| 1 | | - | Amended IN Senate May 09, 2022 Amended IN Senate April 18, 2022 CALIFORNIA LEGISLATURE 20212022 REGULAR SESSION Senate Bill No. 1281Introduced by Senator BradfordFebruary 18, 2022An act to amend Sections 34010, 34011, and 34012 of, 34012, 34013, and 34014 of, to amend and repeal Section 34015 of, to amend, repeal, and add Section 34012.5 of, and to add Section 34018.5 to, the Revenue and Taxation Code, relating to cannabis, to take effect immediately, tax levy.LEGISLATIVE COUNSEL'S DIGESTSB 1281, as amended, Bradford. Cannabis taxes.Existing(1) Existing law, the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure, as additionally amended by statute, imposes a weight-based cultivation tax on harvested cannabis that enters the commercial market and a separate excise tax on purchasers of cannabis or cannabis products sold in this state at the rate of 15% of the average market price of any retail sale by a cannabis retailer, as specified. Existing law defines average market price in an arms length transaction to mean the average retail price determined by the wholesale cost of the cannabis or cannabis products sold or transferred to a cannabis retailer, plus a mark-up, as determined by the California Department of Tax and Fee Administration on a biannual basis in 6-month intervals. Existing law requires the distributor to collect the excise tax from the cannabis retailer and to remit the tax to the department. Existing law requires revenues from the cultivation and excise taxes to be deposited into the California Cannabis Tax Fund, and continuously appropriates that tax fund for specified purposes.This bill, beginning on January 1, 2023, would discontinue the imposition of the cultivation tax, would reduce the excise tax to 5%, and would remove the mark-up from the definition of average market price in an arms length transaction. The as specified, and would impose the excise tax on purchasers of cannabis or cannabis products sold in this state at the rate of 5% of the gross receipts of any retail sale by a cannabis retailer, as specified. The bill, beginning on January 1, 2023, and annually thereafter, would require the Department of Finance to estimate the amount of revenue that would have been collected pursuant to the excise tax and cultivation tax imposed prior to January 1, 2023, and would require the Controller, upon appropriation by the Legislature, to transfer moneys equivalent to that amount from the General Fund to the California Cannabis Tax Fund.(2) Existing law requires the distributor to collect the excise tax from the cannabis retailer and to remit the tax to the department. Under existing law, the cultivation tax and the cannabis excise tax collected by a distributor or a manufacturer and any amount unreturned to the cultivator or retailer that is not tax, but was collected under the representation by the distributor or manufacturer that it was tax, constitute debts owed by the distributor or manufacturer to this state. Existing law deems any tax collected from a cultivator or retailer that has not been remitted to the department a debt owed to this state by the person required to collect and remit the tax. Existing law requires a distributor to obtain a permit from the department and provides that any person required to obtain a permit and who engages in business as a distributor without a valid permit is guilty of a misdemeanor. This bill, beginning on January 1, 2023, would revise and recast the provisions relating to the administration of the cannabis cultivation and excise taxes. The bill would remove the requirement that the distributor collect the excise tax from the cannabis retailer, and would instead require the cannabis retailer to collect the cannabis excise tax from the purchaser and to remit the excise tax to the department. The bill, beginning on January 1, 2023, and annually thereafter, would require the Department of Finance to estimate the amount of revenue that would have been collected pursuant to the excise tax and cultivation tax imposed prior to January 1, 2023, and would require the Controller, upon appropriation by the Legislature, to transfer moneys equivalent to that amount from the General Fund to the California Cannabis Tax Fund. The bill would deem any tax collected by the cannabis retailer, and any amount unreturned to the purchaser that is not tax, to constitute a debt owed to this state by the cannabis retailer, as provided. The bill would require a cannabis retailer to obtain a permit from the department, and would provide that any person required to obtain a permit and who engages in business as a cannabis retailer without a valid permit is guilty of a misdemeanor. By expanding creating a new crime, the bill would impose a state-mandated local program.(3) 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.AUMA(4) AUMA authorizes legislative amendment of its provisions with a 2/3 vote of both houses, without submission to the voters, to further its purposes and intent.This bill would declare that its provisions further the purposes and intent of AUMA.This(5) This bill would take effect immediately as a tax levy.Digest Key Vote: 2/3 Appropriation: NO Fiscal Committee: YES Local Program: NOYES Bill TextThe people of the State of California do enact as follows:SECTION 1. (a) It is the intent of the Legislature to undercut the illicit cannabis market prices, and stop the illicit cannabis market from growing and operating, by making it viable to operate in the licensed legal cannabis market.(b) The Legislature intends to discourage persons younger than 21 years of age from using cannabis by supporting licensed cannabis operations that are in competition with the illicit market. Licensed cannabis operations cannot sell to individuals under 21 years of age, but those operating illegally are selling to individuals regardless of their age.(c) The primary mechanisms the Legislature intends to use to undercut the illicit market are to eliminate the cultivation tax and reduce the excise tax. These two taxes, individually and taken together, make it very difficult for licensed cannabis businesses to turn a profit due to rising operating and regulatory costs not associated with the illicit market. In turn, these measures will keep legal cannabis businesses open. If legal cannabis businesses cannot operate, the illicit market will grow stronger and be more pervasive.(d) In December 2020, a significant number of cultivators, manufacturers, distributors, testing laboratories, retailers, consumers, and nonprofit leaders sent a letter to Governor Gavin Newsom, President pro Tempore Toni Atkins, and Speaker Anthony Rendon warning the leadership of the state that their industry is collapsing and that they are facing imminent loss of their businesses and ability to provide for their families. They assert that the California cannabis system is a nationwide mockery and a public policy lesson in what not to do.(e) In the cannabis industry letter, the signatories stated that the opportunity to create a robust legal market has been squandered as a result of excessive taxation, and that legal cannabis product is at least 50 percent more expensive at retail than illicit cannabis products. News outlets report that legal cannabis products can be two to three times higher than illegal cannabis products. The cannabis industry stated in the letter that the illegal cannabis market is three times the size of the legal cannabis market. A February 2020 market analysis by Marijuana Business Daily found that while California had 823 licensed brick and mortar businesses at the time, the state had nearly 3,000 retailers and delivery services, and there are reports of many illegal growing operations with large quantities of plants.(f) The licensed cannabis industry stated in the letter that the cultivation tax undermines the viability and sustainability of Californias cannabis industry, being the only agricultural product in the world that is taxed at the farm.(g) The legal cannabis industry in California requested a three-year suspension of the excise tax to help them build a foundation, to become stable, and to overtake the illicit cannabis market.(h) The Legislature intends to reduce the excise tax for the purposes stated in this section.(i) The Legislature anticipates that eliminating the cultivation tax and reducing the excise tax will bring down the cost of cannabis products for consumers in California. If cannabis products are less costly, consumers are more likely to purchase them. Greater demands and increase sales are anticipated to offset lost revenues from the elimination of the cultivation tax and the reduction of the excise tax.(j) In enacting this bill, the Legislature intends to adhere to and further the purposes of the Control, Regulate and Tax Adult Use of Marijuana Act.SEC. 2.Section 34010 of the Revenue and Taxation Code is amended to read:34010.For purposes of this part:(a)Arms length transaction shall mean a sale entered into 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.(b)Average market price shall mean both of the following:(1)(A)Until January 1, 2023, in an arms length transaction, the average retail price determined by the wholesale cost of the cannabis or cannabis products sold or transferred to a cannabis retailer, plus a mark-up, as determined by the department on a biannual basis in six-month intervals.(B)Notwithstanding subparagraph (A), the department shall not increase the mark-up amount during the period beginning on and after September 18, 2020, and before July 1, 2021.(C)Effective January 1, 2023, in an arms length transaction, the average retail price determined by the wholesale cost of the cannabis or cannabis products sold or transferred to a cannabis retailer, as determined by the department on a biannual basis in six-month intervals.(2)In a nonarms length transaction, the cannabis retailers gross receipts from the retail sale of the cannabis or cannabis products.(c)Department means the California Department of Tax and Fee Administration or its successor agency.(d)Tax Fund means the California Cannabis Tax Fund created by Section 34018.(e)Cannabis has the same meaning as set forth in Section 11018 of the Health and Safety Code and shall also mean medicinal cannabis.(f)Cannabis products has the same meaning as set forth in Section 11018.1 of the Health and Safety Code and shall also mean medicinal concentrates and medicinal cannabis products.(g)Cannabis flowers means the dried flowers of the cannabis plant as defined by the board.(h)Cannabis leaves means all parts of the cannabis plant other than cannabis flowers that are sold or consumed.(i)Cannabis retailer means a person required to be licensed as a retailer, non-storefront retailer, microbusiness, or nonprofit pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(j)Cultivator means all persons required to be licensed to cultivate cannabis pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(k)Distributor means a person required to be licensed as a distributor pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(l)Enters the commercial market means cannabis or cannabis products, except for immature cannabis plants and seeds, that complete and comply with a quality assurance review and testing, as described in Section 26110 of the Business and Professions Code.(m)Gross receipts has the same meaning as set forth in Section 6012.(n)Microbusiness has the same meaning as set forth in paragraph (3) of subdivision (a) of Section 26070 of the Business and Professions Code.(o)Nonprofit has the same meaning as set forth in Section 26070.5 of the Business and Professions Code.(p)Person has the same meaning as set forth in Section 6005.(q)Retail sale has the same meaning as set forth in Section 6007.(r)Sale and purchase mean any change of title or possession, exchange, or barter, conditional or otherwise, in any manner or by any means whatsoever, for consideration.(s)Transfer means to grant, convey, hand over, assign, sell, exchange, or barter, in any manner or by any means, with or without consideration.(t)Unprocessed cannabis includes cannabis flowers, cannabis leaves, or other categories of harvested cannabis, categories for unprocessed or frozen cannabis or immature plants, or cannabis that is shipped directly to manufacturers.(u)Manufacturer means a person required to be licensed as a manufacturer pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(v)Medicinal cannabis patient shall mean a qualified patient, as defined in Section 11362.7 of the Health and Safety Code, who possesses a physicians recommendation that complies with Article 25 (commencing with Section 2525) of Chapter 5 of Division 2 of the Business and Professions Code, or a qualified patient or primary caregiver for a qualified patient issued a valid identification card pursuant to Section 11362.71 of the Health and Safety Code.(w)Designated for donation shall mean medicinal cannabis donated by a cultivator to a cannabis retailer for subsequent donation to a medicinal cannabis patient pursuant to Section 26071 of the Business and Professions Code.SEC. 3.SEC. 2. Section 34011 of the Revenue and Taxation Code is amended to read:34011. (a) (1) (A) Effective January 1, 2018, until January 1, 2023, a cannabis excise tax shall be imposed upon purchasers of cannabis or cannabis products sold in this state at the rate of 15 percent of the average market price of any retail sale by a cannabis retailer.(B) Effective On or after January 1, 2023, the rate of the a cannabis excise tax shall be imposed by this section on upon purchasers of cannabis or cannabis products sold in this state shall be at a rate of 5 percent of the average market price gross receipts of any retail sale by a cannabis retailer.(2) A purchasers liability for the cannabis excise tax is not extinguished until the cannabis excise tax has been paid to this state except that an invoice, receipt, or other document from a cannabis retailer given to the purchaser pursuant to this subdivision is sufficient to relieve the purchaser from further liability for the tax to which the invoice, receipt, or other document refers.(3) Each cannabis retailer shall provide a purchaser with an invoice, receipt, or other document that includes a statement that reads: The cannabis excise taxes are included in the total amount of this invoice.(4) The department may prescribe other means to display the cannabis excise tax on an invoice, receipt, or other document from a cannabis retailer given to the purchaser.(b) (1) A distributor in an arms length transaction shall collect the cannabis excise tax from the cannabis retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the cannabis retailer. A distributor in a nonarms length transaction shall collect the cannabis excise tax from the cannabis retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the cannabis retailer, or at the time of retail sale by the cannabis retailer, whichever is earlier. A distributor shall report and remit the cannabis excise tax to the department pursuant to Section 34015. A cannabis retailer shall be responsible for collecting the cannabis excise tax from the purchaser and remitting the cannabis excise tax to the distributor in accordance with rules and procedures established under law and any regulations adopted by the department.(2) A distributor shall provide an invoice, receipt, or other similar document to the cannabis retailer that identifies the licensee receiving the product, the distributor from which the product originates, including the associated unique identifier, the amount of cannabis excise tax, and any other information deemed necessary by the department. The department may authorize other forms of documentation under this paragraph.(3) This subdivision shall be inoperative on not apply to any sale or transfer of cannabis or cannabis products to a cannabis retailer occurring on or after January 1, 2023.(c) On (1) For any sale or transfer of cannabis or cannabis product to a cannabis retailer occurring on and after January 1, 2023, a cannabis retailer shall be responsible for collecting the cannabis excise tax from the purchaser and remitting the cannabis excise tax to the department in accordance with rules and procedures established under law and any regulations adopted by the department.(2) A cannabis retailer may claim a credit on the cannabis excise tax return for cannabis excise tax amounts paid to a distributor before January 1, 2023, on cannabis or cannabis products sold to a purchaser on or after January 1, 2023, for which the cannabis retailer is responsible for remitting to the department.(d) The excise tax imposed by this section shall be in addition to the sales and use tax imposed by the state and local governments.(e) Gross receipts from the sale of cannabis or cannabis products for purposes of assessing the sales and use taxes under Part 1 (commencing with Section 6001) shall include the tax levied pursuant to this section.(f) Cannabis or cannabis products shall not be sold to a purchaser unless the excise tax required by law has been paid by the purchaser at the time of sale.(g) The sales and use taxes imposed by Part 1 (commencing with Section 6001) shall not apply to retail sales of medicinal cannabis, medicinal cannabis concentrate, edible medicinal cannabis products, or topical cannabis as those terms are defined in Division 10 (commencing with Section 26000) of the Business and Professions Code when a qualified patient or primary caregiver for a qualified patient provides their card issued under Section 11362.71 of the Health and Safety Code and a valid government-issued identification card.(h) Nothing in this section shall be construed to impose an excise tax upon medicinal cannabis, or medicinal cannabis product, donated for no consideration to a medicinal cannabis patient pursuant to Section 26071 of the Business and Professions Code.(i) (1) Nothing in this section shall be construed to impose an excise tax upon cannabis or cannabis products designated as a trade sample pursuant to Section 26153.1 of the Business and Professions Code.(2) A person licensed under Division 10 (commencing with Section 26000) of the Business and Professions Code that sells cannabis or cannabis products designated as a trade sample pursuant to Section 26153.1 of the Business and Professions Code shall be liable for the excise tax imposed by this section as if the person were a cannabis retailer at the time of sale.SEC. 4.SEC. 3. Section 34012 of the Revenue and Taxation Code is amended to read:34012. (a) (1) Effective January 1, 2018, and until January 1, 2023, there is hereby imposed a cultivation tax on all harvested cannabis that enters the commercial market upon all cultivators. The tax shall be due after the cannabis is harvested and enters the commercial market.(1)(A) The tax for cannabis flowers shall be nine dollars and twenty-five cents ($9.25) per dry-weight ounce.(2)(B) The tax for cannabis leaves shall be set at two dollars and seventy-five cents ($2.75) per dry-weight ounce.(2) Notwithstanding paragraph (1), the cultivation tax imposed by this subdivision shall not apply to harvested cannabis that enters the commercial market and no tax collection is required pursuant to subdivision (h) if either of the following apply:(A) The harvested cannabis was first sold or transferred by a cultivator to a manufacturer on or after November 1, 2022.(B) The harvested cannabis was sold or transferred by a cultivator to a distributor on or after November 1, 2022, and was not first sold or transferred by a cultivator to a manufacturer before November 1, 2022.(b) The department may adjust the tax rate for cannabis leaves annually to reflect fluctuations in the relative price of cannabis flowers to cannabis leaves.(c) The department may from time to time establish other categories of harvested cannabis, categories for unprocessed or frozen cannabis or immature plants, or cannabis that is shipped directly to manufacturers. These categories shall be taxed at their relative value compared with cannabis flowers.(d) The department may prescribe by regulation a method and manner for payment of the cultivation tax that utilizes tax stamps or state-issued product bags that indicate that all required tax has been paid on the product to which the tax stamp is affixed or in which the cannabis is packaged.(e) The tax stamps and product bags shall be of the designs, specifications, and denominations as may be prescribed by the department and may be purchased by any licensee under Division 10 (commencing with Section 26000) of the Business and Professions Code.(f) Subsequent to the establishment of a tax stamp program, the department may by regulation provide that cannabis shall not be removed from a licensed cultivation facility or transported on a public highway unless in a state-issued product bag bearing a tax stamp in the proper denomination.(g) The tax stamps and product bags shall be capable of being read by a scanning or similar device and must be traceable utilizing the track and trace system pursuant to Section 26068 of the Business and Professions Code.(h) Cultivators shall be responsible for payment of the tax pursuant to regulations adopted by the department. A cultivators liability for the tax is not extinguished until the tax has been paid to this state except that an invoice, receipt, or other document from a distributor or manufacturer given to the cultivator pursuant to paragraph (3) is sufficient to relieve the cultivator from further liability for the tax to which the invoice, receipt, or other document refers. Cannabis shall not be sold unless the tax has been paid as provided in this part.(1) A distributor shall collect the cultivation tax from a cultivator on all harvested cannabis that enters the commercial market. This paragraph shall not apply where a cultivator is not required to send, and does not send, the harvested cannabis to a distributor.(2) (A) A manufacturer shall collect the cultivation tax from a cultivator on the first sale or transfer of unprocessed cannabis by a cultivator to a manufacturer. The manufacturer shall remit the cultivation tax collected on the cannabis product sold or transferred to a distributor for quality assurance, inspection, and testing, as described in Section 26110 of the Business and Professions Code. This paragraph shall not apply where a distributor collects the cultivation tax from a cultivator pursuant to paragraph (1).(B) Notwithstanding subparagraph (A), the department may prescribe a substitute method and manner for collection and remittance of the cultivation tax under this paragraph, including a method and manner for collection of the cultivation tax by a distributor.(3) A distributor or manufacturer shall provide to the cultivator, and a distributor that collects the cultivation tax from a manufacturer pursuant to paragraph (2) shall provide to the manufacturer, an invoice, receipt, or other similar document that identifies the licensee receiving the product, the cultivator from which the product originates, including the associated unique identifier, the amount of cultivation tax, and any other information deemed necessary by the department. The department may authorize other forms of documentation under this paragraph.(4) The department may adopt regulations prescribing procedures for the refund of cultivation tax collected on cannabis or cannabis product that fails quality assurance, inspection, and testing as described in Section 26110 of the Business and Professions Code.(i) All cannabis removed from a cultivators premises, except for plant waste or medicinal cannabis or medicinal cannabis products designated for donation, shall be presumed to be sold and thereby taxable under this section, except as otherwise exempt pursuant to Section 34012.2.(j) The tax imposed by this section shall be imposed on all cannabis cultivated in the state pursuant to rules and regulations promulgated by the department, but shall not apply to cannabis cultivated for personal use under Section 11362.1 of the Health and Safety Code or cultivated by a qualified patient or primary caregiver in accordance with the Compassionate Use Act of 1996 (Proposition 215), found in Section 11362.5 of the Health and Safety Code.(k) (1) For the 2020 calendar year, the rates set forth in subdivisions (a), (b), and (c) shall be adjusted by the department for inflation.(2) For the 2021 calendar year, the rates shall be those imposed for the 2020 calendar year in paragraph (1) and shall not be adjusted for inflation unless the adjustment is for an inflation rate that is less than zero.(3) For the 2022 calendar year, until January 1, 2023, the rates shall be those imposed for the 2021 calendar year in paragraph (2) and shall be adjusted by the department for inflation.(l) The Department of Cannabis Control is not responsible for enforcing any provisions of the cultivation tax.(m)This section shall become inoperative on January 1, 2023.SEC. 4. Section 34012.5 of the Revenue and Taxation Code is amended to read:34012.5. (a) The cultivation tax and cannabis excise tax required to be collected by the distributor, or required to be collected by the manufacturer pursuant to paragraph (2) of subdivision (h) of Section 34012, and any amount unreturned to the cultivator or cannabis retailer that is not tax but was collected from the cultivator or cannabis retailer under the representation by the distributor or the manufacturer that it was tax constitute debts owed by the distributor or the manufacturer to this state.