BILL ANALYSIS Ó
SB 987
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Date of Hearing: June 20, 2016
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Sebastian Ridley-Thomas, Chair
SB
987 (McGuire) - As Amended June 13, 2016
2/3 vote. Fiscal committee.
SENATE VOTE: 27-10
SUBJECT: Medical marijuana: Marijuana User Fee Act
SUMMARY: Enacts the Marijuana User Fee Act (Fee Act).
Specifically, this bill:
1)Imposes a fee, on and after January 1, 2018, on the
consumption or other use in this state of "medical marijuana"
purchased from any "retailer" for the consumption or other use
in this state at the rate of 10% of the sales price of the
"medical marijuana".
2)Provides that every "purchaser" consuming or otherwise using
in this state "medical marijuana" that the "purchaser"
purchased from a "retailer" for consumption or other use in
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this state is liable for the fee. The "purchaser's" liability
is not extinguished until the fee has been paid to this state,
except that a receipt from a "retailer" engaged in business in
this state given to the "purchaser" is sufficient to relieve
the "purchaser" from further liability for the fee to which
the receipt refers.
3)Provides that a "purchaser" is not liable for the tax [sic] if
the "purchaser" has an identification card issued under Health
and Safety Code Section 11362.7 et seq. indicating that the
"purchaser" has low income.
4)Requires every "retailer" engaged in business in this state
and making sales of "medical marijuana" to a "purchaser" to,
at the time of making such a sale, collect the fee as a charge
separate from, and not included in, any other fee, charge, or
other amount paid by the "purchaser".
5)Requires every "retailer" engaged in business in this state to
collect the fee from the "purchaser" and to give the
"purchaser" a receipt, as specified.
6)Provides that a "retailer" engaged in business in this state
shall not collect the tax [sic] from a "purchaser" who, at the
time of the sale, presents the "retailer" with an
identification card issued under Health and Safety Code
Section 11362.7 et seq. indicating that the "purchaser" has
low income.
7)Defines "medical marijuana" to mean medical cannabis, as
defined in Business and Professions Code (B&PC) Section
19300.5.
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8)Defines a "retailer" to include every person that makes any
"retail sale" or sales of medical marijuana. The term also
includes a person holding a dispensary license issued under
the Medical Marijuana Regulation and Safety Act (MMRSA).
Furthermore, every person making more than two "retail sales"
of medical marijuana during any 12-month period shall be
considered a retailer.
9)Defines a "purchaser" as a person that purchases medical
marijuana for consumption or other use in this state.
10)Defines a "retail sale" to mean a sale for any purpose other
than resale in the regular course of business in the form of
medical marijuana.
11)Excludes from the definition of sale or purchase the transfer
of title or possession, exchange, or barter of medical
marijuana for a consideration between a "qualified patient"
and his or her "primary caregiver".
12)Defines a "qualified patient" as a person who is entitled to
the protections of the Compassionate Use Act of 1996
(Proposition 215).
13)Defines a "primary caregiver" as a person who is exempt from
the licensure requirements of the MMRSA under B&PC Section
19319(b).
14)Requires the State Board of Equalization (BOE) to administer
and collect the fee pursuant to the Fee Collection Procedures
Law, as specified.
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15)Specifies that a retailer is relieved from liability to
collect the fee that became due and payable, insofar as the
measure of the fee is represented by accounts that have been
found to be worthless and charged off by the retailer in
accordance with generally accepted accounting principles.
16)Authorizes the BOE to prescribe, adopt, and enforce any
emergency regulations as necessary to implement this bill.
17)Provides that the fee shall be due and payable to the BOE
quarterly on or before the last day of the month next
succeeding each quarterly period.
18)Provides that, on or before the last day of the month
following each quarterly period, a return for the preceding
quarter shall be filed using electronic media with the BOE.
19)Provides that a retailer required to collect the fee must
register for a permit with the BOE. The BOE, in turn, is
required to issue to each applicant a separate permit for each
place of business in California.
