BILL NUMBER: SB 1131AMENDED BILL TEXT AMENDED IN ASSEMBLY AUGUST 20, 2010 AMENDED IN SENATE APRIL 27, 2010 INTRODUCED BY Senator Calderon FEBRUARY 18, 2010An act to add Section 11082 to the Government Code, relating to state government.An act to add Division 8.9 (commencing with Section 22992) to the Business and Professions Code, and to amend Sections 6592 and 6901 of, to add Section 6471.5 to, and to add Article 1.7 (commencing with Section 6480.50) to Chapter 5 of Part 1 of Division 2 of, the Revenue and Taxation Code, relating to cannabis. LEGISLATIVE COUNSEL'S DIGEST SB 1131, as amended, Calderon.Commercials: state funding prohibition.Cannabis and cannabis products: licensure: taxation . Existing law provides for the licensure by the State Board of Equalization of manufacturers, distributors, wholesalers, importers, and retailers of cigarettes or tobacco products that are engaged in business in California, and prohibits retailers, manufacturers, distributors, and wholesalers from distributing or selling those cigarette and tobacco products unless they are licensed. Existing law also imposes a tax on the gross receipts from the sale in this state of, or the storage, use, or other consumption in this state of, tangible personal property purchased from a retailer for storage, use, or other consumption in this state. This bill would create the Cannabis Licensing Act and provide for the licensure by the State Board of Equalization of growers, importers, wholesalers, retailers, and transporters of cannabis and cannabis products that are engaged in business in California. The bill would require these licensed growers, importers, wholesalers, retailers, and transporters to keep records of every sale, transfer, or delivery of cannabis or cannabis products, as specified. The bill would authorize any peace officer and specified employees of the board to conduct inspections, as provided. It would prohibit growers, importers, wholesalers, retailers, and transporters from selling or purchasing cannabis or cannabis products without a license. The bill would provide for the seizure of cannabis or cannabis products that are sold or purchased in violation of the act. The bill would impose specified penalties for a violation of the act, including license revocation or suspension, civil penalties, and criminal penalties. By imposing criminal penalties, the bill would create a state-mandated local program. The bill would require each wholesaler to prepay the retail sales tax on its gross receipts derived from the sale of cannabis and cannabis products, as specified. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.Under existing law, whenever a state agency is required or authorized to prepare and cause the publishing of any notice, advertisement or publication in any newspaper or other medium, that agency is required to properly prepare the notice, advertisement or publication and deliver it to the Department of General Services in due time for publication.Existing law establishes the California Film Commission, which has prescribed duties, including taking actions that encourage motion picture and television filming in California. Existing law also provides various incentives, including tax incentives, to specified entities that undertake film production in this state.This bill would prohibit the state from expending any state funds for the purpose of filming or producing commercials or other filmed materials, for commercial use, outside of the state.Vote: majority. Appropriation: no. Fiscal committee:noyes . State-mandated local program:noyes . THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Division 8.9 (commencing with Section 22992) is added to the Business and Professions Code , to read: DIVISION 8.9. CANNABIS LICENSING ACT CHAPTER 1. GENERAL PROVISIONS AND DEFINITIONS 22992. This division shall be known, and may be cited, as the Cannabis Licensing Act. 22992.1. The board shall administer a statewide program to license sellers and transporters of cannabis and cannabis products. 22992.2. For purposes of this division, the following terms shall have the following meanings: (a) "Board" means the State Board of Equalization. (b) "Cannabis" means all parts of the plant Cannabis sativa L., whether growing or not; the seeds thereof; the resin extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, or its seeds or resin. It does not include the mature stalks of the plant, fiber produced from the stalks, oil, or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of the plant which is incapable of germination. (c) "Cannabis product" means any article made of, and containing, at least 50 percent, cannabis. (d) "Display for sale" means the placement of cannabis or cannabis products in retail stock for the purpose of selling or gifting the cannabis or cannabis products. For purposes of this definition, the clear and easily visible display of cannabis or cannabis products shall create a rebuttable presumption that either was displayed for sale. (e) "Gifting" means any transfer of title or possession without consideration, exchange, or barter, in any manner or by any means, of cannabis or cannabis products that have been purchased for resale under a license issued pursuant to this division if the transfer occurs while the license is suspended or after the effective date of its revocation. (f) "Grower" means every person that plants, cultivates, harvests, dries, or processes any cannabis or cannabis products. (g) "Importer" means any purchaser for resale in California of cannabis or cannabis products manufactured outside of California for the purpose of making the first sale within California. (h) "License" means a license issued by the board pursuant to this division. (i) "Licensee" means any person holding a license issued by the board pursuant to this division. (j) "Notice" or "notification" means, unless as otherwise provided, the written notice or notification provided to a licensee by the board by either actual delivery to the licensee or by first-class mail addressed to the licensee at the address on the license. (k) "Person" means a person as defined in Section 6005 of the Revenue and Taxation Code. (l) "Retailer" means a retailer as defined in Section 6015 of the Revenue and Taxation Code that engages in this state in the retail sale of cannabis or cannabis products from a retail location, and a retailer as described in Section 6019 of the Revenue and Taxation Code making sales of cannabis or cannabis products. (m) "Retail location" means any building from which cannabis or cannabis products are sold at retail. (n) "Retail sale" means a retail sale as defined in Section 6007 of the Revenue and Taxation Code. (o) "Sale" or "sold" means a sale as defined in Section 6006 of the Revenue and Taxation Code. (p) "Seller" means a grower, importer, wholesaler, and retailer of cannabis or cannabis products in California, but does not mean a transporter of cannabis or cannabis products. (q) "Transporter" means any common carrier and holder of interstate cannabis transporter's permits, transporting within California and into California from outside California for delivery or use within California and for transport for delivery or use outside of California. (r) "Wholesaler" means every person, other than a grower or importer, that engages in this state in making sales for resale of cannabis or cannabis products. 22992.3. The board shall administer and enforce the provisions of this division and may prescribe, adopt, and enforce rules and regulations relating to the administration and enforcement of this division. 22992.4. No person is subject to the requirements of this division if that person is exempt from regulation under the United States Constitution, the laws of the United States, or the California Constitution. 