An act to add Part 13.5 (commencing with Section 31001) to Division 2 of the Revenue and Taxation Code, relating to medical marijuana, and making an appropriation therefor.

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


SECTION 1.
Part 13.5 (commencing with Section 31001) is added to Division 2 of the Revenue and Taxation Code, to read:
PART 13.5. Medical Marijuana Tax Law
CHAPTER  1. General Provisions and Definitions
31001.
This part shall be known and may be cited as the Medical Marijuana Tax Law.
31002.
As used in this part, the following terms have the following definitions:
(a) “Cultivator” means a person that is licensed as a cultivator for purposes of medical marijuana regulation under the Business and Professions Code.
(b) “Distribution” has the same meaning as that term is defined for purposes of medical marijuana regulation in the Business and Professions Code.
(c) “Licensed distributor” means a person that is licensed as a distributor for purposes of medical marijuana regulation under the Business and Professions Code.
(d) “Sale” means the transfer of title or possession for consideration in any manner or by any means whatever.
(e) “Qualified nonprofit organization” means an organization exempt from tax as an organization described in Section 501(c)(3) of the Internal Revenue Code .
CHAPTER  2. Imposition of Tax
31005.
(a) On and after the operative date set forth in Section 31030, for the privilege of distributing marijuana flowers, marijuana leaves, and immature marijuana plants, a tax is hereby imposed upon all cultivators at a rate of $9.25 per ounce of marijuana flowers, $2.75 per ounce of marijuana leaves, and $1.25 per immature marijuana plant from the sale of all marijuana flowers, marijuana leaves, and immature marijuana plants distributed to a licensed distributor in this state.
(b) The licensed distributor shall collect the tax from the cultivator and shall separately state the amount of the tax imposed under this part on the purchase order, which shall be given by the licensed distributor to the cultivator at the time of sale.
(c) There are exempted from the taxes imposed by this part, sales by a cultivator that the state is prohibited from taxing under the Constitution or laws of the United States or the Constitution of this state. Any claim for exemption from the tax imposed by this part shall be made to the board in the manner prescribed by the board.
31006.
The Legislative Analyst’s Office shall regularly review the tax levels established under this part, at a minimum of every other year, beginning in 2018, and make recommendations to the Legislature, as appropriate, regarding adjustments that would further the goal of addressing public safety and the environmental impacts caused by the proliferation of marijuana cultivation.
CHAPTER  3. Administration
31010.
(a) The board shall administer and collect the tax imposed by this part pursuant to the Fee Collection Procedures Law (Part 30 (commencing with Section 55001) of Division 2 of the Revenue and Taxation Code) with those changes as may be necessary to conform to this section. For purposes of this part, the references in the Fee Collection Procedures Law to “fee” shall include the tax imposed by this part, and references to “feepayer” shall include a person required to pay the tax imposed by this part.
(b) The tax that is required to be collected by the licensed distributor, and any amount unreturned to the medical marijuana cultivator that is not owed as part of the tax, but was collected from the cultivator under the representation by the licensed distributor that it was owed as a tax, constitutes debts owed by the licensed distributor to the state.
(c) A cultivator is liable for the tax until it has been paid to the state, except that payment to the licensed distributor relieves the cultivator from further liability for the tax. Any tax collected from a cultivator that has not been remitted to the board shall be a debt owed to the state by the licensed distributor required to collect and remit the tax. This part does not impose any obligation upon the licensed distributor to take any legal action to enforce the collection of the tax imposed by this part.
31011.
(a) The board may prescribe, adopt, and enforce regulations relating to the implementation, administration, and enforcement of this part, including, but not limited to, applicant requirements, collections, reporting, refunds, and appeals.
(b) The board may prescribe, adopt, and enforce any emergency regulations as necessary to implement this part. 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.
31012.
(a) The tax is due and payable to the board quarterly on or before the last day of the month following each calendar quarter.
(b) On or before the last day of the month following each calendar quarter, a return for the preceding calendar quarter shall be filed with the board.
(c) Returns shall be authenticated in a form or pursuant to methods as may be prescribed by the board.
31013.
(a) The Marijuana Production and Environment Mitigation Fund is hereby created in the State Treasury. All taxes, interest, penalties, and other amounts collected and paid to the board pursuant to this part, less payments of refunds and costs of administration, shall be deposited in the fund.
(b) Notwithstanding Section 13340 of the Government Code, all moneys deposited in the Marijuana Production and Environment Mitigation Fund are hereby continuously appropriated, without regard to fiscal years, in the following manner:
(1) Thirty-five percent to the Department of Food and Agriculture for disbursement for local law enforcement-related activities pertaining to illegal marijuana cultivation. Funds allocated pursuant to this paragraph shall be allocated on a competitive grant application process administered by the Department of Food and Agriculture. The Department of Food and Agriculture shall promulgate guidelines for the grant process as soon as administratively possible, but no later than April 1, 2017.
(2) Thirty-five percent to the Natural Resources Agency to fund a competitive grant program for environmental cleanup restoration, and protection of public and private lands that have been damaged by illegal marijuana cultivation. Where appropriate, the agency may administer funds using programs established pursuant to Section 5750 of the Public Resources Code, subdivision (a) and paragraph (1) of subdivision (l) of Section 75050 of the Public Resources Code. Funds allocated pursuant to this paragraph shall be prioritized to restoration and cleanup projects, on public or private lands, based on the level of damages that have occurred. Not less than 35 percent of the funds shall be used for these purposes related to public lands, and not less than 20 percent of the funds shall be used for these purposes related to private lands. The agency shall consult and partner with counties, cities, or cities and counties, and may partner with qualified nonprofit organizations, other appropriate state agencies, and the appropriate federal entities, including, but not limited to, the United States Department of Agriculture and the United States Department of the Interior, for the purposes of awarding grants to state or local government entities and qualified nonprofit organizations that engage in environmental cleanup and restoration. The agency shall promulgate guidelines for the grant process as soon as administratively possible, but no later than April 1, 2017.
(3) Thirty percent to the multiagency task force, the Department of Fish and Wildlife and State Water Resources Control Board pilot project, to address the environmental impacts of marijuana cultivation on public and private lands in California and other state enforcement-related activities from illegal marijuana cultivation.
CHAPTER  4. Report to the Legislature
31020.
(a) The board shall submit a report to the Legislature on the total amount of revenue that was collected for the two-year period commencing on the operative date of this part. The report is due to the Legislature on or before the last day of the month commencing 180 days after the two-year period commencing on the operative date of this part.
(b) The report required by this section shall be submitted in compliance with Section 9795 of the Government Code.
CHAPTER  5. Operative Date and Funding
31030.
This part shall become operative on or after the first day of the first calendar quarter commencing more than 270 days after adequate funding has been received by the board to implement and administer this part. The board shall post a notice on its Internet Web site when this condition has been satisfied.
31031.
Funds for the establishment and support of the activities required pursuant to this part shall be advanced as a General Fund or special fund loan, and shall be repaid by the board from the initial proceeds from taxes collected pursuant to this part, no later than six months after the operative date specified in Section 31030.
SEC. 2.
No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.