(b) A distributor or manufacturer that has collected any amount of tax in excess of the amount of tax imposed by this part and actually due from a cultivator or cannabis retailer, may refund such amount to the cultivator or cannabis retailer, even though such tax amount has already been paid over to the department and no corresponding credit or refund has yet been secured. The distributor or manufacturer may claim credit for that overpayment against the amount of tax imposed by this part that is due upon any other quarterly return, providing that credit is claimed in a return dated no later than three years from the date of overpayment.(c) Any tax collected from a cultivator or cannabis retailer that has not been remitted to the department shall be deemed a debt owed to the State of California by the person required to collect and remit the tax.(d) This section shall remain in effect only until January 1, 2023, and as of that date is repealed.SEC. 5. Section 34012.5 is added to the Revenue and Taxation Code, to read:34012.5. (a) The cannabis excise tax required to be collected by the cannabis retailer, and any amount unreturned to the purchaser that is not tax but was collected from the purchaser under the representation by the cannabis retailer that it was tax, constitute debts owed by the cannabis retailer to this state.(b) This section shall become operative on January 1, 2023. SEC. 6. Section 34013 of the Revenue and Taxation Code is amended to read:34013. (a) The department shall administer and collect the taxes imposed by this part pursuant to the Fee Collection Procedures Law (Part 30 (commencing with Section 55001)). For purposes of this part, the references in the Fee Collection Procedures Law to fee shall include the taxes imposed by this part, and references to feepayer shall include a person required to pay or collect the taxes imposed by this part.(b) Until January 1, 2022, subdivision (a) of Section 55050 shall not apply to a person required to pay or collect the taxes imposed by this part on a person licensed to engage in commercial cannabis activity under Division 10 (commencing with Section 26000) of the Business and Professions Code if the department deems it necessary to facilitate the collection of amounts due.(c) The department may prescribe, adopt, and enforce regulations relating to the administration and enforcement of this part, including, but not limited to, collections, reporting, refunds, and appeals.(d) The department shall adopt necessary rules and regulations to administer the taxes in this part. Such rules and regulations may include methods or procedures to tag cannabis or cannabis products, or the packages thereof, to designate prior tax payment.(e) Until January 1, 2019, 2024, the department may prescribe, adopt, and enforce any emergency regulations as necessary to implement, administer, and enforce its duties under this division. Any emergency regulation prescribed, adopted, or enforced pursuant to this section shall be adopted in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, and, for purposes of that chapter, including Section 11349.6 of the Government Code, the adoption of the regulation is an emergency and shall be considered by the Office of Administrative Law as necessary for the immediate preservation of the public peace, health and safety, and general welfare. Notwithstanding any other law, the emergency regulations adopted by the department may remain in effect for two years from adoption. adoption, and may be readopted in accordance with subdivision (h) of Section 11346.1 of the Government Code.(f) Any person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code who fails to pay the taxes imposed under this part shall, in addition to owing the taxes not paid, be subject to a penalty of at least one-half the amount of the taxes not paid, and shall be subject to having its license revoked pursuant to Section 26031 of the Business and Professions Code.(g) The department may bring such legal actions as are necessary to collect any deficiency in the tax required to be paid, and, upon the departments request, the Attorney General shall bring the actions.SEC. 7. Section 34014 of the Revenue and Taxation Code is amended to read:34014. (a) All (1) Until January 1, 2023, all distributors must obtain a separate permit from the board department pursuant to regulations adopted by the board. department. No fee shall be charged to any person for issuance of the permit. Any person required to obtain a permit who engages in business as a distributor without a permit or after a permit has been canceled, suspended, or revoked, and each officer of any corporation which that so engages in business, is guilty of a misdemeanor.(2) On and after January 1, 2023, all cannabis retailers must obtain a separate cannabis tax permit from the department pursuant to regulations adopted by the department. A fee shall not be charged to any person for issuance of the permit. Any person required to obtain a permit who engages in business as a cannabis retailer without a permit or after a permit has been canceled, suspended, or revoked, and each officer of any corporation that so engages in business, is guilty of a misdemeanor. (b) The board department may require every licensed distributor, retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed, to provide security to cover the liability for taxes imposed by state law on cannabis produced or received by the retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed in accordance with procedures to be established by the board. department. Notwithstanding anything herein to the contrary, the board department may waive any security requirement it imposes for good cause, as determined by the board. department. Good cause includes, but is not limited to, the inability of a distributor, retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed to obtain security due to a lack of service providers or the policies of service providers that prohibit service to a cannabis business. A person may not commence or continue any business or operation relating to cannabis cultivation until any surety required by the board department with respect to the business or operation has been properly prepared, executed, and submitted under this part.(c) In fixing the amount of any security required by the board, department, the board department shall give consideration to the financial hardship that may be imposed on licensees as a result of any shortage of available surety providers.SEC. 8. Section 34015 of the Revenue and Taxation Code is amended to read:34015. (a) Unless otherwise prescribed by the board department pursuant to subdivision (c), the cannabis excise tax and cultivation tax imposed by this part is due and payable to the board department quarterly on or before the last day of the month following each quarterly period of three months. On or before the last day of the month following each quarterly period, a return for the preceding quarterly period shall be filed with the board department by each distributor using electronic media. Returns shall be authenticated in a form or pursuant to methods as may be prescribed by the board. department. If the cultivation tax is paid by stamp pursuant to subdivision (d) of Section 34012 34012, the board department may by regulation determine when and how the tax shall be paid.(b) The board department may require every person engaged in the cultivation, distribution, manufacturing, retail sale of cannabis or cannabis products, or any other person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code to file, on or before the 25th day of each month, a report using electronic media respecting the persons inventory, purchases, and sales during the preceding month and any other information as the board department may require to carry out the purposes of this part. Reports shall be authenticated in a form or pursuant to methods as may be prescribed by the board. department.(c) The board department may adopt regulations prescribing the due date for returns and remittances of cannabis excise tax collected by a distributor in an arms length transaction pursuant to subdivision (b) of Section 34011.(d) The board department may make examinations of the books and records of any person licensed, or required to be licensed, pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code, as it may deem necessary in carrying out this part.(e) This section shall remain in effect only until January 1, 2023, and as of that date is repealed.SEC. 5.SEC. 9. Section 34018.5 is added to the Revenue and Taxation Code, to read:34018.5. (a) Beginning on January 1, 2023, and annually thereafter, the Department of Finance shall estimate the amount of revenue that would have been collected the prior calendar year pursuant to the excise tax imposed prior to January 1, 2023, under subdivision (A) of paragraph (1) of subdivision (a) of Section 34011, and the weight-based cultivation tax imposed prior to January 1, 2023, under Section 34012.(b) The Controller, upon appropriation by the Legislature, shall transfer moneys equivalent to the amount estimated by the Department of Finance in subdivision (a) from the General Fund to the California Cannabis Tax Fund established by Section 34018. Tax Fund.SEC. 10. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB 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 XIIIB of the California Constitution.SEC. 6.SEC. 11. The Legislature finds and declares that this act furthers the purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act, enacted as Proposition 64 at the November 8, 2016, statewide general election.SEC. 7.SEC. 12. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. |
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| 1 | + | Amended IN Senate April 18, 2022 CALIFORNIA LEGISLATURE 20212022 REGULAR SESSION Senate Bill No. 1281Introduced by Senator BradfordFebruary 18, 2022 An act to amend Sections 34010, 34011, and 34012 of of, and to add Section 34018.5 to, the Revenue and Taxation Code, relating to cannabis, to take effect immediately, tax levy.LEGISLATIVE COUNSEL'S DIGESTSB 1281, as amended, Bradford. Cannabis taxes.Existing law, the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure, as additionally amended by statute, imposes a weight-based cultivation tax on harvested cannabis that enters the commercial market and a separate excise tax on purchasers of cannabis or cannabis products sold in this state at the rate of 15% of the average market price of any retail sale by a cannabis retailer, as specified. Existing law defines average market price in an arms length transaction to mean the average retail price determined by the wholesale cost of the cannabis or cannabis products sold or transferred to a cannabis retailer, plus a mark-up, as determined by the California Department of Tax and Fee Administration on a biannual basis in 6-month intervals. Existing law requires the distributor to collect the excise tax from the cannabis retailer and to remit the tax to the department. Existing law requires revenues from the cultivation and excise taxes to be deposited into the California Cannabis Tax Fund, and continuously appropriates that tax fund for specified purposes.This bill bill, beginning on January 1, 2023, would discontinue the imposition of the cultivation tax, would reduce the excise tax to 5%, and would remove the mark-up from the definition of average market price in an arms length transaction. The bill bill, beginning on January 1, 2023, would remove the requirement that the distributor collect the excise tax from the cannabis retailer, and would instead require the cannabis retailer to remit the excise tax to the department. The bill would make these provisions effective beginning January 1, 2023. The bill, beginning on January 1, 2023, and annually thereafter, would require the Department of Finance to estimate the amount of revenue that would have been collected pursuant to the excise tax and cultivation tax imposed prior to January 1, 2023, and would require the Controller, upon appropriation by the Legislature, to transfer moneys equivalent to that amount from the General Fund to the California Cannabis Tax Fund.AUMA authorizes legislative amendment of its provisions with a 2/3 vote of both houses, without submission to the voters, to further its purposes and intent.This bill would declare that its provisions further the purposes and intent of AUMA.This bill would take effect immediately as a tax levy.Digest Key Vote: 2/3 Appropriation: NO Fiscal Committee: YES Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. (a) It is the intent of the Legislature to undercut the illicit cannabis market prices, and stop the illicit cannabis market from growing and operating, by making it viable to operate in the licensed legal cannabis market.(b) The Legislature intends to discourage persons younger than 21 years of age from using cannabis by supporting licensed cannabis operations that are in competition with the illicit market. Licensed cannabis operations cannot sell to individuals under 21 years of age, but those operating illegally are selling to individuals regardless of their age.(c) The primary mechanisms the Legislature intends to use to undercut the illicit market are to eliminate the cultivation tax and reduce the excise tax. These two taxes, individually and taken together, make it very difficult for licensed cannabis businesses to turn a profit due to rising operating and regulatory costs not associated with the illicit market. In turn, these measures will keep legal cannabis businesses open. If legal cannabis businesses cannot operate, the illicit market will grow stronger and be more pervasive.(d) In December 2020, a significant number of cultivators, manufacturers, distributors, testing laboratories, retailers, consumers, and nonprofit leaders sent a letter to Governor Gavin Newsom, President pro Tempore Toni Atkins, and Speaker Anthony Rendon warning the leadership of the state that their industry is collapsing and that they are facing imminent loss of their businesses and ability to provide for their families. They assert that the California cannabis system is a nationwide mockery and a public policy lesson in what not to do.(e) In the cannabis industry letter, the signatories stated that the opportunity to create a robust legal market has been squandered as a result of excessive taxation, and that legal cannabis product is at least 50 percent more expensive at retail than illicit cannabis products. News outlets report that legal cannabis products can be two to three times higher than illegal cannabis products. The cannabis industry stated in the letter that the illegal cannabis market is three times the size of the legal cannabis market. A February 2020 market analysis by Marijuana Business Daily found that while California had 823 licensed brick and mortar businesses at the time, the state had nearly 3,000 retailers and delivery services, and there are reports of many illegal growing operations with large quantities of plants.(f) The licensed cannabis industry stated in the letter that the cultivation tax undermines the viability and sustainability of Californias cannabis industry, being the only agricultural product in the world that is taxed at the farm.(g) The legal cannabis industry in California requested a three-year suspension of the excise tax to help them build a foundation, to become stable, and to overtake the illicit cannabis market.(h) The Legislature intends to reduce the excise tax for the purposes stated in this section.(i) The Legislature anticipates that eliminating the cultivation tax and reducing the excise tax will bring down the cost of cannabis products for consumers in California. If cannabis products are less costly, consumers are more likely to purchase them. Greater demands and increase sales are anticipated to offset lost revenues from the elimination of the cultivation tax and the reduction of the excise tax.(j) In enacting this bill, the Legislature intends to adhere to and further the purposes of the Control, Regulate and Tax Adult Use of Marijuana Act.SECTION 1.SEC. 2. Section 34010 of the Revenue and Taxation Code is amended to read:34010. For purposes of this part:(a) Arms length transaction shall mean a sale entered into 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.(b) Average market price shall mean both of the following:(1) (A) Until January 1, 2023, in an arms length transaction, the average retail price determined by the wholesale cost of the cannabis or cannabis products sold or transferred to a cannabis retailer, plus a mark-up, as determined by the department on a biannual basis in six-month intervals.(B) Notwithstanding subparagraph (A), the department shall not increase the mark-up amount during the period beginning on and after September 18, 2020, and before July 1, 2021.(C) Effective January 1, 2023, in an arms length transaction, the average retail price determined by the wholesale cost of the cannabis or cannabis products sold or transferred to a cannabis retailer, as determined by the department on a biannual basis in six-month intervals.(2) In a nonarms length transaction, the cannabis retailers gross receipts from the retail sale of the cannabis or cannabis products.(c) Department means the California Department of Tax and Fee Administration or its successor agency.(d) Tax Fund means the California Cannabis Tax Fund created by Section 34018.(e) Cannabis has the same meaning as set forth in Section 11018 of the Health and Safety Code and shall also mean medicinal cannabis.(f) Cannabis products has the same meaning as set forth in Section 11018.1 of the Health and Safety Code and shall also mean medicinal concentrates and medicinal cannabis products.(g) Cannabis flowers means the dried flowers of the cannabis plant as defined by the board.(h) Cannabis leaves means all parts of the cannabis plant other than cannabis flowers that are sold or consumed.(i) Cannabis retailer means a person required to be licensed as a retailer, non-storefront retailer, microbusiness, or nonprofit pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(j) Cultivator means all persons required to be licensed to cultivate cannabis pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(k) Distributor means a person required to be licensed as a distributor pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(l) Enters the commercial market means cannabis or cannabis products, except for immature cannabis plants and seeds, that complete and comply with a quality assurance review and testing, as described in Section 26110 of the Business and Professions Code.(m) Gross receipts has the same meaning as set forth in Section 6012.(n) Microbusiness has the same meaning as set forth in paragraph (3) of subdivision (a) of Section 26070 of the Business and Professions Code.(o) Nonprofit has the same meaning as set forth in Section 26070.5 of the Business and Professions Code.(p) Person has the same meaning as set forth in Section 6005.(q) Retail sale has the same meaning as set forth in Section 6007.(r) Sale and purchase mean any change of title or possession, exchange, or barter, conditional or otherwise, in any manner or by any means whatsoever, for consideration.(s) Transfer means to grant, convey, hand over, assign, sell, exchange, or barter, in any manner or by any means, with or without consideration.(t) Unprocessed cannabis includes cannabis flowers, cannabis leaves, or other categories of harvested cannabis, categories for unprocessed or frozen cannabis or immature plants, or cannabis that is shipped directly to manufacturers.(u) Manufacturer means a person required to be licensed as a manufacturer pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(v) Medicinal cannabis patient shall mean a qualified patient, as defined in Section 11362.7 of the Health and Safety Code, who possesses a physicians recommendation that complies with Article 25 (commencing with Section 2525) of Chapter 5 of Division 2 of the Business and Professions Code, or a qualified patient or primary caregiver for a qualified patient issued a valid identification card pursuant to Section 11362.71 of the Health and Safety Code.(w) Designated for donation shall mean medicinal cannabis donated by a cultivator to a cannabis retailer for subsequent donation to a medicinal cannabis patient pursuant to Section 26071 of the Business and Professions Code.SEC. 2.SEC. 3. Section 34011 of the Revenue and Taxation Code is amended to read:34011. (a) (1) (A) Effective January 1, 2018, until January 1, 2023, a cannabis excise tax shall be imposed upon purchasers of cannabis or cannabis products sold in this state at the rate of 15 percent of the average market price of any retail sale by a cannabis retailer.(B) Effective January 1, 2023, the rate of the cannabis excise tax imposed by this section on purchasers of cannabis or cannabis products sold in this state shall be 5 percent of the average market price of any retail sale by a cannabis retailer.(2) A purchasers liability for the cannabis excise tax is not extinguished until the cannabis excise tax has been paid to this state except that an invoice, receipt, or other document from a cannabis retailer given to the purchaser pursuant to this subdivision is sufficient to relieve the purchaser from further liability for the tax to which the invoice, receipt, or other document refers.(3) Each cannabis retailer shall provide a purchaser with an invoice, receipt, or other document that includes a statement that reads: The cannabis excise taxes are included in the total amount of this invoice.(4) The department may prescribe other means to display the cannabis excise tax on an invoice, receipt, or other document from a cannabis retailer given to the purchaser.(b) (1) A distributor in an arms length transaction shall collect the cannabis excise tax from the cannabis retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the cannabis retailer. A distributor in a nonarms length transaction shall collect the cannabis excise tax from the cannabis retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the cannabis retailer, or at the time of retail sale by the cannabis retailer, whichever is earlier. A distributor shall report and remit the cannabis excise tax to the department pursuant to Section 34015. A cannabis retailer shall be responsible for collecting the cannabis excise tax from the purchaser and remitting the cannabis excise tax to the distributor in accordance with rules and procedures established under law and any regulations adopted by the department.(2) A distributor shall provide an invoice, receipt, or other similar document to the cannabis retailer that identifies the licensee receiving the product, the distributor from which the product originates, including the associated unique identifier, the amount of cannabis excise tax, and any other information deemed necessary by the department. The department may authorize other forms of documentation under this paragraph.(3) This subdivision shall be inoperative on January 1, 2023.(c) On and after January 1, 2023, a cannabis retailer shall be responsible for collecting the cannabis excise tax from the purchaser and remitting the cannabis excise tax to the department in accordance with rules and procedures established under law and any regulations adopted by the department.(d) The excise tax imposed by this section shall be in addition to the sales and use tax imposed by the state and local governments.(e) Gross receipts from the sale of cannabis or cannabis products for purposes of assessing the sales and use taxes under Part 1 (commencing with Section 6001) shall include the tax levied pursuant to this section.(f) Cannabis or cannabis products shall not be sold to a purchaser unless the excise tax required by law has been paid by the purchaser at the time of sale.(g) The sales and use taxes imposed by Part 1 (commencing with Section 6001) shall not apply to retail sales of medicinal cannabis, medicinal cannabis concentrate, edible medicinal cannabis products, or topical cannabis as those terms are defined in Division 10 (commencing with Section 26000) of the Business and Professions Code when a qualified patient or primary caregiver for a qualified patient provides their card issued under Section 11362.71 of the Health and Safety Code and a valid government-issued identification card.(h) Nothing in this section shall be construed to impose an excise tax upon medicinal cannabis, or medicinal cannabis product, donated for no consideration to a medicinal cannabis patient pursuant to Section 26071 of the Business and Professions Code.(i) (1) Nothing in this section shall be construed to impose an excise tax upon cannabis or cannabis products designated as a trade sample pursuant to Section 26153.1 of the Business and Professions Code.(2) A person licensed under Division 10 (commencing with Section 26000) of the Business and Professions Code that sells cannabis or cannabis products designated as a trade sample pursuant to Section 26153.1 of the Business and Professions Code shall be liable for the excise tax imposed by this section as if the person were a cannabis retailer at the time of sale.SEC. 3.SEC. 4. Section 34012 of the Revenue and Taxation Code is amended to read:34012. (a) Effective January 1, 2018, and until January 1, 2023, there is hereby imposed a cultivation tax on all harvested cannabis that enters the commercial market upon all cultivators. The tax shall be due after the cannabis is harvested and enters the commercial market.(1) The tax for cannabis flowers shall be nine dollars and twenty-five cents ($9.25) per dry-weight ounce.