20)Authorizes the BOE, upon hearing and proper notice, to revoke
or suspend a permit whenever a retailer fails to comply with
this bill's provisions.
21)Establishes the Marijuana User Fee Fund (Fund) in the State
Treasury.
22)Provides that, except as otherwise specified, moneys in the
Fund shall be allocated by the Controller annually as follows:
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a) 30% to the General Fund;
b) 30% to the Bureau of Medical Marijuana Regulation for
the administration of a grant program to distribute grants
to local agencies that oversee or are affected by the
regulation of cultivating, processing, manufacturing,
distributing, and selling of medical marijuana, that
undertake enforcement activities pertaining to the
cultivation of marijuana in violation of state law or local
ordinance, or that are involved in a fire suppression,
emergency medical, or other "all-risk" response to a
marijuana cultivation, processing, manufacturing, or
distribution incident, upon appropriation by the
Legislature. The grants shall be made available beginning
on or before July 1, 2018, and no more than 5% of any funds
allocated may be used for administrative costs of the grant
program by the bureau or for any administrative costs of
the local agency awarded the grant;
c) 20% to the Department of Parks and Recreation for the
stewardship, operation, maintenance, and preservation of
state park units, including units operated on behalf of the
state by local or regional agencies or by nonprofit
organizations, upon appropriation by the Legislature; and,
d) 20% to "counties" for drug and alcohol treatment
programs, distributed based on the ratio of each county's
population to the total population of all counties, as
specified, upon appropriation by the Legislature. Requires
any funds appropriated to be used for drug and alcohol
treatment and recovery and case management services. For
purposes of this allocation, counties are defined as a
county mental health department, two or more county mental
health departments acting jointly, or a city-operated
program receiving funds pursuant to Welfare and
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Institutions Code Section 5701.5.
23)Specifies that funds for the implementation and
administration of the Fee Act shall be advanced to the Fund as
a General Fund or special fund loan, and shall be repaid by
the initial revenues, less refunds, collected.
24)Authorizes the Director of Finance to provide an initial
operating loan from the General Fund to the Fund that does not
exceed $5 million.
25)Provides that, beginning in 2018, and at least every other
year thereafter, the Legislative Analyst must review and
evaluate the fee, and provide a report to specified Assembly
and Senate Committees making recommendations regarding the fee
rate and revenue allocations.
26)Provides that the Fee Act shall not be interpreted to
preclude a city, county, or city and county from enacting or
continuing to enforce a local ordinance that imposes any fees,
taxes, or other charges on the consumption or other use of
medical marijuana, as may be otherwise authorized by law.
27)Provides that the Fee Act shall only become operative if
Secretary of State Initiative Number 1762, also known as the
Control, Regulate and Tax Adult Use of Marijuana Act, is not
approved by the voters at the November 8, 2016, statewide
general election.
28)Contains legislative findings that edible cannabis products,
as defined in B&PC Section 19300.5 and as applicable to this
bill's provisions, are not considered a food product for
purposes of Section 34 of Article XIII of the California
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Constitution.
29)Modifies the state's existing Medical Marijuana Program to:
a) Require a person seeking an identification card to
provide documentation of the person's income to the county
health department or the county's designee;
b) Require, within 30 days of receipt of an application for
an identification card, a county health department or the
county's designee to determine whether the applicant has
low income. Specifies that an applicant has low income if
the applicant's income is less than 200% of the federal
poverty guidelines; and,
c) Require an identification card issued by the county
health department to contain an indication that the
cardholder has low income, if applicable.
EXISTING FEDERAL LAW prohibits the manufacture, possession,
sale, or distribution of marijuana. [21 United States Code
Section 841 et seq.]
EXISTING STATE LAW:
1)Imposes a sales tax on retailers for the privilege of selling
tangible personal property (TPP), absent a specific exemption.
The tax is based upon the retailer's gross receipts from TPP
sales in this state.
