California Senate Bill SB362 Amended / Bill

 BILL NUMBER: SB 362AMENDED BILL TEXT AMENDED IN ASSEMBLY FEBRUARY 23, 2010 AMENDED IN ASSEMBLY JULY 6, 2009 AMENDED IN SENATE MAY 28, 2009 AMENDED IN SENATE MAY 20, 2009 INTRODUCED BY Senator Florez FEBRUARY 25, 2009  An act to amend Section 62722 of the Food and Agricultural Code, relating to milk.   An act to add Section 23356.4 to the Business and Professions Code, to add Section 47060 to the Food and Agricultural Code, and to add Sections 6075.5, 6363.9, 17158, 24316, and 32177.7 to the Revenue and Taxation Code, relating to agriculture.  LEGISLATIVE COUNSEL'S DIGEST SB 362, as amended, Florez.  Milk pooling: exemptions.   Agriculture: victory gardens and microvintners: taxes: exemptions.   Existing law provides for the direct marketing of agricultural produce, including through certified farmers' markets, field retail stands, or farm stands, subject to specified conditions.   This bill would authorize a victory garden grower, as defined, that files a notice with, and pays a $50 filing fee to, the county agricultural commissioner to sell fruits, nuts, or vegetables that he or she grows in his or her garden directly to the public, including at a farmers' market, or to a retailer or distributor or others, within a 15-mile radius from the garden. The license would be effective upon the filing of the notice and payment of the fee and would be renewable annually. A licensed victory garden grower would be exempt from certain state laws and local ordinances, as specified. Because this bill would impose new duties on local agencies, the bill would impose a state-mandated local program.   A violation of any of these provisions would be a misdemeanor. Because this bill would create a new crime, it would impose a state-mandated local program.   The Alcoholic Beverage Control Act contains various provisions regulating the application for, the issuance of, the suspension of, and the conditions imposed upon, alcoholic beverage licenses by the Department of Alcoholic Beverage Control.   This bill would authorize the issuance of an alcoholic beverage license to a victory microvintner, as defined, authorizing the licensee to engage in the manufacture and sale of wine using victory garden grapes, subject to specified conditions.   The Alcoholic Beverage Control Act provides that a violation of its provisions is a misdemeanor, unless otherwise specified. Because this bill would create new crimes, the bill would impose a state-mandated local program.   The Sales and Use Tax Law imposes a tax on retailers measured by the gross receipts from the sale of tangible property sold at retail in this state, 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, and requires every person desiring to engage in or conduct business as a seller within this state to obtain a seller's permit from the State Board of Equalization. That law provides various exemptions from those taxes. The Personal Income Tax Law and the Corporation Tax Law provide for various exclusions from gross income for the purposes of the taxes imposed by those laws. The Alcoholic Beverage Tax Law imposes an excise tax, at specified rates, for the privilege of selling or possessing for sale, beer, wine, sparkling wine, sparkling cider, and distilled spirits. Existing law authorizes cities and counties to license businesses within their jurisdictions.   This bill would exempt from sales and use taxes the sale of, or storage, use, or other consumption of, wine sold by a licensed victory microvintner pursuant to that license, and would exempt the licensee from the requirement to obtain a seller's permit or business license or other state and local licenses and permits. This bill would, for purposes of computing personal income and corporation taxes, exclude from gross income any amounts received from the sale of wine made pursuant to the license by a licensed victory microvintner or from the sale of fruits, nuts, or vegetables grown by a licensed victory garden grower pursuant to the license. This bill would also exempt from the alcoholic beverage excise tax the sale of that wine by a licensed victory microvintner.   The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes counties and cities to impose local sales and use taxes in conformity with the Sales and Use Tax Law, and the Transactions and Use Tax Law authorizes districts, as specified, to impose transactions and use taxes in conformity with the Sales and Use Tax Law. Amendments to the Sales and Use Tax Law relating to sales and use taxes, not inconsistent with these laws, are incorporated into ordinances imposing these taxes. Existing law requires the state to reimburse counties and cities for revenue losses caused by the enactment of sales and use tax exemptions.   This bill would provide that no appropriation is made and the state shall not reimburse cities and counties for sales and use tax revenues lost by them pursuant to this bill.   