(2) The tax for cannabis leaves shall be set at two dollars and seventy-five cents ($2.75) per dry-weight ounce.(b) The department may adjust the tax rate for cannabis leaves annually to reflect fluctuations in the relative price of cannabis flowers to cannabis leaves.(c) The department may from time to time establish other categories of harvested cannabis, categories for unprocessed or frozen cannabis or immature plants, or cannabis that is shipped directly to manufacturers. These categories shall be taxed at their relative value compared with cannabis flowers.(d) The department may prescribe by regulation a method and manner for payment of the cultivation tax that utilizes tax stamps or state-issued product bags that indicate that all required tax has been paid on the product to which the tax stamp is affixed or in which the cannabis is packaged.(e) The tax stamps and product bags shall be of the designs, specifications, and denominations as may be prescribed by the department and may be purchased by any licensee under Division 10 (commencing with Section 26000) of the Business and Professions Code.(f) Subsequent to the establishment of a tax stamp program, the department may by regulation provide that cannabis shall not be removed from a licensed cultivation facility or transported on a public highway unless in a state-issued product bag bearing a tax stamp in the proper denomination.(g) The tax stamps and product bags shall be capable of being read by a scanning or similar device and must be traceable utilizing the track and trace system pursuant to Section 26068 of the Business and Professions Code.(h) Cultivators shall be responsible for payment of the tax pursuant to regulations adopted by the department. A cultivators liability for the tax is not extinguished until the tax has been paid to this state except that an invoice, receipt, or other document from a distributor or manufacturer given to the cultivator pursuant to paragraph (3) is sufficient to relieve the cultivator from further liability for the tax to which the invoice, receipt, or other document refers. Cannabis shall not be sold unless the tax has been paid as provided in this part.(1) A distributor shall collect the cultivation tax from a cultivator on all harvested cannabis that enters the commercial market. This paragraph shall not apply where a cultivator is not required to send, and does not send, the harvested cannabis to a distributor.(2) (A) A manufacturer shall collect the cultivation tax from a cultivator on the first sale or transfer of unprocessed cannabis by a cultivator to a manufacturer. The manufacturer shall remit the cultivation tax collected on the cannabis product sold or transferred to a distributor for quality assurance, inspection, and testing, as described in Section 26110 of the Business and Professions Code. This paragraph shall not apply where a distributor collects the cultivation tax from a cultivator pursuant to paragraph (1).(B) Notwithstanding subparagraph (A), the department may prescribe a substitute method and manner for collection and remittance of the cultivation tax under this paragraph, including a method and manner for collection of the cultivation tax by a distributor.(3) A distributor or manufacturer shall provide to the cultivator, and a distributor that collects the cultivation tax from a manufacturer pursuant to paragraph (2) shall provide to the manufacturer, an invoice, receipt, or other similar document that identifies the licensee receiving the product, the cultivator from which the product originates, including the associated unique identifier, the amount of cultivation tax, and any other information deemed necessary by the department. The department may authorize other forms of documentation under this paragraph.(4) The department may adopt regulations prescribing procedures for the refund of cultivation tax collected on cannabis or cannabis product that fails quality assurance, inspection, and testing as described in Section 26110 of the Business and Professions Code.(i) All cannabis removed from a cultivators premises, except for plant waste or medicinal cannabis or medicinal cannabis products designated for donation, shall be presumed to be sold and thereby taxable under this section, except as otherwise exempt pursuant to Section 34012.2.(j) The tax imposed by this section shall be imposed on all cannabis cultivated in the state pursuant to rules and regulations promulgated by the department, but shall not apply to cannabis cultivated for personal use under Section 11362.1 of the Health and Safety Code or cultivated by a qualified patient or primary caregiver in accordance with the Compassionate Use Act of 1996 (Proposition 215), found in Section 11362.5 of the Health and Safety Code.(k) (1) For the 2020 calendar year, the rates set forth in subdivisions (a), (b), and (c) shall be adjusted by the department for inflation.(2) For the 2021 calendar year, the rates shall be those imposed for the 2020 calendar year in paragraph (1) and shall not be adjusted for inflation unless the adjustment is for an inflation rate that is less than zero.(3) For the 2022 calendar year, until January 1, 2023, the rates shall be those imposed for the 2021 calendar year in paragraph (2) and shall be adjusted by the department for inflation.(l) The Department of Cannabis Control is not responsible for enforcing any provisions of the cultivation tax.(m) This section shall become inoperative on January 1, 2023.SEC. 5. Section 34018.5 is added to the Revenue and Taxation Code, to read:34018.5. (a) Beginning on January 1, 2023, and annually thereafter, the Department of Finance shall estimate the amount of revenue that would have been collected the prior calendar year pursuant to the excise tax imposed prior to January 1, 2023, under subdivision (A) of paragraph (1) of subdivision (a) of Section 34011, and the weight-based cultivation tax imposed prior to January 1, 2023, under Section 34012.(b) The Controller, upon appropriation by the Legislature, shall transfer moneys equivalent to the amount estimated by the Department of Finance in subdivision (a) from the General Fund to the California Cannabis Tax Fund established by Section 34018. SEC. 4.SEC. 6. The Legislature finds and declares that this act furthers the purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act, enacted as Proposition 64 at the November 8, 2016, statewide general election.SEC. 5.SEC. 7. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. |
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| 65 | | - | The people of the State of California do enact as follows:SECTION 1. (a) It is the intent of the Legislature to undercut the illicit cannabis market prices, and stop the illicit cannabis market from growing and operating, by making it viable to operate in the licensed legal cannabis market.(b) The Legislature intends to discourage persons younger than 21 years of age from using cannabis by supporting licensed cannabis operations that are in competition with the illicit market. Licensed cannabis operations cannot sell to individuals under 21 years of age, but those operating illegally are selling to individuals regardless of their age.(c) The primary mechanisms the Legislature intends to use to undercut the illicit market are to eliminate the cultivation tax and reduce the excise tax. These two taxes, individually and taken together, make it very difficult for licensed cannabis businesses to turn a profit due to rising operating and regulatory costs not associated with the illicit market. In turn, these measures will keep legal cannabis businesses open. If legal cannabis businesses cannot operate, the illicit market will grow stronger and be more pervasive.(d) In December 2020, a significant number of cultivators, manufacturers, distributors, testing laboratories, retailers, consumers, and nonprofit leaders sent a letter to Governor Gavin Newsom, President pro Tempore Toni Atkins, and Speaker Anthony Rendon warning the leadership of the state that their industry is collapsing and that they are facing imminent loss of their businesses and ability to provide for their families. They assert that the California cannabis system is a nationwide mockery and a public policy lesson in what not to do.(e) In the cannabis industry letter, the signatories stated that the opportunity to create a robust legal market has been squandered as a result of excessive taxation, and that legal cannabis product is at least 50 percent more expensive at retail than illicit cannabis products. News outlets report that legal cannabis products can be two to three times higher than illegal cannabis products. The cannabis industry stated in the letter that the illegal cannabis market is three times the size of the legal cannabis market. A February 2020 market analysis by Marijuana Business Daily found that while California had 823 licensed brick and mortar businesses at the time, the state had nearly 3,000 retailers and delivery services, and there are reports of many illegal growing operations with large quantities of plants.(f) The licensed cannabis industry stated in the letter that the cultivation tax undermines the viability and sustainability of Californias cannabis industry, being the only agricultural product in the world that is taxed at the farm.(g) The legal cannabis industry in California requested a three-year suspension of the excise tax to help them build a foundation, to become stable, and to overtake the illicit cannabis market.(h) The Legislature intends to reduce the excise tax for the purposes stated in this section.(i) The Legislature anticipates that eliminating the cultivation tax and reducing the excise tax will bring down the cost of cannabis products for consumers in California. If cannabis products are less costly, consumers are more likely to purchase them. Greater demands and increase sales are anticipated to offset lost revenues from the elimination of the cultivation tax and the reduction of the excise tax.(j) In enacting this bill, the Legislature intends to adhere to and further the purposes of the Control, Regulate and Tax Adult Use of Marijuana Act.SEC. 2.Section 34010 of the Revenue and Taxation Code is amended to read:34010.For purposes of this part:(a)Arms length transaction shall mean a sale entered into 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.(b)Average market price shall mean both of the following:(1)(A)Until January 1, 2023, in an arms length transaction, the average retail price determined by the wholesale cost of the cannabis or cannabis products sold or transferred to a cannabis retailer, plus a mark-up, as determined by the department on a biannual basis in six-month intervals.(B)Notwithstanding subparagraph (A), the department shall not increase the mark-up amount during the period beginning on and after September 18, 2020, and before July 1, 2021.(C)Effective January 1, 2023, in an arms length transaction, the average retail price determined by the wholesale cost of the cannabis or cannabis products sold or transferred to a cannabis retailer, as determined by the department on a biannual basis in six-month intervals.(2)In a nonarms length transaction, the cannabis retailers gross receipts from the retail sale of the cannabis or cannabis products.(c)Department means the California Department of Tax and Fee Administration or its successor agency.(d)Tax Fund means the California Cannabis Tax Fund created by Section 34018.(e)Cannabis has the same meaning as set forth in Section 11018 of the Health and Safety Code and shall also mean medicinal cannabis.(f)Cannabis products has the same meaning as set forth in Section 11018.1 of the Health and Safety Code and shall also mean medicinal concentrates and medicinal cannabis products.(g)Cannabis flowers means the dried flowers of the cannabis plant as defined by the board.(h)Cannabis leaves means all parts of the cannabis plant other than cannabis flowers that are sold or consumed.(i)Cannabis retailer means a person required to be licensed as a retailer, non-storefront retailer, microbusiness, or nonprofit pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(j)Cultivator means all persons required to be licensed to cultivate cannabis pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(k)Distributor means a person required to be licensed as a distributor pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(l)Enters the commercial market means cannabis or cannabis products, except for immature cannabis plants and seeds, that complete and comply with a quality assurance review and testing, as described in Section 26110 of the Business and Professions Code.(m)Gross receipts has the same meaning as set forth in Section 6012.(n)Microbusiness has the same meaning as set forth in paragraph (3) of subdivision (a) of Section 26070 of the Business and Professions Code.(o)Nonprofit has the same meaning as set forth in Section 26070.5 of the Business and Professions Code.(p)Person has the same meaning as set forth in Section 6005.(q)Retail sale has the same meaning as set forth in Section 6007.(r)Sale and purchase mean any change of title or possession, exchange, or barter, conditional or otherwise, in any manner or by any means whatsoever, for consideration.(s)Transfer means to grant, convey, hand over, assign, sell, exchange, or barter, in any manner or by any means, with or without consideration.(t)Unprocessed cannabis includes cannabis flowers, cannabis leaves, or other categories of harvested cannabis, categories for unprocessed or frozen cannabis or immature plants, or cannabis that is shipped directly to manufacturers.(u)Manufacturer means a person required to be licensed as a manufacturer pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(v)Medicinal cannabis patient shall mean a qualified patient, as defined in Section 11362.7 of the Health and Safety Code, who possesses a physicians recommendation that complies with Article 25 (commencing with Section 2525) of Chapter 5 of Division 2 of the Business and Professions Code, or a qualified patient or primary caregiver for a qualified patient issued a valid identification card pursuant to Section 11362.71 of the Health and Safety Code.(w)Designated for donation shall mean medicinal cannabis donated by a cultivator to a cannabis retailer for subsequent donation to a medicinal cannabis patient pursuant to Section 26071 of the Business and Professions Code.SEC. 3.SEC. 2. Section 34011 of the Revenue and Taxation Code is amended to read:34011. (a) (1) (A) Effective January 1, 2018, until January 1, 2023, a cannabis excise tax shall be imposed upon purchasers of cannabis or cannabis products sold in this state at the rate of 15 percent of the average market price of any retail sale by a cannabis retailer.(B) Effective On or after January 1, 2023, the rate of the a cannabis excise tax shall be imposed by this section on upon purchasers of cannabis or cannabis products sold in this state shall be at a rate of 5 percent of the average market price gross receipts of any retail sale by a cannabis retailer.(2) A purchasers liability for the cannabis excise tax is not extinguished until the cannabis excise tax has been paid to this state except that an invoice, receipt, or other document from a cannabis retailer given to the purchaser pursuant to this subdivision is sufficient to relieve the purchaser from further liability for the tax to which the invoice, receipt, or other document refers.(3) Each cannabis retailer shall provide a purchaser with an invoice, receipt, or other document that includes a statement that reads: The cannabis excise taxes are included in the total amount of this invoice.(4) The department may prescribe other means to display the cannabis excise tax on an invoice, receipt, or other document from a cannabis retailer given to the purchaser.(b) (1) A distributor in an arms length transaction shall collect the cannabis excise tax from the cannabis retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the cannabis retailer. A distributor in a nonarms length transaction shall collect the cannabis excise tax from the cannabis retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the cannabis retailer, or at the time of retail sale by the cannabis retailer, whichever is earlier. A distributor shall report and remit the cannabis excise tax to the department pursuant to Section 34015. A cannabis retailer shall be responsible for collecting the cannabis excise tax from the purchaser and remitting the cannabis excise tax to the distributor in accordance with rules and procedures established under law and any regulations adopted by the department.(2) A distributor shall provide an invoice, receipt, or other similar document to the cannabis retailer that identifies the licensee receiving the product, the distributor from which the product originates, including the associated unique identifier, the amount of cannabis excise tax, and any other information deemed necessary by the department. The department may authorize other forms of documentation under this paragraph.(3) This subdivision shall be inoperative on not apply to any sale or transfer of cannabis or cannabis products to a cannabis retailer occurring on or after January 1, 2023.(c) On (1) For any sale or transfer of cannabis or cannabis product to a cannabis retailer occurring on and after January 1, 2023, a cannabis retailer shall be responsible for collecting the cannabis excise tax from the purchaser and remitting the cannabis excise tax to the department in accordance with rules and procedures established under law and any regulations adopted by the department.(2) A cannabis retailer may claim a credit on the cannabis excise tax return for cannabis excise tax amounts paid to a distributor before January 1, 2023, on cannabis or cannabis products sold to a purchaser on or after January 1, 2023, for which the cannabis retailer is responsible for remitting to the department.(d) The excise tax imposed by this section shall be in addition to the sales and use tax imposed by the state and local governments.(e) Gross receipts from the sale of cannabis or cannabis products for purposes of assessing the sales and use taxes under Part 1 (commencing with Section 6001) shall include the tax levied pursuant to this section.(f) Cannabis or cannabis products shall not be sold to a purchaser unless the excise tax required by law has been paid by the purchaser at the time of sale.(g) The sales and use taxes imposed by Part 1 (commencing with Section 6001) shall not apply to retail sales of medicinal cannabis, medicinal cannabis concentrate, edible medicinal cannabis products, or topical cannabis as those terms are defined in Division 10 (commencing with Section 26000) of the Business and Professions Code when a qualified patient or primary caregiver for a qualified patient provides their card issued under Section 11362.71 of the Health and Safety Code and a valid government-issued identification card.(h) Nothing in this section shall be construed to impose an excise tax upon medicinal cannabis, or medicinal cannabis product, donated for no consideration to a medicinal cannabis patient pursuant to Section 26071 of the Business and Professions Code.(i) (1) Nothing in this section shall be construed to impose an excise tax upon cannabis or cannabis products designated as a trade sample pursuant to Section 26153.1 of the Business and Professions Code.(2) A person licensed under Division 10 (commencing with Section 26000) of the Business and Professions Code that sells cannabis or cannabis products designated as a trade sample pursuant to Section 26153.1 of the Business and Professions Code shall be liable for the excise tax imposed by this section as if the person were a cannabis retailer at the time of sale.SEC. 4.SEC. 3. Section 34012 of the Revenue and Taxation Code is amended to read:34012. (a) (1) Effective January 1, 2018, and until January 1, 2023, there is hereby imposed a cultivation tax on all harvested cannabis that enters the commercial market upon all cultivators. The tax shall be due after the cannabis is harvested and enters the commercial market.(1)(A) The tax for cannabis flowers shall be nine dollars and twenty-five cents ($9.25) per dry-weight ounce.(2)(B) The tax for cannabis leaves shall be set at two dollars and seventy-five cents ($2.75) per dry-weight ounce.(2) Notwithstanding paragraph (1), the cultivation tax imposed by this subdivision shall not apply to harvested cannabis that enters the commercial market and no tax collection is required pursuant to subdivision (h) if either of the following apply:(A) The harvested cannabis was first sold or transferred by a cultivator to a manufacturer on or after November 1, 2022.(B) The harvested cannabis was sold or transferred by a cultivator to a distributor on or after November 1, 2022, and was not first sold or transferred by a cultivator to a manufacturer before November 1, 2022.(b) The department may adjust the tax rate for cannabis leaves annually to reflect fluctuations in the relative price of cannabis flowers to cannabis leaves.(c) The department may from time to time establish other categories of harvested cannabis, categories for unprocessed or frozen cannabis or immature plants, or cannabis that is shipped directly to manufacturers. These categories shall be taxed at their relative value compared with cannabis flowers.(d) The department may prescribe by regulation a method and manner for payment of the cultivation tax that utilizes tax stamps or state-issued product bags that indicate that all required tax has been paid on the product to which the tax stamp is affixed or in which the cannabis is packaged.(e) The tax stamps and product bags shall be of the designs, specifications, and denominations as may be prescribed by the department and may be purchased by any licensee under Division 10 (commencing with Section 26000) of the Business and Professions Code.(f) Subsequent to the establishment of a tax stamp program, the department may by regulation provide that cannabis shall not be removed from a licensed cultivation facility or transported on a public highway unless in a state-issued product bag bearing a tax stamp in the proper denomination.(g) The tax stamps and product bags shall be capable of being read by a scanning or similar device and must be traceable utilizing the track and trace system pursuant to Section 26068 of the Business and Professions Code.(h) Cultivators shall be responsible for payment of the tax pursuant to regulations adopted by the department. A cultivators liability for the tax is not extinguished until the tax has been paid to this state except that an invoice, receipt, or other document from a distributor or manufacturer given to the cultivator pursuant to paragraph (3) is sufficient to relieve the cultivator from further liability for the tax to which the invoice, receipt, or other document refers. Cannabis shall not be sold unless the tax has been paid as provided in this part.(1) A distributor shall collect the cultivation tax from a cultivator on all harvested cannabis that enters the commercial market. This paragraph shall not apply where a cultivator is not required to send, and does not send, the harvested cannabis to a distributor.(2) (A) A manufacturer shall collect the cultivation tax from a cultivator on the first sale or transfer of unprocessed cannabis by a cultivator to a manufacturer. The manufacturer shall remit the cultivation tax collected on the cannabis product sold or transferred to a distributor for quality assurance, inspection, and testing, as described in Section 26110 of the Business and Professions Code. This paragraph shall not apply where a distributor collects the cultivation tax from a cultivator pursuant to paragraph (1).(B) Notwithstanding subparagraph (A), the department may prescribe a substitute method and manner for collection and remittance of the cultivation tax under this paragraph, including a method and manner for collection of the cultivation tax by a distributor.(3) A distributor or manufacturer shall provide to the cultivator, and a distributor that collects the cultivation tax from a manufacturer pursuant to paragraph (2) shall provide to the manufacturer, an invoice, receipt, or other similar document that identifies the licensee receiving the product, the cultivator from which the product originates, including the associated unique identifier, the amount of cultivation tax, and any other information deemed necessary by the department. The department may authorize other forms of documentation under this paragraph.(4) The department may adopt regulations prescribing procedures for the refund of cultivation tax collected on cannabis or cannabis product that fails quality assurance, inspection, and testing as described in Section 26110 of the Business and Professions Code.(i) All cannabis removed from a cultivators premises, except for plant waste or medicinal cannabis or medicinal cannabis products designated for donation, shall be presumed to be sold and thereby taxable under this section, except as otherwise exempt pursuant to Section 34012.2.(j) The tax imposed by this section shall be imposed on all cannabis cultivated in the state pursuant to rules and regulations promulgated by the department, but shall not apply to cannabis cultivated for personal use under Section 11362.1 of the Health and Safety Code or cultivated by a qualified patient or primary caregiver in accordance with the Compassionate Use Act of 1996 (Proposition 215), found in Section 11362.5 of the Health and Safety Code.