2)Imposes a complimentary use tax on the storage, use, or other
consumption of TPP purchased out-of-state and brought into
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California. The use tax is imposed on the purchaser, and
unless the purchaser pays the use tax to an out-of-state
retailer registered to collect California's use tax, the
purchaser remains liable for the tax. The use tax is set at
the same rate as the state's sales tax and must generally be
remitted to the BOE.
3)Applies the sales and use tax (SUT) to retail sales of
marijuana, including medical marijuana, to the same extent as
any other retail sale of TPP.
4)Provides a SUT exemption for medicines, when the medicines
are:
a) Prescribed by an authorized person and dispensed on a
prescription filled by a pharmacist;
b) Furnished by a licensed physician to his or her own
patient; or,
c) Furnished by a health facility for treatment pursuant to
a licensed physician's order, or sold to a licensed
physician. [Revenue and Taxation Code Section 6369]
5)Defines "cannabis" as all parts of the plant Cannabis sativa
Linnaeus, Cannabis indica, or Cannabis ruderalis, whether
growing or not; the seeds thereof; the resin, whether crude
or purified, extracted from any part of the plant; and every
compound, manufacture, salt, derivative, mixture, or
preparation of the plant, its seeds, or resin. [B&PC Section
19300.5]
FISCAL EFFECT: The BOE's fiscal estimate for this bill is
currently pending.
COMMENTS:
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1)The author has provided the following statement in support of
this bill:
For decades, state and local taxpayers have had to foot the
bill for the enormous costs associated with illegal and
rouge marijuana sales.
SB 987 implements a [10] percent User Fee on all medical
marijuana products - including edibles, tinctures, salves
and vapes. [. . .]
And it comes only from people who are purchasing Marijuana
Products, no one else.
Some have expressed concern that this User Fee, combined
with sales tax and perhaps local fees, will create a rate
that keeps people in the black market. We have spent a lot
of time researching this, and assure you that no one has
more incentive to get people out of the black market [than]
ourselves and people in my district.
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We have done our very best to learn from the mistakes of
other states on this issue . . . Sometimes it's good to be
number 3.
Washington State started out with a total 75% levy.
They quickly learned that this rate was way too high.
Washington responded with a "Point of Sale" rate, (like
ours, but much higher) of 37 percent, and it has worked
very well ever since.
Colorado also started out with a complicated, multi-tier
formula that charged too much, and [has] since settled on a
more simple point of sale fee that is still nearly double
what we are proposing.
We have worked with individuals and groups who are
concerned about the "patient protection" aspects of our
bill, and have made the following adjustments:
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1. We made sure that patients who grow their own
medicine for themselves and their families are not
subject to this User Fee.
2. We have specifically included language, at the
request of the Drug Policy Alliance, that ensures that
transactions between care givers and patients are also
exempt from this User Fee.
This includes many of the most financially and medically
fragile people in this state, as well as some of its most
passionate advocates.
3. This User Fee will not apply to anyone who is not
currently required to be licensed with the BOE and to pay
Sales Tax under current law. In other words, if you are
not required to have a Seller's Permit by the state, you
don't have to charge or collect this User Fee. Anyone
who is required to pay sales tax now will have to pay it.
Very fair and simple. This bill doesn't add a burden to
anyone who is not already required to be in the system.
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4. AND - we have prepared an amendment for this
committee that will exempt a qualified patient if they
can prove that their income falls under 200% of the
federal poverty guidelines to make sure that legitimate
[patients] don't have a financial barrier.
For decades taxpayers have had to bear the cost of public
safety to deal with the black market and criminal element
of the industry.
Every police and fire chief and county sheriff in your
districts can detail the costs that they have had to cover.
In addition, our state general fund has had to pay the
immense costs to the Judicial, Human Services and other
functions over these same decades. Every year we struggle
to make decisions on how to fund these crucial aspects of
our society, and every year we come up short.
And remember, only people who purchase Marijuana Products
will be paying this fee.
