used, including moisture content
7and other attributes.end insert

8(2) begin deleteScientifically end deletebegin insertA scientifically end insertvalidbegin delete methodology that is
9demonstrably equal or superior to paragraph (1), in the opinion of
10the accrediting body.end delete
begin insert methodology, as determined by the bureau.end insert

11(d) If a test result falls outside the specifications authorized by
12law or regulation, thebegin delete licensedend delete testing laboratory shall follow a
13standard operating procedure to confirm or refute the original
14result.

15(e) Abegin delete licensedend delete testing laboratory shall destroy the remains of
16the sample of medical cannabis or medical cannabis product upon
17completion of the analysis.

begin insert

18
(f) The State Department of Public Health and the Department
19of Pesticide Regulation shall provide assistance to the bureau in
20 developing regulations, as requested by the bureau.

end insert
21begin insert

begin insertSEC. 39.end insert  

end insert

begin insertSection 19343 of the end insertbegin insertBusiness and Professions Codeend insert
22
begin insert is amended to read:end insert

23

19343.  

Abegin delete licensedend delete testing laboratory shall notbegin delete handle, test, or
24analyze medical cannabis or medical cannabis productsend delete
begin insert be licensed
25by the bureauend insert
unless thebegin delete licensed testingend delete laboratory meets all of
26the following:

begin delete

27(a) Is registered by the State Department of Public Health.

end delete
begin delete

28(b) Is independent from all other persons and entities involved
29in the medical cannabis industry.

end delete
begin insert

30
(a) A testing laboratory shall not hold a license in another
31license category under this chapter and shall not own or have an
32ownership interest in any other entity or premises licensed under
33a different category pursuant to this chapter.

end insert
begin delete

34(c)

end delete

35begin insert(b)end insert Follows the methodologies, ranges, and parameters that are
36contained in the scope of the accreditation for testing medical
37cannabis or medical cannabis products. The testingbegin delete labend deletebegin insert laboratoryend insert
38 shall also comply with any other requirements specified by the
39
begin delete State Department of Public Health.end deletebegin insert bureau.end insert

begin delete

40(d)

end delete

P60   1begin insert(c)end insert Notifies thebegin delete State Department of Public Healthend deletebegin insert bureauend insert within
2one business day after the receipt of notice of any kind that its
3 accreditation has been denied, suspended, or revoked.

begin delete

4(e)

end delete

5begin insert(d)end insert Has established standard operating procedures that provide
6for adequate chain of custody controls for samples transferred to
7thebegin delete licensedend delete testing laboratory for testing.

8begin insert

begin insertSEC. 40.end insert  

end insert

begin insertSection 19344 of the end insertbegin insertBusiness and Professions Codeend insert
9
begin insert is amended to read:end insert

10

19344.  

(a) Abegin delete licensedend delete testing laboratory shall issue a certificate
11of analysis for each lot, with supporting data, to report both of the
12following:

13(1) Whether the chemical profile of the lot conforms to the
14specifications of the lot for compounds, including, but not limited
15to, all of thebegin delete following:end deletebegin insert following, unless limited through regulation
16by the bureau:end insert

17(A) Tetrahydrocannabinol (THC).

18(B) Tetrahydrocannabinolic Acid (THCA).

19(C) Cannabidiol (CBD).

20(D) Cannabidiolic Acid (CBDA).

21(E)  begin deleteThe terpenes described in the most current version of the
22cannabis inflorescence monograph published by the American
23Herbal Pharmacopoeia. end delete
begin insertTerpenes required by the bureau in a
24regulation.end insert

25(F) Cannabigerol (CBG).

26(G) Cannabinol (CBN).

27(H) Any other compoundsbegin insert or contaminantsend insert required by thebegin delete State
28Department of Public Health.end delete
begin insert bureau.end insert

29(2) That the presence of contaminants does not exceed the levels
30
begin delete that are the lesser of either the most current version of the American
31Herbal Pharmacopoeia monograph or the State Department of
32Public Health. For purposes of this paragraph, contaminants
33includes, but is not limited to, all of the following:end delete
begin insert set by the
34bureau. In setting the levels, the bureau shall consider the
35American Herbal Pharmacopoeia monograph, guidelines set by
36the Department of Pesticide Regulation pursuant to subdivision
37(b) of Section 19332, and any other relevant sources.end insert

38(A) Residual solvent or processing chemicals.

39(B) Foreign material, including, but not limited to, hair, insects,
40or similar or related adulterant.

P61   1(C) Microbiologicalbegin delete impurity, including total aerobic microbial
2count, total yeast mold count, P. aeruginosa, aspergillus spp., s.
3aureus, aflatoxin B1, B2, G1, or G2, or ochratoxin A.end delete
begin insert end insertbegin insertimpurities
4as identified by the bureau in regulation.end insert

begin delete

5(D) Whether the batch is within specification for odor and
6appearance.

end delete

7(b) Residual levels of volatile organic compounds shall be below
8the lesser of either the specifications set by the United States
9Pharmacopeia (U.S.P. Chapter 467) or those set by thebegin delete State
10Department of Public Health.end delete
begin insert bureau.end insert

11begin insert

begin insertSEC. 41.end insert  

end insert

begin insertSection 19345 of the end insertbegin insertBusiness and Professions Codeend insert
12
begin insert is amended to read:end insert

13

19345.  

(a) Except as provided in this chapter, abegin delete licensedend delete testing
14laboratory shall not acquire or receive medical cannabis or medical
15cannabis products except from abegin delete licensed facilityend deletebegin insert licenseeend insert in
16accordance with this chapter, and shall not distribute, sell, deliver,
17transfer, transport, or dispense medical cannabis or medical
18cannabis products, frombegin delete whichend deletebegin insert the licensed premisesend insert the medical
19cannabis or medical cannabis products were acquired or received.
20All transfer or transportation shall be performed pursuant to a
21specified chain of custody protocol.

22(b) Abegin delete licensedend delete testing laboratory may receive and test samples
23of medical cannabis or medical cannabis products from a qualified
24patient or primary caregiver only if he or she presents his or her
25valid recommendation for cannabis for medical purposes from a
26physician. Abegin delete licensedend delete testing laboratory shall not certify samples
27from a qualified patient or caregiver for resale or transfer to another
28party or licensee. All tests performed by abegin delete licensedend delete testing
29laboratory for a qualified patient or caregiver shall be recorded
30with the name of the qualified patient or caregiver and the amount
31of medical cannabis or medical cannabis product received.

32(c) Thebegin delete State Department of Public Healthend deletebegin insert bureauend insert shall develop
33proceduresbegin insert relatedend insert tobegin delete ensure thatend deletebegin insert all of the following:end insert

34begin insert(1)end insertbegin insertend insertbegin insertEnsuring thatend insert testing ofbegin insert medicalend insert cannabisbegin insert and medical
35cannabis productsend insert
occurs prior to delivery to dispensaries or any
36otherbegin delete business, specify howend deletebegin insert business.end insert

37begin insert(2)end insertbegin insertend insertbegin insertSpecifying howend insert often licensees shall testbegin insert medicalend insert cannabis
38andbegin delete that the cost of testing shall be borne by the licensed
39cultivators, and require destructionend delete
begin insert medical cannabis products.end insert

P62   1begin insert(3)end insertbegin insertend insertbegin insertRequiring the destructionend insert of harvested batches whose testing
2samples indicate noncompliance with health and safety standards
3begin delete promulgated by the State Department of Public Health,end deletebegin insert required
4by state law,end insert
unless remedial measures can bring thebegin insert medicalend insert
5 cannabisbegin insert or medical cannabis productsend insert into compliance with
6quality assurance standards asbegin delete promulgated by the State Department
7of Public Health.end delete
begin insert specified by state law.end insert

8(d) begin deleteThe State Department of Public Health shall establish a
9licensing fee, and laboratories shall pay a fee to be licensed.
10Licensing fees shall not exceed the reasonable regulatory cost of
11the licensing activities. end delete
begin insertCultivators and manufacturers shall pay
12all costs related to and associated with the testing of medical
13cannabis and medical cannabis products required by this chapter.end insert

14begin insert

begin insertSEC. 42.end insert  

end insert

begin insertSection 19347 of the end insertbegin insertBusiness and Professions Codeend insert
15
begin insert is amended to read:end insert

16

19347.  

(a) Prior to deliverybegin insert byend insert or sale at a dispensary, medical
17cannabisbegin insert and medical cannabisend insert products shall be labeled and inbegin delete a
18tamper-evident package. Labels and packagesend delete
begin insert tamper proof
19packaging end insert
begin insertand shall include a unique identifier, as prescribed by
20the Department of Food and Agriculture, for the purpose of
21identifying and tracking medical cannabis or medical cannabis
22productsend insert
begin insert. Packagesend insert of medical cannabisbegin insert and medical cannabisend insert
23 products shall meet the following requirements:

24(1) Medical cannabis packages and labels shall not be made to
25be attractive to children.

26(2) All medical cannabisbegin insert and medical cannabisend insert product labels
27shall include the following information, prominently displayed
28and in a clear and legible font:

29(A) begin deleteManufacture end deletebegin insertCultivation and manufacture end insertdate and source.

30(B) The statement “SCHEDULE I CONTROLLED
31SUBSTANCE.”

32(C) The statement “KEEP OUT OF REACH OF CHILDREN
33AND ANIMALS” in bold print.

34(D) The statement “FOR MEDICAL USE ONLY.”

35(E) The statement “THE INTOXICATING EFFECTS OF THIS
36PRODUCT MAY BE DELAYED BY UP TO TWO HOURS.”

37(F) The statement “THIS PRODUCT MAY IMPAIR THE
38ABILITY TO DRIVE OR OPERATE MACHINERY. PLEASE
39USE EXTREME CAUTION.”

P63   1(G) For packages containing only dried flower, the net weight
2of medical cannabis in the package.

3(H) A warning if nuts or other known allergens arebegin delete used.end deletebegin insert used
4in the manufacturing of the medical cannabis products.end insert

5(I) List ofbegin insert ingredients andend insert pharmacologically active ingredients,
6including, but not limited to, tetrahydrocannabinol (THC),
7cannabidiol (CBD), and other cannabinoid content, thebegin delete THCend deletebegin insert THC,
8CBD,end insert
and other cannabinoid amount in milligrams per serving,
9servings per package, and thebegin delete THCend deletebegin insert THC, CBD,end insert and other
10cannabinoid amount in milligrams for the package total.

11(J) Clear indication, in bold type, that the product contains
12medical cannabis.

begin delete

13(K) Identification of the source and date of cultivation and
14manufacture.

end delete
begin delete

15(L)

end delete

16begin insert(K)end insert Any other requirement set by thebegin delete bureau.end deletebegin insert bureau or the
17State Department of Public Health.end insert

begin delete

18(M)

end delete

19begin insert(L)end insert Information associated with the unique identifier issued by
20the Department of Food and Agriculture pursuant to Section
2111362.777 of the Health and Safety Code.

begin insert

22
(M) All manufactured and edible medical cannabis products
23shall be sold only in special packaging constructed to be
24child-resistant unless otherwise exempted by regulation.

end insert

25(b) Only generic food names may be used to describe edible
26medical cannabis products.

27begin insert

begin insertSEC. 43.end insert  

end insert

begin insertSection 19347.1 is added to the end insertbegin insertBusiness and
28Professions Code
end insert
begin insert, to read:end insert

begin insert
29

begin insert19347.1.end insert  

(a) The State Department of Public Health may issue
30a citation, which may contain an order of abatement and an order
31to pay an administrative fine assessed by the department where
32the licensee is in violation of this chapter or any regulation adopted
33pursuant to it.

34
(1) Citations shall be in writing and shall describe with
35particularity the nature of the violation, including specific
36reference to the provision of law determined to have been violated.

37
(2) Whenever appropriate, the citation shall contain an order
38of abatement fixing a reasonable time for abatement of the
39violation.

P64   1
(3) In no event shall the administrative fine assessed by the State
2Department of Public Health exceed five thousand dollars ($5,000)
3for each violation, unless a different fine amount is expressly
4provided by this chapter. In assessing a fine, the licensing authority
5shall give due consideration to the appropriateness of the amount
6of the fine with respect to factors such as the gravity of the
7violation, the good faith of the licensee, and the history of previous
8violations.

9
(4) A citation issued or a fine assessed pursuant to this section
10shall notify the licensee that if the licensee desires a hearing to
11contest the finding of a violation, that hearing shall be requested
12by written notice to the State Department of Public Health within
1330 days of the date of issuance of the citation or fine. If a hearing
14is not requested pursuant to this section, payment of any fine shall
15not constitute an admission of the violation charged. Hearings
16shall be held pursuant to Chapter 5 (commencing with Section
1711500) of Part 1 of Division 3 of Title 2 of the Government Code.

18
(5) Failure of a licensee to pay a fine within 30 days of the date
19of assessment of the fine, unless assessment of the fine or the
20citation is being appealed, may result in further legal action being
21taken by the State Department of Public Health. If a licensee does
22not contest a citation or pay the fine, the full amount of the fine
23shall be added to the fee for renewal of the license. A license shall
24not be renewed without payment of the renewal fee, including the
25amount of the fine.

26
(6) A citation may be issued without the assessment of an
27administrative fine.

28
(7) The State Department of Public Health may limit the
29assessment of administrative fines to only particular violations of
30the chapter and establish any other requirement for implementation
31of the citation system by regulation.

32
(b) Notwithstanding any other law, if a fine is paid to satisfy an
33assessment based on the finding of a violation, payment of the fine
34shall be represented as satisfactory resolution of the matter for
35purposes of public disclosure.

end insert
36begin insert

begin insertSEC. 44.end insert  

end insert

begin insertSection 19347.2 is added to the end insertbegin insertBusiness and
37Professions Code
end insert
begin insert, to read:end insert

begin insert
38

begin insert19347.2.end insert  

The State Department of Public Health may, in
39addition to the administrative citation system authorized by Section
4019347.1, also establish by regulation a similar system for the
P65   1issuance of an administrative citation to an unlicensed person who
2is acting in the capacity of a licensee under the jurisdiction of the
3State Department of Public Health as pertains to this chapter. The
4administrative citation system authorized by this section shall meet
5the requirements of Section 19347.1 and shall not be applied to
6an unlicensed person who is otherwise exempt from the licensing
7provisions of this chapter. The establishment of an administrative
8citation system for unlicensed activity does not preclude the use
9of other enforcement statutes for unlicensed activities at the
10discretion of the State Department of Public Health.

end insert
11begin insert

begin insertSEC. 45.end insert  

end insert

begin insertSection 19347.3 is added to the end insertbegin insertBusiness and
12Professions Code
end insert
begin insert, to read:end insert

begin insert
13

begin insert19347.3.end insert  

In determining whether to exercise its discretion when
14enforcing this chapter, the State Department of Public Health may
15consider whether the public interest will be adequately served in
16the circumstances by a suitable written notice or warning. The
17State Department of Public Health may also require licensees to
18provide it with a written plan of correction and correct a violation
19within a timeframe the State Department of Public Health deems
20necessary under the circumstances.

end insert
21begin insert

begin insertSEC. 46.end insert  

end insert

begin insertSection 19347.4 is added to the end insertbegin insertBusiness and
22Professions Code
end insert
begin insert, to read:end insert

begin insert
23

begin insert19347.4.end insert  

The State Department of Public Health may notify
24the public regarding any medical cannabis product when the State
25Department of Public Health deems it necessary for the protection
26of the health and safety of the consumer or for his or her protection
27from fraud.

end insert
28begin insert

begin insertSEC. 47.end insert  

end insert

begin insertSection 19347.5 is added to the end insertbegin insertBusiness and
29Professions Code
end insert
begin insert, to read:end insert

begin insert
30

begin insert19347.5.end insert  

(a) A medical cannabis product is misbranded if it
31is any of the following:

32
(1) Manufactured, packed, or held in this state in a
33manufacturing site not duly licensed as provided in this chapter.

34
(2) Its labeling is false or misleading in any particular.

35
(3) Its labeling or packaging does not conform to the
36requirements of Section 19347 or any other labeling or packaging
37requirement established pursuant to this chapter.

38
(b) It is unlawful for any person to manufacture, sell, deliver,
39hold, or offer for sale a medical cannabis product that is
40 misbranded.

P66   1
(c) It is unlawful for any person to misbrand a medical cannabis
2product.

3
(d) It is unlawful for any person to receive in commerce a
4medical cannabis product that is misbranded or to deliver or offer
5for delivery any such medical cannabis product.

end insert
6begin insert

begin insertSEC. 48.end insert  

end insert

begin insertSection 19347.6 is added to the end insertbegin insertBusiness and
7Professions Code
end insert
begin insert, to read:end insert

begin insert
8

begin insert19347.6.end insert  

(a) A medical cannabis product is adulterated if it
9is any of the following:

10
(1) It has been produced, prepared, packed, or held under
11insanitary conditions in which it may have become contaminated
12with filth or in which it may have been rendered injurious.

13
(2) It consists in whole or in part of any filthy, putrid, or
14decomposed substance.

15
(3) It bears or contains any poisonous or deleterious substance
16that may render it injurious to users under the conditions of use
17suggested in the labeling or under conditions as are customary or
18usual.

19
(4) It bears or contains a substance that is restricted or limited
20under this chapter or regulations promulgated pursuant to this
21chapter and the level of substance in the product exceeds the limits
22specified pursuant to this chapter or in regulation.

23
(5) Its concentrations differ from, or its purity or quality is
24below, that which it is represented to possess.

25
(6) The methods, facilities, or controls used for its manufacture,
26packing, or holding do not conform to or are not operated or
27administered in conformity with practices established by
28regulations adopted under this chapter to ensure that the medical
29cannabis product meets the requirements of this chapter as to
30safety and has the concentrations it purports to have and meets
31the quality and purity characteristics that it purports or is
32represented to possess.

33
(7) Its container is composed, in whole or in part, of any
34poisonous or deleterious substance that may render the contents
35injurious to health.

36
(8) It is an edible cannabis product and any substance has been
37mixed or packed with it after testing by a testing laboratory so as
38to reduce its quality or concentration or if any substance has been
39substituted, wholly or in part, for the edible cannabis product.

P67   1
(b) It is unlawful for a person to manufacture, sell, deliver, hold,
2or offer for sale a medical cannabis product that is adulterated.

3
(c) It is unlawful for any person to adulterate a medical cannabis
4product.

5
(d) It is unlawful for any person to receive in commerce a
6medical cannabis product that is adulterated or to deliver or
7proffer for delivery any such medical cannabis product.

end insert
8begin insert

begin insertSEC. 49.end insert  

end insert

begin insertSection 19347.7 is added to the end insertbegin insertBusiness and
9Professions Code
end insert
begin insert, to read:end insert

begin insert
10

begin insert19347.7.end insert  

(a) When the State Department of Public Health has
11evidence that a medical cannabis product is adulterated or
12misbranded, the department shall notify the manufacturer.

13
(b) The State Department of Public Health may order a
14manufacturer to immediately cease distribution of a medical
15cannabis product and recall the product if the department
16determines both of the following:

17
(1) The manufacture, distribution, or sale of the medical
18cannabis product creates or poses an immediate and serious threat
19to human life or health.

20
(2) Other procedures available to the State Department of Public
21Health to remedy or prevent the occurrence of the situation would
22result in an unreasonable delay.

23
(c) The State Department of Public Health shall provide the
24manufacturer an opportunity for an informal proceeding on the
25matter, as determined by the department, within five days, on the
26actions required by the order and on why the product should not
27be recalled. Following the proceeding, the order shall be affirmed,
28modified, or set aside as determined appropriate by the State
29Department of Public Health.

30
(d) The State Department of Public Health’s powers set forth
31in this section expressly include the power to order movement,
32segregation, isolation, or destruction of medical cannabis products,
33as well as the power to hold those products in place.

34
(e) If the State Department of Public Health determines it is
35necessary, it may issue the mandatory recall order and may use
36all appropriate measures to obtain reimbursement from the
37manufacturer for any and all costs associated with these orders.
38All funds obtained by the State Department of Public Health from
39these efforts shall be deposited into a fee account specific to the
40State Department of Public Health, to be established in the Medical
P68   1Cannabis Regulation and Safety Act Fund, and will be available
2for use by the department upon appropriation by the legislature.

3
(f) It is unlawful for any person to move or allow to be moved
4a medical cannabis product subject to an order issued pursuant
5to this section unless that person has first obtained written
6authorization from the State Department of Public Health.

end insert
7begin insert

begin insertSEC. 50.end insert  

end insert

begin insertSection 19347.8 is added to the end insertbegin insertBusiness and
8Professions Code
end insert
begin insert, to read:end insert

begin insert
9

begin insert19347.8.end insert  

(a) Whenever the State Department of Public Health
10finds or has probable cause to believe that any medical cannabis
11product is adulterated or misbranded within the meaning of this
12chapter or the sale of the medical cannabis product would be in
13violation of this chapter, the department shall affix to the medical
14cannabis product, or component thereof, a tag or other appropriate
15marking. The State Department of Public Health shall give notice
16that the medical cannabis product is, or is suspected of being,
17adulterated or misbranded, or the sale of which would be in
18violation of this chapter and has been embargoed and that no
19person shall remove or dispose of the medical cannabis product
20by sale or otherwise until permission for removal or disposal is
21given by the State Department of Public Health or a court.

22
(b) It is unlawful for any person to remove, sell, or dispose of
23a detained or embargoed medical cannabis product without written
24permission of the State Department of Public Health or a court.
25A violation of this subdivision is subject to a fine of not more than
26ten thousand dollars ($10,000).

27
(c) If the adulteration or misbranding can be corrected by
28proper labeling or additional processing of the medical cannabis
29product and all of the provisions of this chapter can be complied
30with, the claimant or owner may request the State Department of
31Public Health to remove the tag or other marking. If, under the
32supervision of the State Department of Public Health, the
33adulteration or misbranding has been corrected, the department
34may remove the tag or other marking.

35
(d) When the State Department of Public Health finds that a
36medical cannabis product that is embargoed is not adulterated,
37misbranded, or whose sale is not otherwise in violation of this
38chapter, the State Department of Public Health may remove the
39tag or other marking.

P69   1
(e) The medical cannabis product may be destroyed by the owner
2pursuant to a corrective action plan approved by the State
3Department of Public Health and under the supervision of the
4department. The medical cannabis product shall be destroyed at
5the expense of the claimant or owner.

6
(f) A proceeding for condemnation of any medical cannabis
7product under this section shall be subject to appropriate notice
8to, and the opportunity for a hearing with regard to, the person
9affected in accordance with Section 19308.

10
(g) Upon a finding by the administrative law judge that the
11medical cannabis product is adulterated, misbranded, or whose
12sale is otherwise in violation of this chapter, the administrative
13law judge may direct the medical cannabis product to be destroyed
14at the expense of the claimant or owner. The administrative law
15judge may also direct a claimant or owner of the affected medical
16cannabis product to pay fees and reasonable costs, including the
17costs of storage and testing, incurred by the bureau or the
18Department of Public Health in investigating and prosecuting the
19action taken pursuant to this section.

20
(h) When, under the supervision of the State Department of
21Public Health, the adulteration or misbranding has been corrected
22by proper labeling or additional processing of the medical
23cannabis and medical cannabis product and when all provisions
24of this chapter have been complied with, and after costs, fees, and
25expenses have been paid, the State Department of Public Health
26may release the embargo and remove the tag or other marking
27and the medical cannabis shall no longer be held for sale in
28violation of this chapter.

29
(i) The State Department of Public Health may condemn any
30medical cannabis product under provisions of this chapter. The
31medical cannabis product shall be destroyed at the expense of the
32claimant or owner.

end insert
33begin insert

begin insertSEC. 51.end insert  

end insert

begin insertSection 19350 of the end insertbegin insertBusiness and Professions Codeend insert
34
begin insert is amended to read:end insert

35

19350.  

Each licensing authority shall establish a scale of
36application, licensing, and renewal fees, based upon the cost of
37enforcing this chapter, as follows:

38(a) Each licensing authority shall charge each licensee a
39licensure and renewal fee, as applicable. The licensure and renewal
40fee shall be calculated to cover the costs of administering this
P70   1chapter. The licensure fee may vary depending upon the varying
2costs associated with administering the various regulatory
3requirements of this chapter as they relate to the nature and scope
4of the different licensure activities, including, but not limited to,
5the track and trace program required pursuant to Section 19335,
6but shall not exceed the reasonable regulatory costs to the licensing
7authority.

8(b) The total fees assessed pursuant to this chapter shall be set
9at an amount that will fairly and proportionately generate sufficient
10total revenue to fully cover the total costs of administering this
11chapter.

12(c) All license fees shall be set on a scaled basis by the licensing
13authority, dependent on the size of the business.begin insert License fees shall
14cover the costs of administering the track and trace program
15managed by the Department of Food and Agriculture, as identified
16in Article 7.5 (commencing with Section 19335).end insert

17(d) The licensing authority shall deposit all fees collected in a
18fee account specific to that licensing authority, to be established
19in the Medicalbegin delete Marijuanaend deletebegin insert Cannabisend insert Regulation and Safety Act
20Fund. Moneys in the licensing authority fee accounts shall be used,
21upon appropriation of the Legislature, by the designated licensing
22authority for the administration of this chapter.

23begin insert

begin insertSEC. 52.end insert  

end insert

begin insertSection 19351 of the end insertbegin insertBusiness and Professions Codeend insert
24
begin insert is amended to read:end insert

25

19351.  

(a) The Medicalbegin delete Marijuanaend deletebegin insert Cannabisend insert Regulation and
26Safety Act Fund is hereby established within the State Treasury.
27Moneys in the fund shall be available upon appropriation by the
28Legislature. Notwithstanding Section 16305.7 of the Government
29Code, the fund shall include any interest and dividends earned on
30the moneys in the fund.

31(b) (1) Funds for the establishment and support of the regulatory
32activities pursuant to this chapter shall be advanced as a General
33Fund or special fund loan, and shall be repaid by the initial
34proceeds from fees collected pursuant to this chapter or any rule
35or regulation adopted pursuant to this chapter, by January 1, 2022.
36Should the initial proceeds from fees not be sufficient to repay the
37loan, moneys from the Medical Cannabis Fines and Penalties
38Account shall be made available to the bureau, by appropriation
39of the Legislature, to repay the loan.

P71   1(2) Funds advanced pursuant to this subdivision shall be
2appropriated to the bureau, which shall distribute the moneys to
3the appropriate licensing authorities, as necessary to implement
4the provisions of this chapter.

5(3) The Director of Finance may provide an initial operating
6loan from the General Fund to the Medicalbegin delete Marijuanaend deletebegin insert Cannabisend insert
7 Regulation and Safety Act Fund that does not exceed ten million
8dollars ($10,000,000).

9(c) Except as otherwise provided, all moneys collected pursuant
10to this chapter as a result of fines or penalties imposed under this
11chapter shall be deposited directly into the Medicalbegin delete Marijuanaend delete
12begin insert Cannabisend insert Fines and Penalties Account, which is hereby established
13within the fund, and shall be available, upon appropriation by the
14Legislature to the bureau, for the purposes of funding the
15enforcement grant program pursuant to subdivision (d).

16(d) (1) The bureau shall establish a grant program to allocate
17moneys from the Medical Cannabis Fines and Penalties Account
18to state and local entities for the following purposes:

19(A) To assist with medical cannabis regulation and the
20enforcement of this chapter and other state and local laws
21applicable to cannabis activities.

22(B) For allocation to state and local agencies and law
23enforcement to remedy the environmental impacts of cannabis
24cultivation.

25(2) The costs of the grant program under this subdivision shall,
26upon appropriation by the Legislature, be paid for with moneys in
27the Medical Cannabis Fines and Penalties Account.

28(3) The grant program established by this subdivision shall only
29be implemented after the loan specified in this section is repaid.

30begin insert

begin insertSEC. 53.end insert  

end insert

begin insertSection 19360 of the end insertbegin insertBusiness and Professions Codeend insert
31
begin insert is amended to read:end insert

32

19360.  