(k) (1) For the 2020 calendar year, the rates set forth in subdivisions (a), (b), and (c) shall be adjusted by the department for inflation.(2) For the 2021 calendar year, the rates shall be those imposed for the 2020 calendar year in paragraph (1) and shall not be adjusted for inflation unless the adjustment is for an inflation rate that is less than zero.(3) For the 2022 calendar year, until January 1, 2023, the rates shall be those imposed for the 2021 calendar year in paragraph (2) and shall be adjusted by the department for inflation.(l) The Department of Cannabis Control is not responsible for enforcing any provisions of the cultivation tax.(m)This section shall become inoperative on January 1, 2023.SEC. 4. Section 34012.5 of the Revenue and Taxation Code is amended to read:34012.5. (a) The cultivation tax and cannabis excise tax required to be collected by the distributor, or required to be collected by the manufacturer pursuant to paragraph (2) of subdivision (h) of Section 34012, and any amount unreturned to the cultivator or cannabis retailer that is not tax but was collected from the cultivator or cannabis retailer under the representation by the distributor or the manufacturer that it was tax constitute debts owed by the distributor or the manufacturer to this state.(b) A distributor or manufacturer that has collected any amount of tax in excess of the amount of tax imposed by this part and actually due from a cultivator or cannabis retailer, may refund such amount to the cultivator or cannabis retailer, even though such tax amount has already been paid over to the department and no corresponding credit or refund has yet been secured. The distributor or manufacturer may claim credit for that overpayment against the amount of tax imposed by this part that is due upon any other quarterly return, providing that credit is claimed in a return dated no later than three years from the date of overpayment.(c) Any tax collected from a cultivator or cannabis retailer that has not been remitted to the department shall be deemed a debt owed to the State of California by the person required to collect and remit the tax.(d) This section shall remain in effect only until January 1, 2023, and as of that date is repealed.SEC. 5. Section 34012.5 is added to the Revenue and Taxation Code, to read:34012.5. (a) The cannabis excise tax required to be collected by the cannabis retailer, and any amount unreturned to the purchaser that is not tax but was collected from the purchaser under the representation by the cannabis retailer that it was tax, constitute debts owed by the cannabis retailer to this state.(b) This section shall become operative on January 1, 2023. SEC. 6. Section 34013 of the Revenue and Taxation Code is amended to read:34013. (a) The department shall administer and collect the taxes imposed by this part pursuant to the Fee Collection Procedures Law (Part 30 (commencing with Section 55001)). For purposes of this part, the references in the Fee Collection Procedures Law to fee shall include the taxes imposed by this part, and references to feepayer shall include a person required to pay or collect the taxes imposed by this part.(b) Until January 1, 2022, subdivision (a) of Section 55050 shall not apply to a person required to pay or collect the taxes imposed by this part on a person licensed to engage in commercial cannabis activity under Division 10 (commencing with Section 26000) of the Business and Professions Code if the department deems it necessary to facilitate the collection of amounts due.(c) The department may prescribe, adopt, and enforce regulations relating to the administration and enforcement of this part, including, but not limited to, collections, reporting, refunds, and appeals.(d) The department shall adopt necessary rules and regulations to administer the taxes in this part. Such rules and regulations may include methods or procedures to tag cannabis or cannabis products, or the packages thereof, to designate prior tax payment.(e) Until January 1, 2019, 2024, the department may prescribe, adopt, and enforce any emergency regulations as necessary to implement, administer, and enforce its duties under this division. Any emergency regulation prescribed, adopted, or enforced pursuant to this section shall be adopted in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, and, for purposes of that chapter, including Section 11349.6 of the Government Code, the adoption of the regulation is an emergency and shall be considered by the Office of Administrative Law as necessary for the immediate preservation of the public peace, health and safety, and general welfare. Notwithstanding any other law, the emergency regulations adopted by the department may remain in effect for two years from adoption. adoption, and may be readopted in accordance with subdivision (h) of Section 11346.1 of the Government Code.(f) Any person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code who fails to pay the taxes imposed under this part shall, in addition to owing the taxes not paid, be subject to a penalty of at least one-half the amount of the taxes not paid, and shall be subject to having its license revoked pursuant to Section 26031 of the Business and Professions Code.(g) The department may bring such legal actions as are necessary to collect any deficiency in the tax required to be paid, and, upon the departments request, the Attorney General shall bring the actions.SEC. 7. Section 34014 of the Revenue and Taxation Code is amended to read:34014. (a) All (1) Until January 1, 2023, all distributors must obtain a separate permit from the board department pursuant to regulations adopted by the board. department. No fee shall be charged to any person for issuance of the permit. Any person required to obtain a permit who engages in business as a distributor without a permit or after a permit has been canceled, suspended, or revoked, and each officer of any corporation which that so engages in business, is guilty of a misdemeanor.(2) On and after January 1, 2023, all cannabis retailers must obtain a separate cannabis tax permit from the department pursuant to regulations adopted by the department. A fee shall not be charged to any person for issuance of the permit. Any person required to obtain a permit who engages in business as a cannabis retailer without a permit or after a permit has been canceled, suspended, or revoked, and each officer of any corporation that so engages in business, is guilty of a misdemeanor. (b) The board department may require every licensed distributor, retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed, to provide security to cover the liability for taxes imposed by state law on cannabis produced or received by the retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed in accordance with procedures to be established by the board. department. Notwithstanding anything herein to the contrary, the board department may waive any security requirement it imposes for good cause, as determined by the board. department. Good cause includes, but is not limited to, the inability of a distributor, retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed to obtain security due to a lack of service providers or the policies of service providers that prohibit service to a cannabis business. A person may not commence or continue any business or operation relating to cannabis cultivation until any surety required by the board department with respect to the business or operation has been properly prepared, executed, and submitted under this part.(c) In fixing the amount of any security required by the board, department, the board department shall give consideration to the financial hardship that may be imposed on licensees as a result of any shortage of available surety providers.SEC. 8. Section 34015 of the Revenue and Taxation Code is amended to read:34015. (a) Unless otherwise prescribed by the board department pursuant to subdivision (c), the cannabis excise tax and cultivation tax imposed by this part is due and payable to the board department quarterly on or before the last day of the month following each quarterly period of three months. On or before the last day of the month following each quarterly period, a return for the preceding quarterly period shall be filed with the board department by each distributor using electronic media. Returns shall be authenticated in a form or pursuant to methods as may be prescribed by the board. department. If the cultivation tax is paid by stamp pursuant to subdivision (d) of Section 34012 34012, the board department may by regulation determine when and how the tax shall be paid.(b) The board department may require every person engaged in the cultivation, distribution, manufacturing, retail sale of cannabis or cannabis products, or any other person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code to file, on or before the 25th day of each month, a report using electronic media respecting the persons inventory, purchases, and sales during the preceding month and any other information as the board department may require to carry out the purposes of this part. Reports shall be authenticated in a form or pursuant to methods as may be prescribed by the board. department.(c) The board department may adopt regulations prescribing the due date for returns and remittances of cannabis excise tax collected by a distributor in an arms length transaction pursuant to subdivision (b) of Section 34011.(d) The board department may make examinations of the books and records of any person licensed, or required to be licensed, pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code, as it may deem necessary in carrying out this part.(e) This section shall remain in effect only until January 1, 2023, and as of that date is repealed.SEC. 5.SEC. 9. Section 34018.5 is added to the Revenue and Taxation Code, to read:34018.5. (a) Beginning on January 1, 2023, and annually thereafter, the Department of Finance shall estimate the amount of revenue that would have been collected the prior calendar year pursuant to the excise tax imposed prior to January 1, 2023, under subdivision (A) of paragraph (1) of subdivision (a) of Section 34011, and the weight-based cultivation tax imposed prior to January 1, 2023, under Section 34012.(b) The Controller, upon appropriation by the Legislature, shall transfer moneys equivalent to the amount estimated by the Department of Finance in subdivision (a) from the General Fund to the California Cannabis Tax Fund established by Section 34018. Tax Fund.SEC. 10. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB 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 XIIIB of the California Constitution.SEC. 6.SEC. 11. The Legislature finds and declares that this act furthers the purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act, enacted as Proposition 64 at the November 8, 2016, statewide general election.SEC. 7.SEC. 12. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. |
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| 44 | + | The people of the State of California do enact as follows:SECTION 1. (a) It is the intent of the Legislature to undercut the illicit cannabis market prices, and stop the illicit cannabis market from growing and operating, by making it viable to operate in the licensed legal cannabis market.(b) The Legislature intends to discourage persons younger than 21 years of age from using cannabis by supporting licensed cannabis operations that are in competition with the illicit market. Licensed cannabis operations cannot sell to individuals under 21 years of age, but those operating illegally are selling to individuals regardless of their age.(c) The primary mechanisms the Legislature intends to use to undercut the illicit market are to eliminate the cultivation tax and reduce the excise tax. These two taxes, individually and taken together, make it very difficult for licensed cannabis businesses to turn a profit due to rising operating and regulatory costs not associated with the illicit market. In turn, these measures will keep legal cannabis businesses open. If legal cannabis businesses cannot operate, the illicit market will grow stronger and be more pervasive.(d) In December 2020, a significant number of cultivators, manufacturers, distributors, testing laboratories, retailers, consumers, and nonprofit leaders sent a letter to Governor Gavin Newsom, President pro Tempore Toni Atkins, and Speaker Anthony Rendon warning the leadership of the state that their industry is collapsing and that they are facing imminent loss of their businesses and ability to provide for their families. They assert that the California cannabis system is a nationwide mockery and a public policy lesson in what not to do.(e) In the cannabis industry letter, the signatories stated that the opportunity to create a robust legal market has been squandered as a result of excessive taxation, and that legal cannabis product is at least 50 percent more expensive at retail than illicit cannabis products. News outlets report that legal cannabis products can be two to three times higher than illegal cannabis products. The cannabis industry stated in the letter that the illegal cannabis market is three times the size of the legal cannabis market. A February 2020 market analysis by Marijuana Business Daily found that while California had 823 licensed brick and mortar businesses at the time, the state had nearly 3,000 retailers and delivery services, and there are reports of many illegal growing operations with large quantities of plants.(f) The licensed cannabis industry stated in the letter that the cultivation tax undermines the viability and sustainability of Californias cannabis industry, being the only agricultural product in the world that is taxed at the farm.(g) The legal cannabis industry in California requested a three-year suspension of the excise tax to help them build a foundation, to become stable, and to overtake the illicit cannabis market.(h) The Legislature intends to reduce the excise tax for the purposes stated in this section.(i) The Legislature anticipates that eliminating the cultivation tax and reducing the excise tax will bring down the cost of cannabis products for consumers in California. If cannabis products are less costly, consumers are more likely to purchase them. Greater demands and increase sales are anticipated to offset lost revenues from the elimination of the cultivation tax and the reduction of the excise tax.(j) In enacting this bill, the Legislature intends to adhere to and further the purposes of the Control, Regulate and Tax Adult Use of Marijuana Act.SECTION 1.SEC. 2. Section 34010 of the Revenue and Taxation Code is amended to read:34010. For purposes of this part:(a) Arms length transaction shall mean a sale entered into 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.(b) Average market price shall mean both of the following:(1) (A) Until January 1, 2023, in an arms length transaction, the average retail price determined by the wholesale cost of the cannabis or cannabis products sold or transferred to a cannabis retailer, plus a mark-up, as determined by the department on a biannual basis in six-month intervals.(B) Notwithstanding subparagraph (A), the department shall not increase the mark-up amount during the period beginning on and after September 18, 2020, and before July 1, 2021.(C) Effective January 1, 2023, in an arms length transaction, the average retail price determined by the wholesale cost of the cannabis or cannabis products sold or transferred to a cannabis retailer, as determined by the department on a biannual basis in six-month intervals.(2) In a nonarms length transaction, the cannabis retailers gross receipts from the retail sale of the cannabis or cannabis products.(c) Department means the California Department of Tax and Fee Administration or its successor agency.(d) Tax Fund means the California Cannabis Tax Fund created by Section 34018.(e) Cannabis has the same meaning as set forth in Section 11018 of the Health and Safety Code and shall also mean medicinal cannabis.(f) Cannabis products has the same meaning as set forth in Section 11018.1 of the Health and Safety Code and shall also mean medicinal concentrates and medicinal cannabis products.(g) Cannabis flowers means the dried flowers of the cannabis plant as defined by the board.(h) Cannabis leaves means all parts of the cannabis plant other than cannabis flowers that are sold or consumed.(i) Cannabis retailer means a person required to be licensed as a retailer, non-storefront retailer, microbusiness, or nonprofit pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(j) Cultivator means all persons required to be licensed to cultivate cannabis pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(k) Distributor means a person required to be licensed as a distributor pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(l) Enters the commercial market means cannabis or cannabis products, except for immature cannabis plants and seeds, that complete and comply with a quality assurance review and testing, as described in Section 26110 of the Business and Professions Code.(m) Gross receipts has the same meaning as set forth in Section 6012.(n) Microbusiness has the same meaning as set forth in paragraph (3) of subdivision (a) of Section 26070 of the Business and Professions Code.(o) Nonprofit has the same meaning as set forth in Section 26070.5 of the Business and Professions Code.(p) Person has the same meaning as set forth in Section 6005.(q) Retail sale has the same meaning as set forth in Section 6007.(r) Sale and purchase mean any change of title or possession, exchange, or barter, conditional or otherwise, in any manner or by any means whatsoever, for consideration.(s) Transfer means to grant, convey, hand over, assign, sell, exchange, or barter, in any manner or by any means, with or without consideration.(t) Unprocessed cannabis includes cannabis flowers, cannabis leaves, or other categories of harvested cannabis, categories for unprocessed or frozen cannabis or immature plants, or cannabis that is shipped directly to manufacturers.(u) Manufacturer means a person required to be licensed as a manufacturer pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(v) Medicinal cannabis patient shall mean a qualified patient, as defined in Section 11362.7 of the Health and Safety Code, who possesses a physicians recommendation that complies with Article 25 (commencing with Section 2525) of Chapter 5 of Division 2 of the Business and Professions Code, or a qualified patient or primary caregiver for a qualified patient issued a valid identification card pursuant to Section 11362.71 of the Health and Safety Code.(w) Designated for donation shall mean medicinal cannabis donated by a cultivator to a cannabis retailer for subsequent donation to a medicinal cannabis patient pursuant to Section 26071 of the Business and Professions Code.SEC. 2.SEC. 3. Section 34011 of the Revenue and Taxation Code is amended to read:34011. (a) (1) (A) Effective January 1, 2018, until January 1, 2023, a cannabis excise tax shall be imposed upon purchasers of cannabis or cannabis products sold in this state at the rate of 15 percent of the average market price of any retail sale by a cannabis retailer.(B) Effective January 1, 2023, the rate of the cannabis excise tax imposed by this section on purchasers of cannabis or cannabis products sold in this state shall be 5 percent of the average market price of any retail sale by a cannabis retailer.(2) A purchasers liability for the cannabis excise tax is not extinguished until the cannabis excise tax has been paid to this state except that an invoice, receipt, or other document from a cannabis retailer given to the purchaser pursuant to this subdivision is sufficient to relieve the purchaser from further liability for the tax to which the invoice, receipt, or other document refers.(3) Each cannabis retailer shall provide a purchaser with an invoice, receipt, or other document that includes a statement that reads: The cannabis excise taxes are included in the total amount of this invoice.(4) The department may prescribe other means to display the cannabis excise tax on an invoice, receipt, or other document from a cannabis retailer given to the purchaser.(b) (1) A distributor in an arms length transaction shall collect the cannabis excise tax from the cannabis retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the cannabis retailer. A distributor in a nonarms length transaction shall collect the cannabis excise tax from the cannabis retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the cannabis retailer, or at the time of retail sale by the cannabis retailer, whichever is earlier. A distributor shall report and remit the cannabis excise tax to the department pursuant to Section 34015. A cannabis retailer shall be responsible for collecting the cannabis excise tax from the purchaser and remitting the cannabis excise tax to the distributor in accordance with rules and procedures established under law and any regulations adopted by the department.(2) A distributor shall provide an invoice, receipt, or other similar document to the cannabis retailer that identifies the licensee receiving the product, the distributor from which the product originates, including the associated unique identifier, the amount of cannabis excise tax, and any other information deemed necessary by the department. The department may authorize other forms of documentation under this paragraph.(3) This subdivision shall be inoperative on January 1, 2023.(c) On and after January 1, 2023, a cannabis retailer shall be responsible for collecting the cannabis excise tax from the purchaser and remitting the cannabis excise tax to the department in accordance with rules and procedures established under law and any regulations adopted by the department.(d) The excise tax imposed by this section shall be in addition to the sales and use tax imposed by the state and local governments.(e) Gross receipts from the sale of cannabis or cannabis products for purposes of assessing the sales and use taxes under Part 1 (commencing with Section 6001) shall include the tax levied pursuant to this section.(f) Cannabis or cannabis products shall not be sold to a purchaser unless the excise tax required by law has been paid by the purchaser at the time of sale.(g) The sales and use taxes imposed by Part 1 (commencing with Section 6001) shall not apply to retail sales of medicinal cannabis, medicinal cannabis concentrate, edible medicinal cannabis products, or topical cannabis as those terms are defined in Division 10 (commencing with Section 26000) of the Business and Professions Code when a qualified patient or primary caregiver for a qualified patient provides their card issued under Section 11362.71 of the Health and Safety Code and a valid government-issued identification card.(h) Nothing in this section shall be construed to impose an excise tax upon medicinal cannabis, or medicinal cannabis product, donated for no consideration to a medicinal cannabis patient pursuant to Section 26071 of the Business and Professions Code.(i) (1) Nothing in this section shall be construed to impose an excise tax upon cannabis or cannabis products designated as a trade sample pursuant to Section 26153.1 of the Business and Professions Code.(2) A person licensed under Division 10 (commencing with Section 26000) of the Business and Professions Code that sells cannabis or cannabis products designated as a trade sample pursuant to Section 26153.1 of the Business and Professions Code shall be liable for the excise tax imposed by this section as if the person were a cannabis retailer at the time of sale.SEC. 3.SEC. 4. Section 34012 of the Revenue and Taxation Code is amended to read:34012. (a) Effective January 1, 2018, and until January 1, 2023, there is hereby imposed a cultivation tax on all harvested cannabis that enters the commercial market upon all cultivators. The tax shall be due after the cannabis is harvested and enters the commercial market.(1) The tax for cannabis flowers shall be nine dollars and twenty-five cents ($9.25) per dry-weight ounce.(2) The tax for cannabis leaves shall be set at two dollars and seventy-five cents ($2.75) per dry-weight ounce.(b) The department may adjust the tax rate for cannabis leaves annually to reflect fluctuations in the relative price of cannabis flowers to cannabis leaves.(c) The department may from time to time establish other categories of harvested cannabis, categories for unprocessed or frozen cannabis or immature plants, or cannabis that is shipped directly to manufacturers. These categories shall be taxed at their relative value compared with cannabis flowers.(d) The department may prescribe by regulation a method and manner for payment of the cultivation tax that utilizes tax stamps or state-issued product bags that indicate that all required tax has been paid on the product to which the tax stamp is affixed or in which the cannabis is packaged.(e) The tax stamps and product bags shall be of the designs, specifications, and denominations as may be prescribed by the department and may be purchased by any licensee under Division 10 (commencing with Section 26000) of the Business and Professions Code.(f) Subsequent to the establishment of a tax stamp program, the department may by regulation provide that cannabis shall not be removed from a licensed cultivation facility or transported on a public highway unless in a state-issued product bag bearing a tax stamp in the proper denomination.