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2)This bill is supported by the Rural County Representatives of
California, which notes the following:
The issue of marijuana regulation and cultivation is of
great importance to California's rural counties. In the
last several years, there has been a dramatic proliferation
of marijuana cultivation throughout many of the rural
counties and the scale and volume of individual grow sites
has enlarged.
In the final hours of the 2015 Regular Legislative Session,
the Legislature enacted a medical marijuana
licensing/regulatory framework. RCRC has advocated that
any licensing scheme address a variety of
environmental-related issues - land conversion, grading,
pesticide use, agricultural discharges, water quality and
diversion, etc. for licensed marijuana cultivators. In the
license/regulatory framework package adopted last year,
monies for environmental issues will be derived primarily
from fines and penalties and some regulatory license fees.
The revenue projections that are derived from these sources
are likely to be inadequate to fully address the scale of
environmental degradation associated with marijuana grows -
legal or otherwise. As such, additional monies will be
needed.
3)This bill is opposed by Americans for Safe Access, which notes
the following:
This tax is an unfair burden on legal medical cannabis
patients, may serve to undermine the implementation of
state law and is being imposed prematurely. ASA urges
lawmakers to delay a decision on any medical cannabis tax
measure until we have more clarity on the legal landscape
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and more information about the costs and revenue generated
by existing law related to commercial medical cannabis
activity.
[. . .]
SB 987 places an unnecessary burden on law-abiding
patients. Medical cannabis is already very expensive, and
it is not covered by insurance. Unlike prescription
medicines, medical cannabis is already subject to sales tax
of between 7.5% and 10%. Furthermore, a number of cities
have imposed an additional tax of between 5% and 15% on
medical cannabis. The bill provides for an exemption for
patients who pay a fee to obtain an ID card pursuant to the
Medical Marijuana Program Act and have an income that is
less than 200% of the federal poverty guidelines. This
limited gesture will do little to address the economic
impact of SB 987 on the large majority of legal medical
cannabis patients who do not meet those criteria.
4)The BOE notes the following in its staff analysis of this
bill:
a) Marijuana User Fee not subject to sales tax : "Under
existing [SUT] Law, [R&TC] Section 6012(a)(2) provides that
taxable gross receipts include all amounts received with
respect to the sale, with no deduction for the cost of the
materials used, labor or service cost, or any other expense
of the retailer passed on to the customer.
"This bill imposes the Marijuana User Fee on the purchasers
of medical marijuana, not on the retailers who sell the
item. When retailers separately state the Marijuana User
Fee on the receipts they issue to purchasers, the retailers
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are not passing on expenses to the purchaser but are
instead collecting the fee from the purchaser as required
by statute. Therefore, the Marijuana User Fee is not
included in gross receipts."
b) This bill could complicate marijuana retailers' records
and reporting : "Medical marijuana retailers already must
collect and remit [SUT] on the retail sale of medical
marijuana in California. Medical marijuana retailers most
likely sell other [TPP] subject to [SUT]. Adding an
additional assessment that would be collected from
purchasers would require retailers to keep track of
marijuana product sales separately from other sales of
[TPP]."
c) Bill could set precedent : "Imposing varying taxes or
fees on specific commodities complicates tax and fee
administration and could set a precedent for establishing
multiple taxes or fees on other classes of [TPP]. This
results in increasing BOE administrative costs and an
increased record-keeping burden on taxpayers."
d) Point of fee imposition : "Typically, BOE staff
recommends that excise taxes and fees be imposed as high in
the distribution chain as possible since there are fewer
taxpayers and therefore less potential for evasion. This
concern is magnified with respect to the cannabis industry,
as historically it has been unregulated with low rates of
tax compliance. The industry is currently substantially
noncompliant. Increasing taxes or fees due at the retail
level will likely increase diversion; however, that may be
reduced due to the track-and-trace requirements set forth
in the MMRSA. Auditing will be more difficult at the
retail level than at the distribution level.