(a) A person engaging inbegin insert commercialend insert cannabis activity
33without a license and associated unique identifiers required by this
34chapter shall be subject to civil penalties of up to twice the amount
35of the license fee for each violation, and the department, state or
36local authority, or court may order the destruction of medical
37cannabis associated with that violation.begin insert A violator shall be
38responsible for the cost of the destruction of medical cannabis
39associated with his or her violation, in addition to any amount
40covered by a bond required as a condition of licensure.end insert
Each day
P72   1of operation shall constitute a separate violation of this section.
2All civil penalties imposed and collected pursuant to this section
3begin insert by a licensing authorityend insert shall be deposited into thebegin delete Marijuana
4Production and Environment Mitigation Fundend delete
begin insert end insertbegin insertMedical Cannabis
5Fines and Penalties Accountend insert
established pursuant to Sectionbegin delete 31013
6of the Revenue and Taxation Code.end delete
begin insert 19351.end insert

7(b) If an action for civil penalties is brought against a licensee
8pursuant to this chapter by the Attorneybegin delete General,end deletebegin insert General on behalf
9of the people,end insert
the penalty collected shall be deposited into the
10begin delete General Fund.end deletebegin insert Medical Cannabis Fines and Penalties Account.end insert If
11the action is brought by a district attorney or county counsel, the
12penalty collected shall be paid to the treasurer of the county in
13which the judgment was entered. If the action is brought by a city
14attorney or city prosecutor, the penalty collected shall be paid to
15the treasurer of the city or city and county in which the judgment
16was entered. If the action is brought by a city attorney and is
17adjudicated in a superior court located in the unincorporated area
18or another city in the same county, the penalty shall be paid
19one-half to the treasurer of the city in which the complaining
20attorney has jurisdiction and one-half to the treasurer of the county
21in which the judgment is entered.

22(c) Notwithstanding subdivision (a), criminal penalties shall
23continue to apply to an unlicensed person or entity engaging in
24cannabis activity in violation of this chapter, including, but not
25limited to, those individuals covered under Section 11362.7 of the
26Health and Safety Code.

27begin insert

begin insertSEC. 54.end insert  

end insert

begin insertSection 2154 of the end insertbegin insertElections Codeend insertbegin insert is amended to
28read:end insert

29

2154.  

In the event that the county elections official receives
30an affidavit of registration, executed under penalty of perjury, that
31does not include portions of the information for which space is
32provided, the county elections official shall apply the following
33rebuttable presumptions:

34(a) If no middle name or initial is shown, it shall be presumed
35that none exists.

36(b) If no party preference is shown, it shall be presumed that
37the affiant has declined to disclose a party preference.begin insert The county
38elections official shall designate the affiant’s party preference as
39“Unknown” on a voter registration index under Article 5
P73   1(commencing with Section 2180) and the affiant shall otherwise
2be treated as a “No Party Preference” voter.end insert

3(c) If no execution date is shown, it shall be presumed that the
4affidavit was executed on or before the 15th day prior to the
5election, provided that (1) the affidavit is received by the county
6elections official on or before the 15th daybegin delete prior toend deletebegin insert beforeend insert the
7election, or (2) the affidavit is postmarked on or before the 15th
8daybegin delete prior toend deletebegin insert beforeend insert the election and received by mail by the county
9elections official.

10(d) If the affiant fails to identify his or her state of birth within
11the United States, it shall be presumed that the affiant was born in
12a state or territory of the United States if the birthplace of the
13affiant is shown as “United States,” “U.S.A.,” or other recognizable
14 term designating the United States. The affiant’s failure to furnish
15his or her place of birth shall not preclude his or her affidavit of
16registration from being deemed complete.

17begin insert

begin insertSEC. 55.end insert  

end insert

begin insertSection 2265 of the end insertbegin insertElections Codeend insertbegin insert is amended to
18read:end insert

19

2265.  

(a)  The records of a person designated in paragraph (1)
20of subdivision (b) of Section 2263 shall constitute a completed
21affidavit of registration and the Secretary of State shall register
22the person to vote, unless any of the following conditions is
23satisfied:

24(1) The person’s records, as described in Section 2263, reflect
25that he or she affirmatively declined to become registered to vote
26during a transaction with the Department of Motor Vehicles.

27(2) The person’s records, as described in Section 2263, do not
28reflect that he or she has attested to meeting all voter eligibility
29requirements specified in Section 2101.

30(3) The Secretary of State determines that the person is ineligible
31to vote.

32(b) begin delete(1)end deletebegin deleteend deleteIf a person who is registered to vote pursuant to this
33chapter does not provide a party preference, his or her party
34preference shall be designated as “Unknown”begin insert on a voter
35registration index under Article 5 (commencing with Section 2180)
36of Chapter 2,end insert
and he or she shallbegin insert otherwiseend insert be treated as a “No
37Party Preference” voter.

begin delete

38(2) A person whose party preference is designated as
39“Unknown” pursuant to this subdivision shall not be counted for
40purposes of determining the total number of voters registered on
P74   1the specified day preceding an election, as required by subdivision
2(b) of Section 5100 and subdivision (c) of Section 5151.

end delete
3begin insert

begin insertSEC. 56.end insert  

end insert

begin insertSection 5100 of the end insertbegin insertElections Codeend insertbegin insert is amended to
4read:end insert

5

5100.  

A party is qualified to participate in a primary election
6under any of the following conditions:

7(a) (1) At the last preceding gubernatorial primary election, the
8sum of the votes cast for all of the candidates for an office voted
9on throughout the state who disclosed a preference for that party
10on the ballot was at least 2 percent of the entire vote of the state
11for that office.

12(2) Notwithstanding paragraph (1), a party may inform the
13Secretary of State that it declines to have the votes cast forbegin delete anyend deletebegin insert aend insert
14 candidate who has disclosed that party as his or her party preference
15on the ballot counted toward the 2-percent qualification threshold.
16If the party wishes to have votes forbegin delete anyend deletebegin insert aend insert candidate not counted
17in support of its qualification under paragraph (1), the party shall
18notify the secretary in writing of that candidate’s name by the
19seventh daybegin delete prior toend deletebegin insert beforeend insert the gubernatorial primary election.

20(b) begin insert(1)end insertbegin insertend insert On or before the 135th day before a primary election,
21it appears to the Secretary of State, as a result of examining and
22totaling the statement of voters and their declared political
23preference transmitted to him or her by the county elections
24officials, that voters equal in number to at least 0.33 percent of the
25total number of voters registered on the 154th day before the
26primary election have declared their preference for that party.

begin insert

27
(2) A person whose party preference is designated as
28“Unknown” pursuant to Section 2154 or 2265 shall not be counted
29for purposes of determining the total number of voters registered
30on the specified day preceding the election under paragraph (1).

end insert

31(c) On or before the 135th day before a primary election, there
32is filed with the Secretary of State a petition signed by voters, equal
33in number to at least 10 percent of the entire vote of the state at
34the last preceding gubernatorial election, declaring that they
35represent a proposed party, the name of which shall be stated in
36the petition, which proposed party those voters desire to have
37participate in that primary election. This petition shall be circulated,
38signed, and verified, and the signatures of the voters on it shall be
39certified to and transmitted to the Secretary of State by the county
40elections officials substantially as provided for initiative petitions.
P75   1Each page of the petition shall bear a caption in 18-point boldface
2type, which caption shall be the name of the proposed party
3followed by the words “Petition to participate in the primary
4election.”

5begin insert

begin insertSEC. 57.end insert  

end insert

begin insertSection 5151 of the end insertbegin insertElections Codeend insertbegin insert is amended to
6read:end insert

7

5151.  

A party is qualified to participate in a presidential general
8election under any of the following conditions:

9(a) The party qualified to participate and participated in the
10presidential primary election preceding the presidential general
11election pursuant to Section 5100.

12(b) (1) At the last preceding gubernatorial primary election, the
13sum of the votes cast for all of the candidates for an office voted
14on throughout the state who disclosed a preference for that party
15on the ballot was at least 2 percent of the entire vote of the state
16for that office.

17(2) Notwithstanding paragraph (1), a party may inform the
18Secretary of State that it declines to have the votes cast forbegin delete anyend deletebegin insert aend insert
19 candidate who has disclosed that party as his or her party preference
20on the ballot counted toward the 2-percent qualification threshold.
21If the party wishes to have votes forbegin delete anyend deletebegin insert aend insert candidate not counted
22in support of its qualification under paragraph (1), the party shall
23notify the secretary in writing of that candidate’s name by the
24seventh daybegin delete prior toend deletebegin insert beforeend insert the gubernatorial primary election.

25(c) begin insert(1)end insertbegin insertend insert If on or before the 102nd day before a presidential
26general election, it appears to the Secretary of State, as a result of
27examining and totaling the statement of voters and their declared
28political preference transmitted to him or her by the county
29elections officials, that voters equal in number to at least 0.33
30percent of the total number of voters registered on the 123rd day
31before the presidential general election have declared their
32preference for that party.

begin insert

33
(2) A person whose party preference is designated as
34“Unknown” pursuant to Section 2154 or 2265 shall not be counted
35for purposes of determining the total number of voters registered
36on the specified day preceding the election under paragraph (1).

end insert

37(d) On or before the 135th day before a presidential general
38election, there is filed with the Secretary of State a petition signed
39by voters, equal in number to at least 10 percent of the entire vote
40of the state at the last preceding gubernatorial election, declaring
P76   1that they represent a proposed party, the name of which shall be
2stated in the petition, which proposed party those voters desire to
3have participate in that presidential general election. This petition
4shall be circulated, signed, and verified, and the signatures of the
5voters on it shall be certified to and transmitted to the Secretary
6of State by the county elections officials substantially as provided
7for initiative petitions. Each page of the petition shall bear a caption
8in 18-point boldface type, which caption shall be the name of the
9proposed party followed by the words “Petition to participate in
10the presidential general election.”

11begin insert

begin insertSEC. 58.end insert  

end insert

begin insertSection 1602 of the end insertbegin insertFish and Game Codeend insertbegin insert is amended
12to read:end insert

13

1602.  

(a) An entity may not substantially divert or obstruct
14the natural flow of, or substantially change or use any material
15from the bed, channel, or bank of, any river, stream, or lake, or
16deposit or dispose of debris, waste, or other material containing
17crumbled, flaked, or ground pavement where it may pass into any
18river, stream, or lake, unless all of the following occur:

19(1) The department receives written notification regarding the
20activity in the manner prescribed by the department. The
21notification shall include, but is not limited to, all of the following:

22(A) A detailed description of the project’s location and a map.

23(B) The name, if any, of the river, stream, or lake affected.

24(C) A detailed project description, including, but not limited to,
25construction plans and drawings, if applicable.

26(D) A copy of any document prepared pursuant to Division 13
27(commencing with Section 21000) of the Public Resources Code.

28(E) A copy of any other applicable local, state, or federal permit
29or agreement already issued.

30(F) Any other information required by the department.

31(2) The department determines the notification is complete in
32accordance with Chapter 4.5 (commencing with Section 65920)
33of Division 1 of Title 7 of the Government Code, irrespective of
34 whether the activity constitutes a development project for the
35purposes of that chapter.

36(3) The entity pays the applicable fees, pursuant to Section 1609.

37(4) One of the following occurs:

begin delete

38(A)

end delete
begin delete end deletebegin delete

39(i) The

end delete

P77   1begin insert(A)end insertbegin insertend insertbegin insert(i)end insertbegin insertend insertbegin insertTheend insert department informs the entity, in writing, that the
2activity will not substantially adversely affect an existing fish or
3wildlife resource, and that the entity may commence the activity
4without an agreement, if the entity conducts the activity as
5described in the notification, including any measures in the
6notification that are intended to protect fish and wildlife resources.

7(ii) Each region of the department shall log the notifications of
8activities where no agreement is required. The log shall list the
9date the notification was received by the department, a brief
10description of the proposed activity, and the location of the activity.
11Each item shall remain on the log for one year. Upon written
12request by any person, a regional office shall send the log to that
13person monthly for one year. A request made pursuant to this
14clause may be renewed annually.

15(B) The department determines that the activity may
16substantially adversely affect an existing fish or wildlife resource
17and issues a final agreement to the entity that includes reasonable
18measures necessary to protect the resource, and the entity conducts
19the activity in accordance with the agreement.

20(C) A panel of arbitrators issues a final agreement to the entity
21in accordance with subdivision (b) of Section 1603, and the entity
22conducts the activity in accordance with the agreement.

23(D) The department does not issue a draft agreement to the
24entity within 60 days from the date notification is complete, and
25the entity conducts the activity as described in the notification,
26including any measures in the notification that are intended to
27protect fish and wildlife resources.

28(b) (1) If an activity involves the routine maintenance and
29operation of water supply, drainage, flood control, or waste
30treatment and disposal facilities, notice to and agreement with the
31department shall not be required after the initial notification and
32agreement, unless the department determines either of the
33following:

34(A) The work described in the agreement has substantially
35changed.

36(B) Conditions affecting fish and wildlife resources have
37substantially changed, and those resources are adversely affected
38by the activity conducted under the agreement.

39(2) This subdivision applies only if notice to, and agreement
40with, the department was attained prior to January 1, 1977, and
P78   1the department has been provided a copy of the agreement or other
2proof of the existence of the agreement that satisfies the
3department, if requested.

begin insert

4
(c) (1) Notwithstanding subdivision (a), an entity shall not be
5required to obtain an agreement with the department pursuant to
6this chapter for activities authorized by a license or renewed
7license for cannabis cultivation issued by the Department of Food
8and Agriculture for the term of the license or renewed license if
9all of the following occur:

end insert
begin insert

10
(A) The entity submits all of the following to the department:

end insert
begin insert

11
(i) The written notification described in paragraph (1) of
12subdivision (a).

end insert
begin insert

13
(ii) A copy of the license or renewed license for cannabis
14cultivation issued by the Department of Food and Agriculture that
15includes the requirements specified in subdivisions (d), (e), and
16(f) of Section 19332.2 of the Business and Professions Code.

end insert
begin insert

17
(iii) The fee specified in paragraph (3) of subdivision (a).

end insert
begin insert

18
(B) The department determines in its sole discretion that
19compliance with the requirements specified in subdivisions (d),
20(e), and (f) of Section 19332.2 of the Business and Professions
21Code that are included in the license will adequately protect
22existing fish and wildlife resources that may be substantially
23adversely affected by the cultivation without the need for additional
24measures that the department would include in a draft streambed
25alteration agreement in accordance with Section 1603.

end insert
begin insert

26
(C) The department notifies the entity in writing that the
27exemption applies to the cultivation authorized by the license or
28renewed license.

end insert
begin insert

29
(2) The department shall notify the entity in writing whether the
30 exemption in paragraph (1) applies to the cultivation authorized
31by the license or renewed license within 60 days from the date that
32the notification is complete and the fee has been paid.

end insert
begin insert

33
(3) If an entity receives an exemption pursuant to this
34subdivision and fails to comply with any of the requirements
35described in subdivision (d), (e), or (f) of Section 19332.2 of the
36Business and Professions Code that are included in the license,
37the failure shall constitute a violation under this section, and the
38department shall notify the Department of Food and Agriculture
39of any enforcement action taken.

end insert
begin delete

40(c)

end delete

P79   1begin insert(d)end insert It is unlawful for any person to violate this chapter.

2begin insert

begin insertSEC. 59.end insert  

end insert

begin insertSection 1617 is added to the end insertbegin insertFish and Game Codeend insertbegin insert,
3to read:end insert

begin insert
4

begin insert1617.end insert  

(a) The department may adopt regulations establishing
5the requirements and procedure for the issuance of a general
6agreement in a geographic area for a category or categories of
7activities related to cannabis cultivation.

8
(b) A general agreement adopted by the department subsequent
9to adoption of regulations under this section shall be in lieu of an
10individual agreement described in subparagraph (B) of paragraph
11(4) of subdivision (a) of Section 1602.

12
(c) Subparagraph (D) of paragraph (4) of subdivision (a) of
13Section 1602 and all other time periods to process agreements
14specified in this chapter do not apply to the issuance of a general
15agreement adopted by the department pursuant to this section.

16
(d) The department general agreement issued by the department
17pursuant to this section is a final agreement and is not subject to
18Section 1603 or 1604.

19
(e) The department shall charge a fee for a general agreement
20adopted by the department under this section in accordance with
21Section 1609.

22
(f) Regulations adopted pursuant to this section, and any
23amendment thereto, shall not be subject to Division 13
24(commencing with Section 21000) of the Public Resources Code.

end insert
25begin insert

begin insertSEC. 60.end insert  

end insert

begin insertSection 12025.2 of the end insertbegin insertFish and Game Codeend insertbegin insert is
26amended to read:end insert

27

12025.2.  

The director or his or her designee may issue a
28complaint to any person or entity in accordance with Section 1055
29of the Water Code alleging a violationbegin delete ofend deletebegin insert for which liability may
30be imposed underend insert
Section 1052begin insert or 1847end insert of the Water Code that
31harms fish and wildlife resources. The complaint is subject to the
32substantive and procedural requirements set forth in Section 1055
33of the Water Code, and the department shall be designated a party
34to any proceeding before the State Water Resources Control Board
35regarding a complaint filed pursuant to this section.

36begin insert

begin insertSEC. 61.end insert  

end insert

begin insertSection 12029 of the end insertbegin insertFish and Game Codeend insertbegin insert is amended
37to read:end insert

38

12029.  

(a) The Legislature finds and declares all of the
39following:

P80   1(1) The environmental impacts associated withbegin delete marijuanaend delete
2begin insert cannabisend insert cultivation have increased, and unlawful water diversions
3forbegin delete marijuanaend deletebegin insert cannabisend insert irrigation have a detrimental effect on fish
4and wildlife and their habitat, which are held in trust by the state
5for the benefit of the people of the state.

6(2) The remediation of existingbegin delete marijuanaend deletebegin insert cannabisend insert cultivation
7sites is often complex and the permitting of these sites requires
8greater department staff time and personnel expenditures. The
9potential forbegin delete marijuanaend deletebegin insert cannabisend insert cultivation sites to significantly
10impact the state’s fish and wildlife resources requires immediate
11action on the part of the department’s lake and streambed alteration
12permitting staff.

13(b) In order to address unlawful water diversions and other
14violations of the Fish and Game Code associated withbegin delete marijuanaend delete
15begin insert cannabisend insert cultivation, the department shall establish the watershed
16enforcement program to facilitate the investigation, enforcement,
17and prosecution of these offenses.

18(c) The department, in coordination with the State Water
19Resources Controlbegin delete Board,end deletebegin insert Board and the Department of Food and
20Agriculture,end insert
shall establish a permanent multiagency task force to
21address the environmental impacts ofbegin delete marijuanaend deletebegin insert cannabisend insert
22 cultivation. The multiagency task force, to the extent feasible and
23subject to availablebegin delete Resources,end deletebegin insert resources,end insert shall expand its
24enforcement efforts on a statewide level to ensure the reduction
25of adverse impacts ofbegin delete marijuanaend deletebegin insert cannabisend insert cultivation on fish and
26wildlife and their habitats throughout the state.

27(d) In order to facilitate the remediation and permitting of
28begin delete marijuanaend deletebegin insert cannabisend insert cultivation sites, the departmentbegin delete shallend deletebegin insert mayend insert
29 adopt regulations to enhance the fees on any entity subject to
30Section 1602 forbegin delete marijuanaend deletebegin insert cannabisend insert cultivation sites that require
31remediation. The fee schedule established pursuant to this
32subdivision shall not exceed the fee limits in Section 1609.

33begin insert

begin insertSEC. 62.end insert  

end insert

begin insertSection 37104 is added to the end insertbegin insertFood and Agricultural
34Code
end insert
begin insert, to read:end insert

begin insert
35

begin insert37104.end insert  

Notwithstanding Section 19300.5 of the Business and
36Professions Code, butter purchased from a licensed milk products
37plant or retail location that is subsequently infused or mixed with
38medical cannabis at the premises or location that is not subject to
39licensing as a milk product plant is exempt from the provisions of
40this division.

end insert
P81   1begin insert

begin insertSEC. 63.end insert  

end insert

begin insertSection 52452 of the end insertbegin insertFood and Agricultural Codeend insertbegin insert is
2amended to read:end insert

3

52452.  

(a)  Except as otherwise provided in Section 52454,
4each container of agricultural seed that is for sale or sold within
5this state for sowingbegin delete purposes, unless the sale is an occasional sale
6of seed grain by the producer of the seed grain to his or her
7neighbor for use by the purchaser within the county of production,end delete

8begin insert purposesend insert shall bear upon it or have attached to it in a conspicuous
9place a plainly written or printed label or tag in the English
10language that includes all of the following information:

11(1) The commonly accepted name of the kind, kind and variety,
12or kind and type of each agricultural seed component in excess of
135 percent of the whole, and the percentage by weight of each. If
14the aggregate of agricultural seed components, each present in an
15amount not exceeding 5 percent of the whole, exceeds 10 percent
16of the whole, each component in excess of 1 percent of the whole
17shall be named together with the percentage by weight of each. If
18more than one component is required to be named, the names of
19all components shall be shown in letters of the same type and size.

20(2) The lot number or other lot identification.

21(3) The percentage by weight of all weed seeds.

22(4) The name and approximate number of each kind of restricted
23noxious weed seed per pound.

24(5) The percentage by weight of any agricultural seed except
25that which is required to be named on the label.

26(6) The percentage by weight of inert matter. If a percentage
27by weight is required to be shown by any provision of this section,
28that percentage shall be exclusive of any substance that is added
29to the seed as a coating and shown on the label as such.

30(7) For each agricultural seed in excess of 5 percent of the
31whole, stated in accordance with paragraph (1), the percentage of
32germination exclusive of hard seed, the percentage of hard seed,
33if present, and the calendar month and year the test was completed
34to determine the percentages. Following the statement of those
35percentages, the additional statement “total germination and hard
36seed” may be stated.

37(8) The name and address of the person who labeled the seed
38or of the person who sells the seed within this state.

begin insert

39
(b) Subdivision (a) does not apply in the following instances:

end insert
begin insert

P82   1
(1) The sale is an occasional sale of seed grain by the producer
2of the seed grain to his or her neighbor for use by the purchaser
3within the county of production.

end insert
begin insert

4
(2) Any cannabis seed, as defined in subdivision (f) of Section
519300.5 of the Business and Professions Code, sold or offered for
6sale in the state.

end insert
begin delete

7(b)

end delete

8begin insert(c)end insert All determinations of noxious weed seeds are subject to
9tolerances and methods of determination prescribed in the
10regulations that are adopted pursuant to this chapter.

begin delete

11(c)

end delete

12begin insert(d)end insert For purposes of this section, “neighbor” means a person
13who lives in close proximity, not to exceed three miles, to another.

14begin insert

begin insertSEC. 64.end insert  

end insert

begin insertSection 15283 is added to the end insertbegin insertGovernment Codeend insertbegin insert, end insert15
immediately following Section 15282begin insert, to read:end insert

begin insert
16

begin insert15283.end insert  

(a) For purposes of this section, “fund” means the
17Public Safety Communications Revolving Fund.

18
(b) The Public Safety Communications Revolving Fund is hereby
19created within the State Treasury. The fund shall be administered
20by the director and shall be used, upon appropriation by the
21Legislature, to pay all costs to the office resulting from this chapter
22or from rendering services to the state or other public agencies,
23which costs include, but are not limited to, costs of employing and
24compensating necessary personnel, expenses such as operating
25or other expenses of the division, and costs associated with
26approved public safety communications projects, and to establish
27reserves. The director, at his or her discretion, may establish
28 segregated, dedicated accounts within the fund.

29
(c) The fund shall consist of all of the following:

30
(1) Revenues from the provision or sale of public safety
31communications services provided for in this chapter or of other
32services rendered by the division.

33
(2) Moneys appropriated and made available by the Legislature
34for the purposes of this chapter.

35
(3) Any other moneys properly credited or made available to
36the division from any other source, including, but not limited to,
37the return from investments of moneys by the Treasurer.

38
(d) Pursuant to Section 11255, the Controller shall, at the
39request of the division and consistent with the annual budget of
40each state department, transfer to the fund any payment authorized
P83   1to be collected by the division from public agencies for the
2division’s services. The division shall notify each affected state
3agency upon requesting the Controller to make any transfer
4pursuant to this subdivision.

5
(e) If the balance remaining in the fund at the end of any fiscal
6year exceeds 25 percent of the portion of the division’s budget for
7that fiscal year that is used for supporting public safety
8communications and other client services, the excess amount shall
9be used to reduce the billing rates for services rendered by the
10office during the following fiscal year.

11
(f) This section shall become operative on July 1, 2016.

end insert
12begin insert

begin insertSEC. 65.end insert  

end insert

begin insertChapter 6.45 (commencing with Section 30035) is
13added to Division 3 of Title 3 of the end insert
begin insertGovernment Codeend insertbegin insert, end insertimmediately
14preceding Chapter 7begin insert, to read:end insert

begin insert

15 

16Chapter  begin insert6.45.end insert Community-Based Transitional Housing
17Program
18

 

19

begin insert30035.end insert  

The Legislature finds and declares all of the following:

20
(a) Upon release from custody, offenders who are incarcerated
21for felony or misdemeanor convictions generally return to their
22communities of last residence.

23
(b) Providing released offenders with transitional housing
24services in tandem with support services that include, but are not
25limited to, employment counseling, job training, continuing
26education, psychological counseling, and substance abuse
27treatment may help these individuals transition into productive
28roles in their communities and reduce the fiscal and operational
29strain of recidivism on state and local law enforcement agencies
30and the courts.

31
(c) Research has found that transitional housing, and related
32support services, can be effective when provided to ex-offenders
33in community-based settings that reflect the environments in which
34they will permanently reside.

35
(d) For a variety of reasons, local agencies charged with land
36use decisions may be reluctant to approve facilities that provide
37released offenders with community-based services similar to those
38described in subdivision (b).

39
(e) It is in the state’s interest to increase the supply of
40transitional housing for ex-offenders. The provision of state grants
P84   1to cities, counties, and cities and counties that agree to approve
2facilities that provide released offenders with community-based
3services can provide incentives to increase the number of those
4facilities, while also providing additional resources to those
5communities.

6

begin insert30035.1.end insert  

(a) There is hereby established the Community-Based
7Transitional Housing Program, to be administered by the
8Department of Finance. As used in this chapter, “program” means
9the Community-Based Transitional Housing Program and
10“department” means the Department of Finance.

11
(b) Eligibility to apply to participate in the program shall be
12limited to cities, counties, and cities and counties.

13
(c) The program shall be funded with moneys appropriated for
14that purpose in the annual Budget Act or other measure.
15Notwithstanding any other law, the encumbrance period for moneys
16appropriated in a budget act or other measure for the program
17shall be three fiscal years.

18

begin insert30035.2.end insert  

In order for a city, county, or city and county to
19receive funds pursuant to the program, the facility for which it has
20approved a conditional use permit or other local entitlement
21pursuant to paragraph (2) of subdivision (a) of Section 30035.3
22shall meet all of the following criteria:

23
(a) The facility shall provide transitional housing for a period
24of not less than 10 years to persons who have been released from
25a state prison or county jail after serving a sentence for one or
26more felony or misdemeanor convictions.

27
(b) The facility shall provide, or contract with another provider
28for, two or more additional services to residents. These services
29may include, but need not necessarily be limited to, life skills
30training, employment counseling, vocational training, continuing
31education, psychological counseling, anger management training,
32substance abuse treatment and counseling, or cognitive behavioral
33therapy.

34
(c) The facility operator, and any entity with which it contracts
35for the provisions of services described in subdivision (b), shall
36be in valid possession of all licenses required by state law and
37local rules, regulations, or ordinances.

38

begin insert30035.3.end insert  

(a) (1) Applications for program funding shall be
39submitted to the department, in the form and manner specified by
P85   1the department, no earlier than October 1, 2016, and no later than
2October 1, 2018.

3
(2) (A) Each application shall be accompanied by a copy of a
4resolution adopted by the county board of supervisors or the city
5council, as applicable, stating that the board or council has
6approved the issuance of a conditional use permit or other local
7entitlement for a facility that meets the criteria specified in Section
830035.2 and that final issuance of the conditional use permit or
9provision of other local entitlement will be provided within the
10three scheduled public meetings of the county board of supervisors
11or city council, as applicable, following the department’s approval
12of the city’s, county’s, or city and county’s application for program
13funds.

14
(B) The conditional use permit or other local entitlement issued
15pursuant to this paragraph shall be valid for a minimum period
16of 10 years from the date of issuance.

17
(C) Failure of the city, county, or city and county to provide
18final issuance of the conditional use permit or other local
19entitlement within the three scheduled public meetings following
20the department’s approval of the city’s, county’s, or city and
21county’s application shall render the department’s approval of
22that application void. The city, county, or city and county shall
23thereafter be permanently ineligible to submit any future
24application for funding under the program.

25
(b) Each application for program funding shall detail all of the
26following:

27
(1) The amount of program funding requested.

28
(2) The number of offenders for whom the facility will provide
29services.

30
(3) The types of offenders for whom the facility will provide
31services.

32
(4) The types of services that the facility will provide to
33offenders.

34
(5) The purposes for which the city, county, or city and county
35will use the program funds for which it has applied.

36
(6) The purposes for which the facility will use program funds
37provided to it by the applicant city, county, or city and county.

38
(7) (A) The facility operator’s past in-state experience with
39operating facilities similar to those for which the application has
40been submitted.