(g) The tax stamps and product bags shall be capable of being read by a scanning or similar device and must be traceable utilizing the track and trace system pursuant to Section 26068 of the Business and Professions Code.(h) Cultivators shall be responsible for payment of the tax pursuant to regulations adopted by the department. A cultivators liability for the tax is not extinguished until the tax has been paid to this state except that an invoice, receipt, or other document from a distributor or manufacturer given to the cultivator pursuant to paragraph (3) is sufficient to relieve the cultivator from further liability for the tax to which the invoice, receipt, or other document refers. Cannabis shall not be sold unless the tax has been paid as provided in this part.(1) A distributor shall collect the cultivation tax from a cultivator on all harvested cannabis that enters the commercial market. This paragraph shall not apply where a cultivator is not required to send, and does not send, the harvested cannabis to a distributor.(2) (A) A manufacturer shall collect the cultivation tax from a cultivator on the first sale or transfer of unprocessed cannabis by a cultivator to a manufacturer. The manufacturer shall remit the cultivation tax collected on the cannabis product sold or transferred to a distributor for quality assurance, inspection, and testing, as described in Section 26110 of the Business and Professions Code. This paragraph shall not apply where a distributor collects the cultivation tax from a cultivator pursuant to paragraph (1).(B) Notwithstanding subparagraph (A), the department may prescribe a substitute method and manner for collection and remittance of the cultivation tax under this paragraph, including a method and manner for collection of the cultivation tax by a distributor.(3) A distributor or manufacturer shall provide to the cultivator, and a distributor that collects the cultivation tax from a manufacturer pursuant to paragraph (2) shall provide to the manufacturer, an invoice, receipt, or other similar document that identifies the licensee receiving the product, the cultivator from which the product originates, including the associated unique identifier, the amount of cultivation tax, and any other information deemed necessary by the department. The department may authorize other forms of documentation under this paragraph.(4) The department may adopt regulations prescribing procedures for the refund of cultivation tax collected on cannabis or cannabis product that fails quality assurance, inspection, and testing as described in Section 26110 of the Business and Professions Code.(i) All cannabis removed from a cultivators premises, except for plant waste or medicinal cannabis or medicinal cannabis products designated for donation, shall be presumed to be sold and thereby taxable under this section, except as otherwise exempt pursuant to Section 34012.2.(j) The tax imposed by this section shall be imposed on all cannabis cultivated in the state pursuant to rules and regulations promulgated by the department, but shall not apply to cannabis cultivated for personal use under Section 11362.1 of the Health and Safety Code or cultivated by a qualified patient or primary caregiver in accordance with the Compassionate Use Act of 1996 (Proposition 215), found in Section 11362.5 of the Health and Safety Code.(k) (1) For the 2020 calendar year, the rates set forth in subdivisions (a), (b), and (c) shall be adjusted by the department for inflation.(2) For the 2021 calendar year, the rates shall be those imposed for the 2020 calendar year in paragraph (1) and shall not be adjusted for inflation unless the adjustment is for an inflation rate that is less than zero.(3) For the 2022 calendar year, until January 1, 2023, the rates shall be those imposed for the 2021 calendar year in paragraph (2) and shall be adjusted by the department for inflation.(l) The Department of Cannabis Control is not responsible for enforcing any provisions of the cultivation tax.(m) This section shall become inoperative on January 1, 2023.SEC. 5. Section 34018.5 is added to the Revenue and Taxation Code, to read:34018.5. (a) Beginning on January 1, 2023, and annually thereafter, the Department of Finance shall estimate the amount of revenue that would have been collected the prior calendar year pursuant to the excise tax imposed prior to January 1, 2023, under subdivision (A) of paragraph (1) of subdivision (a) of Section 34011, and the weight-based cultivation tax imposed prior to January 1, 2023, under Section 34012.(b) The Controller, upon appropriation by the Legislature, shall transfer moneys equivalent to the amount estimated by the Department of Finance in subdivision (a) from the General Fund to the California Cannabis Tax Fund established by Section 34018. SEC. 4.SEC. 6. The Legislature finds and declares that this act furthers the purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act, enacted as Proposition 64 at the November 8, 2016, statewide general election.SEC. 5.SEC. 7. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. |
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| 67 | 46 | | The people of the State of California do enact as follows: |
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| 69 | 48 | | ## The people of the State of California do enact as follows: |
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| 71 | 50 | | SECTION 1. (a) It is the intent of the Legislature to undercut the illicit cannabis market prices, and stop the illicit cannabis market from growing and operating, by making it viable to operate in the licensed legal cannabis market.(b) The Legislature intends to discourage persons younger than 21 years of age from using cannabis by supporting licensed cannabis operations that are in competition with the illicit market. Licensed cannabis operations cannot sell to individuals under 21 years of age, but those operating illegally are selling to individuals regardless of their age.(c) The primary mechanisms the Legislature intends to use to undercut the illicit market are to eliminate the cultivation tax and reduce the excise tax. These two taxes, individually and taken together, make it very difficult for licensed cannabis businesses to turn a profit due to rising operating and regulatory costs not associated with the illicit market. In turn, these measures will keep legal cannabis businesses open. If legal cannabis businesses cannot operate, the illicit market will grow stronger and be more pervasive.(d) In December 2020, a significant number of cultivators, manufacturers, distributors, testing laboratories, retailers, consumers, and nonprofit leaders sent a letter to Governor Gavin Newsom, President pro Tempore Toni Atkins, and Speaker Anthony Rendon warning the leadership of the state that their industry is collapsing and that they are facing imminent loss of their businesses and ability to provide for their families. They assert that the California cannabis system is a nationwide mockery and a public policy lesson in what not to do.(e) In the cannabis industry letter, the signatories stated that the opportunity to create a robust legal market has been squandered as a result of excessive taxation, and that legal cannabis product is at least 50 percent more expensive at retail than illicit cannabis products. News outlets report that legal cannabis products can be two to three times higher than illegal cannabis products. The cannabis industry stated in the letter that the illegal cannabis market is three times the size of the legal cannabis market. A February 2020 market analysis by Marijuana Business Daily found that while California had 823 licensed brick and mortar businesses at the time, the state had nearly 3,000 retailers and delivery services, and there are reports of many illegal growing operations with large quantities of plants.(f) The licensed cannabis industry stated in the letter that the cultivation tax undermines the viability and sustainability of Californias cannabis industry, being the only agricultural product in the world that is taxed at the farm.(g) The legal cannabis industry in California requested a three-year suspension of the excise tax to help them build a foundation, to become stable, and to overtake the illicit cannabis market.(h) The Legislature intends to reduce the excise tax for the purposes stated in this section.(i) The Legislature anticipates that eliminating the cultivation tax and reducing the excise tax will bring down the cost of cannabis products for consumers in California. If cannabis products are less costly, consumers are more likely to purchase them. Greater demands and increase sales are anticipated to offset lost revenues from the elimination of the cultivation tax and the reduction of the excise tax.(j) In enacting this bill, the Legislature intends to adhere to and further the purposes of the Control, Regulate and Tax Adult Use of Marijuana Act. |
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| 72 | 51 | | |
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| 73 | 52 | | SECTION 1. (a) It is the intent of the Legislature to undercut the illicit cannabis market prices, and stop the illicit cannabis market from growing and operating, by making it viable to operate in the licensed legal cannabis market.(b) The Legislature intends to discourage persons younger than 21 years of age from using cannabis by supporting licensed cannabis operations that are in competition with the illicit market. Licensed cannabis operations cannot sell to individuals under 21 years of age, but those operating illegally are selling to individuals regardless of their age.(c) The primary mechanisms the Legislature intends to use to undercut the illicit market are to eliminate the cultivation tax and reduce the excise tax. These two taxes, individually and taken together, make it very difficult for licensed cannabis businesses to turn a profit due to rising operating and regulatory costs not associated with the illicit market. In turn, these measures will keep legal cannabis businesses open. If legal cannabis businesses cannot operate, the illicit market will grow stronger and be more pervasive.(d) In December 2020, a significant number of cultivators, manufacturers, distributors, testing laboratories, retailers, consumers, and nonprofit leaders sent a letter to Governor Gavin Newsom, President pro Tempore Toni Atkins, and Speaker Anthony Rendon warning the leadership of the state that their industry is collapsing and that they are facing imminent loss of their businesses and ability to provide for their families. They assert that the California cannabis system is a nationwide mockery and a public policy lesson in what not to do.(e) In the cannabis industry letter, the signatories stated that the opportunity to create a robust legal market has been squandered as a result of excessive taxation, and that legal cannabis product is at least 50 percent more expensive at retail than illicit cannabis products. News outlets report that legal cannabis products can be two to three times higher than illegal cannabis products. The cannabis industry stated in the letter that the illegal cannabis market is three times the size of the legal cannabis market. A February 2020 market analysis by Marijuana Business Daily found that while California had 823 licensed brick and mortar businesses at the time, the state had nearly 3,000 retailers and delivery services, and there are reports of many illegal growing operations with large quantities of plants.(f) The licensed cannabis industry stated in the letter that the cultivation tax undermines the viability and sustainability of Californias cannabis industry, being the only agricultural product in the world that is taxed at the farm.(g) The legal cannabis industry in California requested a three-year suspension of the excise tax to help them build a foundation, to become stable, and to overtake the illicit cannabis market.(h) The Legislature intends to reduce the excise tax for the purposes stated in this section.(i) The Legislature anticipates that eliminating the cultivation tax and reducing the excise tax will bring down the cost of cannabis products for consumers in California. If cannabis products are less costly, consumers are more likely to purchase them. Greater demands and increase sales are anticipated to offset lost revenues from the elimination of the cultivation tax and the reduction of the excise tax.(j) In enacting this bill, the Legislature intends to adhere to and further the purposes of the Control, Regulate and Tax Adult Use of Marijuana Act. |
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| 74 | 53 | | |
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| 75 | 54 | | SECTION 1. (a) It is the intent of the Legislature to undercut the illicit cannabis market prices, and stop the illicit cannabis market from growing and operating, by making it viable to operate in the licensed legal cannabis market. |
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| 76 | 55 | | |
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| 77 | 56 | | ### SECTION 1. |
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| 78 | 57 | | |
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| 79 | 58 | | (b) The Legislature intends to discourage persons younger than 21 years of age from using cannabis by supporting licensed cannabis operations that are in competition with the illicit market. Licensed cannabis operations cannot sell to individuals under 21 years of age, but those operating illegally are selling to individuals regardless of their age. |
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| 80 | 59 | | |
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| 81 | 60 | | (c) The primary mechanisms the Legislature intends to use to undercut the illicit market are to eliminate the cultivation tax and reduce the excise tax. These two taxes, individually and taken together, make it very difficult for licensed cannabis businesses to turn a profit due to rising operating and regulatory costs not associated with the illicit market. In turn, these measures will keep legal cannabis businesses open. If legal cannabis businesses cannot operate, the illicit market will grow stronger and be more pervasive. |
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| 82 | 61 | | |
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| 83 | 62 | | (d) In December 2020, a significant number of cultivators, manufacturers, distributors, testing laboratories, retailers, consumers, and nonprofit leaders sent a letter to Governor Gavin Newsom, President pro Tempore Toni Atkins, and Speaker Anthony Rendon warning the leadership of the state that their industry is collapsing and that they are facing imminent loss of their businesses and ability to provide for their families. They assert that the California cannabis system is a nationwide mockery and a public policy lesson in what not to do. |
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| 84 | 63 | | |
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| 85 | 64 | | (e) In the cannabis industry letter, the signatories stated that the opportunity to create a robust legal market has been squandered as a result of excessive taxation, and that legal cannabis product is at least 50 percent more expensive at retail than illicit cannabis products. News outlets report that legal cannabis products can be two to three times higher than illegal cannabis products. The cannabis industry stated in the letter that the illegal cannabis market is three times the size of the legal cannabis market. A February 2020 market analysis by Marijuana Business Daily found that while California had 823 licensed brick and mortar businesses at the time, the state had nearly 3,000 retailers and delivery services, and there are reports of many illegal growing operations with large quantities of plants. |
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| 86 | 65 | | |
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| 87 | 66 | | (f) The licensed cannabis industry stated in the letter that the cultivation tax undermines the viability and sustainability of Californias cannabis industry, being the only agricultural product in the world that is taxed at the farm. |
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| 88 | 67 | | |
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| 89 | 68 | | (g) The legal cannabis industry in California requested a three-year suspension of the excise tax to help them build a foundation, to become stable, and to overtake the illicit cannabis market. |
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| 90 | 69 | | |
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| 91 | 70 | | (h) The Legislature intends to reduce the excise tax for the purposes stated in this section. |
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| 92 | 71 | | |
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| 93 | 72 | | (i) The Legislature anticipates that eliminating the cultivation tax and reducing the excise tax will bring down the cost of cannabis products for consumers in California. If cannabis products are less costly, consumers are more likely to purchase them. Greater demands and increase sales are anticipated to offset lost revenues from the elimination of the cultivation tax and the reduction of the excise tax. |
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| 94 | 73 | | |
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| 95 | 74 | | (j) In enacting this bill, the Legislature intends to adhere to and further the purposes of the Control, Regulate and Tax Adult Use of Marijuana Act. |
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| 96 | 75 | | |
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| 76 | + | SECTION 1.SEC. 2. Section 34010 of the Revenue and Taxation Code is amended to read:34010. For purposes of this part:(a) Arms length transaction shall mean a sale entered into 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.(b) Average market price shall mean both of the following:(1) (A) Until January 1, 2023, in an arms length transaction, the average retail price determined by the wholesale cost of the cannabis or cannabis products sold or transferred to a cannabis retailer, plus a mark-up, as determined by the department on a biannual basis in six-month intervals.(B) Notwithstanding subparagraph (A), the department shall not increase the mark-up amount during the period beginning on and after September 18, 2020, and before July 1, 2021.(C) Effective January 1, 2023, in an arms length transaction, the average retail price determined by the wholesale cost of the cannabis or cannabis products sold or transferred to a cannabis retailer, as determined by the department on a biannual basis in six-month intervals.(2) In a nonarms length transaction, the cannabis retailers gross receipts from the retail sale of the cannabis or cannabis products.(c) Department means the California Department of Tax and Fee Administration or its successor agency.(d) Tax Fund means the California Cannabis Tax Fund created by Section 34018.(e) Cannabis has the same meaning as set forth in Section 11018 of the Health and Safety Code and shall also mean medicinal cannabis.(f) Cannabis products has the same meaning as set forth in Section 11018.1 of the Health and Safety Code and shall also mean medicinal concentrates and medicinal cannabis products.(g) Cannabis flowers means the dried flowers of the cannabis plant as defined by the board.(h) Cannabis leaves means all parts of the cannabis plant other than cannabis flowers that are sold or consumed.(i) Cannabis retailer means a person required to be licensed as a retailer, non-storefront retailer, microbusiness, or nonprofit pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(j) Cultivator means all persons required to be licensed to cultivate cannabis pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(k) Distributor means a person required to be licensed as a distributor pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(l) Enters the commercial market means cannabis or cannabis products, except for immature cannabis plants and seeds, that complete and comply with a quality assurance review and testing, as described in Section 26110 of the Business and Professions Code.(m) Gross receipts has the same meaning as set forth in Section 6012.(n) Microbusiness has the same meaning as set forth in paragraph (3) of subdivision (a) of Section 26070 of the Business and Professions Code.(o) Nonprofit has the same meaning as set forth in Section 26070.5 of the Business and Professions Code.(p) Person has the same meaning as set forth in Section 6005.(q) Retail sale has the same meaning as set forth in Section 6007.(r) Sale and purchase mean any change of title or possession, exchange, or barter, conditional or otherwise, in any manner or by any means whatsoever, for consideration.(s) Transfer means to grant, convey, hand over, assign, sell, exchange, or barter, in any manner or by any means, with or without consideration.(t) Unprocessed cannabis includes cannabis flowers, cannabis leaves, or other categories of harvested cannabis, categories for unprocessed or frozen cannabis or immature plants, or cannabis that is shipped directly to manufacturers.(u) Manufacturer means a person required to be licensed as a manufacturer pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(v) Medicinal cannabis patient shall mean a qualified patient, as defined in Section 11362.7 of the Health and Safety Code, who possesses a physicians recommendation that complies with Article 25 (commencing with Section 2525) of Chapter 5 of Division 2 of the Business and Professions Code, or a qualified patient or primary caregiver for a qualified patient issued a valid identification card pursuant to Section 11362.71 of the Health and Safety Code.(w) Designated for donation shall mean medicinal cannabis donated by a cultivator to a cannabis retailer for subsequent donation to a medicinal cannabis patient pursuant to Section 26071 of the Business and Professions Code. |
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| 77 | + | |
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| 78 | + | SECTION 1.SEC. 2. Section 34010 of the Revenue and Taxation Code is amended to read: |
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| 79 | + | |
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| 80 | + | ### SECTION 1.SEC. 2. |
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| 81 | + | |
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| 82 | + | 34010. For purposes of this part:(a) Arms length transaction shall mean a sale entered into 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.(b) Average market price shall mean both of the following:(1) (A) Until January 1, 2023, in an arms length transaction, the average retail price determined by the wholesale cost of the cannabis or cannabis products sold or transferred to a cannabis retailer, plus a mark-up, as determined by the department on a biannual basis in six-month intervals.(B) Notwithstanding subparagraph (A), the department shall not increase the mark-up amount during the period beginning on and after September 18, 2020, and before July 1, 2021.(C) Effective January 1, 2023, in an arms length transaction, the average retail price determined by the wholesale cost of the cannabis or cannabis products sold or transferred to a cannabis retailer, as determined by the department on a biannual basis in six-month intervals.(2) In a nonarms length transaction, the cannabis retailers gross receipts from the retail sale of the cannabis or cannabis products.(c) Department means the California Department of Tax and Fee Administration or its successor agency.(d) Tax Fund means the California Cannabis Tax Fund created by Section 34018.(e) Cannabis has the same meaning as set forth in Section 11018 of the Health and Safety Code and shall also mean medicinal cannabis.(f) Cannabis products has the same meaning as set forth in Section 11018.1 of the Health and Safety Code and shall also mean medicinal concentrates and medicinal cannabis products.(g) Cannabis flowers means the dried flowers of the cannabis plant as defined by the board.(h) Cannabis leaves means all parts of the cannabis plant other than cannabis flowers that are sold or consumed.(i) Cannabis retailer means a person required to be licensed as a retailer, non-storefront retailer, microbusiness, or nonprofit pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(j) Cultivator means all persons required to be licensed to cultivate cannabis pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(k) Distributor means a person required to be licensed as a distributor pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(l) Enters the commercial market means cannabis or cannabis products, except for immature cannabis plants and seeds, that complete and comply with a quality assurance review and testing, as described in Section 26110 of the Business and Professions Code.(m) Gross receipts has the same meaning as set forth in Section 6012.(n) Microbusiness has the same meaning as set forth in paragraph (3) of subdivision (a) of Section 26070 of the Business and Professions Code.(o) Nonprofit has the same meaning as set forth in Section 26070.5 of the Business and Professions Code.(p) Person has the same meaning as set forth in Section 6005.(q) Retail sale has the same meaning as set forth in Section 6007.(r) Sale and purchase mean any change of title or possession, exchange, or barter, conditional or otherwise, in any manner or by any means whatsoever, for consideration.(s) Transfer means to grant, convey, hand over, assign, sell, exchange, or barter, in any manner or by any means, with or without consideration.(t) Unprocessed cannabis includes cannabis flowers, cannabis leaves, or other categories of harvested cannabis, categories for unprocessed or frozen cannabis or immature plants, or cannabis that is shipped directly to manufacturers.(u) Manufacturer means a person required to be licensed as a manufacturer pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(v) Medicinal cannabis patient shall mean a qualified patient, as defined in Section 11362.7 of the Health and Safety Code, who possesses a physicians recommendation that complies with Article 25 (commencing with Section 2525) of Chapter 5 of Division 2 of the Business and Professions Code, or a qualified patient or primary caregiver for a qualified patient issued a valid identification card pursuant to Section 11362.71 of the Health and Safety Code.(w) Designated for donation shall mean medicinal cannabis donated by a cultivator to a cannabis retailer for subsequent donation to a medicinal cannabis patient pursuant to Section 26071 of the Business and Professions Code. |