22992.5. Nothing in this division preempts or supersedes any local cannabis or cannabis products law. Local licensing laws may provide for the suspension or revocation of the local license for any violation of a state cannabis licensing law. 22992.6. Any notice required by this division shall be served personally or by mail. If by mail, the notice shall be placed in a sealed envelope, with postage paid, addressed to the licensee at the address as it appears in the records of the board. The giving of notice shall be deemed complete at the time of deposit of the notice in the United States Post Office, or a mailbox, subpost office, substation or mail chute, or other facility regularly maintained or provided by the United States Postal Service, without extension of time for any reason. In lieu of mailing, a notice may be served personally by delivering to the person to be served and service shall be deemed complete at the time of delivery. Personal service to a corporation may be made by delivery of a notice to any person designated in the Code of Civil Procedure to be served for the corporation with summons and complaints in a civil action. 22992.7. (a) All information and records provided to the board pursuant to this division are confidential in nature and shall not be disclosed by the board. Information required under this division is not a public record under the California Public Records Act, as described in Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code, and shall not be open to public inspection. (b) All information and records that are submitted to the board by or on behalf of a grower, importer, wholesaler, retailer, or transporter which contain the name, address, or any other identifying information concerning the grower, importer, wholesaler, retailer, or transporter are confidential. CHAPTER 2. LICENSE FOR GROWERS AND IMPORTERS OF CANNABIS AND CANNABIS PRODUCTS 22993. (a) Every grower or importer of cannabis and cannabis products shall annually obtain and maintain a license under this division to engage in the sale of cannabis or cannabis products. (b) A license issued to a grower or an importer under this division is only valid with respect to the grower or importer designated on the license and may not be transferred or assigned to another grower or importer. (c) Any grower or importer that is issued a license under this division that does not commence business in the manner specified or designated in the license, ceases to do business in the manner specified or designated in the license, or is notified that the license is suspended or revoked, shall immediately surrender that license to the board. 22993.2. (a) An application for a license or license renewal by a grower or by an importer shall be on a form prescribed by the board and shall include all of the following: (1) The name, address, and telephone number of the applicant. For applicants whose corporate offices are at a separate location, the business name, address, and telephone number of the corporate office. Citations issued to licensees shall be forwarded to all addresses on the license. (2) If any other licenses or permits have been issued by the board to the applicant, the license or permit numbers for each license or permit then in effect. (3) A statement by the applicant affirming that the applicant has not been convicted of a felony and has not violated and will not violate or cause or permit to be violated any of the provisions of this division or any rule of the board applicable to the applicant or pertaining to the growing, importing, sale, or distribution of cannabis or cannabis products. If the applicant is unable to affirm this statement, the application shall contain a statement by the applicant of the nature of any violation or the reasons that prevent the applicant from complying with the requirements with respect to the statement. (4) A statement by the applicant that the contents of the application are complete, true, and correct. Any person who signs a statement pursuant to this subdivision that asserts the truth of any material matter that he or she knows to be false is guilty of a misdemeanor punishable by imprisonment of up to one year in the county jail, or a fine of not more than one thousand dollars ($1,000), or by both the imprisonment and the fine. (5) Signature of the applicant. (6) Any other information the board may require. (b) The board may investigate to determine the truthfulness and completeness of the information provided in the application. (c) The board shall provide electronic means for applicants to download and submit applications. 22993.4. Every grower or importer of cannabis or cannabis products shall submit with each application or application for renewal a license fee of ____ dollars ($____). The fee shall be for a calendar year and may not be prorated. 22993.6. (a) The board shall issue a license to a grower or importer upon receipt of a completed application and payment of the fee prescribed in Section 22993.4, unless any of the following apply: (1) If the grower or importer is not an individual, any person controlling the grower or importer has previously been issued a license that is suspended or revoked by the board for violation of any of the provisions of this division. (2) The application is for a license or renewal of a license for a grower or importer whose license is revoked or for which revocation is pending, unless either of the following is true: (A) It has been more than five years since a grower or importer's previous license was revoked. (B) The person applying for the license provides the board with documentation demonstrating that the applicant has acquired or is acquiring the business in an arm's length transaction. For purposes of this section, "arm's length transaction" means a sale in good faith and for valuable consideration that reflects the fair market value in the open market between two informed and willing parties, neither under any compulsion to participate in the transaction. A sale of the business between relatives, related companies, or partners, or a sale for the primary purpose of avoiding the effect of the violation of state cannabis or cannabis products control laws that were committed by the wholesaler is presumed not to be made at "arm's length." (3) If the grower or importer is not an individual, any person controlling the grower or importer has been convicted of a felony. (b) (1) Any grower or any importer that is denied a license may petition for a redetermination of the board's denial of the license within 30 days after service upon that grower or that importer of the notice of the denial of the license. If a petition for redetermination is not filed within the 30-day period, the determination of denial becomes final at the expiration of the 30-day period. (2) Every petition for redetermination shall be in writing and shall state the specific grounds upon which the petition is founded. The petition may be amended to state additional grounds at any time prior to the date on which the board issues its order or decision upon the petition for redetermination. (3) If the petition for redetermination is filed within the 30-day period, the board shall reconsider the determination of the denial and, if the grower or importer has so requested in the petition, shall grant an oral hearing and shall give the grower or the importer at least 10 days' notice of the time and place of the hearing. The board may continue the hearing from time to time as may be necessary. (4) The order or decision of the board upon a petition for redetermination becomes final 30 days after mailing of notice thereof. CHAPTER 3. LICENSE FOR WHOLESALERS OF CANNABIS AND CANNABIS PRODUCTS 22994. (a) Every wholesaler shall annually obtain and maintain a license to engage in the sale of cannabis or cannabis products. A wholesaler of cannabis and cannabis products that owns or controls more than one location shall obtain a separate license for each location but may submit a single application for all such licenses. (b) Licenses shall be valid for a calendar year period upon payment of the fee prescribed in Section 22994.4, unless surrendered, suspended, or revoked prior to the end of the calendar year, and may be renewed each year upon payment of the fee. (c) A license issued to a wholesaler under this division is valid only with respect to the wholesaler designated on the license and may not be transferred or assigned to another wholesaler. A person that obtains a license as a wholesaler that ceases to do business as specified in the license, or that never commenced business, or whose license is suspended or revoked, shall immediately surrender the license to the board. 