P86   1
(B) The information required by this paragraph shall include
2detailed information describing each instance in which the facility
3operator was found to be in violation of any state law or local
4rule, regulation, or ordinance, including any applicable state or
5local licensing requirements.

6
(8) The facility operator’s program performance measurement
7in reducing recidivism and assisting ex-offenders in transitioning
8back into society.

9
(9) (A) A list of all permitted facilities within the applicant
10city’s, county’s, or city and county’s jurisdiction that, in a
11residential setting, provide transitional housing services,
12 psychological counseling, or cognitive behavioral therapy.

13
(B) The number of persons residing in each facility described
14in subparagraph (A) and the types of services provided to those
15residents.

16
(C) The number of persons residing in each facility described
17in subparagraph (A) who are on probation or parole.

18
(10) An agreement, as a condition of receiving program funds,
19that the applicant city, county, or city and county will allow the
20conditional use permit or other local entitlement to remain valid
21throughout the 10-year period for which the conditional use permit
22or other local entitlement required pursuant to paragraph (2) of
23subdivision (a) is valid.

24
(11) Two contact persons at the applicant city, county, or city
25and county and two contact persons at the facility provider who
26will be tasked with responding to questions regarding the facility
27if the application for program funding is approved. The applicant
28city, county, or city and county shall promptly notify the department
29of any changes made to the contact information required by this
30paragraph.

31

begin insert30035.4.end insert  

(a) The department shall approve or deny each
32application received pursuant to Section 30035.3 within 90 days
33of receipt and, if the application is approved, shall determine the
34amount of funding to be provided to each applicant city, county,
35or city and county, subject to subdivision (a) of Section 30035.5.
36The department’s decision to approve or deny an application and
37the determination of the amount of funding to be provided shall
38be final.

39
(b) The criteria specified in paragraphs (1) through (9),
40inclusive, of subdivision (b) of Section 30035.3 shall be the primary
P87   1basis upon which the department determines whether to approve
2or deny an application and the amount of funds to award to an
3applicant city, county, or city and county. The department may
4consider any other criteria it deems appropriate, provided that
5any additional criteria are germane to making an award decision
6and further the purposes of the program.

7
(c) The department shall encourage applicant cities, counties,
8and cities and counties to match the requested program funds, to
9the greatest extent possible, using local funds. In the event that
10the department determines that, based on the criteria specified in
11subdivision (b), two or more applications are equal in merit, the
12department shall give priority to those applicant cities, counties,
13or cities and counties that agree to provide the largest amount of
14local matching funds proportionate to the amount of program
15funds for which they have applied.

16
(d) If the department approves an application and receives
17subsequent notification that the applicant city, county, or city and
18county has provided final issuance of a conditional use permit or
19other local entitlement as required by paragraph (2) of subdivision
20(a) of Section 30035.3, the Director of Finance, or his or her
21designee, shall direct the State Controller to remit to the applicant
22city, county, or city and county the amount of program funding
23approved by the department from those funds designated for that
24purpose in any budget act or other measure.

25

begin insert30035.5.end insert  

(a) The department shall award to a city, county, or
26city and county, the application of which the department has
27approved pursuant to Section 30035.4, up to two million dollars
28($2,000,000). An applicant city, county, or city and county shall
29specify in its application the amount for which they are applying,
30as required by paragraph (1) of subdivision (b) of Section 30035.3.

31
(b) Of the funds provided to an applicant pursuant to this
32section, 60 percent shall be retained by the city, county, or city
33and county that provided the conditional use permit or other local
34entitlement for the facility and 40 percent shall be provided by the
35city, county, or city and county to the facility operator.

36
(1) A city, county, or city and county may use program funds,
37and any matching funds provided pursuant to subdivision (c) of
38Section 30035.4, for the following purposes:

P88   1
(A) Discretionary law enforcement services, including efforts
2to enhance public safety in the vicinity of the facility for which
3program funding is provided.

4
(B) Community outreach efforts that seek to address the
5concerns of residents and property owners within the one-quarter
6mile radius of the facility for which program funding is provided.

7
(C) Any other community-based activities that the board of
8supervisors or city council, as applicable, believes will contribute
9to improved community relations regarding the facility for which
10program funding is provided.

11
(2) Facility operators may use program funds provided by the
12applicant city, county, or city and county for the following
13purposes:

14
(A) Providing facility residents with the services specified in
15the approved application for program funding.

16
(B) Enhancing the security of the facility and its premises.

17
(C) Community outreach and communications.

18
(D) Start-up costs for the operation of the facility.

19
(3) While the program is intended to primarily target offenders
20released from state prison or county jail, nothing in this chapter
21shall be construed as prohibiting the program from serving other
22individuals in the community who may benefit from the program’s
23services.

24
(c) No later than August 1, 2017, and each subsequent August
251 for which the program is in effect, each participating city, county,
26or city and county shall report the following to the department in
27the form and manner specified by the department:

28
(1) Program funds and matching funds received by the
29participating city, county, or city and county.

30
(2) A description of the use of the program funds and matching
31funds.

32
(3) A list of permitted facilities within the city’s, county’s, or
33city and county’s jurisdiction.

34
(d) No later than August 1, 2017, and each subsequent August
351 for which the program is in effect, each facility operator receiving
36program funds from a participating city, county, or city and county
37shall report the following to the department in the form and manner
38specified by the department:

39
(1) Program funds and matching funds received by the facility
40operator.

P89   1
(2) The number of ex-offenders currently receiving program
2services.

3
(3) A description of the services provided.

4
(4) The number of ex-offenders who, over the course of the year
5preceding the report, received treatment and transitioned back
6into society.

7
(5) The facility operator’s program performance measurement
8of recidivism reduction.

9

begin insert30035.6.end insert  

(a) No later than November 1, 2017, and each
10subsequent November 1 until November 1, 2020, the department
11shall submit a report to the Joint Legislative Budget Committee
12detailing all of the following for the preceding fiscal year:

13
(1) The number of applications for program funding received
14by the department.

15
(2) The number of applications for program funding approved
16and denied by the department.

17
(3) The name of each city, county, or city and county receiving
18program funds and the number of ex-offenders for which each
19recipient city, county, or city and county has received program
20funds.

21
(4) The name of each city, county, or city and county whose
22application for program funding was denied and the number of
23ex-offenders for which each denied application requested program
24funding.

25
(b) A report submitted pursuant to subdivision (a) shall be
26submitted in compliance with Section 9795.

27

begin insert30035.7.end insert  

(a) Of the amount appropriated in the annual Budget
28Act or other measure for the program, the department’s Office of
29State Audits and Evaluations may use up to five hundred thousand
30dollars ($500,000) to conduct a review of the program to determine
31its effectiveness in providing services to offenders released from
32state prison or county jail.

33
(b) The department’s Office of State Audits and Evaluations
34shall initiate its review of the program on July 1, 2018. The
35department shall provide a copy of the review to the Joint
36Legislative Budget Committee no later than May 1, 2019. The copy
37of the review shall be submitted in compliance with Section 9795.

38
(c) Cities, counties, cities and counties, and facility operators
39that receive program funds shall agree, as a condition of receiving
40program funds, to cooperate fully with the review conducted
P90   1pursuant this section by the department’s Office of State Audits
2and Evaluations.

3

begin insert30035.8.end insert  

Any action by the department to adopt and update
4instructions to any state or local agency for the purpose of carrying
5out the department’s obligations pursuant to this chapter
6constitutes a department action to adopt and update instructions
7for the preparation, development, or administration of the state
8budget pursuant to Section 11357 and is exempt from the
9rulemaking provisions of the Administrative Procedure Act
10(Chapter 3.5 (commencing with Section 11340) of Part 1 of
11Division 3 of Title 2).

end insert
12begin insert

begin insertSEC. 66.end insert  

end insert

begin insertSection 11362.769 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
13amended to read:end insert

14

11362.769.  

Indoor and outdoor medicalbegin delete marijuanaend deletebegin insert cannabisend insert
15 cultivation shall be conducted in accordance with state and local
16begin delete laws related to land conversion, grading, electricity usage, water
17usage, water quality, woodland and riparian habitat protection,
18agricultural discharges, and similar matters.end delete
begin insert laws.end insert State agencies,
19including, but not limited to, thebegin insert Department of Food and
20Agriculture, theend insert
State Board of Forestry and Fire Protection, the
21Department of Fish and Wildlife, the State Water Resources
22Control Board, the California regional water quality control boards,
23and traditional state law enforcement agencies shall address
24environmental impacts of medicalbegin delete marijuanaend deletebegin insert cannabisend insert cultivation
25and shall coordinate, when appropriate, with cities and counties
26and their law enforcement agencies in enforcement efforts.

27begin insert

begin insertSEC. 67.end insert  

end insert

begin insertSection 11362.775 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
28amended to read:end insert

29

11362.775.  

(a) Subject to subdivision (b), qualified patients,
30persons with valid identification cards, and the designated primary
31caregivers of qualified patients and persons with identification
32cards, who associate within the State of California in order
33collectively or cooperatively to cultivate cannabis for medical
34purposes, shall not solely on the basis of that fact be subject to
35state criminal sanctions under Section 11357, 11358, 11359, 11360,
3611366, 11366.5, or 11570.

37(b) This section shall remain in effect only until one year after
38the Bureau of Medicalbegin delete Marijuanaend deletebegin insert Cannabisend insert Regulation posts a
39notice on its Internet Web site that the licensing authorities have
40commenced issuing licenses pursuant to the Medicalbegin delete Marijuanaend delete
P91   1begin insert Cannabisend insert Regulation and Safety Act (Chapter 3.5 (commencing
2with Section 19300) of Division 8 of the Business and Professions
3
begin delete Code), and is repealed upon issuance of licenses.end deletebegin insert Code).end insert

begin insert

4
(c) This section is repealed one year after the date upon which
5the notice is posted pursuant to subdivision (b).

end insert
6begin insert

begin insertSEC. 68.end insert  

end insert

begin insertSection 11362.777 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
7amended to read:end insert

8

11362.777.  

(a) The Department of Food and Agriculture shall
9establish a Medical Cannabis Cultivation Program to be
10administered by the secretary and, except as specified in
11subdivision (c), shall administer this section as it pertains to the
12begin insert commercialend insert cultivation of medicalbegin delete marijuana.end deletebegin insert cannabis.end insert For
13purposes of this section and Chapter 3.5 (commencing with Section
1419300) of Division 8 of the Business and Professions Code,
15medical cannabis is an agricultural product.

16(b) (1) A person or entity shall not cultivate medicalbegin delete marijuanaend delete
17begin insert cannabisend insert without first obtaining both of the following:

18(A) A license, permit, or other entitlement, specifically
19permitting cultivation pursuant to these provisions, from the city,
20county, or city and county in which the cultivation will occur.

21(B) A state license issued by the department pursuant to this
22section.

23(2) A person or entity shall not submit an application for a state
24licensebegin delete issued by the departmentend delete pursuant to this section unless
25that person or entity has received a license, permit, or other
26entitlement, specifically permitting cultivation pursuant to these
27provisions, from the city, county, or city and county in which the
28cultivation will occur.

29(3) A person or entity shall not submit an application for a state
30licensebegin delete issued by the departmentend delete pursuant to this section if the
31proposed cultivation ofbegin delete marijuanaend deletebegin insert cannabisend insert will violate the
32provisions of any local ordinance or regulation, or if medical
33begin delete marijuanaend deletebegin insert cannabisend insert is prohibited by the city, county, or city and
34county in which the cultivation is proposed to occur, either
35expressly or otherwise under principles of permissive zoning.

36(c) (1) Except as otherwise specified in this subdivision, and
37without limiting any other local regulation, a city, county, or city
38and county, through its current or future land use regulations or
39ordinance, may issue or deny a permit to cultivate medical
40begin delete marijuanaend deletebegin insert cannabisend insert pursuant to this section. A city, county, or city
P92   1and county may inspect the intended cultivation site for suitability
2before issuing a permit. After the city, county, or city and county
3has approved a permit, the applicant shall apply for a state medical
4begin delete marijuanaend deletebegin insert cannabisend insert cultivation license from the department. A
5locally issued cultivation permit shall only become active upon
6licensing by the department and receiving final local approval. A
7person shall not cultivate medicalbegin delete marijuanaend deletebegin insert cannabisend insert before
8obtaining both a permit from the city, county, or city and county
9and a state medicalbegin delete marijuanaend deletebegin insert cannabisend insert cultivation license from
10the department.

11(2) A city, county, or city and county that issues or denies
12conditional licenses to cultivate medicalbegin delete marijuanaend deletebegin insert cannabisend insert
13 pursuant to this section shall notify the department in a manner
14prescribed by the secretary.

15(3) A city, county, or city and county’s locally issued conditional
16permit requirements must be at least as stringent as the
17department’s state licensing requirements.

18(d) (1) The secretary may prescribe, adopt, and enforce
19regulations relating to the implementation, administration, and
20enforcement of this part, including, but not limited to, applicant
21requirements, collections, reporting, refunds, and appeals.

22(2) The secretary may prescribe, adopt, and enforce any
23emergency regulations as necessary to implement this part. Any
24emergency regulation prescribed, adopted, or enforced pursuant
25to this section shall be adopted in accordance with Chapter 3.5
26(commencing with Section 11340) of Part 1 of Division 3 of Title
272 of the Government Code, and, for purposes of that chapter,
28including Section 11349.6 of the Government Code, the adoption
29of the regulation is an emergency and shall be considered by the
30Office of Administrative Law as necessary for the immediate
31preservation of the public peace, health and safety, and general
32welfare.

33(3) The secretary may enter into a cooperative agreement with
34a county agricultural commissioner to carry out the provisions of
35this chapter, including, but not limited to, administration,
36investigations, inspections, licensing and assistance pertaining to
37the cultivation of medicalbegin delete marijuana.end deletebegin insert cannabis.end insert Compensation
38under the cooperative agreement shall be paid from assessments
39and fees collected and deposited pursuant to this chapter and shall
P93   1provide reimbursement to the county agricultural commissioner
2for associated costs.

3(e) (1) The department, in consultation with, but not limited
4to, the Bureau of Medicalbegin delete Marijuanaend deletebegin insert Cannabisend insert Regulation, the
5State Water Resources Control Board, and the Department of Fish
6and Wildlife, shall implement a unique identification program for
7medicalbegin delete marijuana.end deletebegin insert cannabis.end insert In implementing the program, the
8department shall consider issues, including, but not limited to,
9water use and environmental impacts. In implementing the
10program, the department shall ensurebegin delete that:end deletebegin insert compliance with Section
1119332.2 of the Business and Professions Code.end insert

begin delete

12(A) Individual and cumulative effects of water diversion and
13discharge associated with cultivation do not affect the instream
14flows needed for fish spawning, migration, and rearing, and the
15flows needed to maintain natural flow variability.

end delete
begin delete

16(B) Cultivation will not negatively impact springs, riparian
17wetlands, and aquatic habitats.

end delete

18(2) The department shall establish a program for the
19identification of permitted medicalbegin delete marijuanaend deletebegin insert cannabisend insert plants at
20a cultivation site during the cultivation period. The unique identifier
21shall be attached at the base of each plant. A unique identifier,
22such as, but not limited to, a zip tie, shall be issued for each medical
23begin delete marijuanaend deletebegin insert cannabisend insert plant.

24(A) Unique identifiers will only be issued to those persons
25appropriately licensed by this section.

26(B) Information associated with the assigned unique identifier
27and licensee shall be included in the trace and track program
28specified in Section 19335 of the Business and Professions Code.

29(C) The department may charge a fee to cover the reasonable
30costs of issuing the unique identifier and monitoring, tracking, and
31inspecting each medicalbegin delete marijuanaend deletebegin insert cannabisend insert plant.

32(D) The department may promulgate regulations to implement
33this section.

34(3) The department shall take adequate steps to establish
35protections against fraudulent unique identifiers and limit illegal
36diversion of unique identifiers to unlicensed persons.

37(f) (1) A city, county, or city and county that issues or denies
38begin delete licensesend deletebegin insert licenses, permits, or other entitlementsend insert to cultivate medical
39begin delete marijuanaend deletebegin insert cannabisend insert pursuant to this section shall notify the
40department in a manner prescribed by the secretary.

P94   1(2) Unique identifiers and associated identifying information
2administered by abegin delete city or countyend deletebegin insert city, county, or city and countyend insert
3 shall adhere to the requirements set by the department and be the
4equivalent to those administered by the department.

5(g) This section does not apply to a qualified patient cultivating
6begin delete marijuanaend deletebegin insert cannabisend insert pursuant to Section 11362.5 if the area he or
7she uses to cultivatebegin delete marijuanaend deletebegin insert cannabisend insert does not exceed 100
8square feet and he or she cultivatesbegin delete marijuanaend deletebegin insert cannabisend insert for his or
9her personal medical use and does not sell, distribute, donate, or
10providebegin delete marijuanaend deletebegin insert cannabisend insert to any other person or entity. This
11section does not apply to a primary caregiver cultivatingbegin delete marijuanaend delete
12begin insert cannabisend insert pursuant to Section 11362.5 if the area he or she uses to
13cultivatebegin delete marijuanaend deletebegin insert cannabisend insert does not exceed 500 square feet and
14he or she cultivatesbegin delete marijuanaend deletebegin insert cannabisend insert exclusively for the personal
15medical use of no more than five specified qualified patients for
16whom he or she is the primary caregiver within the meaning of
17Section 11362.7 and does not receive remuneration for these
18activities, except for compensation provided in full compliance
19with subdivision (c) of Section 11362.765. For purposes of this
20section, the area used to cultivatebegin delete marijuanaend deletebegin insert cannabisend insert shall be
21measured by the aggregate area of vegetative growth of live
22begin delete marijuanaend deletebegin insert cannabisend insert plants on the premises. Exemption from the
23requirements of this section does not limit or prevent a city, county,
24or city and county from exercising its police authority under
25Section 7 of Article XI of the California Constitution.

26begin insert

begin insertSEC. 69.end insert  

end insert

begin insertSection 44559.11 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
27amended to read:end insert

28

44559.11.  

(a) It is the intent of the Legislature to ensure that
29the state, through the authority, may make maximum, efficient use
30of capital access programs enacted by all federal and state agencies,
31as well as funding available from any governmental program whose
32goals may be advanced by providing funding to the Capital Access
33Loan Program.

34(b) In furtherance of this intent, and notwithstanding any other
35provision of this article, when the contributions required pursuant
36to Section 44559.4 are entirely funded by abegin delete sourceend deletebegin insert public or
37quasi-public entityend insert
other than thebegin delete authority,end deletebegin insert authority’s fee revenue
38under Sections 44525 and 44548,end insert
the authority may, by regulation
39adopted pursuant to subdivision (b) of Sectionbegin delete 44520,end deletebegin insert 44520 or
40subdivision (e) of Section 44559.14,end insert
establish alternate provisions
P95   1as necessary to enable the authority to participate in the alternative
2funding sourcebegin delete program.end deletebegin insert program, including implementing loan
3loss reserve programs to benefit any individual person engaged
4in qualifying activities in furtherance of the public or quasi-public
5entity’s policy objectives in the state that require financing.end insert

6begin insert

begin insertSEC. 70.end insert  

end insert

begin insertSection 44559.14 is added to the end insertbegin insertHealth and Safety
7Code
end insert
begin insert, to read:end insert

begin insert
8

begin insert44559.14.end insert  

(a) (1) It is the intent of the Legislature in enacting
9the act adding this section to create and fund a program to assist
10residential property owners and small business owners in
11seismically retrofitting residences and small businesses with a
12priority on soft-story buildings and unreinforced brick and concrete
13buildings. It is not the intent of the Legislature to assist the physical
14expansion of small businesses and residences.

15
(2) The Legislature hereby establishes the California Seismic
16Safety Capital Access Loan Program. The program shall cover
17losses on qualified loans by participating lenders to qualified
18residential property owners or qualified small businesses for
19eligible projects, as specified under this section. The program shall
20be administered by the California Pollution Control Financing
21Authority and follow the terms and conditions for the Capital
22Access Loan Program in this article with the additional program
23requirements specified under this section.

24
(b) For purposes of this section, unless the context requires
25otherwise, the following words and terms shall have the following
26meanings:

27
(1) “Seismic retrofit construction” means alteration performed
28on or after January 1, 2017, of a qualified building or its
29components to substantially mitigate seismic damage. “Seismic
30retrofit construction” includes, but is not limited to, all of the
31following:

32
(A) Anchoring the structure to the foundation.

33
(B) Bracing cripple walls.

34
(C) Bracing hot water heaters.

35
(D) Installing automatic gas shutoff valves.

36
(E) Repairing or reinforcing the foundation to improve the
37integrity of the foundation against seismic damage.

38
(F) Anchoring fuel storage.

P96   1
(G) Installing an earthquake-resistant bracing system for
2mobilehomes that are registered with the Department of Housing
3and Community Development.

4
(2) “Eligible costs” means the costs paid or incurred on or after
5January 1, 2017, for an eligible project, including any engineering
6or architectural design work necessary to permit or complete the
7eligible project less the amount of any grant provided by a public
8entity for the eligible project. “Eligible costs” do not include costs
9paid or incurred for any of the following:

10
(A) Maintenance, including abatement of deferred or inadequate
11maintenance, and correction of violations unrelated to the seismic
12retrofit construction.

13
(B) Repair, including repair of earthquake damage.

14
(C) Seismic retrofit construction required by local building
15codes as a result of addition, repair, building relocation, or change
16of use or occupancy.

17
(D) Other work or improvement required by local building or
18planning codes as a result of the intended seismic retrofit
19construction.

20
(E) Rent reductions or other associated compensation,
21compliance actions, or other related coordination involving the
22qualified residential property owner or qualified small business
23and any other party, including a tenant, insurer, or lender.

24
(F) Replacement of existing building components, including
25equipment, except as needed to complete the seismic retrofit
26construction.

27
(G) Bracing or securing nonpermanent building contents.

28
(H) The offset of costs, reimbursements, or other costs
29transferred from the qualified residential property owner or
30qualified small business to others.

31
(3) “Eligible project” means seismic retrofit construction that
32is necessary to ensure that the qualified building is capable of
33substantially mitigating seismic damage, and the financing
34necessary to pay eligible costs of the project.

35
(4) “Qualified building” means a building that is certified by
36the appropriate local building code enforcement authority for the
37jurisdiction in which the building is located as hazardous and in
38danger of collapse in the event of a catastrophic earthquake.

39
(5) “Qualified loan” means a loan or portion of a loan as
40defined in subdivision (j) of Section 44559.1, where the proceeds
P97   1of the loan or portion of the loan are limited to the eligible costs
2for an eligible project under this program, and where the loan or
3portion of the loan does not exceed two hundred fifty thousand
4dollars ($250,000).

5
(6) “Qualified small business” means a business referred to in
6subdivisions (i) and (m) of Section 44559.1 that owns and occupies,
7or intends to occupy, a qualified building for the operation of the
8business.

9
(7) “Qualified residential property owner” means either an
10owner and occupant of a residential building that is a qualified
11building or a qualified small business that owns one or more
12residential buildings, including a multiunit housing building, that
13is a qualified building.

14
(c) (1) The California Seismic Safety Capital Access Loan
15Program Fund is established in the State Treasury and shall be
16administered by the authority pursuant to Sections 44548 and
1744549 for this program. For purposes of this section, the references
18in Sections 44548 and 44549 to “small business” shall include
19“qualified residential property owner,” as defined in this section.
20Notwithstanding Section 13340 of the Government Code, all
21moneys in the fund are continuously appropriated to the authority
22for carrying out this section. The authority may divide the fund
23into separate accounts. All moneys accruing to the authority
24pursuant to this section from any source shall be deposited into
25the fund.

26
(2) All moneys in the fund derived from any source shall be held
27in trust for the life of this program, for program expenditures and
28costs of administering this section, as follows:

29
(A) Program expenditures shall include both of the following:

30
(i) Contributions paid by the authority in support of qualified
31loans.

32
(ii) Costs for a qualified expert to validate that the proceeds of
33the loans are eligible costs, as defined under this section.

34
(iii) Reasonable costs to educate the small business community,
35residential property owners, and participating lenders about the
36program, including travel within the state.

37
(B) Administrative expenditures shall be limited to 5 percent of
38the initial appropriation plus 5 percent of all moneys recaptured,
39and shall include all of the following:

40
(i) Personnel costs.

P98   1
(ii) Service and vending contracts, other than program
2expenditures described in subparagraph (A), that are necessary
3to carry out the program.

4
(iii) Other reasonable direct and indirect administrative costs.

5
(3) The authority may direct the Treasurer to invest moneys in
6the fund that are not required for its current needs in the eligible
7securities specified in Section 16430 of the Government Code as
8the authority shall designate. The authority may direct the
9 Treasurer to deposit moneys in interest-bearing accounts in state
10or national banks or other financial institutions having principal
11offices located in the state. The authority may alternatively require
12the transfer of moneys in the fund to the Surplus Money Investment
13Fund for investment pursuant to Article 4 (commencing with
14Section 16470) of Chapter 3 of Part 2 of Division 4 of Title 2 of
15the Government Code. All interest or other increment resulting
16from an investment or deposit shall be deposited into the fund,
17notwithstanding Section 16305.7 of the Government Code. Moneys
18in the fund shall not be subject to transfer to any other fund
19pursuant to any provision of Part 2 (commencing with Section
2016300) of Division 4 of Title 2 of the Government Code, excepting
21the Surplus Money Investment Fund.

22
(d) The authority shall adopt regulations pursuant to Section
2344520 to implement the program, including, but not limited to,
24provisions to:

25
(1) Establish a new loss reserve account for each participating
26lender enrolling loans in this program.

27
(2) Obtain a certification from each participating lender and
28qualified small business or qualified residential property owner
29upon enrollment of a qualified loan that the proceeds of the loan
30will be used for the eligible costs of an eligible project.

31
(3) Contribute an additional incentive from the fund for each
32loan enrolled for a qualified small business or qualified residential
33property owner located in a severely affected community.

34
(4) Restrict the enrollment of a qualified loan in any other
35Capital Access Loan Program for a qualified small business or
36qualified residential property owner offered by the authority as
37long as funds are available for this program.

38
(5) Limit the term of loss coverage for each qualified loan to
39no more than 10 years.

P99   1
(6) Recapture from the loss reserve account the authority’s
2contribution for each enrolled loan upon the maturation of that
3loan or after 10 years from the date of enrollment, whichever
4happens first, to be deposited in the fund and applied to future
5program and administrative expenditures.

6
(e) The authority may adopt regulations relating to residential
7property owner or small business financing as emergency
8regulations in accordance with Chapter 3.5 (commencing with
9Section 11340) of Part 1 of Division 3 of Title 2 of the Government
10Code. For purposes of that Chapter 3.5, including Section 11349.6
11of the Government Code, the adoption of the regulations shall be
12considered by the Office of Administrative Law to be necessary
13for the immediate preservation of the public peace, health and
14safety, and general welfare. The regulations shall be repealed 180
15days after their effective date, unless the adopting authority or
16agency complies with that Chapter 3.5.

end insert
17begin insert

begin insertSEC. 71.end insert  

end insert

begin insertSection 50800.5 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
18amended to read:end insert

19

50800.5.  

(a)  There is hereby created in the State Treasury the
20Emergency Housing and Assistance Fund. Notwithstanding Section
2113340 of the Government Code, all money in the fund is
22continuously appropriated to the department to carry out the
23purposes of this chapter. Any repayments, interest, or new
24appropriations shall be deposited in the fund, notwithstanding
25Section 16305.7 of the Government Code. Money in the fund shall
26not be subject to transfer to any other fund pursuant to any
27provision of Part 2 (commencing with Section 16300) of Division
284 of Title 2 of the Government Code, except to the Surplus Money
29Investment Fund.

30(b)  All moneys in the Emergency Housing and Assistance Fund,
31created pursuant to Section 50800.5 as it existed prior to the
32effective date of the act that adds this chapter, shall be transferred,
33on the effective date of the act that adds this chapter, to the
34Emergency Housing and Assistance Fund created by subdivision
35(a).

36(c)  The department may require the transfer of moneys in the
37Emergency Housing and Assistance Fund to the Surplus Money
38Investment Fund for investment pursuant to Article 4 (commencing
39with Section 16470) of Chapter 3 of Part 2 of Division 4 of Title
402 of the Government Code. All interest, dividends, and pecuniary
P100  1gains from these investments shall accrue to the Emergency
2Housing and Assistance Fund, notwithstanding Section 16305.7
3of the Government Code.

begin insert

4
(d) To the extent funds are made available by the Legislature,
5moneys in the fund may be used for the purposes of Chapter 19
6(commencing with Section 50899.1) of Part 2 of Division 31 of the
7Health and Safety Code.

end insert
8begin insert

begin insertSEC. 72.end insert  

end insert

begin insertChapter 19 (commencing with Section 50899.1) is
9added to Part 2 of Division 31 of the end insert
begin insertHealth and Safety Codeend insertbegin insert, to
10read:end insert

begin insert

11 

12Chapter  begin insert19.end insert California Emergency Solutions Grants
13Program
14

 

15

begin insert50899.1.end insert  

This chapter may be cited as the California
16Emergency Solutions Grants Program.