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| 83 | + | |
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| 84 | + | 34010. For purposes of this part:(a) Arms length transaction shall mean a sale entered into 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.(b) Average market price shall mean both of the following:(1) (A) Until January 1, 2023, in an arms length transaction, the average retail price determined by the wholesale cost of the cannabis or cannabis products sold or transferred to a cannabis retailer, plus a mark-up, as determined by the department on a biannual basis in six-month intervals.(B) Notwithstanding subparagraph (A), the department shall not increase the mark-up amount during the period beginning on and after September 18, 2020, and before July 1, 2021.(C) Effective January 1, 2023, in an arms length transaction, the average retail price determined by the wholesale cost of the cannabis or cannabis products sold or transferred to a cannabis retailer, as determined by the department on a biannual basis in six-month intervals.(2) In a nonarms length transaction, the cannabis retailers gross receipts from the retail sale of the cannabis or cannabis products.(c) Department means the California Department of Tax and Fee Administration or its successor agency.(d) Tax Fund means the California Cannabis Tax Fund created by Section 34018.(e) Cannabis has the same meaning as set forth in Section 11018 of the Health and Safety Code and shall also mean medicinal cannabis.(f) Cannabis products has the same meaning as set forth in Section 11018.1 of the Health and Safety Code and shall also mean medicinal concentrates and medicinal cannabis products.(g) Cannabis flowers means the dried flowers of the cannabis plant as defined by the board.(h) Cannabis leaves means all parts of the cannabis plant other than cannabis flowers that are sold or consumed.(i) Cannabis retailer means a person required to be licensed as a retailer, non-storefront retailer, microbusiness, or nonprofit pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(j) Cultivator means all persons required to be licensed to cultivate cannabis pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(k) Distributor means a person required to be licensed as a distributor pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(l) Enters the commercial market means cannabis or cannabis products, except for immature cannabis plants and seeds, that complete and comply with a quality assurance review and testing, as described in Section 26110 of the Business and Professions Code.(m) Gross receipts has the same meaning as set forth in Section 6012.(n) Microbusiness has the same meaning as set forth in paragraph (3) of subdivision (a) of Section 26070 of the Business and Professions Code.(o) Nonprofit has the same meaning as set forth in Section 26070.5 of the Business and Professions Code.(p) Person has the same meaning as set forth in Section 6005.(q) Retail sale has the same meaning as set forth in Section 6007.(r) Sale and purchase mean any change of title or possession, exchange, or barter, conditional or otherwise, in any manner or by any means whatsoever, for consideration.(s) Transfer means to grant, convey, hand over, assign, sell, exchange, or barter, in any manner or by any means, with or without consideration.(t) Unprocessed cannabis includes cannabis flowers, cannabis leaves, or other categories of harvested cannabis, categories for unprocessed or frozen cannabis or immature plants, or cannabis that is shipped directly to manufacturers.(u) Manufacturer means a person required to be licensed as a manufacturer pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(v) Medicinal cannabis patient shall mean a qualified patient, as defined in Section 11362.7 of the Health and Safety Code, who possesses a physicians recommendation that complies with Article 25 (commencing with Section 2525) of Chapter 5 of Division 2 of the Business and Professions Code, or a qualified patient or primary caregiver for a qualified patient issued a valid identification card pursuant to Section 11362.71 of the Health and Safety Code.(w) Designated for donation shall mean medicinal cannabis donated by a cultivator to a cannabis retailer for subsequent donation to a medicinal cannabis patient pursuant to Section 26071 of the Business and Professions Code. |
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| 85 | + | |
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| 86 | + | 34010. For purposes of this part:(a) Arms length transaction shall mean a sale entered into 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.(b) Average market price shall mean both of the following:(1) (A) Until January 1, 2023, in an arms length transaction, the average retail price determined by the wholesale cost of the cannabis or cannabis products sold or transferred to a cannabis retailer, plus a mark-up, as determined by the department on a biannual basis in six-month intervals.(B) Notwithstanding subparagraph (A), the department shall not increase the mark-up amount during the period beginning on and after September 18, 2020, and before July 1, 2021.(C) Effective January 1, 2023, in an arms length transaction, the average retail price determined by the wholesale cost of the cannabis or cannabis products sold or transferred to a cannabis retailer, as determined by the department on a biannual basis in six-month intervals.(2) In a nonarms length transaction, the cannabis retailers gross receipts from the retail sale of the cannabis or cannabis products.(c) Department means the California Department of Tax and Fee Administration or its successor agency.(d) Tax Fund means the California Cannabis Tax Fund created by Section 34018.(e) Cannabis has the same meaning as set forth in Section 11018 of the Health and Safety Code and shall also mean medicinal cannabis.(f) Cannabis products has the same meaning as set forth in Section 11018.1 of the Health and Safety Code and shall also mean medicinal concentrates and medicinal cannabis products.(g) Cannabis flowers means the dried flowers of the cannabis plant as defined by the board.(h) Cannabis leaves means all parts of the cannabis plant other than cannabis flowers that are sold or consumed.(i) Cannabis retailer means a person required to be licensed as a retailer, non-storefront retailer, microbusiness, or nonprofit pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(j) Cultivator means all persons required to be licensed to cultivate cannabis pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(k) Distributor means a person required to be licensed as a distributor pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(l) Enters the commercial market means cannabis or cannabis products, except for immature cannabis plants and seeds, that complete and comply with a quality assurance review and testing, as described in Section 26110 of the Business and Professions Code.(m) Gross receipts has the same meaning as set forth in Section 6012.(n) Microbusiness has the same meaning as set forth in paragraph (3) of subdivision (a) of Section 26070 of the Business and Professions Code.(o) Nonprofit has the same meaning as set forth in Section 26070.5 of the Business and Professions Code.(p) Person has the same meaning as set forth in Section 6005.(q) Retail sale has the same meaning as set forth in Section 6007.(r) Sale and purchase mean any change of title or possession, exchange, or barter, conditional or otherwise, in any manner or by any means whatsoever, for consideration.(s) Transfer means to grant, convey, hand over, assign, sell, exchange, or barter, in any manner or by any means, with or without consideration.(t) Unprocessed cannabis includes cannabis flowers, cannabis leaves, or other categories of harvested cannabis, categories for unprocessed or frozen cannabis or immature plants, or cannabis that is shipped directly to manufacturers.(u) Manufacturer means a person required to be licensed as a manufacturer pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.(v) Medicinal cannabis patient shall mean a qualified patient, as defined in Section 11362.7 of the Health and Safety Code, who possesses a physicians recommendation that complies with Article 25 (commencing with Section 2525) of Chapter 5 of Division 2 of the Business and Professions Code, or a qualified patient or primary caregiver for a qualified patient issued a valid identification card pursuant to Section 11362.71 of the Health and Safety Code.(w) Designated for donation shall mean medicinal cannabis donated by a cultivator to a cannabis retailer for subsequent donation to a medicinal cannabis patient pursuant to Section 26071 of the Business and Professions Code. |
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| 219 | | - | 34011. (a) (1) (A) Effective January 1, 2018, until January 1, 2023, a cannabis excise tax shall be imposed upon purchasers of cannabis or cannabis products sold in this state at the rate of 15 percent of the average market price of any retail sale by a cannabis retailer.(B) Effective On or after January 1, 2023, the rate of the a cannabis excise tax shall be imposed by this section on upon purchasers of cannabis or cannabis products sold in this state shall be at a rate of 5 percent of the average market price gross receipts of any retail sale by a cannabis retailer.(2) A purchasers liability for the cannabis excise tax is not extinguished until the cannabis excise tax has been paid to this state except that an invoice, receipt, or other document from a cannabis retailer given to the purchaser pursuant to this subdivision is sufficient to relieve the purchaser from further liability for the tax to which the invoice, receipt, or other document refers.(3) Each cannabis retailer shall provide a purchaser with an invoice, receipt, or other document that includes a statement that reads: The cannabis excise taxes are included in the total amount of this invoice.(4) The department may prescribe other means to display the cannabis excise tax on an invoice, receipt, or other document from a cannabis retailer given to the purchaser.(b) (1) A distributor in an arms length transaction shall collect the cannabis excise tax from the cannabis retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the cannabis retailer. A distributor in a nonarms length transaction shall collect the cannabis excise tax from the cannabis retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the cannabis retailer, or at the time of retail sale by the cannabis retailer, whichever is earlier. A distributor shall report and remit the cannabis excise tax to the department pursuant to Section 34015. A cannabis retailer shall be responsible for collecting the cannabis excise tax from the purchaser and remitting the cannabis excise tax to the distributor in accordance with rules and procedures established under law and any regulations adopted by the department.(2) A distributor shall provide an invoice, receipt, or other similar document to the cannabis retailer that identifies the licensee receiving the product, the distributor from which the product originates, including the associated unique identifier, the amount of cannabis excise tax, and any other information deemed necessary by the department. The department may authorize other forms of documentation under this paragraph.(3) This subdivision shall be inoperative on not apply to any sale or transfer of cannabis or cannabis products to a cannabis retailer occurring on or after January 1, 2023.(c) On (1) For any sale or transfer of cannabis or cannabis product to a cannabis retailer occurring on and after January 1, 2023, a cannabis retailer shall be responsible for collecting the cannabis excise tax from the purchaser and remitting the cannabis excise tax to the department in accordance with rules and procedures established under law and any regulations adopted by the department.(2) A cannabis retailer may claim a credit on the cannabis excise tax return for cannabis excise tax amounts paid to a distributor before January 1, 2023, on cannabis or cannabis products sold to a purchaser on or after January 1, 2023, for which the cannabis retailer is responsible for remitting to the department.(d) The excise tax imposed by this section shall be in addition to the sales and use tax imposed by the state and local governments.(e) Gross receipts from the sale of cannabis or cannabis products for purposes of assessing the sales and use taxes under Part 1 (commencing with Section 6001) shall include the tax levied pursuant to this section.(f) Cannabis or cannabis products shall not be sold to a purchaser unless the excise tax required by law has been paid by the purchaser at the time of sale.(g) The sales and use taxes imposed by Part 1 (commencing with Section 6001) shall not apply to retail sales of medicinal cannabis, medicinal cannabis concentrate, edible medicinal cannabis products, or topical cannabis as those terms are defined in Division 10 (commencing with Section 26000) of the Business and Professions Code when a qualified patient or primary caregiver for a qualified patient provides their card issued under Section 11362.71 of the Health and Safety Code and a valid government-issued identification card.(h) Nothing in this section shall be construed to impose an excise tax upon medicinal cannabis, or medicinal cannabis product, donated for no consideration to a medicinal cannabis patient pursuant to Section 26071 of the Business and Professions Code.(i) (1) Nothing in this section shall be construed to impose an excise tax upon cannabis or cannabis products designated as a trade sample pursuant to Section 26153.1 of the Business and Professions Code.(2) A person licensed under Division 10 (commencing with Section 26000) of the Business and Professions Code that sells cannabis or cannabis products designated as a trade sample pursuant to Section 26153.1 of the Business and Professions Code shall be liable for the excise tax imposed by this section as if the person were a cannabis retailer at the time of sale. |
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| 220 | | - | |
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| 221 | | - | 34011. (a) (1) (A) Effective January 1, 2018, until January 1, 2023, a cannabis excise tax shall be imposed upon purchasers of cannabis or cannabis products sold in this state at the rate of 15 percent of the average market price of any retail sale by a cannabis retailer.(B) Effective On or after January 1, 2023, the rate of the a cannabis excise tax shall be imposed by this section on upon purchasers of cannabis or cannabis products sold in this state shall be at a rate of 5 percent of the average market price gross receipts of any retail sale by a cannabis retailer.(2) A purchasers liability for the cannabis excise tax is not extinguished until the cannabis excise tax has been paid to this state except that an invoice, receipt, or other document from a cannabis retailer given to the purchaser pursuant to this subdivision is sufficient to relieve the purchaser from further liability for the tax to which the invoice, receipt, or other document refers.(3) Each cannabis retailer shall provide a purchaser with an invoice, receipt, or other document that includes a statement that reads: The cannabis excise taxes are included in the total amount of this invoice.(4) The department may prescribe other means to display the cannabis excise tax on an invoice, receipt, or other document from a cannabis retailer given to the purchaser.(b) (1) A distributor in an arms length transaction shall collect the cannabis excise tax from the cannabis retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the cannabis retailer. A distributor in a nonarms length transaction shall collect the cannabis excise tax from the cannabis retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the cannabis retailer, or at the time of retail sale by the cannabis retailer, whichever is earlier. A distributor shall report and remit the cannabis excise tax to the department pursuant to Section 34015. A cannabis retailer shall be responsible for collecting the cannabis excise tax from the purchaser and remitting the cannabis excise tax to the distributor in accordance with rules and procedures established under law and any regulations adopted by the department.(2) A distributor shall provide an invoice, receipt, or other similar document to the cannabis retailer that identifies the licensee receiving the product, the distributor from which the product originates, including the associated unique identifier, the amount of cannabis excise tax, and any other information deemed necessary by the department. The department may authorize other forms of documentation under this paragraph.(3) This subdivision shall be inoperative on not apply to any sale or transfer of cannabis or cannabis products to a cannabis retailer occurring on or after January 1, 2023.(c) On (1) For any sale or transfer of cannabis or cannabis product to a cannabis retailer occurring on and after January 1, 2023, a cannabis retailer shall be responsible for collecting the cannabis excise tax from the purchaser and remitting the cannabis excise tax to the department in accordance with rules and procedures established under law and any regulations adopted by the department.(2) A cannabis retailer may claim a credit on the cannabis excise tax return for cannabis excise tax amounts paid to a distributor before January 1, 2023, on cannabis or cannabis products sold to a purchaser on or after January 1, 2023, for which the cannabis retailer is responsible for remitting to the department.(d) The excise tax imposed by this section shall be in addition to the sales and use tax imposed by the state and local governments.(e) Gross receipts from the sale of cannabis or cannabis products for purposes of assessing the sales and use taxes under Part 1 (commencing with Section 6001) shall include the tax levied pursuant to this section.(f) Cannabis or cannabis products shall not be sold to a purchaser unless the excise tax required by law has been paid by the purchaser at the time of sale.(g) The sales and use taxes imposed by Part 1 (commencing with Section 6001) shall not apply to retail sales of medicinal cannabis, medicinal cannabis concentrate, edible medicinal cannabis products, or topical cannabis as those terms are defined in Division 10 (commencing with Section 26000) of the Business and Professions Code when a qualified patient or primary caregiver for a qualified patient provides their card issued under Section 11362.71 of the Health and Safety Code and a valid government-issued identification card.(h) Nothing in this section shall be construed to impose an excise tax upon medicinal cannabis, or medicinal cannabis product, donated for no consideration to a medicinal cannabis patient pursuant to Section 26071 of the Business and Professions Code.(i) (1) Nothing in this section shall be construed to impose an excise tax upon cannabis or cannabis products designated as a trade sample pursuant to Section 26153.1 of the Business and Professions Code.(2) A person licensed under Division 10 (commencing with Section 26000) of the Business and Professions Code that sells cannabis or cannabis products designated as a trade sample pursuant to Section 26153.1 of the Business and Professions Code shall be liable for the excise tax imposed by this section as if the person were a cannabis retailer at the time of sale. |
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| 222 | | - | |
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| 223 | | - | 34011. (a) (1) (A) Effective January 1, 2018, until January 1, 2023, a cannabis excise tax shall be imposed upon purchasers of cannabis or cannabis products sold in this state at the rate of 15 percent of the average market price of any retail sale by a cannabis retailer.(B) Effective On or after January 1, 2023, the rate of the a cannabis excise tax shall be imposed by this section on upon purchasers of cannabis or cannabis products sold in this state shall be at a rate of 5 percent of the average market price gross receipts of any retail sale by a cannabis retailer.(2) A purchasers liability for the cannabis excise tax is not extinguished until the cannabis excise tax has been paid to this state except that an invoice, receipt, or other document from a cannabis retailer given to the purchaser pursuant to this subdivision is sufficient to relieve the purchaser from further liability for the tax to which the invoice, receipt, or other document refers.(3) Each cannabis retailer shall provide a purchaser with an invoice, receipt, or other document that includes a statement that reads: The cannabis excise taxes are included in the total amount of this invoice.(4) The department may prescribe other means to display the cannabis excise tax on an invoice, receipt, or other document from a cannabis retailer given to the purchaser.(b) (1) A distributor in an arms length transaction shall collect the cannabis excise tax from the cannabis retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the cannabis retailer. A distributor in a nonarms length transaction shall collect the cannabis excise tax from the cannabis retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the cannabis retailer, or at the time of retail sale by the cannabis retailer, whichever is earlier. A distributor shall report and remit the cannabis excise tax to the department pursuant to Section 34015. A cannabis retailer shall be responsible for collecting the cannabis excise tax from the purchaser and remitting the cannabis excise tax to the distributor in accordance with rules and procedures established under law and any regulations adopted by the department.(2) A distributor shall provide an invoice, receipt, or other similar document to the cannabis retailer that identifies the licensee receiving the product, the distributor from which the product originates, including the associated unique identifier, the amount of cannabis excise tax, and any other information deemed necessary by the department. The department may authorize other forms of documentation under this paragraph.(3) This subdivision shall be inoperative on not apply to any sale or transfer of cannabis or cannabis products to a cannabis retailer occurring on or after January 1, 2023.(c) On (1) For any sale or transfer of cannabis or cannabis product to a cannabis retailer occurring on and after January 1, 2023, a cannabis retailer shall be responsible for collecting the cannabis excise tax from the purchaser and remitting the cannabis excise tax to the department in accordance with rules and procedures established under law and any regulations adopted by the department.(2) A cannabis retailer may claim a credit on the cannabis excise tax return for cannabis excise tax amounts paid to a distributor before January 1, 2023, on cannabis or cannabis products sold to a purchaser on or after January 1, 2023, for which the cannabis retailer is responsible for remitting to the department.(d) The excise tax imposed by this section shall be in addition to the sales and use tax imposed by the state and local governments.(e) Gross receipts from the sale of cannabis or cannabis products for purposes of assessing the sales and use taxes under Part 1 (commencing with Section 6001) shall include the tax levied pursuant to this section.(f) Cannabis or cannabis products shall not be sold to a purchaser unless the excise tax required by law has been paid by the purchaser at the time of sale.(g) The sales and use taxes imposed by Part 1 (commencing with Section 6001) shall not apply to retail sales of medicinal cannabis, medicinal cannabis concentrate, edible medicinal cannabis products, or topical cannabis as those terms are defined in Division 10 (commencing with Section 26000) of the Business and Professions Code when a qualified patient or primary caregiver for a qualified patient provides their card issued under Section 11362.71 of the Health and Safety Code and a valid government-issued identification card.(h) Nothing in this section shall be construed to impose an excise tax upon medicinal cannabis, or medicinal cannabis product, donated for no consideration to a medicinal cannabis patient pursuant to Section 26071 of the Business and Professions Code.(i) (1) Nothing in this section shall be construed to impose an excise tax upon cannabis or cannabis products designated as a trade sample pursuant to Section 26153.1 of the Business and Professions Code.(2) A person licensed under Division 10 (commencing with Section 26000) of the Business and Professions Code that sells cannabis or cannabis products designated as a trade sample pursuant to Section 26153.1 of the Business and Professions Code shall be liable for the excise tax imposed by this section as if the person were a cannabis retailer at the time of sale. |