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"The highest point in the cannabis distribution chain would
be the grower. However, BOE staff understands that due to
the high number of growers, imposing a fee at that level
would be inefficient. Therefore, the distributor level,
similar to the taxation of cigarettes, may be a more
appropriate point of fee imposition, as auditing is less
difficult with fewer feepayers."
e) Cash Payments : "Collecting cash payments from cannabis
retailers currently is challenging both from a compliance
and public safety standpoint. Under existing law,
retailers must report sales taxes ranging from 7.50 percent
to 10.00 percent. Collecting cash payments from these
retailers on sales taxes alone has created administrative
and safety issues for BOE staff and retailers. By imposing
[a] marijuana user fee at the retail level, retailers will
be responsible for remitting up to three times their
current payments. This significant increase in the level of
cash payments from cannabis retailers will lead to enhanced
public safety concerns."
f) Primary caregiver exemption : "This bill defines a
'primary caregiver' as a person exempt from licensure under
the MMRSA. The MMRSA exempts a primary caregiver that has
no more than five specified qualified patients for whom he
or she is the primary caregiver within the meaning of the
Medical Marijuana Program. The bill prohibits a primary
caregiver from receiving payment for their activities,
except for compensation for actual expenses, including
reasonable compensation incurred for qualified patient
services or for payment for out-of-pocket expenses in
providing services.
"This bill makes clear that a 'sale' or 'purchase' does not
include the transfer of title or possession, exchange, or
barter of medical marijuana for a consideration between a
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qualified patient and his or her primary caregiver, as that
is already limited to compensation for actual expenses."
5)Committee staff comments:
a) An overview of federal law : Federal law prohibits the
manufacture, possession, sale, or distribution of
marijuana. Congress enacted the Controlled Substances Act
(CSA) as part of the Comprehensive Drug Abuse Prevention
and Control Act of 1970. The CSA sets forth five
"schedules" of specified drugs and other substances
designated "controlled substances." For a drug or other
substance to be designated as a "Schedule I" controlled
substance, it must be found that the substance "has a high
potential for abuse", and has "no currently accepted
medical use in treatment in the United States". Federal
law lists marijuana as a Schedule I controlled substance,
deemed to have no accepted medical use.
i) The Cole Memo : On August 29, 2013, the U.S.
Department of Justice issued guidance to federal
prosecutors regarding cannabis enforcement under the CSA
(referred to as the "Cole Memo"). The Cole Memo
reiterated the Department's commitment to enforcing the
CSA consistent with Congress' determination that cannabis
is a dangerous drug that provides a significant source of
revenue to large-scale criminal enterprises, gangs, and
cartels. In furtherance of this objective, the Cole Memo
instructed Department attorneys and law enforcement
officials to focus on the following eight enforcement
priorities:
(1) Preventing the distribution of marijuana to
minors;
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(2) Preventing revenue from marijuana sales from
going to criminal enterprises, gangs, and cartels;
(3) Preventing the diversion of marijuana from
states where it is legal under state law in some form
to other states;
(4) Preventing state-authorized marijuana activity
from being used as a cover or pretext for the
trafficking of other illegal drugs or other illegal
activity;
(5) Preventing violence and the use of firearms in
the cultivation and distribution of marijuana;
(6) Preventing drugged driving and the
exacerbation of other adverse public health
consequences associated with marijuana use;
(7) Preventing the growing of marijuana on public
lands and the attendant public safety and
environmental dangers posed by marijuana production on
public lands; and,
(8) Preventing marijuana possession or use on
federal property.