17

begin insert50899.2.end insert  

The California Emergency Solutions Grants Program
18shall be administered by the California Department of Housing
19and Community Development.

20

begin insert50899.3.end insert  

The following definitions shall apply to all activities
21conducted pursuant to this chapter:

22
(a) “Department” means the California Department of Housing
23and Community Development.

24
(b) “Homelessness” means the same as defined by the United
25States Department of Housing and Urban Development in the
26federal Emergency Solutions Grants Program at Section 576.2 of
27Title 24 of the Code of Federal Regulations.

28
(c) “Continuum of care” means the same as defined by the
29United States Department of Housing and Urban Development at
30Section 586.2 of Title 24 of the Code of Federal Regulations.

31
(d) “Continuum of care service area” means the entire
32geographic area within the boundaries of a continuum of care.

33
(e) “Subrecipient” means an entity that enters into a written
34agreement with the department to implement activities pursuant
35to this chapter.

36
(f) “California ESG Regulations” means the regulations set
37forth in Section 8400 and following of Title 25 of the California
38Code of Regulations, pertaining to the administration of the
39Federal Emergency Shelter Grants Program.

P101  1
(g) “Federal ESG Program” means collectively the California
2ESG Regulations and the federal laws in connection with which
3the California ESG Regulations were adopted, including Title IV
4of the McKinney-Vento Homeless Assistance Act (42 U.S.C. Secs.
511371-11378, incl.), and any amendments thereto, the Homeless
6Emergency Assistance and Rapid Transition to Housing (HEARTH)
7Act of 2009 (42 U.S.C. Secs. 11302-11304, incl. and 11360-11378,
8incl.), and any amendments and any implementing federal
9regulations thereto.

10

begin insert50899.4.end insert  

Funding for the California Emergency Solutions
11Grants Program shall be made available upon appropriation to
12the department for the purpose of addressing the crisis of
13homelessness in California. In furtherance of this purpose, the
14department shall make grants to qualifying subrecipients
15throughout the state to implement activities that address the needs
16of homeless individuals and families and assist them to regain
17stability in permanent housing as quickly as possible. Funded
18activities may include without limitation activities eligible under
19the Federal ESG Program, including (a) engaging homeless
20individuals and families living on the street; (b) operating homeless
21shelters and providing essential services to shelter residents; (c)
22rapidly rehousing homeless individuals and families; and (d)
23preventing families and individuals from becoming homeless. In
24addition, the California Emergency Solutions Grants Program
25may facilitate technical assistance activities to improve the capacity
26of subrecipients and the continuum of care to end homelessness.

27

begin insert50899.5.end insert  

Any moneys appropriated and made available for the
28purposes of this chapter, and all moneys received by the
29department pursuant to this chapter, shall be used for the purposes
30of this chapter, including the administration of the California
31Emergency Solutions Grants Program. The administrative expenses
32of the department in administering the California Emergency
33Solutions Grants Program shall not exceed 5 percent of the funds
34appropriated for the purposes of this chapter. Notwithstanding
35any other provision of law, the department may provide an
36additional amount, not to exceed 5 percent of the moneys
37appropriated and made available for the purposes of this chapter,
38for technical assistance to subrecipients and continuums of care
39to develop, implement, carry out, or improve implementation of
40activities pursuant to this chapter. Notwithstanding any other
P102  1provision of law, the department may also allocate an amount, not
2to exceed 5 percent of the funding provided to a subrecipient, for
3the general administration costs of those subrecipients that are
4cities, counties, or other political subdivisions of the State of
5California, in furthering the purposes of this chapter.

6

begin insert50899.6.end insert  

The California Emergency Solutions Grants Program
7generally will be administered by the department in a manner
8consistent with the Federal ESG Program. However, the
9department may administer the California Emergency Solutions
10Grants Program differently from the Federal ESG Program, and
11include such modifications as the department may determine are
12necessary to address the purposes of this chapter or to improve
13the effectiveness or efficiency of the California Emergency
14Solutions Grants Program, including but not limited to:

15
(a) The participation of all continuum of care service areas
16within California, using a formula distribution that reflects the
17entire continuum of care service area.

18
(b) The modification of formula factors in the Federal ESG
19Program for use in the California Emergency Solutions Grants
20Program.

21

begin insert50899.7.end insert  

The department shall review, adopt, amend, and
22repeal guidelines to implement this chapter. Any guidelines adopted
23to implement this chapter shall not be subject to Chapter 3.5
24(commencing with Section 11340) of Part 1 of Division 3 of Title
252 of the Government Code. In the event of any inconsistency
26between such guidelines or terms and the Federal ESG Program,
27the guidelines shall prevail for the purposes of this chapter.

end insert
28begin insert

begin insertSEC. 73.end insert  

end insert

begin insertSection 50912.5 is added to the end insertbegin insertHealth and Safety
29Code
end insert
begin insert, to read:end insert

begin insert
30

begin insert50912.5.end insert  

There shall be within the agency a director of
31enterprise risk management and compliance appointed by the
32Governor and serving at the pleasure of the executive director of
33the agency. The director of enterprise risk management and
34compliance shall assist in the implementation of processes, tools,
35and systems to identify, assess, measure, manage, monitor, and
36mitigate risks related to the development of new programs or
37changes to existing law or regulations that may result in new or
38increased risk to the agency, as well as other duties as may be
39required by the executive director.

end insert
P103  1begin insert

begin insertSEC. 74.end insert  

end insert

begin insertSection 51341 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
2amended to read:end insert

3

51341.  

The Legislature finds and declares that:

4(a) There is a continuing and urgent need to provide affordable
5mortgage financing to meet the increasingly unfulfilled housing
6needs of citizens of thisbegin delete state, (b) thereend deletebegin insert state.end insert

7begin insert(b)end insertbegin insertend insertbegin insertThereend insert is a need to develop financial mechanisms to make
8homes affordable tobegin delete first-time homebuyers, (c) theend deletebegin insert low- and
9moderate-income buyers who intend to occupy the homes as their
10primary residences.end insert

11begin insert(c)end insertbegin insertend insertbegin insertTheend insert high cost of housing impedes the ability of California
12employers to compete in the national marketplace forbegin delete employees,
13and (d), therefore,end delete
begin insert employees.end insert

begin insert

14
(d) Affordable housing enhances the quality of life for California
15residents and provides fuel for the state’s economic engine.

end insert
begin insert

16
(e) Housing is a critical component of the California economy,
17both as an income producing sector and a principal factor in
18economic development.

end insert
begin insert

19
(f) California’s housing crisis severely impacts families
20struggling to provide safe, stable homes for their children to grow
21and learn and the workers who are the backbone of many of the
22state’s most important industries.

end insert
begin insert

23
(g) The percentage of Californians able to purchase their own
24homes continues to decline.

end insert
begin insert

25
(h) There is a need to streamline the agency’s homeownership
26assistance programs to make them more efficient and effective.

end insert

27begin insert(i)end insertbegin insertend insertbegin insertTherefore,end insert this chapter is enacted to makebegin delete existing tax-exempt
28and taxable bond financing for residential mortgages more
29affordable to California’s first-time homebuyers.end delete
begin insert home purchases
30more affordable to low- and moderate-income Californians seeking
31the opportunity to own and occupy their own homes.end insert

32begin insert

begin insertSEC. 75.end insert  

end insert

begin insertSection 51342 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
33repealed.end insert

begin delete
34

51342.  

This chapter shall be known and may be cited as the
35Roberti-Greene Home Purchase Assistance Program.

end delete
36begin insert

begin insertSEC. 76.end insert  

end insert

begin insertSection 51344 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
37amended and renumbered to read:end insert

38

begin delete51344.end delete
39
begin insert51342.end insert  

begin insert(a)end insertbegin insertend insertThere is herebybegin delete createdend deletebegin insert continuedend insert in the State
40Treasury a Home Purchase Assistance Fund. “Fund,” as used in
P104  1this chapter, means the Home Purchase Assistance Fund.
2Notwithstandingbegin delete the provisions ofend delete Section 13340 of the
3Government Code, all moneys in the fund are continuously
4appropriated to the agency, without regard to fiscal years, for
5expenditure pursuant to this chapter and defrayingbegin delete actualend delete
6 administrative costs of the agency. Notwithstandingbegin delete the provisions
7ofend delete
Section 16305.7 of the Government Code, any interest earned
8or other increment derived from investments made from moneys
9in the fund shall be deposited in the fund.

begin insert

10
(b) On and after July 1, 2016, all of the following shall apply:

end insert
begin insert

11
(1) Any unobligated amounts remaining in any fund established
12for the purposes of Chapter 9 (commencing with Section 51450)
13or Chapter 11 (commencing with Section 51500), including, but
14not limited to, the California Homebuyer’s Downpayment
15Assistance Program, the School Facility Fee Program, and the
16Extra Credit Teacher Program, shall be transferred to the Home
17Purchase Assistance Fund for expenditure by the agency for the
18purposes of this chapter.

end insert
begin insert

19
(2) The agency shall have no obligation to continue
20administering loan programs authorized by Chapter 9
21(commencing with Section 51450) or Chapter 11 (commencing
22with Section 51500).

end insert
begin insert

23
(3) Notwithstanding Section 16305.7 of the Government Code,
24any interest earned, or other increment derived, from investments
25made from moneys transferred to the fund pursuant to paragraph
26(1), and any loan receivables, repayments made, or other sums
27accruing to the agency pursuant to Chapter 9 (commencing with
28Section 51450) or Chapter 11 (commencing with Section 51500)
29shall be deposited into the fund for expenditure by the agency for
30the purposes of this chapter.

end insert
31begin insert

begin insertSEC. 77.end insert  

end insert

begin insertSection 51345 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
32amended and renumbered to read:end insert

33

begin delete51345.end delete
34
begin insert51343.end insert  

(a) The agency shall administer a home purchase
35assistance program in accordance with this chapter. The purpose
36of the home purchase assistance program is to assistbegin delete first-timeend deletebegin insert low-
37and moderate-incomeend insert
homebuyers tobegin delete utilize existing mortgage
38financing available pursuant to this part or Division 4 (commencing
39with Section 800) of the Military and Veterans Code with the
40additional financial resources made available pursuant to Part 8
P105  1(commencing with Section 53130).end delete
begin insert qualify for the purchase of
2owner-occupied homes. The agency shall make assistance to
3first-time homebuyers a priority use of these funds.end insert

4(b) begin deleteHome purchase end deletebegin insertHomeownership end insertassistance under this chapter
5begin delete shall include, but not beend deletebegin insert may be provided for any purposes
6authorized under Section 51402, including, but notend insert
limitedbegin delete to: (1)
7anend delete
begin insert to, all of the following:end insert

8begin insert(1)end insertbegin insertend insertbegin insertAnend insert interest rate subsidy to reduce the interestbegin delete rate, (2) aend deletebegin insert rate.end insert

9begin insert(2)end insertbegin insertend insertbegin insertAend insert deferred-payment, low-interest,begin delete second-mortgage loan to
10reduce the principal and interest payments, and (3)end delete
begin insert subordinate
11mortgage loan, includingend insert
downpaymentbegin delete assistanceend deletebegin insert assistance,
12closing cost assistance, or both,end insert
to make financing affordable to
13begin delete first-timeend deletebegin insert low- and moderate-incomeend insert homebuyers.

begin insert

14
(3) Buying down the cost of mortgage insurance.

end insert
begin delete

15(c) In no case shall the interest rate subsidy reduce the effective
16interest rate to the borrower below 3 percent per annum, nor shall
17the deferred-payment, low-interest, second mortgage loan exceed
1849 percent of the total debt financing necessary to purchase the
19home.

end delete
begin delete

20(d)

end delete

21begin insert(c)end insert The amount of home purchase assistance shall bebegin delete a secondend delete
22begin insert available only in conjunction with firstend insert mortgage loanbegin delete secured by
23a deed of trust of second priority to the primaryend delete
financing provided
24by the agency or the Department of Veterans Affairs.begin delete Theend delete

25begin insert(d)end insertbegin insertend insertbegin insertTheend insert term of the home purchase assistance shall not exceed
26the term of the primary loan.

begin insert

27
(e) Assistance under this chapter is available only for
28owner-occupied residential structures.

end insert
begin delete

29(e)

end delete

30begin insert(f)end insert (1) The agency may, in its discretion, permitbegin insert the lien ofend insert the
31downpayment assistance loan to be subordinated to refinancing if
32it determines thatbegin delete theend deletebegin insert one of the following applies:end insert

33begin insert(A)end insertbegin insertend insertbegin insertTheend insert borrower has demonstratedbegin delete hardship,end deletebegin insert hardship andend insert
34 subordination is required to avoidbegin delete foreclosure, and theend deletebegin insert foreclosure.end insert

begin insert

35
(B) The borrower has acquired subordinate financing to build
36an accessory dwelling on the property.

end insert
begin insert

37
(C) The borrower has acquired subordinate financing to make
38the property compliant with the federal Americans with Disabilities
39Act of 1990 (Public Law 101-336), facilitate rehabilitation needed
40to allow the owner to age in place, or both.

end insert

P106  1begin insert(D)end insertbegin insertend insertbegin insertTheend insert new loan meets the agency’s underwriting requirements.
2
begin delete Theend delete

3begin insert(2)end insertbegin insertend insertbegin insertTheend insert agency may permit subordination on those terms and
4conditions as it determines arebegin delete reasonable, but subordination is
5not permitted if the borrower has sufficient equity to repay the
6loan.end delete
begin insert reasonable.end insert

begin delete

7(2)

end delete

8begin insert(3)end insert The amount of home purchase assistance shall not be due
9and payable upon the sale of the home if the first mortgage loan
10is insured by the Federal Housing Administration (FHA) or if the
11first mortgage loan is, or has been, transferred to the FHA, or if
12the requirement is otherwise contrary to the regulations of the
13United States Department of Housing and Urban Development
14governing FHA insured first mortgage loans.

begin delete

15(f)

end delete

16begin insert(g)end insert All repayments shall be deposited in thebegin delete fund.end deletebegin insert fund for
17ongoing use in this downpayment assistance program.end insert

18begin insert

begin insertSEC. 78.end insert  

end insert

begin insertSection 51347 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
19repealed.end insert

begin delete
20

51347.  

The agency may provide mortgage insurance for the
21home purchase assistance provided pursuant to this chapter and
22may use not more than 15 percent of the moneys provided for
23purposes of this chapter for mortgage insurance.

end delete
24begin insert

begin insertSEC. 79.end insert  

end insert

begin insertSection 51348 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
25repealed.end insert

begin delete
26

51348.  

It is the intent of the Legislature that no more than 50
27percent of the home purchase assistance provided under this chapter
28shall be for the purchase of homes that have not been previously
29occupied.

end delete
30begin insert

begin insertSEC. 80.end insert  

end insert

begin insertSection 51349 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
31amended to read:end insert

32

51349.  

(a) The agency shall have all the powers conferred
33upon it by this part and Part 4 (commencing with Section 51600)
34in administering this chapter.

35(b) The authority provided by this section shall be conferred
36upon the Department of Veterans Affairs by any contract executed
37pursuant to Section 51346, with respect to the assistance being
38provided pursuant to the contract.

begin insert

39
(c) Notwithstanding any other law, the agency, pursuant to the
40objectives specified in Section 50952, may, with its own funds or
P107  1from funds derived from other sources, create its own home
2purchase assistance programs, home purchase assistance products,
3or both, on such terms and conditions as the agency deems prudent.
4Nothing in this chapter shall be deemed to prohibit the agency
5from exercising its discretion pursuant to this subdivision.

end insert
6begin insert

begin insertSEC. 81.end insert  

end insert

begin insertSection 51455 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
7amended to read:end insert

8

51455.  

(a) Except as provided in subdivision (b), Sections
951450, 51451, 51452, and 51454 shall not be operative on and
10after January 1, 2002.

11(b) Except as provided in Section 51453 and 51453.5,begin insert until July
121, 2016,end insert
the School Facilities Fee Assistance Fund established by
13Section 51452 and the programmatic authority necessary to operate
14the programs authorized by Section 51451 shall continue on and
15after January 1, 2002, only with respect to any repayment
16obligation pertaining to that assistance or to any regulatory
17agreement imposed as a condition of that assistance.

begin insert

18
(c) Sections 51451.5, 51453, and 51453.5 shall not be operative
19on and after July 1, 2016.

end insert
begin insert

20
(d) On and after July 1, 2016, any unobligated amounts
21remaining in the School Facilities Fee Assistance Fund, including
22the repayment of disbursed moneys, or any interest earned from
23the investment of those moneys or any other moneys accruing to
24the fund from any source, shall be transferred to the Home
25Purchase Assistance Fund and are continuously appropriated to
26the agency for the purposes described in Section 51342.

end insert
27begin insert

begin insertSEC. 82.end insert  

end insert

begin insertSection 51511 is added to the end insertbegin insertHealth and Safety Codeend insertbegin insert,
28to read:end insert

begin insert
29

begin insert51511.end insert  

(a) This chapter, except for this section, shall not be
30operative on and after July 1, 2016.

31
(b) On and after July 1, 2016, any unobligated amounts
32remaining in any fund established for the purposes of this chapter,
33including the repayment of disbursed moneys, or any interest
34earned from the investment of those moneys or any other moneys
35accruing to the fund from any source, shall be transferred to the
36Home Purchase Assistance Fund and are continuously
37appropriated to the agency for the purposes described in Section
3851342.

end insert
39begin insert

begin insertSEC. 83.end insert  

end insert

begin insertSection 51618 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
40repealed.end insert

begin delete
P108  1

51618.  

There shall be within the agency a Director of Insurance
2of the fund, appointed by the Governor and serving at the pleasure
3of the executive director. The Director of Insurance of the fund
4shall demonstrate knowledge of, and expertise in, mortgage
5insurance. The Director of Insurance of the fund shall manage and
6conduct the business and affairs of the insurance fund under the
7direction and supervision of the agency, and shall perform any
8other duties as the executive director prescribes.

end delete
9begin insert

begin insertSEC. 84.end insert  

end insert

begin insertSection 51619 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
10repealed.end insert

begin delete
11

51619.  

The agency may delegate to the Director of Insurance
12of the fund, under the resolutions of the board and subject to the
13conditions as it from time to time prescribes, any power, function,
14or duty conferred by law on the agency in connection with the
15administration, management, and conduct of the business and
16affairs of the insurance fund. The Director of Insurance may
17exercise the powers and functions and perform the duties with the
18same force and effect as the executive director, but subject to his
19or her approval.

end delete
20begin insert

begin insertSEC. 85.end insert  

end insert

begin insertSection 51622 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
21amended to read:end insert

22

51622.  

(a)  The agency may contract with any private person
23or public agency for review of the administration of this part and
24for assistance in implementing this part.

25(b)  The agency shall prepare a biennial report on the condition
26of the program of loan and bond insurance authorized by this part.
27The report of the evaluation shall include an evaluation of program
28effectiveness in relation to cost and shall include recommendations
29and suggested legislation for the improvement of the program, if
30any. The agency shall obtain an annualbegin delete auditend deletebegin insert agreedend insertbegin insert-upon
31 procedures engagementend insert
of the insurance fund’s books and accounts
32with respect to its activities under this part to be made at least once
33for each calendar year by an independent certified public
34accountant. A copy of the annualbegin delete auditend deletebegin insert agreedend insertbegin insert-upon procedures
35engagementend insert
and biennial report shall be transmitted to the
36Governor, to the chairperson and vice-chairperson of the Senate
37and Assembly housing policy committees, the Senate and
38Assembly budget committees, and the Joint Legislative Budget
39Committee, and made available for review by interested parties
40no later than November 1 of each year for the annualbegin delete audit,end delete
P109  1begin insert agreedend insertbegin insert-upon procedures engagementend insert and November 1 biennially
2for the program evaluation report.

begin insert

3
(c) For purposes of this section, the agreed-upon procedures
4engagement shall be conducted in accordance with the Statements
5on Standards for Attestation Engagements Number 10, as issued
6by the American Institute of Certified Public Accountants.

end insert
7begin insert

begin insertSEC. 86.end insert  

end insert

begin insertSection 12206 of the end insertbegin insertRevenue and Taxation Codeend insertbegin insert is
8amended to read:end insert

9

12206.  

(a) (1) There shall be allowed as a credit against the
10begin delete “tax” (asend deletebegin insert “tax,”end insert described by Sectionbegin delete 12201)end deletebegin insert 12201,end insert a state
11low-income housing tax credit in an amount equal to the amount
12determined in subdivision (c), computed in accordance with Section
1342 of the Internal Revenue Code,begin insert relating to low-income housing
14credit,end insert
except as otherwise provided in this section.

15(2) “Taxpayer,” for purposes of this section, means the sole
16owner in the case of a “C” corporation, the partners in the case of
17a partnership, and the shareholders in the case of an “S”
18corporation.

19(3) “Housing sponsor,” for purposes of this section, means the
20sole owner in the case of a “C” corporation, the partnership in the
21case of a partnership, and the “S” corporation in the case of an “S”
22corporation.

23(b) (1) The amount of the credit allocated to any housing
24sponsor shall be authorized by the California Tax Credit Allocation
25Committee, or any successor thereof, based on a project’s need
26for the credit for economic feasibility in accordance with the
27requirements of this section.

28(A) Except for projects to provide farmworker housing, as
29defined in subdivision (h) of Section 50199.7 of the Health and
30Safety Code, that are allocated credits solely under the set-aside
31described in subdivision (c) of Section 50199.20 of the Health and
32Safety Code, the low-income housing project shall be located in
33California and shall meet either of the following requirements:

34(i) The project’s housing sponsorbegin delete shall haveend deletebegin insert hasend insert been allocated
35by the California Tax Credit Allocation Committee a credit for
36federal income tax purposes under Section 42 of the Internal
37Revenuebegin delete Code.end deletebegin insert Code, relating to low-income housing credit.end insert

38(ii) Itbegin delete shall qualifyend deletebegin insert qualifiesend insert for a credit under Section
3942(h)(4)(B) of the Internal Revenuebegin delete Code.end deletebegin insert Code, relating to special
P110  1rule where 50 percent or more of building is financed with
2tax-exempt bonds subject to volume cap.end insert

3(B) The California Tax Credit Allocation Committee shall not
4require fees for the credit under this section in addition to those
5fees required for applications for the tax credit pursuant to Section
642 of the Internal Revenuebegin delete Code.end deletebegin insert Code, relating to low-income
7housing credit.end insert
The committee may require a fee if the application
8 for the credit under this section is submitted in a calendar year
9after the year the application is submitted for the federal tax credit.

10(C) (i) For a project that receives a preliminary reservation of
11the state low-income housing tax credit, allowed pursuant to
12subdivision (a), on or after January 1, 2009, and before January 1,
13begin delete 2016,end deletebegin insert 2020,end insert the credit shall be allocated to the partners of a
14partnership owning the project in accordance with the partnership
15agreement, regardless of how the federal low-income housing tax
16credit with respect to the project is allocated to the partners, or
17whether the allocation of the credit under the terms of the
18agreement has substantial economic effect, within the meaning of
19Section 704(b) of the Internal Revenuebegin delete Code.end deletebegin insert Code, relating to
20determination of distributive share.end insert

21(ii) This subparagraphbegin delete shallend deletebegin insert doesend insert not apply to a project that
22receives a preliminary reservation of state low-income housing
23tax credits under the set-aside described in subdivision (c) of
24Section 50199.20 of the Health and Safety Code unless the project
25also receives a preliminary reservation of federal low-income
26housing tax credits.

begin delete

27(iii) This subparagraph shall cease to be operative with respect
28to any project that receives a preliminary reservation of a credit
29on or after January 1, 2016.

end delete

30(2) (A) The California Tax Credit Allocation Committee shall
31certify to the housing sponsor the amount of tax credit under this
32section allocated to the housing sponsor for each credit period.

33(B) In the case of a partnership or an “S” corporation, the
34housing sponsor shall provide a copy of the California Tax Credit
35Allocation Committee certification to the taxpayer.

36(C) The taxpayer shall attach a copy of the certification to any
37return upon which a tax credit is claimed under this section.

38(D) In the case of a failure to attach a copy of the certification
39for the year to the return in which a tax credit is claimed under this
P111  1section, no credit under this section shall be allowed for that year
2until a copy of that certification is provided.

3(E) All elections made by the taxpayer pursuant to Section 42
4of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating to low-income housing
5credit,end insert
shall apply to this section.

6(F) (i) Except as described in clause (ii), for buildings located
7in designated difficult development areas (DDAs) or qualified
8census tracts (QCTs), as defined in Section 42(d)(5)(B) of the
9Internal Revenue Code,begin insert relating to increase in credit for buildings
10in high-cost areas,end insert
credits may be allocated under this section in
11the amounts prescribed in subdivision (c), provided that the amount
12of credit allocated under Section 42 of the Internal Revenuebegin delete Codeend delete
13begin insert Code, relating to low-income housing credit,end insert is computed on 100
14percent of the qualified basis of the building.

15(ii) Notwithstanding clause (i), the California Tax Credit
16Allocation Committee may allocate the credit for buildings located
17in DDAs or QCTs that are restricted to having 50 percent of its
18occupants be special needs households, as defined in the California
19Code of Regulations by the California Tax Credit Allocation
20Committee, even if the taxpayer receives federal credits pursuant
21to Section 42(d)(5)(B) of the Internal Revenue Code,begin insert relating to
22increase in credit for buildings in high-cost areas,end insert
provided that
23the credit allowed under this section shall not exceed 30 percent
24of the eligible basis of the building.

25(G) (i) The California Tax Credit Allocation Committee may
26allocate a credit under this section in exchange for a credit allocated
27pursuant to Section 42(d)(5)(B) of the Internal Revenuebegin delete Codeend delete
28begin insert Code, relating to increase in credit for buildings in high-cost areas,end insert
29 in amounts up to 30 percent of the eligible basis of a building if
30the credits allowed under Section 42 of the Internal Revenuebegin delete Codeend delete
31begin insert Code, relating to low-income housing credit,end insert are reduced by an
32equivalent amount.

33(ii) An equivalent amount shall be determined by the California
34Tax Credit Allocation Committee based upon the relative amount
35required to produce an equivalent state tax credit to the taxpayer.

36(c) Section 42(b) of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating
37to applicable percentage: 70 percent present value credit for
38certain new buildings; 30 percent present value credit for certain
39other buildings,end insert
shall be modified as follows:

P112  1(1) In the case of any qualified low-income building that receives
2an allocation after 1989 and is a new building not federally
3subsidized, the term “applicable percentage” means the following:

4(A) For each of the first three years, the percentage prescribed
5by the Secretary of the Treasury for new buildings that are not
6federally subsidized for the taxable year, determined in accordance
7with the requirements of Section 42(b)(2) of the Internal Revenue
8Code,begin insert relating to temporary minimum credit rate for nonfederally
9subsidized new buildings,end insert
in lieu of the percentage prescribed in
10Section 42(b)(1)(A) of the Internal Revenue Code.

11(B) For the fourth year, the difference between 30 percent and
12the sum of the applicable percentages for the first three years.

13(2) In the case of any qualified low-income building that receives
14an allocation after 1989 and that is a new building that is federally
15subsidized or that is an existing building that is “at risk of
16conversion,” the term “applicable percentage” means the following:

17(A) For each of the first three years, the percentage prescribed
18by the Secretary of the Treasury for new buildings that are federally
19subsidized for the taxable year.

20(B) For the fourth year, the difference between 13 percent and
21the sum of the applicable percentages for the first three years.

22(3) For purposes of this section, the term “at risk of conversion,”
23with respect to an existing property means a property that satisfies
24all of the following criteria:

25(A) The property is a multifamily rental housing development
26in which at least 50 percent of the units receive governmental
27assistance pursuant to any of the following:

28(i) New construction, substantial rehabilitation, moderate
29rehabilitation, property disposition, and loan management set-aside
30programs, or any other program providing project-based assistance
31pursuant to Section 8 of the United States Housing Act of 1937,
32Section 1437f of Title 42 of the United States Code, as amended.

33(ii) The Below-Market-Interest-Rate Program pursuant to
34Section 221(d)(3) of the National Housing Act, Sections
351715l(d)(3) and (5) of Title 12 of the United States Code.

36(iii) Section 236 of the National Housing Act, Section 1715z-1
37of Title 12 of the United States Code.

38(iv) Programs for rent supplement assistance pursuant to Section
39101 of the Housing and Urban Development Act of 1965, Section
401701s of Title 12 of the United States Code, as amended.