22994.2. (a) An application for a license or license renewal by a wholesaler shall be on a form prescribed by the board and shall include all of the following: (1) The name, address, and telephone number of the applicant. (2) The business name, address, and telephone number of each location where cannabis or cannabis products will be sold. For applicants who control more than one location, an address for receipt of correspondence or notices from the board, such as a headquarters or corporate office, shall also be included in the application and listed on the license. Citations issued to licensees shall be forwarded to all addresses on the license. (3) A statement by the applicant affirming that the applicant has not been convicted of a felony and has not violated and will not violate or cause or permit to be violated any of the provisions of this division or any rule of the board applicable to the applicant or pertaining to the growing, importing, sale, or distribution of cannabis or cannabis products. If the applicant is unable to affirm this statement, the application shall contain a statement by the applicant of the nature of any violation or the reasons that prevent the applicant from complying with the requirements with respect to the statement. (4) If any other licenses or permits have been issued by the board or the Department of Alcoholic Beverage Control to the applicant, the license or permit numbers for each license or permit then in effect. (5) A statement by the applicant that the contents of the application are complete, true, and correct. Any person who signs a statement pursuant to this subdivision that asserts the truth of any material matter that he or she knows to be false is guilty of a misdemeanor punishable by imprisonment of up to one year in the county jail, or a fine of not more than one thousand dollars ($1,000), or by both the imprisonment and the fine. (6) Signature of the applicant. (7) Any other information the board may require. (b) The board may investigate to determine the truthfulness and completeness of the information provided in the application. (c) The board shall provide electronic means for applicants to download and submit applications. 22994.4. Every wholesaler of cannabis and cannabis products shall submit a license fee of _____ dollars ($____) for each location with each application and each application for renewal. An applicant that owns or controls more than one location shall obtain a separate license for each location but may submit a single application for those licenses or renewal of those licenses. The fee shall be for a calendar year and may not be prorated. 22994.6. (a) The board shall issue a license to a wholesaler upon receipt of a completed application and payment of the fee prescribed in Section 22994.4, unless any of the following apply: (1) If the wholesaler is not an individual, any person controlling the wholesaler has previously been issued a license that is suspended or revoked by the board for violation of any of the provisions of this division. (2) The application is for a license or renewal of a license for a wholesaler whose license is revoked or for which revocation is pending, unless either of the following is true: (A) It has been more than five years since a wholesaler's previous license was revoked. (B) The person applying for the license provides the board with documentation demonstrating that the applicant has acquired or is acquiring the business in an arm's length transaction. For purposes of this section, "arm's length transaction" means a sale in good faith and for valuable consideration that reflects the fair market value in the open market between two informed and willing parties, neither under any compulsion to participate in the transaction. A sale of the business between relatives, related companies, or partners, or a sale for the primary purpose of avoiding the effect of the violation of state cannabis or cannabis products control laws that were committed by the wholesaler is presumed not to be made at "arm's length." (3) If the wholesaler is not an individual, any person controlling the wholesaler has been convicted of a felony. (b) (1) Any wholesaler that is denied a license may petition for a redetermination of the board's denial of the license within 30 days after service upon that wholesaler of the notice of the denial of the license. If a petition for redetermination is not filed within the 30-day period, the determination of denial becomes final at the expiration of the 30-day period. (2) Every petition for redetermination shall be in writing and shall state the specific grounds upon which the petition is founded. The petition may be amended to state additional grounds at any time prior to the date on which the board issues its order or decision upon the petition for redetermination. (3) If the petition for redetermination is filed within the 30-day period, the board shall reconsider the determination of the denial and, if the wholesaler has so requested in the petition, shall grant the wholesaler an oral hearing and shall give the wholesaler at least 10 days' notice of the time and place of the hearing. The board may continue the hearing from time to time as may be necessary. (4) The order or decision of the board upon a petition for redetermination becomes final 30 days after mailing of notice thereof. CHAPTER 4. LICENSE FOR RETAILERS OF CANNABIS AND CANNABIS PRODUCTS 22995. (a) Every retailer of cannabis and cannabis products shall annually obtain and maintain a license under this division to engage in the sale of cannabis or cannabis products in California. A retailer of cannabis and cannabis products that owns or controls more than one retail location shall obtain a separate license for each retail location but may submit a single application for these licenses. (b) Licenses shall be valid for a calendar year period upon payment of the fee prescribed in Section 22995.4, unless surrendered, suspended, or revoked prior to the end of the calendar year, and may be renewed each year upon payment of the fee. (c) The retailer shall conspicuously display the license at each retail location in a manner visible to the public. (d) A license issued to a retailer under this division is only valid with respect to the retailer designated on the license and may not be transferred or assigned to another retailer. A person that obtains a license as a retailer that ceases to do business as specified in the license, or that never commenced business, or whose license is suspended or revoked, shall immediately surrender the license to the board. 