Under the Cole Memo, these priorities will guide the
Department's enforcement of the CSA against
marijuana-related conduct. While the Cole Memo's
guidance was issued in response to recent marijuana
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legalization initiatives in other states, it applies to
all Departmental marijuana enforcement nationwide.
ii) Public Law 113-235 : Operative December 16, 2014,
Public Law 113-235 prohibits the U.S. Department of
Justice from using funds to prevent specified states,
including California, from implementing laws that
authorize the use, distribution, possession, or
cultivation of medical marijuana.
b) An overview of state law : The California Uniform
Controlled Substances Act prohibits, except as authorized,
the possession, cultivation, transportation, and sale of
marijuana and marijuana derivatives. Under Proposition
215, however, existing law does authorize a patient (or the
patient's primary caregiver) to cultivate or possess
marijuana for the patient's medical use when recommended by
a physician, as specified.
i) SB 420 : SB 420 (Vasconcellos), Chapter 875,
Statutes of 2003, established statewide guidelines for
Proposition 215 enforcement. Specifically, SB 420 called
for the establishment of a voluntary program for the
issuance of identification cards to qualified patients.
SB 420 further specified that no patient or primary
caregiver in possession of a valid identification card
shall be subject to arrest for possession,
transportation, delivery, or cultivation of medical
marijuana, as specified.
ii) Medical Marijuana Regulation and Safety Act : In
2015, the Legislature enacted the MMRSA through a package
of bills establishing a comprehensive licensing and
regulatory framework for medical marijuana.
Specifically, the MMRSA consists of three bills: (1) SB
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643 (McGuire), Chapter 719, Statutes of 2015; (2) AB 243
(Wood), Chapter 688, Statutes of 2015; and, (3) AB 266
(Bonta), Chapter 689, Statutes of 2015.
Among its provisions, the MMRSA established the Bureau of
Medical Marijuana Regulation within the Department of
Consumer Affairs to oversee and enforce the state's
medical marijuana regulations, in collaboration with the
California Department of Public Health and the California
Department of Food and Agriculture (CDFA). Additionally,
the law established categories of licenses for various
medical marijuana activities, such as cultivation,
manufacturing, distribution, transportation, and sale.
AB 266 also added R&TC Section 31020 to require the BOE,
in consultation with the CDFA, to adopt a system to
report commercial cannabis and cannabis product movement
throughout the distribution chain (i.e., "track and
trace"). The adopted system must employ secure packaging
and provide information to the BOE. Section 31020 also
requires the system to capture, at a minimum, all of the
following:
(1) The amount of tax due by the designated
entity;
(2) The name, address, and license number of the
designated entity that remitted the tax;
(3) The name, address, and license number of the
succeeding entity receiving the product;
(4) The transaction date; and,
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(5) Any other information the BOE deems necessary
for the taxation and regulation of marijuana and
marijuana products.
c) What would this bill do ? This bill would impose a fee
on the consumption or other use in California of medical
marijuana purchased from any retailer at the rate of 10% of
the sales price. The fee would apply on and after January
1, 2018. The BOE would be charged with administering the
new fee and promulgating regulations to aid in
administration. Revenues from the new fee would be
deposited into a newly established Fund, and thereafter
allocated pursuant to a statutory formula. Specifically,
30% of revenues would be allocated to the state General
Fund, 30% would be allocated to the Bureau of Medical
Marijuana Regulation for the administration of a grant
program, 20% would be allocated to the Department of Parks
and Recreation, and the remaining 20% would be allocated to
counties for drug and alcohol treatment programs.
d) Determining the appropriate point of taxation : This
bill would impose a new fee on the purchasers of medical
marijuana. In other words, while medical marijuana
retailers would be tasked with collecting and remitting the
fee, the legal incidence of the fee would fall on the
consumer.
Imposing the legal incidence of the fee on consumers raises
a number of policy issues this Committee may wish to
consider. As the BOE notes, it is generally advisable to
impose any new tax or fee of this nature as high up in the
distribution chain as is feasible. This eases the BOE's
administrative responsibilities by limiting the number of
tax or feepayers with whom the BOE must interact. Limiting
the pool of tax or feepayers also eases the BOE's audit and
enforcement functions.