P113  1(v) Programs pursuant to Section 515 of the Housing Act of
21949, Section 1485 of Title 42 of the United States Code, as
3amended.

4(vi) The low-income housing credit program set forth in Section
542 of the Internal Revenuebegin delete Code.end deletebegin insert Code, relating to low-income
6housing credit.end insert

7(B) The restrictions on rent and income levels will terminate or
8thebegin delete federalend deletebegin insert federallyend insert insured mortgage on the property is eligible
9for prepayment any time within five years before or after the date
10of application to the California Tax Credit Allocation Committee.

11(C) The entity acquiring the property enters into a regulatory
12agreement that requires the property to be operated in accordance
13with the requirements of this section for a period equal to the
14greater of 55 years or the life of the property.

15(D) The property satisfies the requirements of Section 42(e) of
16the Internal Revenuebegin delete Code regarding rehabilitation expenditures,end delete
17begin insert Code, relating to rehabilitation expenditures treated as end insertbegin insertseparate
18new building,end insert
except that the provisions of Section
1942(e)(3)(A)(ii)(I) shall not apply.

20(d) The term “qualified low-income housing project” as defined
21in Section 42(c)(2) of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating
22to qualified low-income building,end insert
is modified by adding the
23following requirements:

24(1) The taxpayer shall be entitled to receive a cash distribution
25from the operations of the project, after funding required reserves,
26begin delete which,end deletebegin insert that,end insert at the election of the taxpayer, is equal to:

27(A) An amount not to exceed 8 percent of the lesser of:

28(i) The ownerbegin delete equityend deletebegin insert equity,end insert which shall include the amount of
29the capital contributions actually paid to the housing sponsor and
30shall not include any amounts until they are paid on an investor
31note.

32(ii) Twenty percent of the adjusted basis of the building as of
33the close of the first taxable year of the credit period.

34(B) The amount of the cashflow from those units in the building
35that are not low-income units. For purposes of computing cashflow
36under this subparagraph, operating costs shall be allocated to the
37low-income units using the “floor space fraction,” as defined in
38Section 42 of the Internal Revenuebegin delete Code.end deletebegin insert Code, relating to
39low-income housing credit.end insert

P114  1(C) Any amount allowed to be distributed under subparagraph
2(A) that is not available for distribution during the first five years
3of the compliance period maybegin delete accumulate and beend deletebegin insert be accumulated
4andend insert
distributed any time during the first 15 years of the compliance
5period but not thereafter.

6(2) The limitation on returnbegin delete shall applyend deletebegin insert appliesend insert in the aggregate
7to the partners if the housing sponsor is a partnership and in the
8aggregate to the shareholders if the housing sponsor is an “S”
9corporation.

10(3) The housing sponsor shall apply any cash available for
11distribution in excess of the amount eligible to be distributed under
12paragraph (1) to reduce the rent on rent-restricted units or to
13increase the number of rent-restricted units subject to the tests of
14Section 42(g)(1) of the Internal Revenuebegin delete Code.end deletebegin insert Code, relating to
15in general.end insert

16(e) The provisions of Section 42(f) of the Internal Revenuebegin delete Codeend delete
17begin insert Code, relating to definition and special rules relating to credit
18period,end insert
shall be modified as follows:

19(1) The term “credit period” as defined in Section 42(f)(1) of
20the Internal Revenuebegin delete Codeend deletebegin insert Code, relating to credit period defined,end insert
21 is modified by substituting “four taxable years” for “10 taxable
22years.”

23(2) The special rule for the first taxable year of the credit period
24under Section 42(f)(2) of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating
25to special rule for 1st year of credit period,end insert
shall not apply to the
26tax credit under this section.

27(3) Section 42(f)(3) of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating
28to determination of applicable percentage with respect to increases
29in qualified basis after 1st year of credit period,end insert
is modified to
30read:

31If, as of the close of any taxable year in the compliance period,
32after the first year of the credit period, the qualified basis of any
33building exceeds the qualified basis of that building as of the close
34of the first year of the credit period, the housing sponsor, to the
35extent of its tax credit allocation, shall be eligible for a credit on
36the excess in an amount equal to the applicable percentage
37determined pursuant to subdivision (c) for the four-year period
38beginning with the later of the taxable years in which the increase
39in qualified basis occurs.

P115  1(f) The provisions of Section 42(h) of the Internal Revenue
2begin delete Codeend deletebegin insert Code, relating to limitation on aggregate credit allowable
3with respect to projects located in a state,end insert
shall be modified as
4follows:

5(1) Section 42(h)(2) of the Internal Revenuebegin delete Code shall not be
6applicable and instead the following provisions shall be applicable:end delete

7
begin insert Code, relating to allocated credit amount to apply to all taxable
8years ending during or after credit allocation year, does not apply
9and instead the following provisions apply:end insert

10The total amount for the four-year credit period of the housing
11credit dollars allocated in a calendar year to any building shall
12reduce the aggregate housing credit dollar amount of the California
13Tax Credit Allocation Committee for the calendar year in which
14the allocation is made.

15(2) Paragraphs (3), (4), (5), (6)(E)(i)(II), (6)(F), (6)(G), (6)(I),
16(7), and (8) of Section 42(h) of the Internal Revenuebegin delete Code shall
17not be applicable.end delete
begin insert Code, relating to limitation on aggregate credit
18allowable with respect to projects located in a state, do not apply
19to this section.end insert

20(g) The aggregate housing credit dollar amount that may be
21allocated annually by the California Tax Credit Allocation
22Committee pursuant to this section, Section 17058, and Section
2323610.5 shall be an amount equal to the sum of all the following:

24(1) Seventy million dollars ($70,000,000) for the 2001 calendar
25year, and, for the 2002 calendar year and each calendar year
26thereafter, seventy million dollars ($70,000,000) increased by the
27percentage, if any, by which the Consumer Price Index for the
28preceding calendar year exceeds the Consumer Price Index for the
292001 calendar year. For the purposes of this paragraph, the term
30“Consumer Price Index” means the last Consumer Price Index for
31All Urban Consumers published by the federal Department of
32Labor.

33(2) The unused housing credit ceiling, if any, for the preceding
34calendar years.

35(3) The amount of housing credit ceiling returned in the calendar
36year. For purposes of this paragraph, the amount of housing credit
37dollar amount returned in the calendar year equals the housing
38credit dollar amount previously allocated to any project that does
39not become a qualified low-income housing project within the
40period required by this section or to any project with respect to
P116  1which an allocation is canceled by mutual consent of the California
2Tax Credit Allocation Committee and the allocation recipient.

3(4) Five hundred thousand dollars ($500,000) per calendar year
4for projects to provide farmworker housing, as defined in
5subdivision (h) of Section 50199.7 of the Health and Safety Code.

6(5) The amount of any unallocated or returned credits under
7former Sections 17053.14, 23608.2, and 23608.3, as those sections
8read prior to January 1, 2009, until fully exhausted for projects to
9provide farmworker housing, as defined in subdivision (h) of
10Section 50199.7 of the Health and Safety Code.

11(h) The term “compliance period” as defined in Section 42(i)(1)
12of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating to compliance period,end insert
13 is modified to mean, with respect to any building, the period of 30
14consecutive taxable years beginning with the first taxable year of
15the credit period with respect thereto.

16(i) (1) Section 42(j) of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating
17to recapture of credit,end insert
shall not be applicable and the provisions
18in paragraph (2) shall be substituted in its place.

19(2) The requirements of this section shall be set forth in a
20regulatory agreement between the California Tax Credit Allocation
21Committee and the housing sponsor,begin delete whichend deletebegin insert and thisend insert agreement
22shall be subordinated, when required, to any lien or encumbrance
23of any banks or other institutional lenders to the project. The
24regulatory agreement entered into pursuant to subdivision (f) of
25Section 50199.14 of the Health and Safety Code, shall apply,
26begin delete providingend deletebegin insert provided thatend insert the agreement includes all of the following
27provisions:

28(A) A term not less than the compliance period.

29(B) A requirement that the agreement be recorded in the official
30records of the county in which the qualified low-income housing
31project is located.

32(C) A provision stating which state and local agencies can
33enforce the regulatory agreement in the event the housing sponsor
34fails to satisfy any of the requirements of this section.

35(D) A provision that the regulatory agreement shall be deemed
36a contract enforceable by tenants as third-party beneficiaries thereto
37andbegin delete whichend deletebegin insert thatend insert allows individuals, whether prospective, present,
38or former occupants of the building, who meet the income
39limitation applicable to the building, the right to enforce the
40regulatory agreement in any state court.

P117  1(E) A provision incorporating the requirements of Section 42
2of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating to low-income housing
3credit,end insert
as modified by this section.

4(F) A requirement that the housing sponsor notify the California
5Tax Credit Allocation Committee or its designee and the local
6agency that can enforce the regulatory agreement if there is a
7determination by the Internal Revenue Service that the project is
8not in compliance with Section 42(g) of the Internal Revenuebegin delete Code.end delete
9
begin insert Code, relating to qualified low-income housing project.end insert

10(G) A requirement that the housing sponsor, as security for the
11performance of the housing sponsor’s obligations under the
12regulatory agreement, assign the housing sponsor’s interest in rents
13that it receives from the project, provided that until there is a
14default under the regulatory agreement, the housing sponsor is
15entitled to collect and retain the rents.

16(H) begin deleteThe end deletebegin insertA provision that the end insertremedies available in the event of
17a default under the regulatory agreement that is not cured within
18a reasonable curebegin delete period,end deletebegin insert periodend insert include, but are not limited to,
19allowing any of the parties designated to enforce the regulatory
20agreement to collect all rents with respect to the project; taking
21possession of the project and operating the project in accordance
22with the regulatory agreement until the enforcer determines the
23housing sponsor is in a position to operate the project in accordance
24with the regulatory agreement; applying to any court for specific
25performance; securing the appointment of a receiver to operate
26the project; or any other relief as may be appropriate.

27(j) (1) The committee shall allocate the housing credit on a
28regular basis consisting of two or more periods in each calendar
29year during which applications may be filed and considered. The
30committee shall establish application filing deadlines, the maximum
31percentage of federal and state low-income housing tax credit
32ceiling that may be allocated by the committee in that period, and
33the approximate date on which allocations shall be made. If the
34enactment of federal or state law, the adoption of rules or
35regulations, or other similar events prevent the use of two allocation
36periods, the committee may reduce the number of periods and
37adjust the filing deadlines, maximum percentage of credit allocated,
38and the allocation dates.

39(2) The committee shall adopt a qualified allocation plan, as
40provided in Section 42(m)(1) of the Internal Revenuebegin delete Code.end deletebegin insert Code,
P118  1relating to plans for allocation of credit among projects.end insert
In
2adopting this plan, the committee shall comply with the provisions
3of Sections 42(m)(1)(B) and 42(m)(1)(C) of the Internal Revenue
4
begin delete Code.end deletebegin insert Code, relating to qualified allocation plan and relating to
5certain selection criteria must be used, respectively.end insert

6(3) Notwithstanding Section 42(m) of the Internal Revenue
7Code,begin insert relating to responsibilities of housing credit agencies,end insert the
8California Tax Credit Allocation Committee shall allocate housing
9credits in accordance with the qualified allocation plan and
10regulations, which shall include the following provisions:

11(A) All housing sponsors, as defined by paragraph (3) of
12subdivision (a), shall demonstrate at the time the application is
13filed with the committee that the project meets the following
14threshold requirements:

15(i) The housing sponsor shall demonstratebegin insert thatend insert there is a need
16and demand for low-income housing in the community or region
17for which it is proposed.

18(ii) The project’s proposed financing, including tax credit
19proceeds, shall be sufficient to complete the project and that the
20proposed operating income shall be adequate to operate the project
21for the extended use period.

22(iii) The project shall have enforceable financing commitments,
23either construction or permanent financing, for at least 50 percent
24of the total estimated financing of the project.

25(iv) The housing sponsor shall have and maintain control of the
26site for the project.

27(v) The housing sponsor shall demonstrate that the project
28complies with all applicable local land use and zoning ordinances.

29(vi) The housing sponsor shall demonstrate that the project
30development team has the experience and the financial capacity
31to ensure project completion and operation for the extended use
32period.

33(vii) The housing sponsor shall demonstrate the amount of tax
34credit that is necessary for the financial feasibility of the project
35and its viability as a qualified low-income housing project
36throughout the extended use period, taking into account operating
37expenses, a supportable debt service, reserves, funds set aside for
38rentalbegin delete subsidies,end deletebegin insert subsidiesend insert and required equity, and a development
39fee that does not exceed a specified percentage of the eligible basis
P119  1of the project prior to inclusion of the development fee in the
2eligible basis, as determined by the committee.

3(B) The committee shall give a preference to those projects
4satisfying all of the threshold requirements of subparagraph (A)
5if both of the following apply:

6(i) The project serves the lowest income tenants at rents
7affordable to those tenants.

8(ii) The project is obligated to serve qualified tenants for the
9longest period.

10(C) In addition to the provisions of subparagraphs (A) and (B),
11the committee shall use the following criteria in allocating housing
12credits:

13(i) Projects serving large families in which a substantial number,
14as defined by the committee, of all residential unitsbegin delete is comprised
15ofend delete
begin insert areend insert low-income units with three and more bedrooms.

16(ii) Projects providing single-room occupancy units serving
17very low income tenants.

18(iii) Existing projects that are “at risk of conversion,” as defined
19by paragraph (3) of subdivision (c).

20(iv) Projects for which a public agency provides direct or indirect
21long-term financial support for at least 15 percent of the total
22project development costs or projects for which the owner’s equity
23constitutes at least 30 percent of the total project development
24costs.

25(v) Projects that provide tenant amenities not generally available
26to residents of low-income housing projects.

27(4) For purposes of allocating credits pursuant to this section,
28the committee shall not give preference to any project by virtue
29of the date of submission of its application except to break a tie
30when two or more of the projects have an equal rating.

31(k) Section 42(l) of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating
32to certifications and other reports to secretary,end insert
shall be modified
33as follows:

34The term “secretary” shall be replaced by the termbegin delete “California
35Franchiseend delete
begin insert “Franchiseend insert Tax Board.”

36(l) In the casebegin delete where the stateend deletebegin insert in which theend insert credit allowed under
37this section exceeds the “tax,” the excess may be carried over to
38reduce the “tax” in the following year, and succeeding years if
39necessary, until the credit has been exhausted.

P120  1(m) The provisions of Section 11407(a) of Public Law 101-508,
2relating to the effective date of the extension of the low-income
3housing credit,begin delete shallend delete apply to calendar years after 1993.

4(n) The provisions of Section 11407(c) of Public Law 101-508,
5relating to election to accelerate credit,begin delete shallend deletebegin insert doend insert not apply.

begin insert

6
(o) (1) For a project that receives a preliminary reservation
7under this section beginning on or after January 1, 2016, and
8before January 1, 2020, a taxpayer may make an irrevocable
9election in its application to the California Tax Credit Allocation
10Committee to sell all or any portion of any credit allowed under
11this section to one or more unrelated parties for each taxable year
12in which the credit is allowed subject to both of the following
13conditions:

end insert
begin insert

14
(A) The credit is sold for consideration that is not less than 80
15percent of the amount of the credit.

end insert
begin insert

16
(B) The unrelated party or parties purchasing any or all of the
17credit pursuant to this subdivision is a taxpayer allowed the credit
18under this section for the taxable year of the purchase or any prior
19taxable year or is a taxpayer allowed the federal credit under
20Section 42 of the Internal Revenue Code, relating to low-income
21housing credit, for the taxable year of the purchase or any prior
22taxable year in connection with any project located in this state.
23For purposes of this subparagraph, “taxpayer allowed the credit
24under this section” means a taxpayer that is allowed the credit
25under this section without regard to the purchase of a credit
26pursuant to this subdivision.

end insert
begin insert

27
(2) (A) The taxpayer that originally received the credit shall
28report to the California Tax Credit Allocation Committee within
2910 days of the sale of the credit, in the form and manner specified
30by the California Tax Credit Allocation Committee, all required
31information regarding the purchase and sale of the credit,
32including the social security or other taxpayer identification
33number of the unrelated party or parties to whom the credit has
34been sold, the face amount of the credit sold, and the amount of
35consideration received by the taxpayer for the sale of the credit.

end insert
begin insert

36
(B) The California Tax Credit Allocation Committee shall
37provide an annual listing to the Franchise Tax Board, in a form
38and manner agreed upon by the California Tax Credit Allocation
39Committee and the Franchise Tax Board, of the taxpayers that
40have sold or purchased a credit pursuant to this subdivision.

end insert
begin insert

P121  1
(3) (A) A credit may be sold pursuant to this subdivision to
2more than one unrelated party.

end insert
begin insert

3
(B) (i) Except as provided in clause (ii), a credit shall not be
4resold by the unrelated party to another taxpayer or other party.

end insert
begin insert

5
(ii) All or any portion of any credit allowed under this section
6may be resold once by an original purchaser to one or more
7unrelated parties, subject to all of the requirements of this
8subdivision.

end insert
begin insert

9
(4) Notwithstanding any other law, the taxpayer that originally
10received the credit that is sold pursuant to paragraph (1) shall
11remain solely liable for all obligations and liabilities imposed on
12the taxpayer by this section with respect to the credit, none of
13which shall apply to a party to whom the credit has been sold or
14subsequently transferred. Parties that purchase credits pursuant
15to paragraph (1) shall be entitled to utilize the purchased credits
16in the same manner in which the taxpayer that originally received
17the credit could utilize them.

end insert
begin insert

18
(5) A taxpayer shall not sell a credit allowed by this section if
19the taxpayer was allowed the credit on any tax return of the
20taxpayer.

end insert
begin insert

21
(6) Notwithstanding paragraph (1), the taxpayer, with the
22approval of the Executive Director of the California Tax Credit
23 Allocation Committee, may rescind the election to sell all or any
24portion of the credit allowed under this section if the consideration
25for the credit falls below 80 percent of the amount of the credit
26after the California Tax Credit Allocation Committee reservation.

end insert
begin insert

27
(p) The California Tax Credit Allocation Committee may
28prescribe rules, guidelines, or procedures necessary or appropriate
29to carry out the purposes of this section, including any guidelines
30regarding the allocation of the credit allowed under this section.
31Chapter 3.5 (commencing with Section 11340) of Part 1 of Division
323 of Title 2 of the Government Code shall not apply to any rule,
33guideline, or procedure prescribed by the California Tax Credit
34Allocation Committee pursuant to this section.

end insert
begin delete

35(o)

end delete

36begin insert(q)end insert This section shall remain in effect for as long as Section 42
37of the Internal Revenue Code, relating to low-income housing
38begin delete credits,end deletebegin insert credit,end insert remains in effect.

39begin insert

begin insertSEC. 87.end insert  

end insert

begin insertSection 17053.88.5 is added to the end insertbegin insertRevenue and
40Taxation Code
end insert
begin insert, to read:end insert

begin insert
P122  1

begin insert17053.88.5.end insert  

(a) In the case of a qualified taxpayer who donates
2fresh fruits or fresh vegetables to a food bank located in California
3under Chapter 5 (commencing with Section 58501) of Part 1 of
4Division 21 of the Food and Agricultural Code, for taxable years
5beginning on or after January 1, 2017, and before January 1,
62022, there shall be allowed as a credit against the “net tax,”
7defined by Section 17039, an amount equal to 15 percent of the
8qualified value of those fresh fruits or fresh vegetables.

9
(b) For purposes of this section:

10
(1) “Qualified taxpayer” means the person responsible for
11planting a crop, managing the crop, and harvesting the crop from
12the land.

13
(2) (A) “Qualified value” shall be calculated by using the
14weighted average wholesale price based on the qualified taxpayer’s
15total like grade wholesale sales of the donated item sold within
16the calendar month of the qualified taxpayer’s donation.

17
(B) If no wholesale sales of the donated item have occurred in
18the calendar month of the qualified taxpayer’s donation, the
19“qualified value” shall be equal to the nearest regional wholesale
20market price for the calendar month of the donation based upon
21the same grade products as published by the United States
22Department of Agriculture’s Agricultural Marketing Service or
23its successor.

24
(c) If the credit allowed by this section is claimed by the
25qualified taxpayer, any deduction otherwise allowed under this
26part for that amount of the cost paid or incurred by the qualified
27taxpayer that is eligible for the credit shall be reduced by the
28amount of the credit provided in subdivision (a).

29
(d) The donor shall provide to the nonprofit organization the
30qualified value of the donated fresh fruits or fresh vegetables and
31information regarding the origin of where the donated fruits or
32vegetables were grown, and upon receipt of the donated fresh
33fruits or fresh vegetables, the nonprofit organization shall provide
34a certificate to the donor. The certificate shall contain a statement
35signed and dated by a person authorized by that organization that
36the product is donated under Chapter 5 (commencing with Section
3758501) of Part 1 of Division 21 of the Food and Agricultural Code.
38The certificate shall also contain the type and quantity of product
39donated, the name of donor or donors, the name and address of
40the donee nonprofit organization, and, as provided by the donor,
P123  1the qualified value of the donated fresh fruits or fresh vegetables
2and its origins. Upon the request of the Franchise Tax Board, the
3qualified taxpayer shall provide a copy of the certification to the
4Franchise Tax Board.

5
(e) The credit allowed by this section may be claimed only on
6a timely filed original return.

7
(f) In the case where the credit allowed by this section exceeds
8the “net tax,” the excess may be carried over to reduce the “net
9tax” in the following year, and for the six succeeding years if
10necessary, until the credit has been exhausted.

11
(g) In accordance with Section 41, the purpose of the credit is
12to increase fresh fruits and vegetable donations to food banks.
13Using the information available to the Franchise Tax Board from
14the certificates required under subdivision (d) and subdivision (d)
15of Section 23688.5, the Franchise Tax Board shall report to the
16Legislature on or before December 1, 2019, and each December
171 thereafter until the inoperative date specified in subdivision (h),
18regarding the utilization of the credit authorized by this section
19and Section 23688.5. The Franchise Tax Board shall also include
20in the report the qualified value of the fresh fruits and fresh
21vegetables donated, the county in which the products originated,
22and the month the donation was made.

23
(h) (1) A report required to be submitted pursuant to subdivision
24(g) shall be submitted in compliance with Section 9795 of the
25Government Code.

26
(2) The requirement for submitting a report imposed under
27subdivision (g) is inoperative on January 1, 2021, pursuant to
28Section 10231.5 of the Government Code.

29
(i) This section shall be repealed on December 1, 2022.

end insert
30begin insert

begin insertSEC. 88.end insert  

end insert

begin insertSection 17058 of the end insertbegin insertRevenue and Taxation Codeend insertbegin insert is
31amended to read:end insert

32

17058.  

(a) (1) There shall be allowed as a credit against the
33“netbegin delete tax” (asend deletebegin insert tax,”end insert definedbegin delete inend deletebegin insert byend insert Sectionbegin delete 17039)end deletebegin insert 17039,end insert a state
34low-income housingbegin insert taxend insert credit in an amount equal to the amount
35determined in subdivision (c), computed in accordance withbegin delete the
36provisions ofend delete
Section 42 of the Internal Revenue Code,begin insert relating
37to low-income housing credit,end insert
except as otherwise provided in this
38section.

39(2) begin delete“Taxpayer” end deletebegin insert“Taxpayer,” end insertfor purposes of thisbegin delete sectionend deletebegin insert section,end insert
40 means the sole owner in the case of an individual, the partners in
P124  1the case of a partnership, and the shareholders in the case of an
2“S” corporation.

3(3) “Housingbegin delete sponsor”end deletebegin insert sponsor,”end insert for purposes of thisbegin delete sectionend delete
4begin insert section,end insert means the sole owner in the case of an individual, the
5partnership in the case of a partnership, and the “S” corporation
6in the case of an “S” corporation.

7(b) (1) The amount of the credit allocated to any housing
8sponsor shall be authorized by the California Tax Credit Allocation
9Committee, or any successor thereof, based on a project’s need
10for the credit for economic feasibility in accordance with the
11requirements of this section.

12(A) The low-income housing project shall be located in
13California and shall meet either of the following requirements:

14(i) Except for projects to provide farmworker housing, as defined
15in subdivision (h) of Section 50199.7 of the Health and Safety
16Code, that are allocated credits solely under the set-aside described
17in subdivision (c) of Section 50199.20 of the Health and Safety
18Code, the project’s housing sponsor has been allocated by the
19California Tax Credit Allocation Committee a credit for federal
20income tax purposes under Section 42 of the Internal Revenue
21
begin delete Code.end deletebegin insert Code, relating to low-income housing credit.end insert

22(ii) It qualifies for a credit under Section 42(h)(4)(B) of the
23Internal Revenuebegin delete Code.end deletebegin insert Code, relating to special rule where 50
24percent or more of building is financed with tax-exempt bonds
25subject to volume cap.end insert

26(B) The California Tax Credit Allocation Committee shall not
27require fees for the credit under this section in addition to those
28fees required for applications for the tax credit pursuant to Section
2942 of the Internal Revenuebegin delete Code.end deletebegin insert Code, relating to low-income
30housing credit.end insert
The committee may require a fee if the application
31for the credit under this section is submitted in a calendar year
32after the year the application is submitted for the federal tax credit.

33(C) (i) For a project that receives a preliminary reservation of
34the state low-income housing tax credit, allowed pursuant to
35subdivision (a), on or after January 1, 2009, and before January 1,
36begin delete 2016,end deletebegin insert 2020,end insert the credit shall be allocated to the partners of a
37partnership owning the project in accordance with the partnership
38agreement, regardless of how the federal low-income housing tax
39credit with respect to the project is allocated to the partners, or
40whether the allocation of the credit under the terms of the
P125  1agreement has substantial economic effect, within the meaning of
2Section 704(b) of the Internal Revenuebegin delete Code.end deletebegin insert Code, relating to
3determination of distributive share.end insert

4(ii) To the extent the allocation of the credit to a partner under
5this section lacks substantial economic effect, any loss or deduction
6otherwise allowable under this part that is attributable to the sale
7or other disposition of that partner’s partnership interest made prior
8to the expiration of the federal credit shall not be allowed in the
9taxable year in which the sale or other disposition occurs, but shall
10instead be deferred until and treated as if it occurred in the first
11taxable year immediately following the taxable year in which the
12federal credit period expires for the project described in clause (i).

13(iii) This subparagraph does not apply to a project that receives
14a preliminary reservation of state low-income housing tax credits
15under the set-aside described in subdivision (c) of Section 50199.20
16of the Health and Safety Code unless the project also receives a
17 preliminary reservation of federal low-income housing tax credits.

begin delete

18(iv) This subparagraph shall cease to be operative with respect
19to any project that receives a preliminary reservation of a credit
20on or after January 1, 2016.

end delete

21(2) (A) The California Tax Credit Allocation Committee shall
22certify to the housing sponsor the amount of tax credit under this
23section allocated to the housing sponsor for each credit period.

24(B) In the case of a partnership or an “S” corporation, the
25housing sponsor shall provide a copy of the California Tax Credit
26Allocation Committee certification to the taxpayer.

27(C) The taxpayer shall, upon request, provide a copy of the
28certification to the Franchise Tax Board.

29(D) All elections made by the taxpayer pursuant to Section 42
30of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating to low-income housing
31credit,end insert
apply to this section.

32(E) (i) Except as described in clause (ii), for buildings located
33in designated difficult development areas (DDAs) or qualified
34census tracts (QCTs), as defined in Section 42(d)(5)(B) of the
35Internal Revenue Code,begin insert relating to increase in credit for buildings
36in high-cost areas,end insert
credits may be allocated under this section in
37the amounts prescribed in subdivision (c), provided that the amount
38of credit allocated under Section 42 of the Internal Revenuebegin delete Codeend delete
39begin insert Code, relating to low-income housing credit,end insert is computed on 100
40percent of the qualified basis of the building.

P126  1(ii) Notwithstanding clause (i), the California Tax Credit
2Allocation Committee may allocate the credit for buildings located
3in DDAs or QCTs that are restricted to having 50 percent of its
4occupants be special needs households, as defined in the California
5Code of Regulations by the California Tax Credit Allocation
6Committee, even if the taxpayer receives federal credits pursuant
7to Section 42(d)(5)(B) of the Internal Revenue Code,begin insert relating to
8increase in credit for buildings in high-cost areas,end insert
provided that
9the credit allowed under this section shall not exceed 30 percent
10of the eligible basis of the building.

11(F) (i) The California Tax Credit Allocation Committee may
12allocate a credit under this section in exchange for a credit allocated
13pursuant to Section 42(d)(5)(B) of the Internal Revenuebegin delete Codeend delete
14begin insert Code, relating to increase in credit for buildings in high-cost areas,end insert
15 in amounts up to 30 percent of the eligible basis of a building if
16the credits allowed under Section 42 of the Internal Revenuebegin delete Codeend delete
17begin insert Code, relating to low-income housing credit,end insert are reduced by an
18equivalent amount.