22995.2. (a) An application for a license or license renewal by a retailer shall be on a form prescribed by the board and shall include all of the following: (1) The name, address, and telephone number of the applicant. (2) The business name, address, and telephone number of each retail location where cannabis or cannabis products will be sold. For applicants who control more than one retail location, an address for receipt of correspondence or notices from the board, such as a headquarters or corporate office of the retailer, shall also be included in the application and listed on the license. Citations issued to licensees shall be forwarded to all addresses on the license. (3) A statement by the applicant affirming that the applicant has not been convicted of a felony and has not violated and will not violate or cause or permit to be violated any of the provisions of this division or any rule of the board applicable to the applicant or pertaining to the growing, importing, sale, or distribution of cannabis or cannabis products. If the applicant is unable to affirm this statement, the application shall contain a statement by the applicant of the nature of any violation or the reasons that prevent the applicant from complying with the requirements with respect to the statement. (4) If any other licenses or permits have been issued by the board or the Department of Alcoholic Beverage Control to the applicant, the license or permit number of each license or permit then in effect. (5) A statement by the applicant that the contents of the application are complete, true, and correct. Any person who signs a statement pursuant to this subdivision that asserts the truth of any material matter that he or she knows to be false is guilty of a misdemeanor punishable by imprisonment of up to one year in the county jail, or a fine of not more than one thousand dollars ($1,000), or by both the imprisonment and the fine. (6) Signature of the applicant. (7) Any other information the board may require. (b) The board may investigate to determine the truthfulness and completeness of the information provided in the application. (c) The board may issue a license to an applicant for a retail location without further investigation if the applicant holds a valid license from the Department of Alcoholic Beverage Control for that same location. (d) The board shall provide electronic means for applicants to download and submit applications. 22995.4. Every retailer of cannabis and cannabis products shall submit a license fee of _____ dollars ($____) for each location where cannabis or cannabis products are sold with each application and each application for renewal. An applicant that owns or controls more than one retail location shall obtain a separate license for each retail location, but may submit a single application for those licenses or renewal of those licenses. The fee shall be for a calendar year and may not be prorated. 22995.6. (a) The board shall issue a license to a retailer upon receipt of a completed application and payment of the fee prescribed in Section 22995.4, unless any of the following apply: (1) If the retailer or, if the retailer is not an individual, any person controlling the retailer has previously been issued a license that is suspended or revoked by the board for violation of any of the provisions of this division. (2) The application is for a license or renewal of a license for a retail location that is the same retail location as that of a retailer whose license was revoked or for which revocation is pending, unless either of the following is true: (A) It has been more than five years since a previous license for the retail location was revoked. (B) The person applying for the license provides the board with documentation demonstrating that the applicant has acquired or is acquiring the premises or business in an arm's length transaction. For purposes of this section, "arm's length transaction" means a sale in good faith and for valuable consideration that reflects the fair market value in the open market between two informed and willing parties, neither under any compulsion to participate in the transaction. A sale between relatives, related companies, or partners, or a sale for the primary purpose of avoiding the effect of the violation of this division that occurred at the retail location, is presumed not to be made at "arm's length." (3) The retailer or, if the retailer is not an individual, any person controlling the retailer, has been convicted of a felony. (4) The retailer does not possess all required permits or licenses required under the Revenue and Taxation Code or Division 8.6 (commencing with Section 22970) of this code. (b) (1) Any retailer that is denied a license may petition for a redetermination of the board's denial of the license within 30 days after service upon that retailer of the notice of the denial of the license. If a petition for redetermination is not filed within the 30-day period, the determination of denial becomes final at the expiration of the 30-day period. (2) Every petition for redetermination shall be in writing and shall state the specific grounds upon which the petition is founded. The petition may be amended to state additional grounds at anytime prior to the date on which the board issues its order or decision upon the petition for redetermination. (3) If the petition for redetermination is filed within the 30-day period, the board shall reconsider the determination of the denial and, if the retailer has so requested in the petition, shall grant the retailer an oral hearing and shall give the retailer at least 10 days' notice of the time and place of the hearing. The board may continue the hearing from time to time as may be necessary. (4) The order or decision of the board upon a petition for redetermination becomes final 30 days after mailing of notice thereof. CHAPTER 5. LICENSE FOR TRANSPORTERS OF CANNABIS AND CANNABIS PRODUCTS 22996. (a) Every common carrier transporting cannabis or cannabis products within California and into California from outside California for delivery or use within California and for transport for delivery or use outside of California, shall annually obtain and maintain a license under this division to engage in the transportation of cannabis and cannabis products in California. A common carrier that owns or controls more than one transportation vehicle shall obtain a separate license for each vehicle that is used to transport cannabis or cannabis products, but may submit a single application for these licenses. (b) A license issued to a transporter under this division is only valid with respect to the transporter designated on the license and may not be transferred or assigned to another transporter. (c) Licenses shall be valid for a calendar year period upon payment of the fee prescribed in Section 22996.4, unless surrendered, suspended, or revoked prior to the end of the calendar year, and may be renewed each year upon payment of the fee. (d) A person that obtains a license as a transporter that ceases to do business as specified in the license, or that never commenced business, or whose license is suspended or revoked, shall immediately surrender the license to the board. 22996.2. (a) An application for a license or license renewal by a transporter shall be on a form prescribed by the board and shall include all of the following: (1) The name, address, and telephone number of the applicant. (2) The business name, address, and telephone number. Citations issued to licensees shall be forwarded to all addresses on the license. (3) A statement by the applicant affirming that the applicant has not been convicted of a felony and has not violated and will not violate or cause or permit to be violated any of the provisions of this division or any rule of the board applicable to the applicant or pertaining to the growing, importing, sale, or distribution of cannabis or cannabis products. If the applicant is unable to affirm this statement, the application shall contain a statement by the applicant of the nature of any violation or the reasons that prevent the applicant from complying with the requirements with respect to the statement. (4) A statement by the applicant that the contents of the application are complete, true, and correct. Any person who signs a statement pursuant to this subdivision that asserts the truth of any material matter that he or she knows to be false is guilty of a misdemeanor punishable by imprisonment of up to one year in the county jail, or a fine of not more than one thousand dollars ($1,000), or by both the imprisonment and the fine. (5) Signature of the applicant. (6) Any other information the board may require. (b) The board may investigate to determine the truthfulness and completeness of the information provided in the application. (c) The board shall provide electronic means for applicants to download and submit applications. 