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In the case of medical marijuana, the distribution chain
begins with cultivators. Given the large number of
marijuana growers, the BOE has suggested that it may be
more appropriate to impose a new marijuana tax or fee at
the distributor level. Critics of such an approach,
however, contend that while the MMRSA is working to impose
order on a previously unregulated industry, the industry,
at present, does not follow traditional lines of production
and distribution. Thus, it may take some time for the
industry to become "regularized" to a degree where
imposition of a tax at the distribution level is
practicable. Thus, they argue for a point-of-sale exaction
similar to the state's sales tax. It should be noted,
however, that the state's sales tax is technically imposed
on retailers, who are then authorized to collect
reimbursement from their customers. In this manner, the
BOE limits the number of taxpayers with whom it interacts.
As such, it is not entirely clear to Committee staff why
this bill's exaction is not structured in a similar way,
with the fee legally imposed on retailers of medical
cannabis, and explicit authorization granted to recoup the
fee from cannabis consumers.
e) Taxing medicine : As noted above, the existing SUT Law
provides an exemption for medicines when those medicines
are prescribed by an authorized person and dispensed by a
pharmacist. This exemption recognizes that the SUT is a
relatively regressive tax, imposing a disproportionate
financial burden on those with modest means. Moreover,
this exemption recognizes that individuals should have
access to necessities of life, such as food and
prescription medications, at affordable prices. This bill,
however, takes a slightly different tact by imposing a new
exaction specifically on consumers of medical marijuana.
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Proponents of such an approach might argue that
California's medical marijuana regime has resulted in de
facto legalization of recreational marijuana use, and that
this growing industry and its consumers should be required
to pay for some of the industry's negative externalities.
Critics of such an approach, however, might point out that
Proposition 215 was designed to provide individuals with
severe illnesses a degree of comfort and relief. Thus,
increasing the cost of marijuana for such patients might
serve as a barrier to such relief. The author has
attempted to address this concern, albeit indirectly, by
providing an exemption for consumers of low income. All of
this, however, raises the question of whether it might be
appropriate to defer the establishment of a tax regime
until after the voters have had a chance to decide whether
to legalize recreational marijuana.
f) How does this bill fit in with the changing legal
landscape ? There is at least one marijuana legalization
initiative currently pending signature verification.
Specifically, Initiative Number 1762 would legalize both
marijuana and hemp under state law. The initiative would
also impose a state excise tax on retail sales of marijuana
equal to 15% of the sales price, along with state
cultivation taxes on marijuana of $9.25 per ounce of
flowers and $2.75 per ounce of leaves. In addition, the
proposed initiative would exempt medical marijuana from
some taxation.
To prevent inconsistencies, this bill provides that the Fee
Act shall only become operative if Initiative Number 1762
is not approved by the voters at the November 8, 2016,
statewide general election.
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g) Related legislation : AB 2243 (Wood) would impose a tax
in specified amounts upon the distribution of medical
cannabis flowers, medical cannabis leaves, and immature
medical cannabis plants. Revenues from the tax would be
continuously appropriated to, among other things, fund
competitive grants for local law enforcement-related
activities pertaining to illegal cannabis cultivation.
Revenues would also be used to fund a competitive grant
program for environmental cleanup restoration and
protection of public and private lands that have been
damaged by illegal cannabis cultivation. AB 2243 passed
the Assembly Floor by a vote of 60 to 12 and is pending
hearing by the Senate Committee on Governance and Finance.
h) Suggested technical amendments : Committee staff
suggests adoption of the following technical amendments:
i) On page 6, in line 29, after "county," insert "city
and county,";
ii) On page 8, in line 16, strike "tax" and insert
"fee"; and,
iii) On page 8, in line 29, strike "tax" and insert
"fee".
REGISTERED SUPPORT / OPPOSITION:
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Support
California State Association of Counties
Rural County Representatives of California
Opposition
Americans for Safe Access
California NORML
Fresno Cannabis Association
UCBA Trade Association
Analysis Prepared by:M. David Ruff / REV. & TAX. / (916)
319-2098
SB 987
Page 26