19(ii) An equivalent amount shall be determined by the California
20Tax Credit Allocation Committee based upon the relative amount
21required to produce an equivalent state tax credit to the taxpayer.

22(c) Section 42(b) of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating
23to applicable percentage: 70 percent present value credit for
24certain new buildings; 30 percent present value credit for certain
25other buildings,end insert
shall be modified as follows:

26(1) In the case of any qualified low-income building placed in
27service by the housing sponsor during 1987, the term “applicable
28percentage” means 9 percent for each of the first three years and
293 percent for the fourth year for new buildings (whether or not the
30building is federally subsidized) and for existing buildings.

31(2) In the case of any qualified low-income building that receives
32an allocation after 1989 and is a new building not federally
33subsidized, the term “applicable percentage” means the following:

34(A) For each of the first three years, the percentage prescribed
35by the Secretary of the Treasury for new buildings that are not
36federally subsidized for the taxable year, determined in accordance
37with the requirements of Section 42(b)(2) of the Internal Revenue
38 Code,begin insert relating to temporary minimum credit rate for nonfederally
39subsidized new buildings,end insert
in lieu of the percentage prescribed in
40Sectionbegin delete 42(b)(1)(B)end deletebegin insert 42(b)(1)(A)end insert of the Internal Revenue Code.

P127  1(B) For the fourth year, the difference between 30 percent and
2the sum of the applicable percentages for the first three years.

3(3) In the case of any qualified low-income building that receives
4an allocation after 1989 and that is a new building that is federally
5subsidized or that is an existing building that is “at risk of
6conversion,” the term “applicable percentage” means the following:

7(A) For each of the first three years, the percentage prescribed
8by the Secretary of the Treasury for new buildings that are federally
9subsidized for the taxable year.

10(B) For the fourth year, the difference between 13 percent and
11the sum of the applicable percentages for the first three years.

12(4) For purposes of this section, the term “at risk of conversion,”
13with respect to an existing property means a property that satisfies
14all of the following criteria:

15(A) The property is a multifamily rental housing development
16in which at least 50 percent of the units receive governmental
17assistance pursuant to any of the following:

18(i) New construction, substantial rehabilitation, moderate
19rehabilitation, property disposition, and loan management set-aside
20programs, or any other program providing project-based assistance
21pursuant to Section 8 of the United States Housing Act of 1937,
22Section 1437f of Title 42 of the United States Code, as amended.

23(ii) The Below-Market-Interest-Rate Program pursuant to
24Section 221(d)(3) of the National Housing Act, Sections
251715l(d)(3) and (5) of Title 12 of the United States Code.

26(iii) Section 236 of the National Housing Act, Section 1715z-1
27of Title 12 of the United States Code.

28(iv) Programs for rent supplement assistance pursuant to Section
29101 of the Housing and Urban Development Act of 1965, Section
301701s of Title 12 of the United States Code, as amended.

31(v) Programs pursuant to Section 515 of the Housing Act of
321949, Section 1485 of Title 42 of the United States Code, as
33amended.

34(vi) The low-income housing credit program set forth in Section
3542 of the Internal Revenuebegin delete Code.end deletebegin insert Code, relating to low-income
36housing credit.end insert

37(B) The restrictions on rent and income levels will terminate or
38thebegin delete federalend deletebegin insert federallyend insert insured mortgage on the property is eligible
39for prepayment any time within five years before or after the date
40of application to the California Tax Credit Allocation Committee.

P128  1(C) The entity acquiring the property enters into a regulatory
2agreement that requires the property to be operated in accordance
3with the requirements of this section for a period equal to the
4greater of 55 years or the life of the property.

5(D) The property satisfies the requirements of Section 42(e) of
6the Internal Revenuebegin delete Code regarding rehabilitation expenditures,end delete
7begin insert Code, relating to rehabilitation expenditures treated as end insertbegin insertseparate
8new building,end insert
except that the provisions of Section
942(e)(3)(A)(ii)(I)begin delete doend deletebegin insert shallend insert not apply.

10(d) The term “qualified low-income housing project” as defined
11in Section 42(c)(2) of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating
12to qualified low-income building,end insert
is modified by adding the
13following requirements:

14(1) The taxpayer shall be entitled to receive a cash distribution
15from the operations of the project, after funding required reserves,
16that, at the election of the taxpayer, is equal to:

17(A) An amount not to exceed 8 percent of the lesser of:

18(i) The ownerbegin delete equity thatend deletebegin insert equity, whichend insert shall include the amount
19of the capital contributions actually paid to the housing sponsor
20and shall not include any amounts until they are paid on an investor
21note.

22(ii) Twenty percent of the adjusted basis of the building as of
23the close of the first taxable year of the credit period.

24(B) The amount of the cashflow from those units in the building
25that are not low-income units. For purposes of computing cashflow
26under this subparagraph, operating costs shall be allocated to the
27low-income units using the “floor space fraction,” as defined in
28Section 42 of the Internal Revenuebegin delete Code.end deletebegin insert Code, relating to
29low-income housing credit.end insert

30(C) Any amount allowed to be distributed under subparagraph
31(A) that is not available for distribution during the first five years
32of the compliance period may be accumulated and distributed any
33time during the first 15 years of the compliance period but not
34thereafter.

35(2) The limitation on return applies in the aggregate to the
36partners if the housing sponsor is a partnership and in the aggregate
37to the shareholders if the housing sponsor is an “S” corporation.

38(3) The housing sponsor shall apply any cash available for
39distribution in excess of the amount eligible to be distributed under
40paragraph (1) to reduce the rent on rent-restricted units or to
P129  1increase the number of rent-restricted units subject to the tests of
2Section 42(g)(1) of the Internal Revenuebegin delete Code.end deletebegin insert Code, relating to
3in general.end insert

4(e) The provisions of Section 42(f) of the Internal Revenuebegin delete Codeend delete
5begin insert Code, relating to definition and special rules relating to credit
6period,end insert
shall be modified as follows:

7(1) The term “credit period” as defined in Section 42(f)(1) of
8the Internal Revenuebegin delete Codeend deletebegin insert Code, relating to credit period defined,end insert
9 is modified by substituting “four taxable years” for “10 taxable
10years.”

11(2) The special rule for the first taxable year of the credit period
12under Section 42(f)(2) of the Internal Revenue begin delete Code doesend delete begin insert Code,
13relating to special rules for 1st year of credit period, shallend insert
not
14apply to the tax credit under this section.

15(3) Section 42(f)(3) of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating
16to determination of applicable percentage with respect to increases
17in qualified basis after 1st year of credit period,end insert
is modified to
18read:

19If, as of the close of any taxable year in the compliance period,
20after the first year of the credit period, the qualified basis of any
21building exceeds the qualified basis of that building as of the close
22of the first year of the credit period, the housing sponsor, to the
23 extent of its tax credit allocation, shall be eligible for a credit on
24the excess in an amount equal to the applicable percentage
25determined pursuant to subdivision (c) for the four-year period
26beginning with the taxable year in which the increase in qualified
27basis occurs.

28(f) The provisions of Section 42(h) of the Internal Revenue
29begin delete Codeend deletebegin insert Code, relating to limitation on aggregate credit allowable
30with respect to projects located in a state,end insert
shall be modified as
31follows:

32(1) Section 42(h)(2) of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating
33to allocated credit amount to apply to all taxable years ending
34during or after credit allocation year,end insert
does not apply and instead
35the following provisions apply:

36The total amount for the four-yearbegin insert creditend insert period of the housing
37credit dollars allocated in a calendar year to any building shall
38reduce the aggregate housing credit dollar amount of the California
39Tax Credit Allocation Committee for the calendar year in which
40the allocation is made.

P130  1(2) Paragraphs (3), (4), (5), (6)(E)(i)(II), (6)(F), (6)(G), (6)(I),
2(7), and (8) of Section 42(h) of the Internal Revenuebegin delete Codeend deletebegin insert Code,
3relating to limitation on aggregate credit allowable with respect
4to projects located in a state,end insert
do not apply to this section.

5(g) The aggregate housing credit dollar amount that may be
6allocated annually by the California Tax Credit Allocation
7Committee pursuant to this section, Section 12206, and Section
823610.5 shall be an amount equal to the sum of all the following:

9(1) Seventy million dollars ($70,000,000) for the 2001 calendar
10year, and, for the 2002 calendar year and each calendar year
11thereafter, seventy million dollars ($70,000,000) increased by the
12percentage, if any, by which the Consumer Price Index for the
13preceding calendar year exceeds the Consumer Price Index for the
142001 calendar year. For the purposes of this paragraph, the term
15“Consumer Price Index” means the last Consumer Price Index for
16All Urban Consumers published by the federal Department of
17Labor.

18(2) The unused housing credit ceiling, if any, for the preceding
19calendar years.

20(3) The amount of housing credit ceiling returned in the calendar
21year. For purposes of this paragraph, the amount of housing credit
22dollar amount returned in the calendar year equals the housing
23credit dollar amount previously allocated to any project that does
24not become a qualified low-income housing project within the
25period required by this section or to any project with respect to
26which an allocation is canceled by mutual consent of the California
27Tax Credit Allocation Committee and the allocation recipient.

28(4) Five hundred thousand dollars ($500,000) per calendar year
29for projects to provide farmworker housing, as defined in
30subdivision (h) of Section 50199.7 of the Health and Safety Code.

31(5) The amount of any unallocated or returned credits under
32former Sections 17053.14, 23608.2, and 23608.3, as those sections
33read prior to January 1, 2009, until fully exhausted for projects to
34provide farmworker housing, as defined in subdivision (h) of
35Section 50199.7 of the Health and Safety Code.

36(h) The term “compliance period” as defined in Section 42(i)(1)
37of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating to compliance period,end insert
38 is modified to mean, with respect to any building, the period of 30
39consecutive taxable years beginning with the first taxable year of
40the credit period with respect thereto.

P131  1(i) Section 42(j) of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating
2to recapture of credit,end insert
does not apply and the following
3requirements of this section shall be set forth in a regulatory
4agreement between the California Tax Credit Allocation Committee
5and the housing sponsor,begin delete whichend deletebegin insert and thisend insert agreement shall be
6subordinated, when required, to any lien or encumbrance of any
7banks or other institutional lenders to the project. The regulatory
8agreement entered into pursuant to subdivision (f) of Section
950199.14 of the Health and Safety Code shall apply, provided that
10the agreement includes all of the following provisions:

11(1) A term not less than the compliance period.

12(2) A requirement that the agreement be recorded in the official
13records of the county in which the qualified low-income housing
14project is located.

15(3) A provision stating which state and local agencies can
16enforce the regulatory agreement in the event the housing sponsor
17fails to satisfy any of the requirements of this section.

18(4) A provision that the regulatory agreement shall be deemed
19a contract enforceable by tenants as third-party beneficiaries thereto
20and that allows individuals, whether prospective, present, or former
21occupants of the building, who meet the income limitation
22applicable to the building, the right to enforce the regulatory
23agreement in any state court.

24(5) A provision incorporating the requirements of Section 42
25of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating to low-income housing
26credit,end insert
as modified by this section.

27(6) A requirement that the housing sponsor notify the California
28Tax Credit Allocation Committee or its designee if there is a
29determination by the Internal Revenue Service that the project is
30not in compliance with Section 42(g) of the Internal Revenuebegin delete Code.end delete
31
begin insert Code, relating to qualified low-income housing project.end insert

32(7) A requirement that the housing sponsor, as security for the
33performance of the housing sponsor’s obligations under the
34regulatory agreement, assign the housing sponsor’s interest in rents
35that it receives from the project, provided that until there is a
36default under the regulatory agreement, the housing sponsor is
37entitled to collect and retain the rents.

38(8) begin deleteThe end deletebegin insertA provision that the end insertremedies available in the event of
39a default under the regulatory agreement that is not cured within
40a reasonable curebegin delete period,end deletebegin insert periodend insert include, but are not limited to,
P132  1allowing any of the parties designated to enforce the regulatory
2agreement to collect all rents with respect to the project; taking
3possession of the project and operating the project in accordance
4with the regulatory agreement until the enforcer determines the
5housing sponsor is in a position to operate the project in accordance
6with the regulatory agreement; applying to any court for specific
7performance; securing the appointment of a receiver to operate
8the project; or any other relief as may be appropriate.

9(j) (1) The committee shall allocate the housing credit on a
10regular basis consisting of two or more periods in each calendar
11year during which applications may be filed and considered. The
12committee shall establish application filing deadlines, the maximum
13percentage of federal and state low-income housing tax credit
14ceiling that may be allocated by the committee in that period, and
15the approximate date on which allocations shall be made. If the
16enactment of federal or state law, the adoption of rules or
17regulations, or other similar events prevent the use of two allocation
18periods, the committee may reduce the number of periods and
19adjust the filing deadlines, maximum percentage of credit allocated,
20and the allocation dates.

21(2) The committee shall adopt a qualified allocation plan, as
22provided in Section 42(m)(1) of the Internal Revenuebegin delete Code.end deletebegin insert Code,
23relating to plans for allocation of credit among projects.end insert
In
24adopting this plan, the committee shall comply with the provisions
25of Sections 42(m)(1)(B) and 42(m)(1)(C) of the Internal Revenue
26
begin delete Code.end deletebegin insert Code, relating to qualified allocation plan and relating to
27certain selection criteria must be used, respectively.end insert

28(3) Notwithstanding Section 42(m) of the Internal Revenue
29Code,begin insert relating to responsibilities of housing credit agencies,end insert the
30California Tax Credit Allocation Committee shall allocate housing
31credits in accordance with the qualified allocation plan and
32regulations, which shall include the following provisions:

33(A) All housing sponsors, as defined by paragraph (3) of
34subdivision (a), shall demonstrate at the time the application is
35filed with the committee that the project meets the following
36threshold requirements:

37(i) The housing sponsor shall demonstratebegin insert thatend insert there is a need
38and demand for low-income housing in the community or region
39for which it is proposed.

P133  1(ii) The project’s proposed financing, including tax credit
2proceeds, shall be sufficient to complete the project and that the
3proposed operating income shall be adequate to operate the project
4for the extended use period.

5(iii) The project shall have enforceable financing commitments,
6either construction or permanent financing, for at least 50 percent
7of the total estimated financing of the project.

8(iv) The housing sponsor shall have and maintain control of the
9site for the project.

10(v) The housing sponsor shall demonstrate that the project
11complies with all applicable local land use and zoning ordinances.

12(vi) The housing sponsor shall demonstrate that the project
13development team has the experience and the financial capacity
14to ensure project completion and operation for the extended use
15period.

16(vii) The housing sponsor shall demonstrate the amount of tax
17credit that is necessary for the financial feasibility of the project
18and its viability as a qualified low-income housing project
19throughout the extended use period, taking into account operating
20expenses, a supportable debt service, reserves, funds set aside for
21rental subsidies and required equity, and a development fee that
22does not exceed a specified percentage of the eligible basis of the
23project prior to inclusion of the development fee in the eligible
24basis, as determined by the committee.

25(B) The committee shall give a preference to those projects
26satisfying all of the threshold requirements of subparagraph (A)
27if both of the following apply:

28(i) The project serves the lowest income tenants at rents
29affordable to those tenants.

30(ii) The project is obligated to serve qualified tenants for the
31longest period.

32(C) In addition to the provisions of subparagraphs (A) and (B),
33the committee shall use the following criteria in allocating housing
34credits:

35(i) Projects serving large families in which a substantial number,
36as defined by the committee, of all residential unitsbegin delete is comprised
37ofend delete
begin insert areend insert low-income units with three and more bedrooms.

38(ii) Projects providing single-room occupancy units serving
39very low income tenants.

P134  1(iii) Existing projects that are “at risk of conversion,” as defined
2by paragraph (4) of subdivision (c).

3(iv) Projects for which a public agency provides direct or indirect
4long-term financial support for at least 15 percent of the total
5project development costs or projects for which the owner’s equity
6constitutes at least 30 percent of the total project development
7costs.

8(v) Projects that provide tenant amenities not generally available
9to residents of low-income housing projects.

10(4) For purposes of allocating credits pursuant to this section,
11the committee shall not give preference to any project by virtue
12of the date of submission of its application.

13(k) Section 42(l) of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating
14to certifications and other reports to secretary,end insert
shall be modified
15as follows:

16The term “secretary” shall be replaced by the termbegin delete “California
17Franchiseend delete
begin insert “Franchiseend insert Tax Board.”

18(l) In the case in which the credit allowed under this section
19exceeds the net tax, the excessbegin delete creditend delete may be carried over to reduce
20the net tax in the following year, and succeedingbegin delete taxableend delete years, if
21necessary, until the credit has been exhausted.

22(m) A project that received an allocation of a 1989 federal
23housing credit dollar amount shall be eligible to receive an
24allocation of a 1990 state housing credit dollar amount, subject to
25all of the following conditions:

26(1) The project was not placed in service prior to 1990.

27(2) To the extent the amendments made to this section by the
28Statutes of 1990 conflict with any provisions existing in this section
29prior to those amendments, the prior provisions of law shall prevail.

30(3) Notwithstanding paragraph (2), a project applying for an
31allocation under this subdivision is subject to the requirements of
32paragraph (3) of subdivision (j).

33(n) The credit period with respect to an allocation of credit in
341989 by the California Tax Credit Allocation Committee of which
35any amount is attributable to unallocated credit from 1987 or 1988
36shall not begin until after December 31, 1989.

37(o) The provisions of Section 11407(a) of Public Law 101-508,
38relating to the effective date of the extension of the low-income
39housing credit, apply to calendar years after 1989.

P135  1(p) The provisions of Section 11407(c) of Public Law 101-508,
2relating to election to accelerate credit, do not apply.

begin insert

3
(q) (1) For a project that receives a preliminary reservation
4under this section beginning on or after January 1, 2016, and
5before Janaury 1, 2020, a taxpayer may make an irrevocable
6election in its application to the California Tax Credit Allocation
7Committee to sell all or any portion of any credit allowed under
8this section to one or more unrelated parties for each taxable year
9in which the credit is allowed subject to both of the following
10conditions:

end insert
begin insert

11
(A) The credit is sold for consideration that is not less than 80
12percent of the amount of the credit.

end insert
begin insert

13
(B) The unrelated party or parties purchasing any or all of the
14credit pursuant to this subdivision is a taxpayer allowed the credit
15under this section for the taxable year of the purchase or any prior
16taxable year or is a taxpayer allowed the federal credit under
17Section 42 of the Internal Revenue Code, relating to low-income
18housing credit, for the taxable year of the purchase or any prior
19taxable year in connection with any project located in this state.
20For purposes of this subparagraph, “taxpayer allowed the credit
21under this section” means a taxpayer that is allowed the credit
22under this section without regard to the purchase of a credit
23pursuant to this subdivision.

end insert
begin insert

24
(2) (A) The taxpayer that originally received the credit shall
25report to the California Tax Credit Allocation Committee within
2610 days of the sale of the credit, in the form and manner specified
27by the California Tax Credit Allocation Committee, all required
28information regarding the purchase and sale of the credit,
29including the social security or other taxpayer identification
30number of the unrelated party or parties to whom the credit has
31been sold, the face amount of the credit sold, and the amount of
32consideration received by the taxpayer for the sale of the credit.

end insert
begin insert

33
(B) The California Tax Credit Allocation Committee shall
34provide an annual listing to the Franchise Tax Board, in a form
35and manner agreed upon by the California Tax Credit Allocation
36Committee and the Franchise Tax Board, of the taxpayers that
37have sold or purchased a credit pursuant to this subdivision.

end insert
begin insert

38
(3) (A) A credit may be sold pursuant to this subdivision to
39more than one unrelated party.

end insert
begin insert

P136  1
(B) (i) Except as provided in clause (ii), a credit shall not be
2resold by the unrelated party to another taxpayer or other party.

end insert
begin insert

3
(ii) All or any portion of any credit allowed under this section
4may be resold once by an original purchaser to one or more
5unrelated parties, subject to all of the requirements of this
6subdivision.

end insert
begin insert

7
(4) Notwithstanding any other law, the taxpayer that originally
8received the credit that is sold pursuant to paragraph (1) shall
9remain solely liable for all obligations and liabilities imposed on
10the taxpayer by this section with respect to the credit, none of
11which shall apply to a party to whom the credit has been sold or
12subsequently transferred. Parties that purchase credits pursuant
13to paragraph (1) shall be entitled to utilize the purchased credits
14in the same manner in which the taxpayer that originally received
15the credit could utilize them.

end insert
begin insert

16
(5) A taxpayer shall not sell a credit allowed by this section if
17the taxpayer was allowed the credit on any tax return of the
18taxpayer.

end insert
begin insert

19
(6) Notwithstanding paragraph (1), the taxpayer, with the
20approval of the Executive Director of the California Tax Credit
21Allocation Committee, may rescind the election to sell all or any
22portion of the credit allowed under this section if the consideration
23for the credit falls below 80 percent of the amount of the credit
24after the California Tax Credit Allocation Committee reservation.

end insert
begin insert

25
(r) The California Tax Credit Allocation Committee may
26prescribe rules, guidelines, or procedures necessary or appropriate
27to carry out the purposes of this section, including any guidelines
28regarding the allocation of the credit allowed under this section.
29Chapter 3.5 (commencing with Section 11340) of Part 1 of Division
303 of Title 2 of the Government Code shall not apply to any rule,
31guideline, or procedure prescribed by the California Tax Credit
32Allocation Committee pursuant to this section.

end insert
begin delete

33(q)

end delete

34begin insert(s)end insert The amendments to this section made bybegin delete the act adding this
35subdivisionend delete
begin insert Chapter 1222 of the Statutes of 1993end insert apply only to
36taxable years beginning on or after January 1, 1994.

begin delete

37(r)

end delete

38begin insert(t)end insert This section shall remain in effect on and after December 1,
391990, for as long as Section 42 of the Internal Revenue Code,
40relating to low-income housingbegin delete credits,end deletebegin insert credit,end insert remains in effect.
P137  1Any unused credit may continue to be carried forward, as provided
2in subdivision (l), until the credit has been exhausted.

3begin insert

begin insertSEC. 89.end insert  

end insert

begin insertSection 18900.24 of the end insertbegin insertRevenue and Taxation Codeend insert
4
begin insert is amended to read:end insert

5

18900.24.  

All money transferred to the Habitat for Humanity
6Fund, upon appropriation by the Legislature, shall be allocated as
7follows:

8(a) To the Franchise Tax Board, the Controller, and the
9Department of Housing and Community Development for
10reimbursement of all costs incurred by the Franchise Tax Board,
11the Controller, and the Department of Housing and Community
12Development in connection with their duties under this article.

begin delete

13(b) The Department of Housing and Community Development
14for distribution of grants to Habitat for Humanity affiliates in
15California that are in active status, as described on the Business
16Search page of the Secretary of State’s Internet Web site, and that
17are exempt from federal income taxation as an organization
18described in Section 501(c)(3) of the Internal Revenue Code. The
19Department of Housing and Community Development shall award
20grants through a competitive, project-specific grant process and
21be responsible for overseeing that grant program. A Habitat for
22Humanity affiliate shall not use a grant award for administrative
23expenses or for any purposes outside of California.

end delete
begin insert

24
(b) (1) To the Department of Housing and Community
25Development for disbursement to Habitat for Humanity of
26California, Inc., a California nonprofit public benefit corporation
27representing and supporting California Habitat for Humanity
28affiliates as a state-support organization.

end insert
begin insert

29
(2) Habitat for Humanity of California, Inc., shall submit a plan
30to the Department of Housing and Community Development, within
3160 calendar days of receiving a disbursement, for the use and
32competitive project-specific distribution of moneys pursuant to
33this article to Habitat for Humanity affiliates in California that
34are in active status, as described on the Business Search page of
35the Secretary of State’s Internet Web site, and that are exempt
36from federal income taxation as an organization described in
37Section 501(c)(3) of the Internal Revenue Code.

end insert
begin insert

38
(c) Habitat for Humanity of California, Inc., shall not use more
39than 5 percent of the moneys received pursuant to this article for
40administrative expenses.

end insert
begin insert

P138  1
(d) A Habitat for Humanity affiliate shall not use the moneys
2received pursuant to this article for administrative expenses or for
3purposes outside of California.

end insert
begin insert

4
(e) Habitat for Humanity of California, Inc., shall submit an
5annual audit of the program to the Department of Housing and
6Community Development within 60 calendar days of the completion
7of the audit.

end insert
8begin insert

begin insertSEC. 90.end insert  

end insert

begin insertSection 23610.5 of the end insertbegin insertRevenue and Taxation Codeend insert
9
begin insert is amended to read:end insert

10

23610.5.  

(a) (1) There shall be allowed as a credit against the
11begin delete “tax” (asend deletebegin insert “tax,”end insert defined by Sectionbegin delete 23036)end deletebegin insert 23036,end insert a state
12low-income housing tax credit in an amount equal to the amount
13determined in subdivision (c), computed in accordance with Section
1442 of the Internal Revenuebegin delete Code of 1986,end deletebegin insert Code, relating to
15low-income housing credit,end insert
except as otherwise provided in this
16section.

17(2) “Taxpayer,” for purposes of this section, means the sole
18owner in the case of a “C” corporation, the partners in the case of
19a partnership, and the shareholders in the case of an “S”
20corporation.

21(3) “Housing sponsor,” for purposes of this section, means the
22sole owner in the case of a “C” corporation, the partnership in the
23case of a partnership, and the “S” corporation in the case of an “S”
24corporation.

25(b) (1) The amount of the credit allocated to any housing
26sponsor shall be authorized by the California Tax Credit Allocation
27Committee, or any successor thereof, based on a project’s need
28for the credit for economic feasibility in accordance with the
29 requirements of this section.

30(A) The low-income housing project shall be located in
31California and shall meet either of the following requirements:

32(i) Except for projects to provide farmworker housing, as defined
33in subdivision (h) of Section 50199.7 of the Health and Safety
34Code, that are allocated credits solely under the set-aside described
35in subdivision (c) of Section 50199.20 of the Health and Safety
36Code, the project’s housing sponsor has been allocated by the
37California Tax Credit Allocation Committee a credit for federal
38income tax purposes under Section 42 of the Internal Revenue
39
begin delete Code.end deletebegin insert Code, relating to low-income housing credit.end insert

P139  1(ii) It qualifies for a credit under Section 42(h)(4)(B) of the
2Internal Revenuebegin delete Code.end deletebegin insert Code, relating to special rule where 50
3percent or more of building is financed with tax-exempt bonds
4subject to volume cap.end insert

5(B) The California Tax Credit Allocation Committee shall not
6require fees for the credit under this section in addition to those
7fees required for applications for the tax credit pursuant to Section
842 of the Internal Revenuebegin delete Code.end deletebegin insert Code, relating to low-income
9housing credit.end insert
The committee may require a fee if the application
10for the credit under this section is submitted in a calendar year
11after the year the application is submitted for the federal tax credit.

12(C) (i) For a project that receives a preliminary reservation of
13the state low-income housing tax credit, allowed pursuant to
14subdivision (a), on or after January 1, 2009, and before January 1,
15begin delete 2016,end deletebegin insert 2020,end insert the credit shall be allocated to the partners of a
16partnership owning the project in accordance with the partnership
17agreement, regardless of how the federal low-income housing tax
18credit with respect to the project is allocated to the partners, or
19whether the allocation of the credit under the terms of the
20agreement has substantial economic effect, within the meaning of
21Section 704(b) of the Internal Revenuebegin delete Code.end deletebegin insert Code, relating to
22determination of distributive share.end insert

23(ii) To the extent the allocation of the credit to a partner under
24this section lacks substantial economic effect, any loss or deduction
25otherwise allowable under this part that is attributable to the sale
26or other disposition of that partner’s partnership interest made prior
27to the expiration of the federal credit shall not be allowed in the
28taxable year in which the sale or other disposition occurs, but shall
29instead be deferred until and treated as if it occurred in the first
30taxable year immediately following the taxable year in which the
31federal credit period expires for the project described in clause (i).

32(iii) This subparagraph does not apply to a project that receives
33a preliminary reservation of state low-income housing tax credits
34under the set-aside described in subdivision (c) of Section 50199.20
35of the Health and Safety Code unless the project also receives a
36preliminary reservation of federal low-income housing tax credits.

begin delete

37(iv) This subparagraph shall cease to be operative with respect
38to any project that receives a preliminary reservation of a credit
39on or after January 1, 2016.

end delete

P140  1(2) (A) The California Tax Credit Allocation Committee shall
2certify to the housing sponsor the amount of tax credit under this
3section allocated to the housing sponsor for each credit period.