22996.4. Every transporter of cannabis and cannabis products shall submit a license fee of _____ dollars ($____) for each vehicle used to transport cannabis or cannabis products with each application and each application for renewal. An applicant that owns or controls more than one transportation vehicle shall obtain a separate license for each transportation vehicle, but may submit a single application for those licenses or renewal of those licenses. The fee shall be for a calendar year and may not be prorated. 22996.6. (a) The board shall issue a license to a transporter upon receipt of a completed application and payment of the fee prescribed in Section 22996.4, unless any of the following apply: (1) If the transporter or, if the transporter is not an individual, any person controlling the transporter has previously been issued a license that is suspended or revoked by the board for violation of any of the provisions of this division, unless it has been more than five years since a previous license was revoked. (2) The transporter or, if the transporter is not an individual, any person controlling the transporter, has been convicted of a felony. (b) (1) Any transporter that is denied a license may petition for a redetermination of the board's denial of the license within 30 days after service upon that retailer of the notice of the denial of the license. If a petition for redetermination is not filed within the 30-day period, the determination of denial becomes final at the expiration of the 30-day period. (2) Every petition for redetermination shall be in writing and shall state the specific grounds upon which the petition is founded. The petition may be amended to state additional grounds at anytime prior to the date on which the board issues its order or decision upon the petition for redetermination. (3) If the petition for redetermination is filed within the 30-day period, the board shall reconsider the determination of the denial and, if the retailer has so requested in the petition, shall grant the retailer an oral hearing and shall give the retailer at least 10 days' notice of the time and place of the hearing. The board may continue the hearing from time to time as may be necessary. (4) The order or decision of the board upon a petition for redetermination becomes final 30 days after mailing of notice thereof. 22996.8. (a) Common carriers transporting cannabis or cannabis products within California and into California from outside California for delivery or use within California and for transport for delivery or use outside of California, shall obtain from the licensee a receipt for the cannabis so transported and delivered. This receipt shall be carried with the load at all times and contain all of the following information: (1) Name of shipper. (2) Point of origin. (3) Name of licensee to whom delivery is made. (4) Place of delivery. (5) Name of carrier making delivery. (6) A complete description of the shipment. (7) The number of the waybill covering the shipments. (8) In the case of rail shipments, the car number, and in the case of water shipments, the name of the vessel and the number of the steamship bill of lading. (b) A copy of the freight bill or other shipping document containing all of this information shall be deemed to be in compliance with this requirement. A copy of the receipt shall be delivered to the licensee to whom delivery is made. With respect to pool shipments in which more than one licensees participate, the common carrier shall furnish a copy of the receipt to each participating licensee. (c) All deliveries of cannabis and cannabis products, shipment of which originated outside California, made to California importers, shall be reported to the board in Sacramento by common carriers and holders of interstate cannabis transporters' permits. The report shall be filed with the board on forms prescribed by the board not later than the 15th day of each month covering those deliveries made in the previous calendar month. CHAPTER 6. INVOICES 22997. (a) Every sale, transfer, or delivery of cannabis or cannabis products from one licensee to another licensee shall be recorded on a sales invoice, whether or not consideration is involved. Invoices covering the sale or purchase of cannabis or cannabis products shall be filed in a manner as to be readily accessible for examination by employees of the board and shall not be commingled with invoices covering commodities other than cannabis and cannabis products. (b) Each sales invoice shall have printed thereon the name and address of the seller and shall show all of the following information: (1) Name, address, and license number of the seller and the purchaser. (2) Board-issued license numbers of the seller and the purchaser. (3) Date of sale and invoice number. (4) Kind, quantity, size, and capacity of packages of cannabis and cannabis products sold. (5) The cost to the purchaser, together with any discount which at any time is to be given on or from the price as shown on the invoice. (6) The place from which delivery of the cannabis or cannabis products was made. (c) Invoices covering sales of cannabis or cannabis products between licensees shall show, in addition to the information in paragraphs (1) to (6), inclusive, of subdivision (b), the total weight covered by the invoice. (d) Invoices covering the sale of cannabis or cannabis products for export must be marked or stamped: "Sold for export." (e) Each invoice for the sale of cannabis or cannabis products shall be legible and readable. 22997.2. All growers, importers, wholesalers, retailers, and transporters subject to licensing under this division shall retain invoices that meet the requirements set forth in Section 22997 for all cannabis or cannabis products purchased and sold and any other records required by the board. The invoices and records shall be maintained for a period of one year from the date of the purchase or sale at the licensee's location identified in the license, and thereafter, the invoices and records shall be made available for inspection by the board or a law enforcement agency for a period of four years. CHAPTER 7. INSPECTIONS, PROHIBITIONS, AND PENALTIES Article 1. Inspections 22998. (a) (1) Any peace officer or board employee granted limited peace officer status pursuant to paragraph (6) of subdivision (a) of Section 830.11 of the Penal Code, upon presenting appropriate credentials, is authorized to enter any place as described in paragraph (3) and to conduct inspections in accordance with the requirements of this subdivision. (2) Inspections shall be performed in a reasonable manner and at times that are reasonable under the circumstances, taking into consideration the normal business hours of the place to be entered. (3) Inspections may be conducted at any place or upon any vehicle at which cannabis or cannabis products are sold, produced, stored, or transported. (4) Inspections shall be requested or conducted no more than once in any 24-hour period. (b) Any person that refuses to allow an inspection shall be subject to penalties pursuant to Section 22998.22. Article 2. Prohibitions 22998.2. (a) No grower or importer shall sell cannabis or cannabis products to a wholesaler, retailer, or any other person that is not licensed pursuant to this division or whose license has been suspended or revoked. (b) No wholesaler shall sell cannabis or cannabis products to a retailer, wholesaler, or any other person that is not licensed pursuant to this division or whose license has been suspended or revoked. (c) No retailer or wholesaler shall purchase packages of cannabis or cannabis products from a grower or importer that is not licensed pursuant to this division or whose license has been suspended or revoked. (d) No retailer or wholesaler shall