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 with regard to certain mandates no reimbursement is required by this act for a specified reason.   With regard to any other mandates, this bill would provide that, if the Commission on State Mandates determines that the bill contains costs so mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.   Existing law, the Gonsalves Milk Pooling Act (the act), provides for equalization pools and milk pooling to govern the production and distribution of fluid milk and fluid cream. The act authorizes the Secretary of Food and Agriculture to develop a pooling plan, with specified items required to be included in the pooling plan, under which producers of milk are assigned a pool quota that determines the amount of class 1 milk the producer can sell to handlers within the pooling system and the prices to be paid by handlers to producers.   The act provides that producers of certified milk or guaranteed raw milk have the option, at the time of the adoption of the initial pooling plan, to be subject to the plan or to be excluded from the plan.   This bill would provide that a dairy farm that existed on July 1, 2009, may, on or after January 1, 2010, elect to be excluded from the pooling plan if that dairy farm produces and processes fluid milk, and processes no more than 1,500 gallons of fluid milk produced by that dairy farm per day, as specified. The bill would make conforming and technical changes.  Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program:  no   yes  . THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:  SECTION 1.   Section 23356.4 is added to the   Business and Professions Code   , to read:   23356.4. (a) (1) Notwithstanding any other provision of this division, the department may issue an alcoholic beverage license to a victory microvintner pursuant to this section. (2) For purposes of this section, a "victory microvintner" means a person that makes wine obtained from grapes or other agricultural products, but only if 75 percent or more of the grapes or other agricultural products are grown by a victory garden grower, as described in Section 47060 of the Food and Agricultural Code. If the person is an individual or a partnership in which one or more persons are individuals, those individuals shall be over 21 years of age. (b) A license issued pursuant to this section shall authorize the licensee to do any of the following: (1) Engage in the manufacture of wine. The aggregate amount of wine made per calendar year shall not exceed 200 gallons. (2) Notwithstanding any other provision of this division, engage in the sale of wine to authorized licensees or customers located within a 15-mile radius of the victory microvintner's licensed premises, including sales to authorized licensees or customers at farmers' markets. A victory microvintner, or a retail licensee that is not a victory microvintner, may directly offer samples of the victory microvintner's wine at a farmers' market operating within a 15-mile radius of either the victory microvintner's licensed premises or the victory garden that provides the grapes for the victory microvintner's wine. (c) All applicable labeling requirements, including, but not limited to, the provisions of Article 3 (commencing with Section 25235) of Chapter 13, shall apply to wine produced by a licensed victory microvintner. No additional label statement shall be required respecting the 15-mile sale radius applicable to a particular victory microvintner. However, a victory microvintner may add the phrase "Microvintner," "Victory Microvintner," "California Microvintner," or "California Victory Microvintner" to the wine label, and, if such additional designation is added by the victory microvintner, an optional additional geographic statement of origin that reasonably identifies, with customary publicly recognized names, the neighborhood or microlocality of the victory garden from which the wine was made. Any such neighborhood or microlocality shall conform reasonably closely with the 15-mile radius sale area applicable to the victory microvintner as provided in this section. (d) A licensed victory microvintner, or a retail licensee that is not a victory microvintner, may conduct wine tastings on the licensed premises of a victory microvintner. These tastings, if conducted directly by a licensed victory microvintner, shall include only wines produced by that victory microvintner and by other victory microvintners located within the 15-mile radius of the licensed premises where the tasting is conducted. (e) If a license is issued pursuant to this section to a person who is a taxpayer, as defined in Section 32005 of the Revenue and Taxation Code, that person shall also be deemed to be the taxpayer and file an appropriate bond for purposes of Part 14 (commencing with Section 32001) of Division 2 of the Revenue and Taxation Code. (f) (1) A licensed victory microvintner shall be exempt from any state law and local county and city ordinance that requires a license or permit to conduct the activities of a victory microvintner, or that prohibits those activities, including, but not limited to, local zoning and business license ordinances. However, a licensed victory microvintner shall be subject to all other applicable state and local laws relating to, but not limited to, health and safety, noise, and prohibited poisons. (2) The Legislature finds and declares that the encouragement and development of local microvintners to serve their communities is a matter of statewide interest and concern. It is, therefore, the intent of the Legislature that this section shall supersede all conflicting local laws and shall apply in charter cities.   