4(B) In the case of a partnership or an “S” corporation, the
5housing sponsor shall provide a copy of the California Tax Credit
6Allocation Committee certification to the taxpayer.

7(C) The taxpayer shall, upon request, provide a copy of the
8certification to the Franchise Tax Board.

9(D) All elections made by the taxpayer pursuant to Section 42
10of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating to low-income housing
11credit,end insert
apply to this section.

12(E) (i) Except as described in clause (ii), for buildings located
13in designated difficult development areas (DDAs) or qualified
14census tracts (QCTs), as defined in Section 42(d)(5)(B) of the
15Internal Revenue Code,begin insert relating to increase in credit for buildings
16in high-cost areas,end insert
credits may be allocated under this section in
17the amounts prescribed in subdivision (c), provided that the amount
18of credit allocated under Section 42 of the Internal Revenuebegin delete Codeend delete
19begin insert Code, relating to low-income housing credit,end insert is computed on 100
20percent of the qualified basis of the building.

21(ii) Notwithstanding clause (i), the California Tax Credit
22Allocation Committee may allocate the credit for buildings located
23in DDAs or QCTs that are restricted to having 50 percent of its
24occupants be special needs households, as defined in the California
25Code of Regulations by the California Tax Credit Allocation
26Committee, even if the taxpayer receives federal credits pursuant
27to Section 42(d)(5)(B) of the Internal Revenue Code,begin insert relating to
28increase in credit for buildings in high cost areas,end insert
provided that
29the credit allowed under this section shall not exceed 30 percent
30of the eligible basis of the building.

31(F) (i) The California Tax Credit Allocation Committee may
32allocate a credit under this section in exchange for a credit allocated
33pursuant to Section 42(d)(5)(B) of the Internal Revenuebegin delete Codeend delete
34begin insert Code, relating to increase in credit for buildings in high cost areas,end insert
35 in amounts up to 30 percent of the eligible basis of a building if
36the credits allowed under Section 42 of the Internal Revenuebegin delete Codeend delete
37begin insert Code, relating to low-income housing credit,end insert are reduced by an
38equivalent amount.

P141  1(ii) An equivalent amount shall be determined by the California
2Tax Credit Allocation Committee based upon the relative amount
3required to produce an equivalent state tax credit to the taxpayer.

4(c) Section 42(b) of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating
5to applicable percentage: 70 percent present value credit for
6certain new buildings; 30 percent present value credit for certain
7other buildings,end insert
shall be modified as follows:

8(1) In the case of any qualified low-income building placed in
9service by the housing sponsor during 1987, the term “applicable
10percentage” means 9 percent for each of the first three years and
113 percent for the fourth year for new buildings (whether or not the
12building is federally subsidized) and for existing buildings.

13(2) In the case of any qualified low-income building that receives
14an allocation after 1989 and is a new building not federally
15subsidized, the term “applicable percentage” means the following:

16(A) For each of the first three years, the percentage prescribed
17by the Secretary of the Treasury for new buildings that are not
18federally subsidized for the taxable year, determined in accordance
19with the requirements of Section 42(b)(2) of the Internal Revenue
20Code,begin insert relating to temporary minimum credit rate for nonfederally
21subsidized new buildings,end insert
in lieu of the percentage prescribed in
22Section 42(b)(1)(A) of the Internal Revenue Code.

23(B) For the fourth year, the difference between 30 percent and
24the sum of the applicable percentages for the first three years.

25(3) In the case of any qualified low-income building that receives
26an allocation after 1989 and that is a new building that is federally
27subsidized or that is an existing building that is “at risk of
28conversion,” the term “applicable percentage” means the following:

29(A) For each of the first three years, the percentage prescribed
30by the Secretary of the Treasury for new buildings that are federally
31subsidized for the taxable year.

32(B) For the fourth year, the difference between 13 percent and
33the sum of the applicable percentages for the first three years.

34(4) For purposes of this section, the term “at risk of conversion,”
35with respect to an existing property means a property that satisfies
36all of the following criteria:

37(A) The property is a multifamily rental housing development
38in which at least 50 percent of the units receive governmental
39assistance pursuant to any of the following:

P142  1(i) New construction, substantial rehabilitation, moderate
2rehabilitation, property disposition, and loan management set-aside
3programs, or any other program providing project-based assistance
4pursuant to Section 8 of the United States Housing Act of 1937,
5Section 1437f of Title 42 of the United States Code, as amended.

6(ii) The Below-Market-Interest-Rate Program pursuant to
7Section 221(d)(3) of the National Housing Act, Sections
81715l(d)(3) and (5) of Title 12 of the United States Code.

9(iii) Section 236 of the National Housing Act, Section 1715z-1
10of Title 12 of the United States Code.

11(iv) Programs for rent supplement assistance pursuant to Section
12101 of the Housing and Urban Development Act of 1965, Section
131701s of Title 12 of the United States Code, as amended.

14(v) Programs pursuant to Section 515 of the Housing Act of
151949, Section 1485 of Title 42 of the United States Code, as
16amended.

17(vi) The low-income housing credit program set forth in Section
1842 of the Internal Revenuebegin delete Code.end deletebegin insert Code, relating to low-income
19housing credit.end insert

20(B) The restrictions on rent and income levels will terminate or
21the federally insured mortgage on the property is eligible for
22prepayment any time within five years before or after the date of
23application to the California Tax Credit Allocation Committee.

24(C) The entity acquiring the property enters into a regulatory
25agreement that requires the property to be operated in accordance
26with the requirements of this section for a period equal to the
27greater of 55 years or the life of the property.

28(D) The property satisfies the requirements of Section 42(e) of
29the Internal Revenuebegin delete Code regarding rehabilitation expendituresend delete
30begin insert Code, relating to rehabilitation expenditures treated as end insertbegin insertseparate
31new buildingend insert
, except that the provisions of Section
3242(e)(3)(A)(ii)(I) shall not apply.

33(d) The term “qualified low-income housing project” as defined
34in Section 42(c)(2) of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating
35to qualified low-income building,end insert
is modified by adding the
36following requirements:

37(1) The taxpayer shall be entitled to receive a cash distribution
38from the operations of the project, after funding required reserves,
39begin delete thatend deletebegin insert that,end insert at the election of the taxpayer, is equal to:

40(A) An amount not to exceed 8 percent of the lesser of:

P143  1(i) The owner equity,begin delete thatend deletebegin insert whichend insert shall include the amount of the
2capital contributions actually paid to the housing sponsor and shall
3not include any amounts until they are paid on an investor note.

4(ii) Twenty percent of the adjusted basis of the building as of
5the close of the first taxable year of the credit period.

6(B) The amount of the cashflow from those units in the building
7that are not low-income units. For purposes of computing cashflow
8under this subparagraph, operating costs shall be allocated to the
9low-income units using the “floor space fraction,” as defined in
10Section 42 of the Internal Revenuebegin delete Code.end deletebegin insert Code, relating to
11low-income housing credit.end insert

12(C) Any amount allowed to be distributed under subparagraph
13(A) that is not available for distribution during the first five years
14of the compliance period may be accumulated and distributed any
15time during the first 15 years of the compliance period but not
16thereafter.

17(2) The limitation on return applies in the aggregate to the
18partners if the housing sponsor is a partnership and in the aggregate
19to the shareholders if the housing sponsor is an “S” corporation.

20(3) The housing sponsor shall apply any cash available for
21distribution in excess of the amount eligible to be distributed under
22paragraph (1) to reduce the rent on rent-restricted units or to
23increase the number of rent-restricted units subject to the tests of
24Section 42(g)(1) of the Internal Revenuebegin delete Code.end deletebegin insert Code, relating to
25in general.end insert

26(e) The provisions of Section 42(f) of the Internal Revenuebegin delete Codeend delete
27begin insert Code, relating to definition and special rules relating to credit
28period,end insert
shall be modified as follows:

29(1) The term “credit period” as defined in Section 42(f)(1) of
30the Internal Revenuebegin delete Codeend deletebegin insert Code, relating to credit period defined,end insert
31 is modified by substituting “four taxable years” for “10 taxable
32years.”

33(2) The special rule for the first taxable year of the credit period
34under Section 42(f)(2) of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating
35to special rule for 1st year of credit period,end insert
shall not apply to the
36tax credit under this section.

37(3) Section 42(f)(3) of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating
38to determination of applicable percentage with respect to increases
39in qualified basis after 1st year of credit period,end insert
is modified to
40read:

P144  1If, as of the close of any taxable year in the compliance period,
2after the first year of the credit period, the qualified basis of any
3building exceeds the qualified basis of that building as of the close
4of the first year of the credit period, the housing sponsor, to the
5extent of its tax credit allocation, shall be eligible for a credit on
6the excess in an amount equal to the applicable percentage
7determined pursuant to subdivision (c) for the four-year period
8beginning with the later of the taxable years in which the increase
9in qualified basis occurs.

10(f) The provisions of Section 42(h) of the Internal Revenue
11begin delete Codeend deletebegin insert Code, relating to limitation on aggregate credit allowable
12with respect to projects located in a state,end insert
shall be modified as
13follows:

14(1) Section 42(h)(2) of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating
15to allocated credit amount to apply to all taxable years ending
16during or after credit allocation year,end insert
does not apply and instead
17the following provisions apply:

18The total amount for the four-year credit period of the housing
19credit dollars allocated in a calendar year to any building shall
20reduce the aggregate housing credit dollar amount of the California
21Tax Credit Allocation Committee for the calendar year in which
22the allocation is made.

23(2) Paragraphs (3), (4), (5), (6)(E)(i)(II), (6)(F), (6)(G), (6)(I),
24(7), and (8) of Section 42(h) of the Internal Revenuebegin delete Codeend deletebegin insert Code,
25relating to limitation on aggregate credit allowable with respect
26to projects located in a state,end insert
do notbegin delete apply.end deletebegin insert apply to this section.end insert

27(g) The aggregate housing credit dollar amount that may be
28allocated annually by the California Tax Credit Allocation
29Committee pursuant to this section, Section 12206, and Section
3017058 shall be an amount equal to the sum of all the following:

31(1) Seventy million dollars ($70,000,000) for the 2001 calendar
32year, and, for the 2002 calendar year and each calendar year
33thereafter, seventy million dollars ($70,000,000) increased by the
34percentage, if any, by which the Consumer Price Index for the
35preceding calendar year exceeds the Consumer Price Index for the
362001 calendar year. For the purposes of this paragraph, the term
37“Consumer Price Index” means the last Consumer Price Index for
38All Urban Consumers published by the federal Department of
39Labor.

P145  1(2) The unused housing credit ceiling, if any, for the preceding
2calendar years.

3(3) The amount of housing credit ceiling returned in the calendar
4year. For purposes of this paragraph, the amount of housing credit
5dollar amount returned in the calendar year equals the housing
6credit dollar amount previously allocated to any project that does
7not become a qualified low-income housing project within the
8period required by this section or to any project with respect to
9which an allocation is canceled by mutual consent of the California
10Tax Credit Allocation Committee and the allocation recipient.

11(4) Five hundred thousand dollars ($500,000) per calendar year
12for projects to provide farmworker housing, as defined in
13subdivision (h) of Section 50199.7 of the Health and Safety Code.

14(5) The amount of any unallocated or returned credits under
15former Sections 17053.14, 23608.2, and 23608.3, as those sections
16read prior to January 1, 2009, until fully exhausted for projects to
17provide farmworker housing, as defined in subdivision (h) of
18Section 50199.7 of the Health and Safety Code.

19(h) The term “compliance period” as defined in Section 42(i)(1)
20of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating to compliance period,end insert
21 is modified to mean, with respect to any building, the period of 30
22consecutive taxable years beginning with the first taxable year of
23the credit period with respect thereto.

24(i) Section 42(j) of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating
25to recapture of credit,end insert
does not apply and the following shall be
26substituted in its place:

27The requirements of this section shall be set forth in a regulatory
28agreement between the California Tax Credit Allocation Committee
29and the housing sponsor, and this agreement shall be subordinated,
30when required, to any lien or encumbrance of any banks or other
31institutional lenders to the project. The regulatory agreement
32entered into pursuant to subdivision (f) of Section 50199.14 of the
33Health and Safety Code shall apply, provided that the agreement
34includes all of the following provisions:

35(1) A term not less than the compliance period.

36(2) A requirement that the agreement be recorded in the official
37records of the county in which the qualified low-income housing
38project is located.

P146  1(3) A provision stating which state and local agencies can
2enforce the regulatory agreement in the event the housing sponsor
3fails to satisfy any of the requirements of this section.

4(4) A provision that the regulatory agreement shall be deemed
5a contract enforceable by tenants as third-party beneficiaries
6begin delete thereto,end deletebegin insert theretoend insert and that allows individuals, whether prospective,
7present, or former occupants of the building, who meet the income
8limitation applicable to the building, the right to enforce the
9regulatory agreement in any state court.

10(5) A provision incorporating the requirements of Section 42
11of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating to low-income housing
12credit,end insert
as modified by this section.

13(6) A requirement that the housing sponsor notify the California
14Tax Credit Allocation Committee or its designee if there is a
15determination by the Internal Revenue Service that the project is
16not in compliance with Section 42(g) of the Internal Revenuebegin delete Code.end delete
17
begin insert Code, relating to qualified low-income housing project.end insert

18(7) A requirement that the housing sponsor, as security for the
19performance of the housing sponsor’s obligations under the
20regulatory agreement, assign the housing sponsor’s interest in rents
21that it receives from the project, provided that until there is a
22default under the regulatory agreement, the housing sponsor is
23entitled to collect and retain the rents.

24(8) A provision that the remedies available in the event of a
25default under the regulatory agreement that is not cured within a
26reasonable cure period include, but are not limited to, allowing
27any of the parties designated to enforce the regulatory agreement
28to collect all rents with respect to the project; taking possession of
29the project and operating the project in accordance with the
30regulatory agreement until the enforcer determines the housing
31sponsor is in a position to operate the project in accordance with
32the regulatory agreement; applying to any court for specific
33performance; securing the appointment of a receiver to operate
34the project; or any other relief as may be appropriate.

35(j) (1) The committee shall allocate the housing credit on a
36regular basis consisting of two or more periods in each calendar
37year during which applications may be filed and considered. The
38committee shall establish application filing deadlines, the maximum
39percentage of federal and state low-income housing tax credit
40ceiling that may be allocated by the committee in that period, and
P147  1the approximate date on which allocations shall be made. If the
2enactment of federal or state law, the adoption of rules or
3regulations, or other similar events prevent the use of two allocation
4periods, the committee may reduce the number of periods and
5adjust the filing deadlines, maximum percentage of credit allocated,
6andbegin insert theend insert allocation dates.

7(2) The committee shall adopt a qualified allocation plan, as
8provided in Section 42(m)(1) of the Internal Revenuebegin delete Code.end deletebegin insert Code,
9relating to plans for allocation of credit among projects.end insert
In
10adopting this plan, the committee shall comply with the provisions
11of Sections 42(m)(1)(B) and 42(m)(1)(C) of the Internal Revenue
12
begin delete Code.end deletebegin insert Code, relating to qualified allocation plan and relating to
13certain selection criteria must be used, respectively.end insert

14(3) Notwithstanding Section 42(m) of the Internal Revenue
15Code,begin insert relating to responsibilities of housing credit agencies,end insert the
16California Tax Credit Allocation Committee shall allocate housing
17credits in accordance with the qualified allocation plan and
18regulations, which shall include the following provisions:

19(A) All housing sponsors, as defined by paragraph (3) of
20subdivision (a), shall demonstrate at the time the application is
21filed with the committee that the project meets the following
22threshold requirements:

23(i) The housing sponsor shall demonstrate that there is a need
24for low-income housing in the community or region for which it
25is proposed.

26(ii) The project’s proposed financing, including tax credit
27proceeds, shall be sufficient to complete the project and shall be
28adequate to operate the project for the extended use period.

29(iii) The project shall have enforceable financing commitments,
30either construction or permanent financing, for at least 50 percent
31of the total estimated financing of the project.

32(iv) The housing sponsor shall have and maintain control of the
33site for the project.

34(v) The housing sponsor shall demonstrate that the project
35complies with all applicable local land use and zoning ordinances.

36(vi) The housing sponsor shall demonstrate that the project
37development team has the experience and the financial capacity
38to ensure project completion and operation for the extended use
39period.

P148  1(vii) The housing sponsor shall demonstrate the amount of tax
2credit that is necessary for the financial feasibility of the project
3and its viability as a qualified low-income housing project
4throughout the extended use period, taking into account operating
5expenses, a supportable debt service, reserves, funds set aside for
6rental subsidies and required equity, and a development fee that
7does not exceed a specified percentage of the eligible basis of the
8project prior to inclusion of the development fee in the eligible
9basis, as determined by the committee.

10(B) The committee shall give a preference to those projects
11satisfying all of the threshold requirements of subparagraph (A)
12if both of the following apply:

13(i) The project serves the lowest income tenants at rents
14affordable to those tenants.

15(ii) The project is obligated to serve qualified tenants for the
16longest period.

17(C) In addition to the provisions of subparagraphs (A) and (B),
18the committee shall use the following criteria in allocating housing
19credits:

20(i) Projects serving large families in which a substantial number,
21as defined by the committee, of all residential units are low-income
22units with three and more bedrooms.

23(ii) Projects providing single-room occupancy units serving
24very low income tenants.

25(iii) Existing projects that are “at risk of conversion,” as defined
26by paragraph (4) of subdivision (c).

27(iv) Projects for which a public agency provides direct or indirect
28long-term financial support for at least 15 percent of the total
29project development costs or projects for which the owner’s equity
30constitutes at least 30 percent of the total project development
31costs.

32(v) Projects that provide tenant amenities not generally available
33to residents of low-income housing projects.

34(4) For purposes of allocating credits pursuant to this section,
35the committee shall not give preference to any project by virtue
36of the date of submission of its application except to break a tie
37when two or more of the projects have an equal rating.

38(5) Not less than 20 percent of the low-income housing tax
39credits available annually under this section, Section 12206, and
40Section 17058 shall be set aside for allocation to rural areas as
P149  1defined in Section 50199.21 of the Health and Safety Code. Any
2amount of credit set aside for rural areas remaining on or after
3October 31 of any calendar year shall be available for allocation
4to any eligible project. No amount of credit set aside for rural areas
5shall be considered available for any eligible project so long as
6there are eligible rural applications pending on October 31.

7(k) Section 42(l) of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating
8to certifications and other reports to secretary,end insert
shall be modified
9as follows:

10The term “secretary” shall be replaced by the termbegin delete “California
11Franchiseend delete
begin insert “Franchiseend insert Tax Board.”

12(l) In the case in which thebegin delete stateend delete credit allowed under this section
13exceeds the “tax,” the excess may be carried over to reduce the
14“tax” in the following year, and succeeding years if necessary,
15until the credit has been exhausted.

16(m) A project that received an allocation of a 1989 federal
17housing credit dollar amount shall be eligible to receive an
18allocation of a 1990 state housing credit dollar amount, subject to
19all of the following conditions:

20(1) The project was not placed in service prior to 1990.

21(2) To the extent the amendments made to this section by the
22Statutes of 1990 conflict with any provisions existing in this section
23prior to those amendments, the prior provisions of law shall prevail.

24(3) Notwithstanding paragraph (2), a project applying for an
25allocation under this subdivisionbegin delete shall beend deletebegin insert isend insert subject to the
26requirements of paragraph (3) of subdivision (j).

27(n) The credit period with respect to an allocation of credit in
281989 by the California Tax Credit Allocation Committee of which
29any amount is attributable to unallocated credit from 1987 or 1988
30shall not begin until after December 31, 1989.

31(o) The provisions of Section 11407(a) of Public Law 101-508,
32relating to the effective date of the extension of the low-income
33housing credit, apply to calendar years after 1989.

34(p) The provisions of Section 11407(c) of Public Law 101-508,
35relating to election to accelerate credit, do not apply.

36(q) (1) A corporation may elect to assign any portion of any
37credit allowed under this section to one or more affiliated
38corporations for each taxable year in which the credit is allowed.
39For purposes of this subdivision, “affiliated corporation” has the
40meaning provided in subdivision (b) of Section 25110, as that
P150  1section was amended by Chapter 881 of the Statutes of 1993, as
2of the last day of the taxable year in which the credit is allowed,
3except that “100 percent” is substituted for “more than 50 percent”
4wherever it appears in the section, as that section was amended by
5Chapter 881 of the Statutes of 1993, and “voting common stock”
6is substituted for “voting stock” wherever it appears in the section,
7as that section was amended by Chapter 881 of the Statutes of
81993.

9(2) The election provided in paragraph (1):

10(A) May be based on any method selected by the corporation
11that originally receives the credit.

12(B) Shall be irrevocable for the taxable year the credit is allowed,
13once made.

14(C) May be changed for any subsequent taxable year if the
15election to make the assignment is expressly shown on each of the
16returns of the affiliated corporations that assign and receive the
17credits.

begin insert

18
(r) (1) For a project that receives a preliminary reservation
19under this section beginning on or after January 1, 2016, and
20before January 1, 2020, a taxpayer may make an irrevocable
21election in its application to the California Tax Credit Allocation
22Committee to sell all or any portion of any credit allowed under
23this section to one or more unrelated parties for each taxable year
24in which the credit is allowed subject to both of the following
25conditions:

end insert
begin insert

26
(A) The credit is sold for consideration that is not less than 80
27percent of the amount of the credit.

end insert
begin insert

28
(B) (i) The unrelated party or parties purchasing any or all of
29the credit pursuant to this subdivision is a taxpayer allowed the
30credit under this section for the taxable year of the purchase or
31any prior taxable year or is a taxpayer allowed the federal credit
32under Section 42 of the Internal Revenue Code, relating to
33low-income housing credit, for the taxable year of the purchase
34or any prior taxable year in connection with any project located
35in this state.

end insert
begin insert

36
(ii) For purposes of this subparagraph, “taxpayer allowed the
37credit under this section” means a taxpayer that is allowed the
38credit under this section without regard to the purchase of a credit
39pursuant to this subdivision without regard to any of the following:

end insert
begin insert

P151  1
(I) The purchase of a credit under this section pursuant to this
2subdivision.

end insert
begin insert

3
(II) The assignment of a credit under this section pursuant to
4subdivision (q).

end insert
begin insert

5
(III) The assignment of a credit under this section pursuant to
6Section 23363.

end insert
begin insert

7
(2) (A) The taxpayer that originally received the credit shall
8report to the California Tax Credit Allocation Committee within
910 days of the sale of the credit, in the form and manner specified
10by the California Tax Credit Allocation Committee, all required
11information regarding the purchase and sale of the credit,
12including the social security or other taxpayer identification
13number of the unrelated party or parties to whom the credit has
14been sold, the face amount of the credit sold, and the amount of
15consideration received by the taxpayer for the sale of the credit.

end insert
begin insert

16
(B) The California Tax Credit Allocation Committee shall
17provide an annual listing to the Franchise Tax Board, in a form
18and manner agreed upon by the California Tax Credit Allocation
19Committee and the Franchise Tax Board, of the taxpayers that
20have sold or purchased a credit pursuant to this subdivision.

end insert
begin insert

21
(3) (A) A credit may be sold pursuant to this subdivision to
22more than one unrelated party.

end insert
begin insert

23
(B) (i) Except as provided in clause (ii), a credit shall not be
24resold by the unrelated party to another taxpayer or other party.

end insert
begin insert

25
(ii) All or any portion of any credit allowed under this section
26may be resold once by an original purchaser to one or more
27unrelated parties, subject to all of the requirements of this
28subdivision.

end insert
begin insert

29
(4) Notwithstanding any other law, the taxpayer that originally
30received the credit that is sold pursuant to paragraph (1) shall
31remain solely liable for all obligations and liabilities imposed on
32the taxpayer by this section with respect to the credit, none of
33which shall apply to a party to whom the credit has been sold or
34subsequently transferred. Parties that purchase credits pursuant
35to paragraph (1) shall be entitled to utilize the purchased credits
36in the same manner in which the taxpayer that originally received
37the credit could utilize them.

end insert
begin insert

38
(5) A taxpayer shall not sell a credit allowed by this section if
39the taxpayer was allowed the credit on any tax return of the
40taxpayer.

end insert
begin insert

P152  1
(6) Notwithstanding paragraph (1), the taxpayer, with the
2approval of the Executive Director of the California Tax Credit
3Allocation Committee, may rescind the election to sell all or any
4portion of the credit allowed under this section if the consideration
5for the credit falls below 80 percent of the amount of the credit
6after the California Tax Credit Allocation Committee reservation.

end insert
begin insert

7
(s) The California Tax Credit Allocation Committee may
8prescribe rules, guidelines, or procedures necessary or appropriate
9to carry out the purposes of this section, including any guidelines
10regarding the allocation of the credit allowed under this section.
11Chapter 3.5 (commencing with Section 11340) of Part 1 of Division
123 of Title 2 of the Government Code shall not apply to any rule,
13guideline, or procedure prescribed by the California Tax Credit
14Allocation Committee pursuant to this section.

end insert
begin delete

15(r)

end delete

16begin insert(t)end insert Any unused credit may continue to be carried forward, as
17provided in subdivision (l), until the credit has been exhausted.

18begin insert(u)end insertbegin insertend insertThis section shall remain in effect on and after December
191, 1990, for as long as Section 42 of the Internal Revenue Code,
20relating to low-income housingbegin delete credits,end deletebegin insert credit,end insert remains in effect.

begin delete

21(s)

end delete

22begin insert(v)end insert The amendments to this section made bybegin delete the act adding this
23subdivisionend delete
begin insert Chapter 1222 of the Statutes of 1993end insert shall apply only
24to taxable years beginning on or after January 1, 1994, except that
25paragraph (1) of subdivision (q), as amended, shall apply to taxable
26years beginning on or after January 1, 1993.

27begin insert

begin insertSEC. 91.end insert  

end insert

begin insertSection 23688.5 is added to the end insertbegin insertRevenue and Taxation
28Code
end insert
begin insert, to read:end insert

begin insert
29

begin insert23688.5.end insert  

(a) In the case of a qualified taxpayer who donates
30fresh fruits or fresh vegetables to a food bank located in California
31under Chapter 5 (commencing with Section 58501) of Part 1 of
32Division 21 of the Food and Agricultural Code, for taxable years
33beginning on or after January 1, 2017, and before January 1,
342022, there shall be allowed as a credit against the “tax,” defined
35by Section 23036, an amount equal to 15 percent of the qualified
36value of those fresh fruits or fresh vegetables.

37
(b) For purposes of this section:

38
(1) “Qualified taxpayer” means the person responsible for
39planting a crop, managing the crop, and harvesting the crop from
40the land.

P153  1
(2) (A) “Qualified value” shall be calculated by using the
2weighted average wholesale price based on the qualified taxpayer’s
3total like grade wholesale sales of the donated item sold within
4the calendar month of the qualified taxpayer’s donation.

5
(B) If no wholesale sales of the donated item have occurred in
6the calendar month of the qualified taxpayer’s donation, the
7“qualified value” shall be equal to the nearest regional wholesale
8market price for the calendar month of the donation based upon
9the same grade products as published by the United States
10Department of Agriculture’s Agricultural Marketing Service or
11its successor.

12
(c) If the credit allowed by this section is claimed by the
13qualified taxpayer, any deduction otherwise allowed under this
14part for that amount of the cost paid or incurred by the qualified
15taxpayer that is eligible for the credit shall be reduced by the
16amount of the credit provided in subdivision (a).

17
(d) The donor shall provide to the nonprofit organization the
18qualified value of the donated fresh fruits or fresh vegetables and
19information regarding the origin of where the donated fruits or
20vegetables were grown, and upon receipt of the donated fresh
21fruits or fresh vegetables, the nonprofit organization shall provide
22a certificate to the donor. The certificate shall contain a statement
23signed and dated by a person authorized by that organization that
24the product is donated under Chapter 5 (commencing with Section
2558501) of Part 1 of Division 21 of the Food and Agricultural Code.
26The certificate shall also contain the type and quantity of product
27donated, the name of donor or donors, the name and address of
28the donee nonprofit organization, and, as provided by the donor,
29the qualified value of the donated fresh fruits or fresh vegetables
30and its origins. Upon the request of the Franchise Tax Board, the
31qualified taxpayer shall provide a copy of the certification to the
32Franchise Tax Board.

33
(e) The credit allowed by this section may be claimed only on
34a timely filed original return.

35
(f) In the case where the credit allowed by this section exceeds
36the “tax,” the excess may be carried over to reduce the “tax” in
37the following year, and for the six succeeding years if necessary,
38until the credit has been exhausted.

39
(g) This section shall be repealed on December 1, 2022.

end insert
P154  1begin insert

begin insertSEC. 92.end insert  

end insert

begin insertSection 31020 of the end insertbegin insertRevenue and Taxation Codeend insertbegin insert is
2repealed.end insert

begin delete
3

31020.  