purchase cannabis or cannabis products from any person that is not licensed pursuant to this division or whose license has been suspended or revoked. (e) Each separate sale to a retailer, or by a grower or importer, or to or by a wholesaler or any other person that is not licensed pursuant to this division shall constitute a separate violation. (f) Failure to comply with the provisions of this section shall be a misdemeanor subject to penalties pursuant to Section 22998.22. Article 3. Seizure for Violating Prohibitions 22998.4. Notwithstanding any other provision of this division, upon discovery by the board or a law enforcement agency that a grower, importer, wholesaler, retailer, or any other person has made a purchase or sale of cannabis or cannabis products in violation of Section 22998.2, the board or the law enforcement agency may seize all cannabis or cannabis products at the location of the grower, importer, wholesaler, or retailer, or any other location it deems necessary, or any other person's location. Any cannabis or cannabis products seized by a law enforcement agency shall be delivered to the board, or its designee, within seven days, unless the cannabis or cannabis products will be destroyed by that law enforcement agency, or unless the cannabis or cannabis products are otherwise required to be used as evidence in an administrative, criminal, or civil proceeding, or as part of an ongoing law enforcement operation. Any cannabis or cannabis products seized by the board or delivered to the board by a law enforcement agency shall be deemed forfeited and destroyed. Article 4. Invoicing Penalties 22998.6. (a) Failure of a licensee to comply with Section 22997 or 22997.2 shall be a misdemeanor subject to penalties pursuant to Section 22998.22. (b) Any retailer found in violation of Section 22997 or 22997.2, or any person who fails, refuses, or neglects to retain or make available invoices for inspection and copying during normal business hours in accordance with this section shall be subject to penalties pursuant to Section 22998.22. Article 5. Penalty for Unlicensed Sales 22998.8. (a) A person or entity that engages in the business of selling cannabis or cannabis products in this state either without a valid license or after a license has been suspended or revoked, and each officer of any corporation that so engages in this business, is guilty of a misdemeanor punishable as provided in Section 22998.22. (b) Each day after notification by the board or by a law enforcement agency that a grower, wholesaler, importer, retailer, or any other person required to be licensed under this division offers cannabis or cannabis products for sale or exchange without a valid license for the location from which they are offered for sale shall constitute a separate violation. (c) Continued sales or gifting of cannabis or cannabis products either without a valid license or after a notification of suspension or revocation shall constitute a violation punishable as provided in Section 22998.22, and shall result in the seizure of all cannabis and cannabis products in the possession of the person by the board or a law enforcement agency. Any cannabis or cannabis products seized by the board or delivered to the board by a law enforcement agency shall be deemed forfeited and destroyed. Article 6. Suspension or Revocation Penalty 22998.10. The board may suspend the license or revoke the license, pursuant to the provisions applicable to the revocation of a license as set forth in Section 30148 of the Revenue and Taxation Code, of any licensee that has failed to comply with the requirements of this section. 22998.12. The board shall revoke the license, pursuant to the provisions applicable to the revocation of a license as set forth in Section 30148 of the Revenue and Taxation Code, of any retailer or any person controlling the retailer that has: (a) Been convicted of a felony. (b) Had any permit or license revoked under any provision of the Revenue and Taxation Code or Division 8.6 (commencing with Section 22970) of the Business and Professions Code. 22998.14. In addition to any other civil or criminal penalty provided by law, upon a finding that a licensee has violated any provision of this division, the board may take the following actions: (a) In the case of the first offense, the board may revoke or suspend the license or licenses of the licensee pursuant to the procedures applicable to the revocation of a license as set forth in Section 30148 of the Revenue and Taxation Code. (b) In the case of a second or any subsequent offense, in addition to the action authorized under subdivision (a), the board may impose a civil penalty in an amount not to exceed the greater of either of the following: (1) Five times the retail value of the seized cannabis or cannabis products. (2) Ten thousand dollars ($10,000). 22998.16. (a) Licenses issued pursuant to this division shall be subject to suspension or revocation for violations of this division or Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code. (1) In addition to any applicable fines or penalties for a violation, upon first conviction of a violation, a licensee shall receive a written notice from the board detailing the suspension and revocation provisions of this division. At its discretion, the board may also suspend a license for up to 30 days. (2) In addition to any applicable fines or penalties for a violation, upon a second conviction of a violation within four years of a previous violation, the license shall be revoked. (b) The date of the occurrence of a violation shall be used to calculate the duration between subsequent violations. A violation shall be noted in the license record at the board only after judicial conviction or final adjudication of a violation. (c) Upon updating a record for a violation triggering a suspension, the board shall serve the licensee with a notice of suspension and shall order the licensee to cease the sale, gifting, or displaying for sale of cannabis or cannabis products for the period of the suspension. The notice of suspension shall inform the licensee of the effective dates of the suspension. (d) Continued sales or gifting of cannabis or cannabis products after the effective date of the suspension shall constitute a violation of this division and result in the revocation of a license. (e) Upon updating a record for a violation triggering a revocation, the board shall serve the licensee with a notice of revocation and shall order the licensee to cease the sale, gifting, or displaying for sale of cannabis or cannabis products on and after the effective date of the revocation. The notice of revocation shall inform the licensee of the effective date of the revocation. (f) After a revocation, a previously licensed applicant may apply for a new license after six months. The board may, at its discretion, issue a new license. (g) Upon updating a license record for a violation, suspension, or revocation to a license of a person or entity that owns or controls more than one location, the board shall send notice in writing of the violations, suspensions, or revocations within 15 days of the board' s action to the address included in the application and listed on the license for receipt of correspondence or notices from the board. (h) Upon suspension or revocation of a license pursuant to this section, the board shall notify all licensees by electronic mail within 48 hours of the suspension or revocation of that license. All licensed licensees shall provide the board and shall update, as necessary, an electronic mail address that the board can use for purposes of making the notifications required by this subdivision. (i) Violations by a licensee at one location may not be accumulated against other locations of that same licensee. Violations accumulated against a prior owner at a licensed location may not be accumulated against a new owner at the same licensed location. (j) For purposes of this section, a violation includes violations of Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code relating to cannabis or cannabis products, and violations of this division. Only one violation per discrete action shall be counted toward a suspension or revocation of a license. 