SEC. 2.   Section 47060 is added to the   Food and Agricultural Code   , to read:   47060. (a) Notwithstanding any other law, a person licensed as a victory garden grower may, within a 15-mile radius from the garden, sell fresh fruits, nuts, or vegetables that he or she grows in his or her garden directly to the public, including at a farmers' market, or to a retailer or distributor or others, including, but not limited to, a grocer, market, school, or restaurant. (b) For purposes of this section, a "victory garden grower" means a person in this state who owns or leases a garden of a reasonable size, not exceeding one acre in size, and grows fruits, nuts, or vegetables, or any combination of these foods, in that garden. The county agricultural commissioner may determine rules or guidelines of general applicability addressing what is a reasonable size in his or her county under the circumstances. However, no victory garden grower shall be required to obtain the permission of the county agricultural commissioner as a condition of obtaining or maintaining a victory garden grower license, except for the notice and fee as provided in subdivision (c). (c) (1) In order to be licensed as a victory garden grower, the grower shall file a notice, not exceeding one page in length, and otherwise in a form as prescribed by the county agricultural commissioner, along with a fifty-dollar ($50) filing fee, with the county agricultural commissioner in the county in which the garden is located. The license shall be effective upon the filing of the notice and payment of the fee, and may be renewed annually by filing another notice and paying the fifty-dollar ($50) filing fee. (2) A photocopy of the notice, along with proof of payment of the filing fee, which can be a photocopy of a check or money order or other payment form, shall be prima facie evidence of the victory garden grower's licenseholder status pursuant to this section, and all persons shall be entitled to rely on that evidence. However, a county agricultural commissioner may choose to issue, from time to time, receipts or certificates evidencing the victory garden grower's licenseholder status, and that receipt or certificate, if and when issued, shall also be prima facie evidence of the victory garden grower's licenseholder status pursuant to this section. (d) (1) A licensed victory garden grower shall be exempt from any state law and local county and city ordinance that requires a license or permit to conduct the activities of a victory garden grower, or that prohibits these activities, including, but not limited to, local zoning and business license ordinances. However, except as provided in subdivision (e), a licensed victory garden grower shall be subject to all other applicable state and local laws relating to, but not limited to, health and safety, noise, and prohibited poisons. (2) The Legislature finds and declares that the encouragement and development of community-based food gardens to serve their local communities with locally grown foods is a matter of statewide interest and concern. It is, therefore, the intent of the Legislature that this section shall supersede all conflicting local laws and shall apply in charter cities. (e) The agricultural produce sold by a licensed victory garden grower shall be exempt from size, standard pack, container, and labeling requirements of state law. However, a county agricultural commissioner may issue regulations or guidelines of general applicability providing for point-of-sale identification of the produce of a county's victory garden grower as "____ County Victory Garden Produce" or "Victory Garden produce of ____ County," or similar wording, and the identification regulations or guidelines shall not impose any material or unreasonable cost or burden upon a victory garden grower. In addition to the identification, a victory garden grower may add an optional additional geographic statement of origin for any victory garden produce, which reasonably identifies, with customary publicly recognized names, the neighborhood or microlocality of the victory garden. Any such neighborhood or microlocality shall conform reasonably closely with the 15-mile radius sale area applicable to the victory garden grower as provided in this section.   