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| 156 | + | 34011. (a) (1) (A) Effective January 1, 2018, until January 1, 2023, a cannabis excise tax shall be imposed upon purchasers of cannabis or cannabis products sold in this state at the rate of 15 percent of the average market price of any retail sale by a cannabis retailer.(B) Effective January 1, 2023, the rate of the cannabis excise tax imposed by this section on purchasers of cannabis or cannabis products sold in this state shall be 5 percent of the average market price of any retail sale by a cannabis retailer.(2) A purchasers liability for the cannabis excise tax is not extinguished until the cannabis excise tax has been paid to this state except that an invoice, receipt, or other document from a cannabis retailer given to the purchaser pursuant to this subdivision is sufficient to relieve the purchaser from further liability for the tax to which the invoice, receipt, or other document refers.(3) Each cannabis retailer shall provide a purchaser with an invoice, receipt, or other document that includes a statement that reads: The cannabis excise taxes are included in the total amount of this invoice.(4) The department may prescribe other means to display the cannabis excise tax on an invoice, receipt, or other document from a cannabis retailer given to the purchaser.(b) (1) A distributor in an arms length transaction shall collect the cannabis excise tax from the cannabis retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the cannabis retailer. A distributor in a nonarms length transaction shall collect the cannabis excise tax from the cannabis retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the cannabis retailer, or at the time of retail sale by the cannabis retailer, whichever is earlier. A distributor shall report and remit the cannabis excise tax to the department pursuant to Section 34015. A cannabis retailer shall be responsible for collecting the cannabis excise tax from the purchaser and remitting the cannabis excise tax to the distributor in accordance with rules and procedures established under law and any regulations adopted by the department.(2) A distributor shall provide an invoice, receipt, or other similar document to the cannabis retailer that identifies the licensee receiving the product, the distributor from which the product originates, including the associated unique identifier, the amount of cannabis excise tax, and any other information deemed necessary by the department. The department may authorize other forms of documentation under this paragraph.(3) This subdivision shall be inoperative on January 1, 2023.(c) On and after January 1, 2023, a cannabis retailer shall be responsible for collecting the cannabis excise tax from the purchaser and remitting the cannabis excise tax to the department in accordance with rules and procedures established under law and any regulations adopted by the department.(d) The excise tax imposed by this section shall be in addition to the sales and use tax imposed by the state and local governments.(e) Gross receipts from the sale of cannabis or cannabis products for purposes of assessing the sales and use taxes under Part 1 (commencing with Section 6001) shall include the tax levied pursuant to this section.(f) Cannabis or cannabis products shall not be sold to a purchaser unless the excise tax required by law has been paid by the purchaser at the time of sale.(g) The sales and use taxes imposed by Part 1 (commencing with Section 6001) shall not apply to retail sales of medicinal cannabis, medicinal cannabis concentrate, edible medicinal cannabis products, or topical cannabis as those terms are defined in Division 10 (commencing with Section 26000) of the Business and Professions Code when a qualified patient or primary caregiver for a qualified patient provides their card issued under Section 11362.71 of the Health and Safety Code and a valid government-issued identification card.(h) Nothing in this section shall be construed to impose an excise tax upon medicinal cannabis, or medicinal cannabis product, donated for no consideration to a medicinal cannabis patient pursuant to Section 26071 of the Business and Professions Code.(i) (1) Nothing in this section shall be construed to impose an excise tax upon cannabis or cannabis products designated as a trade sample pursuant to Section 26153.1 of the Business and Professions Code.(2) A person licensed under Division 10 (commencing with Section 26000) of the Business and Professions Code that sells cannabis or cannabis products designated as a trade sample pursuant to Section 26153.1 of the Business and Professions Code shall be liable for the excise tax imposed by this section as if the person were a cannabis retailer at the time of sale. |
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| 367 | | - | 34012.5. (a) The cannabis excise tax required to be collected by the cannabis retailer, and any amount unreturned to the purchaser that is not tax but was collected from the purchaser under the representation by the cannabis retailer that it was tax, constitute debts owed by the cannabis retailer to this state.(b) This section shall become operative on January 1, 2023. |
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| 368 | | - | |
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| 369 | | - | |
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| 370 | | - | |
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| 371 | | - | 34012.5. (a) The cannabis excise tax required to be collected by the cannabis retailer, and any amount unreturned to the purchaser that is not tax but was collected from the purchaser under the representation by the cannabis retailer that it was tax, constitute debts owed by the cannabis retailer to this state. |
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| 372 | | - | |
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| 373 | | - | (b) This section shall become operative on January 1, 2023. |
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| 374 | | - | |
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| 375 | | - | SEC. 6. Section 34013 of the Revenue and Taxation Code is amended to read:34013. (a) The department shall administer and collect the taxes imposed by this part pursuant to the Fee Collection Procedures Law (Part 30 (commencing with Section 55001)). For purposes of this part, the references in the Fee Collection Procedures Law to fee shall include the taxes imposed by this part, and references to feepayer shall include a person required to pay or collect the taxes imposed by this part.(b) Until January 1, 2022, subdivision (a) of Section 55050 shall not apply to a person required to pay or collect the taxes imposed by this part on a person licensed to engage in commercial cannabis activity under Division 10 (commencing with Section 26000) of the Business and Professions Code if the department deems it necessary to facilitate the collection of amounts due.(c) The department may prescribe, adopt, and enforce regulations relating to the administration and enforcement of this part, including, but not limited to, collections, reporting, refunds, and appeals.(d) The department shall adopt necessary rules and regulations to administer the taxes in this part. Such rules and regulations may include methods or procedures to tag cannabis or cannabis products, or the packages thereof, to designate prior tax payment.(e) Until January 1, 2019, 2024, the department may prescribe, adopt, and enforce any emergency regulations as necessary to implement, administer, and enforce its duties under this division. Any emergency regulation prescribed, adopted, or enforced pursuant to this section shall be adopted in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, and, for purposes of that chapter, including Section 11349.6 of the Government Code, the adoption of the regulation is an emergency and shall be considered by the Office of Administrative Law as necessary for the immediate preservation of the public peace, health and safety, and general welfare. Notwithstanding any other law, the emergency regulations adopted by the department may remain in effect for two years from adoption. adoption, and may be readopted in accordance with subdivision (h) of Section 11346.1 of the Government Code.(f) Any person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code who fails to pay the taxes imposed under this part shall, in addition to owing the taxes not paid, be subject to a penalty of at least one-half the amount of the taxes not paid, and shall be subject to having its license revoked pursuant to Section 26031 of the Business and Professions Code.(g) The department may bring such legal actions as are necessary to collect any deficiency in the tax required to be paid, and, upon the departments request, the Attorney General shall bring the actions. |
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| 376 | | - | |
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| 377 | | - | SEC. 6. Section 34013 of the Revenue and Taxation Code is amended to read: |
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| 378 | | - | |
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| 379 | | - | ### SEC. 6. |
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| 380 | | - | |
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| 381 | | - | 34013. (a) The department shall administer and collect the taxes imposed by this part pursuant to the Fee Collection Procedures Law (Part 30 (commencing with Section 55001)). For purposes of this part, the references in the Fee Collection Procedures Law to fee shall include the taxes imposed by this part, and references to feepayer shall include a person required to pay or collect the taxes imposed by this part.(b) Until January 1, 2022, subdivision (a) of Section 55050 shall not apply to a person required to pay or collect the taxes imposed by this part on a person licensed to engage in commercial cannabis activity under Division 10 (commencing with Section 26000) of the Business and Professions Code if the department deems it necessary to facilitate the collection of amounts due.(c) The department may prescribe, adopt, and enforce regulations relating to the administration and enforcement of this part, including, but not limited to, collections, reporting, refunds, and appeals.(d) The department shall adopt necessary rules and regulations to administer the taxes in this part. Such rules and regulations may include methods or procedures to tag cannabis or cannabis products, or the packages thereof, to designate prior tax payment.(e) Until January 1, 2019, 2024, the department may prescribe, adopt, and enforce any emergency regulations as necessary to implement, administer, and enforce its duties under this division. Any emergency regulation prescribed, adopted, or enforced pursuant to this section shall be adopted in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, and, for purposes of that chapter, including Section 11349.6 of the Government Code, the adoption of the regulation is an emergency and shall be considered by the Office of Administrative Law as necessary for the immediate preservation of the public peace, health and safety, and general welfare. Notwithstanding any other law, the emergency regulations adopted by the department may remain in effect for two years from adoption. adoption, and may be readopted in accordance with subdivision (h) of Section 11346.1 of the Government Code.(f) Any person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code who fails to pay the taxes imposed under this part shall, in addition to owing the taxes not paid, be subject to a penalty of at least one-half the amount of the taxes not paid, and shall be subject to having its license revoked pursuant to Section 26031 of the Business and Professions Code.(g) The department may bring such legal actions as are necessary to collect any deficiency in the tax required to be paid, and, upon the departments request, the Attorney General shall bring the actions. |
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| 382 | | - | |
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| 383 | | - | 34013. (a) The department shall administer and collect the taxes imposed by this part pursuant to the Fee Collection Procedures Law (Part 30 (commencing with Section 55001)). For purposes of this part, the references in the Fee Collection Procedures Law to fee shall include the taxes imposed by this part, and references to feepayer shall include a person required to pay or collect the taxes imposed by this part.(b) Until January 1, 2022, subdivision (a) of Section 55050 shall not apply to a person required to pay or collect the taxes imposed by this part on a person licensed to engage in commercial cannabis activity under Division 10 (commencing with Section 26000) of the Business and Professions Code if the department deems it necessary to facilitate the collection of amounts due.(c) The department may prescribe, adopt, and enforce regulations relating to the administration and enforcement of this part, including, but not limited to, collections, reporting, refunds, and appeals.(d) The department shall adopt necessary rules and regulations to administer the taxes in this part. Such rules and regulations may include methods or procedures to tag cannabis or cannabis products, or the packages thereof, to designate prior tax payment.(e) Until January 1, 2019, 2024, the department may prescribe, adopt, and enforce any emergency regulations as necessary to implement, administer, and enforce its duties under this division. Any emergency regulation prescribed, adopted, or enforced pursuant to this section shall be adopted in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, and, for purposes of that chapter, including Section 11349.6 of the Government Code, the adoption of the regulation is an emergency and shall be considered by the Office of Administrative Law as necessary for the immediate preservation of the public peace, health and safety, and general welfare. Notwithstanding any other law, the emergency regulations adopted by the department may remain in effect for two years from adoption. adoption, and may be readopted in accordance with subdivision (h) of Section 11346.1 of the Government Code.(f) Any person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code who fails to pay the taxes imposed under this part shall, in addition to owing the taxes not paid, be subject to a penalty of at least one-half the amount of the taxes not paid, and shall be subject to having its license revoked pursuant to Section 26031 of the Business and Professions Code.(g) The department may bring such legal actions as are necessary to collect any deficiency in the tax required to be paid, and, upon the departments request, the Attorney General shall bring the actions. |
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| 384 | | - | |
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| 385 | | - | 34013. (a) The department shall administer and collect the taxes imposed by this part pursuant to the Fee Collection Procedures Law (Part 30 (commencing with Section 55001)). For purposes of this part, the references in the Fee Collection Procedures Law to fee shall include the taxes imposed by this part, and references to feepayer shall include a person required to pay or collect the taxes imposed by this part.(b) Until January 1, 2022, subdivision (a) of Section 55050 shall not apply to a person required to pay or collect the taxes imposed by this part on a person licensed to engage in commercial cannabis activity under Division 10 (commencing with Section 26000) of the Business and Professions Code if the department deems it necessary to facilitate the collection of amounts due.(c) The department may prescribe, adopt, and enforce regulations relating to the administration and enforcement of this part, including, but not limited to, collections, reporting, refunds, and appeals.(d) The department shall adopt necessary rules and regulations to administer the taxes in this part. Such rules and regulations may include methods or procedures to tag cannabis or cannabis products, or the packages thereof, to designate prior tax payment.(e) Until January 1, 2019, 2024, the department may prescribe, adopt, and enforce any emergency regulations as necessary to implement, administer, and enforce its duties under this division. Any emergency regulation prescribed, adopted, or enforced pursuant to this section shall be adopted in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, and, for purposes of that chapter, including Section 11349.6 of the Government Code, the adoption of the regulation is an emergency and shall be considered by the Office of Administrative Law as necessary for the immediate preservation of the public peace, health and safety, and general welfare. Notwithstanding any other law, the emergency regulations adopted by the department may remain in effect for two years from adoption. adoption, and may be readopted in accordance with subdivision (h) of Section 11346.1 of the Government Code.(f) Any person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code who fails to pay the taxes imposed under this part shall, in addition to owing the taxes not paid, be subject to a penalty of at least one-half the amount of the taxes not paid, and shall be subject to having its license revoked pursuant to Section 26031 of the Business and Professions Code.(g) The department may bring such legal actions as are necessary to collect any deficiency in the tax required to be paid, and, upon the departments request, the Attorney General shall bring the actions. |
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| 386 | | - | |
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| 387 | | - | |
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| 388 | | - | |
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| 389 | | - | 34013. (a) The department shall administer and collect the taxes imposed by this part pursuant to the Fee Collection Procedures Law (Part 30 (commencing with Section 55001)). For purposes of this part, the references in the Fee Collection Procedures Law to fee shall include the taxes imposed by this part, and references to feepayer shall include a person required to pay or collect the taxes imposed by this part. |
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| 390 | | - | |
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| 391 | | - | (b) Until January 1, 2022, subdivision (a) of Section 55050 shall not apply to a person required to pay or collect the taxes imposed by this part on a person licensed to engage in commercial cannabis activity under Division 10 (commencing with Section 26000) of the Business and Professions Code if the department deems it necessary to facilitate the collection of amounts due. |
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| 392 | | - | |
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| 393 | | - | (c) The department may prescribe, adopt, and enforce regulations relating to the administration and enforcement of this part, including, but not limited to, collections, reporting, refunds, and appeals. |
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| 394 | | - | |
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| 395 | | - | (d) The department shall adopt necessary rules and regulations to administer the taxes in this part. Such rules and regulations may include methods or procedures to tag cannabis or cannabis products, or the packages thereof, to designate prior tax payment. |
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| 396 | | - | |
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| 397 | | - | (e) Until January 1, 2019, 2024, the department may prescribe, adopt, and enforce any emergency regulations as necessary to implement, administer, and enforce its duties under this division. Any emergency regulation prescribed, adopted, or enforced pursuant to this section shall be adopted in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, and, for purposes of that chapter, including Section 11349.6 of the Government Code, the adoption of the regulation is an emergency and shall be considered by the Office of Administrative Law as necessary for the immediate preservation of the public peace, health and safety, and general welfare. Notwithstanding any other law, the emergency regulations adopted by the department may remain in effect for two years from adoption. adoption, and may be readopted in accordance with subdivision (h) of Section 11346.1 of the Government Code. |
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| 398 | | - | |
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| 399 | | - | (f) Any person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code who fails to pay the taxes imposed under this part shall, in addition to owing the taxes not paid, be subject to a penalty of at least one-half the amount of the taxes not paid, and shall be subject to having its license revoked pursuant to Section 26031 of the Business and Professions Code. |
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| 400 | | - | |
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| 401 | | - | (g) The department may bring such legal actions as are necessary to collect any deficiency in the tax required to be paid, and, upon the departments request, the Attorney General shall bring the actions. |
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| 402 | | - | |
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| 403 | | - | SEC. 7. Section 34014 of the Revenue and Taxation Code is amended to read:34014. (a) All (1) Until January 1, 2023, all distributors must obtain a separate permit from the board department pursuant to regulations adopted by the board. department. No fee shall be charged to any person for issuance of the permit. Any person required to obtain a permit who engages in business as a distributor without a permit or after a permit has been canceled, suspended, or revoked, and each officer of any corporation which that so engages in business, is guilty of a misdemeanor.(2) On and after January 1, 2023, all cannabis retailers must obtain a separate cannabis tax permit from the department pursuant to regulations adopted by the department. A fee shall not be charged to any person for issuance of the permit. Any person required to obtain a permit who engages in business as a cannabis retailer without a permit or after a permit has been canceled, suspended, or revoked, and each officer of any corporation that so engages in business, is guilty of a misdemeanor. (b) The board department may require every licensed distributor, retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed, to provide security to cover the liability for taxes imposed by state law on cannabis produced or received by the retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed in accordance with procedures to be established by the board. department. Notwithstanding anything herein to the contrary, the board department may waive any security requirement it imposes for good cause, as determined by the board. department. Good cause includes, but is not limited to, the inability of a distributor, retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed to obtain security due to a lack of service providers or the policies of service providers that prohibit service to a cannabis business. A person may not commence or continue any business or operation relating to cannabis cultivation until any surety required by the board department with respect to the business or operation has been properly prepared, executed, and submitted under this part.(c) In fixing the amount of any security required by the board, department, the board department shall give consideration to the financial hardship that may be imposed on licensees as a result of any shortage of available surety providers. |
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| 404 | | - | |
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| 405 | | - | SEC. 7. Section 34014 of the Revenue and Taxation Code is amended to read: |
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| 406 | | - | |
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| 407 | | - | ### SEC. 7. |
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| 408 | | - | |