22998.18. A person who, after receiving a notice of suspension or revocation, continues to display for sale cannabis or cannabis products shall be subject to a civil penalty of one thousand dollars ($1,000) for each offense, and shall not be subject to Section 22998.22. Article 7. Notice of Suspension or Revocation 22998.20. (a) A retailer whose license has been suspended or revoked by order of the board shall conspicuously post a notice at both of the following locations: (1) Each public entrance to the retail location. The notice shall directly face any person who enters the retail location and shall not be obstructed from view or placed at a height of less than four feet or greater than nine feet from the floor. (2) Each cash register and other point of retail sale. The notice shall be posted so as to be readily viewable by a person standing at or approaching the cash register or other point of retail sale. The notice shall directly face the purchaser and shall not be obstructed from view or placed at a height of less than four feet or greater than nine feet from the floor. (b) The notices described in this section shall be in the size and form prescribed by the board. The notice shall be provided by the board and may be reproduced in the same size and form in order to comply with subdivision (a). (c) A retailer whose license was suspended shall post the notice at the retail location that was the subject of the suspension for the duration of the suspension. (d) A retailer whose license was revoked shall post the notice at the retail location that was the subject of the revocation for a 30-day period from the effective date of the revocation. (e) Every retailer who fails to post the notices as required by this section, who alters the notice provided by the board, or who removes the notice before the posting period required in subdivision (c) or (d), as applicable, expires, shall be subject, notwithstanding Section 22998.22, to a civil penalty of one thousand dollars ($1,000) for each offense. Article 8. Criminal Penalty 22998.22. Any violation of this division by any person, except as otherwise provided, is a misdemeanor. Each offense shall be punished by a fine not to exceed five thousand dollars ($5,000), or imprisonment not exceeding one year in a county jail, or both the fine and imprisonment. The court shall order any fines assessed be deposited in the Cannabis and Cannabis Products Compliance Fund, which is hereby created in the General Fund. Article 9. Miscellaneous 22998.24. Any prosecution for a violation of any of the penal provisions of this division shall be instituted within four years after the commission of the offense. 22998.26. The provisions of Chapter 4 (commencing with Section 55121) of Part 30 of Division 2 of the Revenue and Taxation Code shall apply with respect to the collection of the fees, civil fines, and penalties imposed pursuant to this division. 22998.28. The board may cancel or revoke any license which has been issued erroneously or issued based on erroneous or false statements. SEC. 2. Section 6471.5 is added to the Revenue and Taxation Code , to read: 6471.5. Any person required to make a prepayment pursuant to Article 1.7 (commencing with Section 6480.50) may not be required to make an additional prepayment pursuant to this article, provided that more than 75 percent of the gross receipts of that person are from the retail sale of cannabis or cannabis products. SEC. 3. Article 1.7 (commencing with Section 6480.50) is added to Chapter 5 of Part 1 of Division 2 of the Revenue and Taxation Code , to read: Article 1.7. Prepayment of Sales Tax on Cannabis and Cannabis Products 6480.50. (a) For purposes of the imposition of the prepayment of sales tax on cannabis and cannabis products pursuant to this article, "cannabis" and "cannabis product" have the meanings set forth in Section 22992.2 of the Business and Professions Code. (b) "Wholesaler" includes every person making sales other than retail sales of cannabis and cannabis products. "Wholesaler" does not include any person making sales of cannabis and cannabis products at retail in the capacity of an operator of a medical cannabis dispensary or any other retail establishment. (c) With respect to cannabis and cannabis products, "sale" means the transfer of title or possession, exchange, or barter, conditional or otherwise, in any manner or by any means whatsoever, of cannabis and cannabis products to a purchaser for a consideration. 6480.51. (a) At any time that cannabis or cannabis products are sold in this state, the wholesaler shall prepay the retail sales tax on his or her gross receipts derived from that sale of cannabis and those cannabis products. Each wholesaler shall report and pay the prepayment amounts to the board, in a form as prescribed by the board, in the period in which the cannabis and cannabis products are sold. The prepayment amounts shall be collected by the wholesaler from the purchaser to whom the cannabis and cannabis products are sold. The prepayment amount constitutes a debt owed by the wholesaler to this state until paid to the board, until satisfactory proof has been submitted to prove that the retailer of the cannabis and cannabis products has paid the retail sales tax to the board, or until a wholesaler who has consumed the cannabis and cannabis products has paid the use tax to the board on the sales price of the amount consumed. On any subsequent sale of that cannabis or cannabis product, each wholesaler shall collect from his or her purchaser a prepayment computed using the combined rate specified in subdivision (e) of the gross receipts from that sale. (b) (1) Each wholesaler shall provide his or her purchaser with an invoice for or other evidence of the collection of the prepayment amounts, which shall be separately stated thereon. (2) Each wholesaler shall report to the board, in a form as prescribed by the board and for the period in which the cannabis and cannabis products were sold, all of the following: (A) The amount of cannabis and cannabis products sold, the gross receipts derived from the sale, and the amount of sales tax prepayments collected by the wholesaler. (B) The amount of tax-paid cannabis and cannabis products purchased, the sales price of that amount, and the amount of sales tax prepayments made by the wholesaler. (C) If the amount of sales tax prepayments collected by the wholesaler is greater than the amount of sales tax prepayments made by the wholesaler, then the excess constitutes a debt owed by the wholesaler to the state until paid to the board, or until satisfactory proof has been submitted that the retailer of the cannabis and cannabis products has paid the tax to the board. (c) A wholesaler who pays the prepayment and issues a resale certificate to the seller, but subsequently consumes the cannabis or cannabis product, shall be entitled to a credit against his or her sales and use taxes due and payable for the period in which the prepayment was made, provided that he or she reports and pays the use tax to the board on the consumption of that cannabis or cannabis product. (d) The amount of a prepayment paid by the retailer or a wholesaler who has consumed the cannabis and cannabis products to the seller from whom he or she acquired the cannabis and cannabis products shall constitute a credit against his or her sales and use taxes due and payable for the period in which the sale was made. Failure of the wholesaler to report prepayments or a wholesaler's failure to comply with any other duty under this article shall not constitute grounds for denial of the credit to the retailer or wholesaler, either on a temporary or permanent basis or otherwise. To be entitled to the credit, the retailer or wholesaler shall retain for inspection by the board any receipts, invoices, or other documents showing the amount of sales tax prepaid to his or her wholesaler, together with the evidence of payment. (e) The rate of the prepayment required to be collected shall be the combined rate of tax imposed pursuant to this part, Part 1.5 (commencing with Section 7200), and Section 35 of Article XIII of the California Constitution on all sales of cannabis and cannabis products sold by wholesalers in this state. 