Summary: Existing law, the Compassionate Use Act of 1996, an initiative measure enacted by the approval of Proposition 215 at the November 5, 1996, statewide general election, authorizes the use and cultivation of marijuana for medical purposes. Existing law makes it a crime to plant, cultivate, harvest, dry, or process marijuana, except as otherwise authorized by law. Under existing law, qualified patients, persons with valid identification cards, and the designated primary caregivers of qualified patients and persons with identification cards, who associate in order collectively and cooperatively to cultivate marijuana for medical purposes, are not subject to criminal sanctions solely on the basis of that fact.
The Fee Collection Procedures Law, among other things, provides for the administration of fee programs by the State Board of Equalization, establishes procedures for collection, reporting, return, refund, and appeals, and authorizes the board to adopt regulations relating to administration and enforcement of the law. The Fee Collection Procedures Law establishes criminal penalties for specified acts, including making it a misdemeanor to knowingly or willfully file a false return and making it a felony to willfully evade or attempt to evade or defeat the payment of a fee.
This bill would impose a tax in specified amounts on the distribution in this state by a cultivator, as defined, of marijuana flowers, marijuana leaves, and immature marijuana plants to a licensed distributor, as specified, and would require the licensed distributor to collect the tax from the cultivator and remit it to the board. The bill would require the board to collect the tax pursuant to the procedures set forth in the Fee Collection Procedures Law. The bill would require all moneys, less refunds and costs of administration, to be deposited into the Marijuana Production and Environment Mitigation Fund, which this bill would establish in the State Treasury, and would continuously appropriate the moneys in that fund to the board for allocation, as specified.
By expanding the application of the Fee Collection Procedures Law, which imposes criminal penalties for various acts, this bill would impose a state-mandated local program.
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.
This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of
2/3
of the membership of each house of the Legislature.