The board, in consultation with the Department of Food
4and Agriculture, shall adopt a system for reporting the movement
5of commercial cannabis and cannabis products throughout the
6distribution chain. The system shall not be duplicative of the
7electronic database administered by the Department of Food and
8Agriculture specified in Section 19335 of the Business and
9Professions Code. The system shall also employ secure packaging
10and be capable of providing information to the board. This system
11shall capture, at a minimum, all of the following:

12(a) The amount of tax due by the designated entity.

13(b) The name, address, and license number of the designated
14entity that remitted the tax.

15(c) The name, address, and license number of the succeeding
16entity receiving the product.

17(d) The transaction date.

18(e) Any other information deemed necessary by the board for
19the taxation and regulation of marijuana and marijuana products.

end delete
20begin insert

begin insertSEC. 93.end insert  

end insert

begin insertSection 1058.5 of the end insertbegin insertWater Codeend insertbegin insert is amended to read:end insert

21

1058.5.  

(a) This section applies to any emergency regulation
22adopted by the board for which the board makes both of the
23following findings:

24(1) The emergency regulation is adopted to prevent the waste,
25unreasonable use, unreasonable method of use, or unreasonable
26method of diversion, of water, to promote water recycling or water
27conservation, to require curtailment of diversions when water is
28not available under the diverter’s priority of right, or in furtherance
29of any of the foregoing, to require reporting of diversion or use or
30the preparation of monitoring reports.

31(2) The emergency regulation is adopted in response to
32conditions which exist, or are threatened, in a critically dry year
33immediately preceded by two or more consecutive below normal,
34dry, or critically dry years or during a period for which the
35Governor has issued a proclamation of a state of emergency under
36the California Emergency Services Act (Chapter 7 (commencing
37with Section 8550) of Division 1 of Title 2 of the Government
38Code) based on drought conditions.

39(b) Notwithstanding Sections 11346.1 and 11349.6 of the
40Government Code, any findings of emergency adopted by the
P155  1board, in connection with the adoption of an emergency regulation
2under this section, are not subject to review by the Office of
3Administrative Law.

4(c) An emergency regulation adopted by the board under this
5section may remain in effect for up to 270 days, as determined by
6the board, and is deemed repealed immediately upon a finding by
7the board that due to changed conditions it is no longer necessary
8for the regulation to remain in effect. An emergency regulation
9adopted by the board under this section may be renewed if the
10board determines that the conditions specified in paragraph (2) of
11subdivision (a) are still in effect.

12(d) In addition to any other applicable civil or criminal penalties,
13any person or entity who violates a regulation adopted by the board
14pursuant to this section is guilty of an infraction punishable by a
15fine of up to five hundred dollars ($500) for each day in which the
16violation occurs.

17(e) (1) Notwithstanding subdivision (b) of Sectionbegin delete 1551,end deletebegin insert 1551
18orend insert
subdivisionbegin delete (d) of Section 1845, and subdivision (f) of Section
191846,end delete
begin insert (e) of Section 1848,end insert a civil liability imposed under Chapter
2012 (commencing with Section 1825) of Part 2 of Division 2 by the
21board or a court for a violation of an emergency conservation
22regulation adopted pursuant to this section shall be deposited, and
23separately accounted for, in the Water Rights Fund. Funds
24deposited in accordance with this subdivision shall be available,
25upon appropriation, for water conservation activities and programs.

26(2) For purposes of this subdivision, an “emergency conservation
27regulation” means an emergency regulation that requires an end
28user of water, a water retailer, or a water wholesaler to conserve
29water or report to the board on water conservation. Water
30conservation includes restrictions or limitations on particular uses
31of water or a reduction in the amount of water used or served, but
32does not include curtailment of diversions when water is not
33available under the diverter’s priority of right or reporting
34requirements related to curtailments.

35begin insert

begin insertSEC. 94.end insert  

end insert

begin insertSection 1525 of the end insertbegin insertWater Codeend insertbegin insert is amended to read:end insert

36

1525.  

(a) Each person or entity who holds a permit or license
37to appropriate water, and each lessor of water leased under Chapter
381.5 (commencing with Section 1020) of Part 1, shall pay an annual
39fee according to a fee schedule established by the board.

P156  1(b) Each person or entity who files any of the following shall
2pay a fee according to a fee schedule established by the board:

3(1) An application for a permit to appropriate water.

4(2) A registration of appropriation for a small domestic use,
5small irrigation use, or livestock stockpond use.

6(3) A petition for an extension of time within which to begin
7construction, to complete construction, or to apply the water to
8full beneficial use under a permit.

9(4) A petition to change the point of diversion, place of use, or
10purpose of use, under a permit, license, or registration.

11(5) A petition to change the conditions of a permit or license,
12requested by the permittee or licensee, that is not otherwise subject
13to paragraph (3) or (4).

14(6) A petition to change the point of discharge, place of use, or
15purpose of use, of treated wastewater, requested pursuant to Section
161211.

17(7) An application for approval of a water lease agreement.

18(8) A request for release from priority pursuant to Section 10504.

19(9) An application for an assignment of a state-filed application
20pursuant to Section 10504.

begin insert

21
(10) A statement of water diversion and use pursuant to Part
225.1 (commencing with Section 5100) that reports that water was
23used for cannabis cultivation.

end insert

24(c) The board shall set the fee schedule authorized by this section
25so that the total amount of fees collected pursuant to this section
26equals that amount necessary to recover costs incurred in
27connection with the issuance, administration, review, monitoring,
28and enforcement of permits, licenses, certificates, and registrations
29to appropriate water, water leases,begin insert statements of water diversion
30and use for cannabis cultivation,end insert
and orders approving changes in
31point of discharge, place of use, or purpose of use of treated
32wastewater. The board may include, as recoverable costs, but is
33not limited to including, the costs incurred in reviewing
34applications, registrations,begin insert statements of water diversion and use
35for cannabis cultivation,end insert
petitions and requests, prescribing terms
36of permits, licenses, registrations, and change orders, enforcing
37and evaluating compliance with permits, licenses, certificates,
38registrations, change orders, and water leases, inspection,
39monitoring, planning, modeling, reviewing documents prepared
40for the purpose of regulating the diversion and use of water,
P157  1applying and enforcing the prohibition set forth in Section 1052
2against the unauthorized diversion or use of water subject to this
3begin delete division,end deletebegin insert division and the water diversion related provisions of
4Article 6 (commencing with Section 19331) of Chapter 3.5 of
5Division 8 of the Business and Professions Code,end insert
and the
6administrative costs incurred in connection with carrying out these
7actions.

8(d) (1) The board shall adopt the schedule of fees authorized
9under this section as emergency regulations in accordance with
10Section 1530.

11(2) For filings subject to subdivision (b), the schedule may
12provide for a single filing fee or for an initial filing fee followed
13by an annual fee, as appropriate to the type of filing involved, and
14may include supplemental fees for filings that have already been
15made but have not yet been acted upon by the board at the time
16the schedule of fees takes effect.

17(3) The board shall set the amount of total revenue collected
18each year through the fees authorized by this section at an amount
19equal to the amounts appropriated by the Legislature for
20expenditure for support of water rights program activities from
21the Water Rights Fund established under Section 1550, taking into
22account the reserves in the Water Rights Fund. The board shall
23review and revise the fees each fiscal year as necessary to conform
24with the amounts appropriated. If the board determines that the
25revenue collected during the preceding year was greater than, or
26less than, the amounts appropriated, the board may further adjust
27the annual fees to compensate for the over or under collection of
28revenue.

29(e) Annual fees imposed pursuant to this section for the 2003-04
30fiscal year shall be assessed for the entire 2003-04 fiscal year.

31begin insert

begin insertSEC. 95.end insert  

end insert

begin insertSection 1535 of the end insertbegin insertWater Codeend insertbegin insert is amended to read:end insert

32

1535.  

(a) Any fee subject to this chapter that is required in
33connection with the filing of an application, registration,begin delete requestend delete
34begin insert request, statement,end insert or proof of claim, other than an annual fee
35required after the period covered by the initial filing fee, shall be
36paid to the board.

37(b) If a fee established under subdivision (b) of Section 1525,
38Section 1528, or Section 13160.1 is not paid when due, the board
39may cancel the application, registration, petition, request,begin insert statement,end insert
P158  1 or claim, or may refer the matter to the State Board of Equalization
2for collection of the unpaid fee.

3begin insert

begin insertSEC. 96.end insert  

end insert

begin insertSection 1552 of the end insertbegin insertWater Codeend insertbegin insert is amended to read:end insert

4

1552.  

Except as provided in subdivision (e) of Section 1058.5,
5moneys in the Water Rights Fund are available for expenditure,
6upon appropriation by the Legislature, for the following purposes:

7(a) For expenditure by the State Board of Equalization in the
8administration of this chapter and the Fee Collection Procedures
9Law (Part 30 (commencing with Section 55001) of Division 2 of
10the Revenue and Taxation Code) in connection with any fee or
11expense subject to this chapter.

12(b) For the payment of refunds, pursuant to Part 30 (commencing
13with Section 55001) of Division 2 of the Revenue and Taxation
14Code, of fees or expenses collected pursuant to this chapter.

15(c) For expenditure by the board for the purposes of carrying
16out this division, Division 1 (commencing with Section 100), Part
172 (commencing with Section 10500) and Chapter 11 (commencing
18with Section 10735) of Part 2.74 of Division 6,begin delete andend delete Article 7
19(commencing with Section 13550) of Chapter 7 of Divisionbegin delete 7.end deletebegin insert 7,
20and the water diversion related provisions of Article 6
21(commencing with Section 19331) of Chapter 3.5 of Division 8 of
22the Business and Professions Code.end insert

23(d) For expenditures by the board for the purposes of carrying
24out Sections 13160 and 13160.1 in connection with activities
25involving hydroelectric power projects subject to licensing by the
26Federal Energy Regulatory Commission.

27(e) For expenditures by the board for the purposes of carrying
28out Sections 13140 and 13170 in connection with plans and policies
29that address the diversion or use of water.

30begin insert

begin insertSEC. 97.end insert  

end insert

begin insertSection 1831 of the end insertbegin insertWater Codeend insertbegin insert is amended to read:end insert

31

1831.  

(a) When the board determines that any person is
32violating, or threatening to violate, any requirement described in
33subdivision (d), the board may issue an order to that person to
34cease and desist from that violation.

35(b) The cease and desist order shall require that person to comply
36forthwith or in accordance with a time schedule set by the board.

37(c) The board may issue a cease and desist order only after
38notice and an opportunity for hearing pursuant to Section 1834.

39(d) The board may issue a cease and desist order in response to
40a violation or threatened violation of any of the following:

P159  1(1) The prohibition set forth in Section 1052 against the
2unauthorized diversion or use of water subject to this division.

3(2) Any term or condition of a permit, license, certification, or
4registration issued under this division.

5(3) Any decision or order of the board issued under this part,
6Section 275, Chapter 11 (commencing with Section 10735) of Part
72.74 of Division 6, or Article 7 (commencing with Section 13550)
8of Chapter 7 of Division 7, in which decision or order the person
9to whom the cease and desist order will be issued, or a predecessor
10in interest to that person, was named as a party directly affected
11by the decision or order.

12(4) A regulation adopted under Section 1058.5.

13(5) Any extraction restriction, limitation, order, or regulation
14adopted or issued under Chapter 11 (commencing with Section
1510735) of Part 2.74 of Division 6.

begin insert

16
(6) Any diversion or use of water for cannabis cultivation if any
17of the following applies:

end insert
begin insert

18
(A) A license is required, but has not been obtained, under
19Article 6 (commencing with Section 19331) of Chapter 3.5 of
20Division 8 of the Business and Professions Code.

end insert
begin insert

21
(B) The diversion is not in compliance with an applicable
22limitation or requirement established by the board or the
23Department of Fish and Wildlife under Section 13149.

end insert
begin insert

24
(C) The diversion or use is not in compliance with a requirement
25imposed under subdivision (d) or (e) of Section 19332.2 of the
26Business and Professions Code.

end insert

27(e) This article does not begin delete authorize the board to regulate in any
28manner, the diversion or use of water not otherwise subject to
29regulation of the board under this part.end delete
begin insert alter the regulatory
30authority of the board under other provisions of law.end insert

31begin insert

begin insertSEC. 98.end insert  

end insert

begin insertSection 1840 of the end insertbegin insertWater Codeend insertbegin insert is amended to read:end insert

32

1840.  

(a) (1) Except as provided in subdivision (b), a person
33who, on or after January 1, 2016, diverts 10 acre-feet of water per
34year or more under a permit or license shall install and maintain
35a device or employ a method capable of measuring the rate of
36direct diversion, rate of collection to storage, and rate of withdrawal
37or release from storage. The measurements shall be made using
38the best available technologies and best professional practices, as
39defined in Section 5100, using a device or methods satisfactory to
40the board, as follows:

P160  1(A) A device shall be capable of continuous monitoring of the
2rate and quantity of water diverted and shall be properly
3maintained. The permittee or licensee shall provide the board with
4evidence that the device has been installed with the first report
5submitted after installation of the device. The permittee or licensee
6shall provide the board with evidence demonstrating that the device
7is functioning properly as part of the reports submitted at five-year
8intervals after the report documenting installation of the device,
9or upon request of the board.

10(B) In developing regulations pursuant to Section 1841, the
11board shall consider devices and methods that provide accurate
12measurement of the total amount diverted and the rate of diversion.
13The board shall consider devices and methods that provide accurate
14measurements within an acceptable range of error, including the
15following:

16(i) Electricity records dedicated to a pump and recent pump test.

17(ii) Staff gage calibrated with an acceptable streamflow rating
18curve.

19(iii) Staff gage calibrated for a flume or weir.

20(iv) Staff gage calibrated with an acceptable storage capacity
21curve.

22(v) Pressure transducer and acceptable storage capacity curve.

23(2) The permittee or licensee shall maintain a record of all
24diversion monitoring that includes the date, time, and diversion
25rate at time intervals of one hour or less, and the total amount of
26water diverted. These records shall be included with reports
27submitted under the permit or license, as required under subdivision
28(c), or upon request of the board.

29(b) (1) The board may modify the requirements of subdivision
30(a) upon finding either of the following:

31(A) That strict compliance is infeasible, is unreasonably
32expensive, would unreasonably affect public trust uses, or would
33result in the waste or unreasonable use of water.

34(B) That the need for monitoring and reporting is adequately
35addressed by other conditions of the permit or license.

36(2) The board may increase the 10-acre-foot reporting threshold
37of subdivision (a) in a watershed or subwatershed, after considering
38the diversion reporting threshold in relation to quantity of water
39within the watershed or subwatershed. The board may increase
40the 10-acre-foot reporting threshold to 25 acre-feet or above if it
P161  1finds that the benefits of the additional information within the
2watershed or subwatershed are substantially outweighed by the
3cost of installing measuring devices or employing methods for
4measurement for diversions at the 10-acre-foot threshold.

5(c) At least annually, a person who diverts water under a
6registration, permit, or license shall report to the board the
7following information:

8(1) The quantity of water diverted by month.

9(2) The maximum rate of diversion by months in the preceding
10calendar year.

11(3) The information required by subdivision (a), if applicable.

begin insert

12
(4) The amount of water used, if any, for cannabis cultivation.

end insert

13(d) Compliance with the applicable requirements of this section
14is a condition of every registration, permit, or license.

15begin insert

begin insertSEC. 99.end insert  

end insert

begin insertSection 1845 of the end insertbegin insertWater Codeend insertbegin insert is amended to read:end insert

16

1845.  

(a) Upon the failure of any person to comply with a
17cease and desist order issued by the board pursuant to this chapter,
18the Attorney General, upon the request of the board, shall petition
19the superior court for the issuance of prohibitory or mandatory
20injunctive relief as appropriate, including a temporary restraining
21order, preliminary injunction, or permanent injunction.

22(b) (1) A person or entity who violates a cease and desist order
23issued pursuant to this chapter may be liable in an amount not to
24exceed the following:

25(A) If the violation occurs in a critically dry year immediately
26preceded by two or more consecutive below normal, dry, or
27critically dry years or during a period for which the Governor has
28issued a proclamation of a state of emergency under the California
29Emergency Services Act (Chapter 7 (commencing with Section
308550) of Division 1 of Title 2 of the Government Code) based on
31drought conditions, ten thousand dollars ($10,000) for each day
32in which the violation occurs.

33(B) If the violation is not described by subparagraph (A), one
34thousand dollars ($1,000) for each day in which the violation
35occurs.

36(2) Civil liability may be imposed by the superior court. The
37Attorney General, upon the request of the board, shall petition the
38superior court to impose, assess, and recover those sums.

39(3) Civil liability may be imposed administratively by the board
40pursuant to Section 1055.

begin delete

P162  1(c) In determining the appropriate amount, the court, or the
2board, as the case may be, shall take into consideration all relevant
3circumstances, including, but not limited to, the extent of harm
4caused by the violation, the nature and persistence of the violation,
5the length of time over which the violation occurs, and the
6corrective action, if any, taken by the violator.

7(d) All funds recovered pursuant to this section shall be
8deposited in the Water Rights Fund established pursuant to Section
91550.

end delete
10begin insert

begin insertSEC. 100.end insert  

end insert

begin insertSection 1846 of the end insertbegin insertWater Codeend insertbegin insert is amended to read:end insert

11

1846.  

(a) A person or entity may be liable for a violation of
12any of the following in an amount not to exceed five hundred
13dollars ($500) for each day in which the violation occurs:

14(1) A term or condition of a permit, license, certificate, or
15registration issued under this division.

16(2) A regulation or order adopted by the board.

17(b) Civil liability may be imposed by the superior court. The
18Attorney General, upon the request of the board, shall petition the
19superior court to impose, assess, and recover those sums.

20(c) Civil liability may be imposed administratively by the board
21pursuant to Section 1055.

begin delete

22(d) In determining the appropriate amount of civil liability, the
23court, pursuant to subdivision (b), or the board, pursuant to
24 subdivision (c), may take into consideration all relevant
25circumstances, including, but not limited to, the extent of harm
26caused by the violation, the nature and persistence of the violation,
27the length of time over which the violation occurs, and the
28corrective action, if any, taken by the violator.

29(e) No liability shall be recoverable under this section for any
30violation for which liability is recovered under Section 1052.

31(f) All funds recovered pursuant to this section shall be deposited
32in the Water Rights Fund established pursuant to Section 1550.

end delete
33begin insert

begin insertSEC. 101.end insert  

end insert

begin insertSection 1847 is added to the end insertbegin insertWater Codeend insertbegin insert, to read:end insert

begin insert
34

begin insert1847.end insert  

(a) A person or entity may be liable for a violation of
35any of the requirements of subdivision (b) in an amount not to
36exceed the sum of the following:

37
(1) Five hundred dollars ($500), plus two hundred fifty dollars
38($250) for each additional day on which the violation continues
39if the person fails to correct the violation within 30 days after the
40board has called the violation to the attention of that person.

P163  1
(2) Two thousand five hundred dollars ($2,500) for each
2acre-foot of water diverted or used in violation of the applicable
3requirement.

4
(b) Liability may be imposed for any of the following violations:

5
(1) Violation of a limitation or requirement established by the
6board or the Department of Fish and Wildlife under Section 13149.

7
(2) Failure to submit information, or making a material
8misstatement in information submitted, under subdivision (a), (b),
9or (c) of Section 19332.2 of the Business and Professions Code.

10
(3) Violation of any requirement imposed under subdivision (e)
11of Section 19332.2 of the Business and Professions Code.

12
(4) Diversion or use of water for cannabis cultivation for which
13a license is required, but has not been obtained, under Article 6
14(commencing with Section 19331) of Chapter 3.5 of Division 8 of
15the Business and Professions Code.

16
(c) Civil liability may be imposed by the superior court. The
17Attorney General, upon the request of the board, shall petition the
18superior court to impose, assess, and recover those sums.

19
(d) Civil liability may be imposed administratively by the board
20pursuant to Section 1055.

end insert
21begin insert

begin insertSEC. 102.end insert  

end insert

begin insertSection 1848 is added to the end insertbegin insertWater Codeend insertbegin insert, to read:end insert

begin insert
22

begin insert1848.end insert  

(a) Except as provided in subdivisions (b) and (c),
23remedies under this chapter are in addition to, and do not
24supersede or limit, any other remedy, civil or criminal.

25
(b) Civil liability shall not be imposed both administratively
26and by the superior court for the same violation.

27
(c) No liability shall be recoverable under Section 1846 or 1847
28for a violation for which liability is recovered under Section 1052.

29
(d) In determining the appropriate amount, the court, or the
30board, as the case may be, shall take into consideration all relevant
31circumstances, including, but not limited to, the extent of harm
32caused by the violation, the nature and persistence of the violation,
33the length of time over which the violation occurs, and the
34corrective action, if any, taken by the violator.

35
(e) All funds recovered pursuant to this article shall be deposited
36in the Water Rights Fund established pursuant to Section 1550.

end insert
37begin insert

begin insertSEC. 103.end insert  

end insert

begin insertSection 5103 of the end insertbegin insertWater Codeend insertbegin insert is amended to read:end insert

38

5103.  

Each statement shall be prepared on a form provided by
39the board. The statement shall include all of the following
40information:

P164  1(a) The name and address of the person who diverted water and
2of the person filing the statement.

3(b) The name of the stream or other source from which water
4was diverted, and the name of the next major stream or other body
5of water to which the source is tributary.

6(c) The place of diversion. The location of the diversion works
7shall be depicted on a specific United States Geological Survey
8topographic map, or shall be identified using the California
9Coordinate System, or latitude and longitude measurements. If
10assigned, the public land description to the nearest 40-acre
11subdivision and the assessor’s parcel number shall also be provided.

12(d) The capacity of the diversion works and of the storage
13reservoir, if any, and the months in which water was used during
14the preceding calendar year.

15(e) (1) (A) At least monthly records of water diversions. The
16measurements of the diversion shall be made in accordance with
17Section 1840.

18(B) (i) On and after July 1, 2016, the measurement of a
19diversion of 10 acre-feet or more per year shall comply with
20regulations adopted by the board pursuant to Article 3
21(commencing with Section 1840) of Chapter 12 of Part 2.

22(ii) The requirement of clause (i) is extended to January 1, 2017,
23for any statement filer that enters into a voluntary agreement that
24is acceptable to the board to reduce the statement filer’s diversions
25during the 2015 irrigation season.

26(2) (A) The terms of, and eligibility for, any grant or loan
27awarded or administered by the department, the board, or the
28California Bay-Delta Authority on behalf of a person that is subject
29to paragraph (1) shall be conditioned on compliance with that
30paragraph.

31(B) Notwithstanding subparagraph (A), the board may determine
32that a person is eligible for a grant or loan even though the person
33is not complying with paragraph (1), if both of the following apply:

34(i) The board determines that the grant or loan will assist the
35grantee or loan recipient in complying with paragraph (1).

36(ii) The person has submitted to the board a one-year schedule
37for complying with paragraph (1).

38(C) It is the intent of the Legislature that the requirements of
39this subdivision shall complement and not affect the scope of
P165  1authority granted to the board by provisions of law other than this
2article.

3(f) begin insert(1)end insertbegin insertend insertThe purpose of use.

begin insert

4
(2) The amount of water used, if any, for cannabis cultivation.

end insert

5(g) A general description of the area in which the water was
6used. The location of the place of use shall be depicted on a specific
7United States Geological Survey topographic map and on any other
8maps with identifiable landmarks. If assigned, the public land
9description to the nearest 40-acre subdivision and the assessor’s
10parcel number shall also be provided.

11(h) The year in which the diversion was commenced as near as
12is known.

13begin insert

begin insertSEC. 104.end insert  

end insert

begin insertSection 13149 is added to the end insertbegin insertWater Codeend insertbegin insert, to read:end insert

begin insert
14

begin insert13149.end insert  

(a) (1) (A) The board, in consultation with the
15Department of Fish and Wildlife, shall adopt principles and
16guidelines for diversion and use of water for cannabis cultivation
17in areas where cannabis cultivation may have the potential to
18substantially affect instream flows. The principles and guidelines
19adopted under this section may include, but are not limited to,
20instream flow objectives, limits on diversions, and requirements
21for screening of diversions and elimination of barriers to fish
22passage. The principles and guidelines may include requirements
23that apply to groundwater extractions where the board determines
24those requirements are reasonably necessary for purposes of this
25section.

26
(B) Prior to adopting principles and guidelines under this
27section, the board shall allow for public comment and hearing,
28pursuant to Section 13147. The board shall provide an opportunity
29for the public to review and comment on the proposal for at least
3060 days and shall consider the public comments before adopting
31the principles and guidelines.

32
(2) The board, in consultation with the Department of Fish and
33Wildlife, shall adopt principles and guidelines pending the
34development of long-term principles and guidelines under
35paragraph (1). The principles and guidelines, including the interim
36principles and guidelines, shall include measures to protect
37springs, wetlands, and aquatic habitats from negative impacts of
38cannabis cultivation. The board may update the interim principles
39and guidelines as it determines to be reasonably necessary for
40purposes of this section.

P166  1
(3) The Department of Fish and Wildlife, in consultation with
2the board, may establish interim requirements to protect fish and
3wildlife from the impacts of diversions for cannabis cultivation
4pending the adoption of long-term principles and guidelines by
5the board under paragraph (1). The requirements may also include
6measures to protect springs, wetlands, and aquatic habitats from
7negative impacts of cannabis cultivation.

8
(b) (1) Notwithstanding Section 15300.2 of Title 14 of the
9California Code of Regulations, actions of the board and the
10Department of Fish and Wildlife under this section shall be deemed
11to be within Section 15308 of Title 14 of the California Code of
12regulations, provided that those actions do not involve relaxation
13of existing streamflow standards.

14
(2) The board shall adopt principles and guidelines under this
15section as part of state policy for water quality control adopted
16pursuant to Article 3 (commencing with Section 13140) of Chapter
173 of Division 7.

18
(3) If the Department of Fish and Wildlife establishes interim
19requirements under this section, it shall do so as emergency
20regulations in accordance with Chapter 3.5 (commencing with
21Section 11340) of Part 1 of Division 3 of Title 2 of the Government
22Code. The adoption of those interim requirements is an emergency
23and shall be considered by the Office of Administrative Law as
24necessary for the immediate preservation of the public peace,
25health, safety, and general welfare. Notwithstanding Chapter 3.5
26(commencing with Section 11340) of Part 1 of Division 3 of Title
272 of the Government Code, the emergency regulations shall remain
28in effect until revised by the Department of Fish and Wildlife,
29provided that the emergency regulations shall not apply after
30long-term principles and guidelines adopted by the board under
31this section take effect for the stream or other body of water where
32the diversion is located.

33
(4) A diversion for cannabis cultivation is subject to both the
34interim principles and guidelines and the interim requirements in
35the period before final principles and guidelines are adopted by
36the board.

37
(5) The board shall have primary enforcement responsibility
38for principles and guidelines adopted under this section, and shall
39notify the Department of Food and Agriculture of any enforcement
40action taken.

end insert
P167  1begin insert

begin insertSEC. 105.end insert  

end insert
begin insert

The California Tax Credit Allocation Committee
2shall enter into an agreement with the Franchise Tax Board to
3pay any costs incurred by the Franchise Tax Board in the
4administration of subdivision (o) of Section 12206, subdivision
5(q) of Section 17058, and subdivision (r) of Section 23610.5 of the
6Revenue and Taxation Code.

end insert
7begin insert

begin insertSEC. 106.end insert  

end insert
begin insert

No reimbursement is required by this act pursuant
8to Section 6 of Article XIII B of the California Constitution for
9certain costs that may be incurred by a local agency or school
10district because, in that regard, this act creates a new crime or
11infraction, eliminates a crime or infraction, or changes the penalty
12for a crime or infraction, within the meaning of Section 17556 of
13the Government Code, or changes the definition of a crime within
14the meaning of Section 6 of Article XIII B of the California
15Constitution.

end insert
begin insert

16
However, if the Commission on State Mandates determines that
17this act contains other costs mandated by the state, reimbursement
18to local agencies and school districts for those costs shall be made
19pursuant to Part 7 (commencing with Section 17500) of Division
204 of Title 2 of the Government Code.

end insert
21begin insert

begin insertSEC. 107.end insert  

end insert
begin insert

This act is a bill providing for appropriations related
22to the Budget Bill within the meaning of subdivision (e) of Section
2312 of Article IV of the California Constitution, has been identified
24as related to the budget in the Budget Bill, and shall take effect
25immediately.

end insert
begin delete
26

SECTION 1.  

It is the intent of the Legislature to enact statutory
27changes, relating to the Budget Act of 2016.

end delete


O

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