6480.52. (a) If the board determines that it is necessary for the efficient administration of this part, the board may require a wholesaler to provide the board with a list of purchasers to whom the cannabis and cannabis products were sold. (b) In addition to any other reports required under this article, the board may, by rule and otherwise, require additional, other, or supplemental reports, in any form which the board may require, from wholesalers with respect to their sales of cannabis and cannabis products. (c) Any wholesaler who fails to comply with this section is guilty of a misdemeanor punishable as provided in Section 7153. 6480.53. The wholesaler shall file his or her prepayment form together with a remittance of the prepayment amounts, if any, required to be collected pursuant to Section 6480.51 payable to the State Board of Equalization, on or before the last day of the month following the monthly period to which the prepayment form or each prepayment relates. 6480.54. (a) Any wholesaler who fails to make a timely remittance to the board of the prepayment amounts, if any, required pursuant to Sections 6480.51 and 6480.53 shall also pay a penalty of 10 percent of the amount of the prepayment due but not paid, plus interest at the modified adjusted rate per month, or fraction thereof, established pursuant to Section 6591.5, from the date the prepayment became due and payable to the state until the date of payment. (b) The penalty amount specified in subdivision (a) shall be 25 percent if the wholesaler or wholesaler knowingly or intentionally fails to make a timely remittance. 6480.55. (a) The following persons who have paid prepayment amounts either directly to the board or to the person from whom the cannabis or cannabis products were purchased shall be refunded those amounts: (1) Any person who exports the cannabis or cannabis products for subsequent sale outside this state. (2) Any person who sells cannabis or cannabis products whose sale, or storage, use, or other consumption are exempt from the sales or use tax pursuant to Sections 6352, 6381, and 6396. (3) Any person who has lost the cannabis or cannabis products through fire, flood, theft, spillage, or accident, prior to any retail sale. (4) Any person who is unable to collect the prepayment from the purchaser insofar as the sales of the cannabis and cannabis products are represented by accounts which have been found to be worthless and charged off for income tax purposes, or, if the person is not required to file income tax returns, accounts which have been charged off in accordance with generally accepted accounting principles. If partial payments have been made, the payments shall be prorated between amounts due for cannabis and cannabis products and amounts due for the related prepayment. If any of those accounts are thereafter in whole or in part collected by the seller, the cannabis and cannabis products represented by the amounts collected shall be included in the first return filed after that collection and the amount of the prepayment thereon paid with the return. (b) In lieu of a refund, the board may authorize a credit to be taken by the person to whom the refund is due upon his or her prepayment form or sales and use tax return. 6480.56. (a) The board may require any wholesaler subject to this article to place with the board any security that the board determines is necessary to ensure compliance with this article. The amount of the security shall be fixed by the board but shall not be greater than three times the estimated average liability of wholesalers required to file returns for monthly periods, determined in any manner that the board deems proper, or five hundred thousand dollars ($500,000), whichever amount is less. These amounts apply regardless of the type of security placed with the board. The amount of the security may be increased or decreased by the board subject to the maximum amounts. (b) The board may sell the security at public auction if it becomes necessary to so do in order to recover any tax or any amount required to be collected or penalty due. Notice of the sale may be served upon the person who placed the security personally or by mail. If service is by mail, service shall be made in the manner prescribed for service of a notice of a deficiency determination and shall be addressed to the person at his or her address as it appears in the records of the board. However, security in the form of a bearer bond issued by the United States or the State of California which has a prevailing market price may be sold by the board at a private sale at a price not lower than the prevailing market price thereof. Upon any sale, any surplus above the amounts due shall be returned to the wholesaler or wholesaler who placed the security. SEC. 4. Section 6592 of the Revenue and Taxation Code is amended to read: 6592. (a) If the board finds that a person's failure to make a timely return or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person shall be relieved of the penalties provided by Sections 6476, 6477, 6479.3, 6480.4, 6480.8, 6480.54, 6511, 6565, 6591, 7051.2, 7073, and 7074. (b) Except as provided in subdivision (c) any person seeking to be relieved of the penalty shall file with the board a statement under penalty of perjury setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provides for efficient resolution of requests for relief pursuant to this section. SEC. 5. Section 6901 of the Revenue and Taxation Code is amended to read: 6901. If the board determines that any amount, penalty, or interest has been paid more than once or has been erroneously or illegally collected or computed, the board shall set forth that fact in the records of the board and shall certify the amount collected in excess of the amount legally due and the person from whom it was collected or by whom paid. The excess amount collected or paid shall be credited by the board on any amounts then due and payable from the person from whom the excess amount was collected or by whom it was paid under this part, and the balance shall be refunded to the person, or his or her successors, administrators, or executors, if a determination by the board is made in any of the following cases: (a) Any amount of tax, interest, or penalty was not required to be paid. (b) Any amount of prepayment of sales tax, interest, or penalty paid pursuant to Article 1.5 (commencing with Section 6480) , or Article 1.7 (commencing with Section 6480.50), of Chapter 5 was not required to be paid. (c) Any amount that is approved as a settlement pursuant to Section 7093.5. Any overpayment of the use tax by a purchaser to a retailer who is required to collect the tax and who gives the purchaser a receipt therefor pursuant to Article 1 (commencing with Section 6201) of Chapter 3 shall be credited or refunded by the state to the purchaser. Any proposed determination by the board pursuant to this section with respect to an amount in excess of fifty thousand dollars ($50,000) shall be available as a public record for at least 10 days prior to the effective date of that determination. SEC. 6. No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.SECTION 1.Section 11082 is added to the Government Code, to read: 11082. Notwithstanding any other law, the state shall not expend any state funds for the purpose of filming or producing commercials or other filmed materials, for commercial use, outside of the state.