SEC. 3.   Section 6075.5 is added to the   Revenue and Taxation Code   , to read:   6075.5. No permit shall be required under this part of any person that engages in business in this state as a victory microvintner issued a license pursuant to Section 23356.4 of the Business and Professions Code, and who engages in no other taxable sales of tangible personal property at retail.   SEC. 4.   Section 6363.9 is added to the   Revenue and Taxation Code   , to read:   6363.9. There are exempted from the taxes imposed by this part, the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of, wine made pursuant to the license by a person licensed pursuant to Section 23356.4 of the Business and Professions Code, that sells or stores, uses, or otherwise consumes that wine.   SEC. 5.   Section 17158 is added to the   Revenue and Taxation Code   , to read:   17158. Gross income shall not include any amount received during the taxable year by a person licensed pursuant to Section 23356.4 of the Business and Professions Code from the sale of wine made pursuant to the license, or by a person licensed pursuant to Section 47060 of the Food and Agricultural Code from the sale of fruits, nuts, or vegetables grown pursuant to the license.   SEC. 6.   Section 24316 is added to the   Revenue and Taxation Code   , to read:   24316. Gross income shall not include any amount received during the taxable year by a person licensed pursuant to Section 23356.4 of the Business and Professions Code from the sale of wine made pursuant to the license, or by a person licensed pursuant to Section 47060 of the Food and Agricultural Code from the sale of fruits, nuts, or vegetables grown pursuant to the license.   SEC. 7.   Section 32177.7 is added to the   Revenue and Taxation Code   , to read:   32177.7. No tax shall be imposed by this part upon any wine sold by a person licensed pursuant to Section 23356.4 of the Business and Professions Code pursuant to the license.   SEC. 8.  Notwithstanding Section 2230 of the Revenue and Taxation Code, no appropriation is made by this act and the state shall not reimburse any local agency for any sales and use tax revenues lost by it under this act.   SEC. 9.   No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution for certain costs that may be incurred by a local agency or school district because, in that regard, 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.  However, if the Commission on State Mandates determines that this act contains other costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.   SECTION 1.   Section 62722 of the Food and Agricultural Code is amended to read: 62722. Pooling plans shall not apply to the production of goats milk or producer-handlers who produce and sell less than 500 gallons of fluid milk used for class 1 purposes per day unless they specifically request entry into the pool at the time of the adoption of the initial pooling plan for that area. A producer of certified milk or guaranteed raw milk shall have the option, at the time of the adoption of the initial pooling plan under this chapter, to be subject to the plan, and accordingly to have a production base and pool quota established for the producer, or to be excluded from the plan. On or after January 1, 2010, a dairy farm, that existed on July 1, 2009, that produces and processes fluid milk used for class 1 purposes, and that processes no more than 1,500 gallons of fluid milk per day that the dairy farm produced, may elect to be excluded from the pool if that dairy farm is current with the pool. For purposes of this section, "dairy farm that produces and processes fluid milk for class 1 purposes" means a vertically integrated operation that includes a dairy farm and processing plant owned and operated by the same entity that produces fluid milk used for class 1 purposes, to be sold to the consumer. (a) Any such producer of less than 1,500 gallons of fluid milk for class 1 purposes per day, electing to be excluded from the plan, may at any later time be admitted to the pool, but with only the production base and pool quota to which the producer would have originally been entitled or the producer's existing production and average daily class 1 usage during the 12 months preceding the producer's entry into the pool, whichever is less. (b) Any producer claiming exemptions from the provision of any pooling plan by reason of the provisions of Section 62708, 62708.1, or this section, who loses his or her exemption by failure to meet the requirements for exemptions set forth in those sections shall automatically be deemed to have applied for and become a part of a producer pool on September 1st following any year ended August 31st during which the secretary determines the producer is no longer entitled to exemption, and the producer's admittance into such a pool shall be on the basis of the production base and pool quota calculations as set forth in those sections.