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| 409 | | - | 34014. (a) All (1) Until January 1, 2023, all distributors must obtain a separate permit from the board department pursuant to regulations adopted by the board. department. No fee shall be charged to any person for issuance of the permit. Any person required to obtain a permit who engages in business as a distributor without a permit or after a permit has been canceled, suspended, or revoked, and each officer of any corporation which that so engages in business, is guilty of a misdemeanor.(2) On and after January 1, 2023, all cannabis retailers must obtain a separate cannabis tax permit from the department pursuant to regulations adopted by the department. A fee shall not be charged to any person for issuance of the permit. Any person required to obtain a permit who engages in business as a cannabis retailer without a permit or after a permit has been canceled, suspended, or revoked, and each officer of any corporation that so engages in business, is guilty of a misdemeanor. (b) The board department may require every licensed distributor, retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed, to provide security to cover the liability for taxes imposed by state law on cannabis produced or received by the retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed in accordance with procedures to be established by the board. department. Notwithstanding anything herein to the contrary, the board department may waive any security requirement it imposes for good cause, as determined by the board. department. Good cause includes, but is not limited to, the inability of a distributor, retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed to obtain security due to a lack of service providers or the policies of service providers that prohibit service to a cannabis business. A person may not commence or continue any business or operation relating to cannabis cultivation until any surety required by the board department with respect to the business or operation has been properly prepared, executed, and submitted under this part.(c) In fixing the amount of any security required by the board, department, the board department shall give consideration to the financial hardship that may be imposed on licensees as a result of any shortage of available surety providers. |
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| 410 | | - | |
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| 411 | | - | 34014. (a) All (1) Until January 1, 2023, all distributors must obtain a separate permit from the board department pursuant to regulations adopted by the board. department. No fee shall be charged to any person for issuance of the permit. Any person required to obtain a permit who engages in business as a distributor without a permit or after a permit has been canceled, suspended, or revoked, and each officer of any corporation which that so engages in business, is guilty of a misdemeanor.(2) On and after January 1, 2023, all cannabis retailers must obtain a separate cannabis tax permit from the department pursuant to regulations adopted by the department. A fee shall not be charged to any person for issuance of the permit. Any person required to obtain a permit who engages in business as a cannabis retailer without a permit or after a permit has been canceled, suspended, or revoked, and each officer of any corporation that so engages in business, is guilty of a misdemeanor. (b) The board department may require every licensed distributor, retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed, to provide security to cover the liability for taxes imposed by state law on cannabis produced or received by the retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed in accordance with procedures to be established by the board. department. Notwithstanding anything herein to the contrary, the board department may waive any security requirement it imposes for good cause, as determined by the board. department. Good cause includes, but is not limited to, the inability of a distributor, retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed to obtain security due to a lack of service providers or the policies of service providers that prohibit service to a cannabis business. A person may not commence or continue any business or operation relating to cannabis cultivation until any surety required by the board department with respect to the business or operation has been properly prepared, executed, and submitted under this part.(c) In fixing the amount of any security required by the board, department, the board department shall give consideration to the financial hardship that may be imposed on licensees as a result of any shortage of available surety providers. |
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| 412 | | - | |
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| 413 | | - | 34014. (a) All (1) Until January 1, 2023, all distributors must obtain a separate permit from the board department pursuant to regulations adopted by the board. department. No fee shall be charged to any person for issuance of the permit. Any person required to obtain a permit who engages in business as a distributor without a permit or after a permit has been canceled, suspended, or revoked, and each officer of any corporation which that so engages in business, is guilty of a misdemeanor.(2) On and after January 1, 2023, all cannabis retailers must obtain a separate cannabis tax permit from the department pursuant to regulations adopted by the department. A fee shall not be charged to any person for issuance of the permit. Any person required to obtain a permit who engages in business as a cannabis retailer without a permit or after a permit has been canceled, suspended, or revoked, and each officer of any corporation that so engages in business, is guilty of a misdemeanor. (b) The board department may require every licensed distributor, retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed, to provide security to cover the liability for taxes imposed by state law on cannabis produced or received by the retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed in accordance with procedures to be established by the board. department. Notwithstanding anything herein to the contrary, the board department may waive any security requirement it imposes for good cause, as determined by the board. department. Good cause includes, but is not limited to, the inability of a distributor, retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed to obtain security due to a lack of service providers or the policies of service providers that prohibit service to a cannabis business. A person may not commence or continue any business or operation relating to cannabis cultivation until any surety required by the board department with respect to the business or operation has been properly prepared, executed, and submitted under this part.(c) In fixing the amount of any security required by the board, department, the board department shall give consideration to the financial hardship that may be imposed on licensees as a result of any shortage of available surety providers. |
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| 414 | | - | |
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| 415 | | - | |
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| 416 | | - | |
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| 417 | | - | 34014. (a) All (1) Until January 1, 2023, all distributors must obtain a separate permit from the board department pursuant to regulations adopted by the board. department. No fee shall be charged to any person for issuance of the permit. Any person required to obtain a permit who engages in business as a distributor without a permit or after a permit has been canceled, suspended, or revoked, and each officer of any corporation which that so engages in business, is guilty of a misdemeanor. |
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| 418 | | - | |
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| 419 | | - | (2) On and after January 1, 2023, all cannabis retailers must obtain a separate cannabis tax permit from the department pursuant to regulations adopted by the department. A fee shall not be charged to any person for issuance of the permit. Any person required to obtain a permit who engages in business as a cannabis retailer without a permit or after a permit has been canceled, suspended, or revoked, and each officer of any corporation that so engages in business, is guilty of a misdemeanor. |
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| 420 | | - | |
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| 421 | | - | (b) The board department may require every licensed distributor, retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed, to provide security to cover the liability for taxes imposed by state law on cannabis produced or received by the retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed in accordance with procedures to be established by the board. department. Notwithstanding anything herein to the contrary, the board department may waive any security requirement it imposes for good cause, as determined by the board. department. Good cause includes, but is not limited to, the inability of a distributor, retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed to obtain security due to a lack of service providers or the policies of service providers that prohibit service to a cannabis business. A person may not commence or continue any business or operation relating to cannabis cultivation until any surety required by the board department with respect to the business or operation has been properly prepared, executed, and submitted under this part. |
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| 422 | | - | |
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| 423 | | - | (c) In fixing the amount of any security required by the board, department, the board department shall give consideration to the financial hardship that may be imposed on licensees as a result of any shortage of available surety providers. |
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| 424 | | - | |
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| 425 | | - | SEC. 8. Section 34015 of the Revenue and Taxation Code is amended to read:34015. (a) Unless otherwise prescribed by the board department pursuant to subdivision (c), the cannabis excise tax and cultivation tax imposed by this part is due and payable to the board department quarterly on or before the last day of the month following each quarterly period of three months. On or before the last day of the month following each quarterly period, a return for the preceding quarterly period shall be filed with the board department by each distributor using electronic media. Returns shall be authenticated in a form or pursuant to methods as may be prescribed by the board. department. If the cultivation tax is paid by stamp pursuant to subdivision (d) of Section 34012 34012, the board department may by regulation determine when and how the tax shall be paid.(b) The board department may require every person engaged in the cultivation, distribution, manufacturing, retail sale of cannabis or cannabis products, or any other person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code to file, on or before the 25th day of each month, a report using electronic media respecting the persons inventory, purchases, and sales during the preceding month and any other information as the board department may require to carry out the purposes of this part. Reports shall be authenticated in a form or pursuant to methods as may be prescribed by the board. department.(c) The board department may adopt regulations prescribing the due date for returns and remittances of cannabis excise tax collected by a distributor in an arms length transaction pursuant to subdivision (b) of Section 34011.(d) The board department may make examinations of the books and records of any person licensed, or required to be licensed, pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code, as it may deem necessary in carrying out this part.(e) This section shall remain in effect only until January 1, 2023, and as of that date is repealed. |
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| 426 | | - | |
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| 427 | | - | SEC. 8. Section 34015 of the Revenue and Taxation Code is amended to read: |
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| 428 | | - | |
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| 429 | | - | ### SEC. 8. |
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| 430 | | - | |
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| 431 | | - | 34015. (a) Unless otherwise prescribed by the board department pursuant to subdivision (c), the cannabis excise tax and cultivation tax imposed by this part is due and payable to the board department quarterly on or before the last day of the month following each quarterly period of three months. On or before the last day of the month following each quarterly period, a return for the preceding quarterly period shall be filed with the board department by each distributor using electronic media. Returns shall be authenticated in a form or pursuant to methods as may be prescribed by the board. department. If the cultivation tax is paid by stamp pursuant to subdivision (d) of Section 34012 34012, the board department may by regulation determine when and how the tax shall be paid.(b) The board department may require every person engaged in the cultivation, distribution, manufacturing, retail sale of cannabis or cannabis products, or any other person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code to file, on or before the 25th day of each month, a report using electronic media respecting the persons inventory, purchases, and sales during the preceding month and any other information as the board department may require to carry out the purposes of this part. Reports shall be authenticated in a form or pursuant to methods as may be prescribed by the board. department.(c) The board department may adopt regulations prescribing the due date for returns and remittances of cannabis excise tax collected by a distributor in an arms length transaction pursuant to subdivision (b) of Section 34011.(d) The board department may make examinations of the books and records of any person licensed, or required to be licensed, pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code, as it may deem necessary in carrying out this part.(e) This section shall remain in effect only until January 1, 2023, and as of that date is repealed. |
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| 432 | | - | |
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| 433 | | - | 34015. (a) Unless otherwise prescribed by the board department pursuant to subdivision (c), the cannabis excise tax and cultivation tax imposed by this part is due and payable to the board department quarterly on or before the last day of the month following each quarterly period of three months. On or before the last day of the month following each quarterly period, a return for the preceding quarterly period shall be filed with the board department by each distributor using electronic media. Returns shall be authenticated in a form or pursuant to methods as may be prescribed by the board. department. If the cultivation tax is paid by stamp pursuant to subdivision (d) of Section 34012 34012, the board department may by regulation determine when and how the tax shall be paid.(b) The board department may require every person engaged in the cultivation, distribution, manufacturing, retail sale of cannabis or cannabis products, or any other person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code to file, on or before the 25th day of each month, a report using electronic media respecting the persons inventory, purchases, and sales during the preceding month and any other information as the board department may require to carry out the purposes of this part. Reports shall be authenticated in a form or pursuant to methods as may be prescribed by the board. department.(c) The board department may adopt regulations prescribing the due date for returns and remittances of cannabis excise tax collected by a distributor in an arms length transaction pursuant to subdivision (b) of Section 34011.(d) The board department may make examinations of the books and records of any person licensed, or required to be licensed, pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code, as it may deem necessary in carrying out this part.(e) This section shall remain in effect only until January 1, 2023, and as of that date is repealed. |
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| 434 | | - | |
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| 435 | | - | 34015. (a) Unless otherwise prescribed by the board department pursuant to subdivision (c), the cannabis excise tax and cultivation tax imposed by this part is due and payable to the board department quarterly on or before the last day of the month following each quarterly period of three months. On or before the last day of the month following each quarterly period, a return for the preceding quarterly period shall be filed with the board department by each distributor using electronic media. Returns shall be authenticated in a form or pursuant to methods as may be prescribed by the board. department. If the cultivation tax is paid by stamp pursuant to subdivision (d) of Section 34012 34012, the board department may by regulation determine when and how the tax shall be paid.(b) The board department may require every person engaged in the cultivation, distribution, manufacturing, retail sale of cannabis or cannabis products, or any other person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code to file, on or before the 25th day of each month, a report using electronic media respecting the persons inventory, purchases, and sales during the preceding month and any other information as the board department may require to carry out the purposes of this part. Reports shall be authenticated in a form or pursuant to methods as may be prescribed by the board. department.(c) The board department may adopt regulations prescribing the due date for returns and remittances of cannabis excise tax collected by a distributor in an arms length transaction pursuant to subdivision (b) of Section 34011.(d) The board department may make examinations of the books and records of any person licensed, or required to be licensed, pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code, as it may deem necessary in carrying out this part.(e) This section shall remain in effect only until January 1, 2023, and as of that date is repealed. |
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| 436 | | - | |
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| 437 | | - | |
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| 438 | | - | |
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| 439 | | - | 34015. (a) Unless otherwise prescribed by the board department pursuant to subdivision (c), the cannabis excise tax and cultivation tax imposed by this part is due and payable to the board department quarterly on or before the last day of the month following each quarterly period of three months. On or before the last day of the month following each quarterly period, a return for the preceding quarterly period shall be filed with the board department by each distributor using electronic media. Returns shall be authenticated in a form or pursuant to methods as may be prescribed by the board. department. If the cultivation tax is paid by stamp pursuant to subdivision (d) of Section 34012 34012, the board department may by regulation determine when and how the tax shall be paid. |
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| 440 | | - | |
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| 441 | | - | (b) The board department may require every person engaged in the cultivation, distribution, manufacturing, retail sale of cannabis or cannabis products, or any other person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code to file, on or before the 25th day of each month, a report using electronic media respecting the persons inventory, purchases, and sales during the preceding month and any other information as the board department may require to carry out the purposes of this part. Reports shall be authenticated in a form or pursuant to methods as may be prescribed by the board. department. |
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| 442 | | - | |
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| 443 | | - | (c) The board department may adopt regulations prescribing the due date for returns and remittances of cannabis excise tax collected by a distributor in an arms length transaction pursuant to subdivision (b) of Section 34011. |
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| 444 | | - | |
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| 445 | | - | (d) The board department may make examinations of the books and records of any person licensed, or required to be licensed, pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code, as it may deem necessary in carrying out this part. |
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| 446 | | - | |
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| 447 | | - | (e) This section shall remain in effect only until January 1, 2023, and as of that date is repealed. |
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| 448 | | - | |
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| 449 | | - | SEC. 5.SEC. 9. Section 34018.5 is added to the Revenue and Taxation Code, to read:34018.5. (a) Beginning on January 1, 2023, and annually thereafter, the Department of Finance shall estimate the amount of revenue that would have been collected the prior calendar year pursuant to the excise tax imposed prior to January 1, 2023, under subdivision (A) of paragraph (1) of subdivision (a) of Section 34011, and the weight-based cultivation tax imposed prior to January 1, 2023, under Section 34012.(b) The Controller, upon appropriation by the Legislature, shall transfer moneys equivalent to the amount estimated by the Department of Finance in subdivision (a) from the General Fund to the California Cannabis Tax Fund established by Section 34018. Tax Fund. |
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| 450 | | - | |
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| 451 | | - | SEC. 5.SEC. 9. Section 34018.5 is added to the Revenue and Taxation Code, to read: |
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| 452 | | - | |
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| 453 | | - | ### SEC. 5.SEC. 9. |
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| 454 | | - | |
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| 455 | | - | 34018.5. (a) Beginning on January 1, 2023, and annually thereafter, the Department of Finance shall estimate the amount of revenue that would have been collected the prior calendar year pursuant to the excise tax imposed prior to January 1, 2023, under subdivision (A) of paragraph (1) of subdivision (a) of Section 34011, and the weight-based cultivation tax imposed prior to January 1, 2023, under Section 34012.(b) The Controller, upon appropriation by the Legislature, shall transfer moneys equivalent to the amount estimated by the Department of Finance in subdivision (a) from the General Fund to the California Cannabis Tax Fund established by Section 34018. Tax Fund. |
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| 456 | | - | |
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| 457 | | - | 34018.5. (a) Beginning on January 1, 2023, and annually thereafter, the Department of Finance shall estimate the amount of revenue that would have been collected the prior calendar year pursuant to the excise tax imposed prior to January 1, 2023, under subdivision (A) of paragraph (1) of subdivision (a) of Section 34011, and the weight-based cultivation tax imposed prior to January 1, 2023, under Section 34012.(b) The Controller, upon appropriation by the Legislature, shall transfer moneys equivalent to the amount estimated by the Department of Finance in subdivision (a) from the General Fund to the California Cannabis Tax Fund established by Section 34018. Tax Fund. |
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| 458 | | - | |
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| 459 | | - | 34018.5. (a) Beginning on January 1, 2023, and annually thereafter, the Department of Finance shall estimate the amount of revenue that would have been collected the prior calendar year pursuant to the excise tax imposed prior to January 1, 2023, under subdivision (A) of paragraph (1) of subdivision (a) of Section 34011, and the weight-based cultivation tax imposed prior to January 1, 2023, under Section 34012.(b) The Controller, upon appropriation by the Legislature, shall transfer moneys equivalent to the amount estimated by the Department of Finance in subdivision (a) from the General Fund to the California Cannabis Tax Fund established by Section 34018. Tax Fund. |
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| 260 | + | 34018.5. (a) Beginning on January 1, 2023, and annually thereafter, the Department of Finance shall estimate the amount of revenue that would have been collected the prior calendar year pursuant to the excise tax imposed prior to January 1, 2023, under subdivision (A) of paragraph (1) of subdivision (a) of Section 34011, and the weight-based cultivation tax imposed prior to January 1, 2023, under Section 34012.(b) The Controller, upon appropriation by the Legislature, shall transfer moneys equivalent to the amount estimated by the Department of Finance in subdivision (a) from the General Fund to the California Cannabis Tax Fund established by Section 34018. |
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