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AB-953 Cannabis: state and local taxes: payment by digital asset.(2019-2020)

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Date Published: 02/21/2019 02:00 PM
AB953:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 953


Introduced by Assembly Members Ting and McCarty

February 21, 2019


An act to add Section 37101.3 to the Government Code, and to amend Section 34021.5 of, and to add Section 34015.5 to, the Revenue and Taxation Code, relating to taxation.


LEGISLATIVE COUNSEL'S DIGEST


AB 953, as introduced, Ting. Cannabis: state and local taxes: payment by digital asset.
Existing law authorizes the legislative body of a city and the board of supervisors of a county to license, for revenue and regulation, and fix a license tax upon, every kind of lawful business transacted in the city or county, as specified.
The Control, Regulate and Tax Adult Use of Marijuana Act of 2016 (AUMA), an initiative measure approved as Proposition 64 at the November 8, 2016, statewide general election, authorizes a person who obtains a state license under AUMA to engage in commercial adult-use cannabis activity pursuant to that license and applicable local ordinances. The Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), among other things, consolidates the licensure and regulation of commercial medicinal and adult-use cannabis activities. MAUCRSA does not supersede or limit the authority of a local jurisdiction to adopt and enforce local ordinances to regulate commercial cannabis businesses within that local jurisdiction. MAUCRSA also specifies that a county may impose a tax on the privilege of cultivating, manufacturing, producing, processing, preparing, storing, providing, donating, selling, or distributing cannabis or cannabis products by a licensee operating under MAUCRSA.
This bill, on and after January 1, 2020, would allow the legislative body of a city or the board of supervisors of a county to determine and implement a method by which a licensee under MAUCRSA may remit any city or county cannabis license tax amounts due by payment using stablecoins, as defined. The bill would authorize that city or county in determining that method to either accept stablecoins directly into a digital wallet controlled by that jurisdiction or to utilize a third-party digital asset payment processor that allows for the immediate conversion of any payments made by stablecoins into United States dollars and deposit into an account of that jurisdiction.
Existing law imposes a state excise tax on the purchase of cannabis and cannabis products, as defined, at the rate of 15% of the average market price of any retail sale by a cannabis retailer. Existing law also imposes a state cultivation tax upon all cultivators on all harvested cannabis that enters the commercial market, at specified rates per dry-weight ounce of cannabis flowers and leaves. The California Department of Tax and Fee Administration administers the cannabis excise tax and the cannabis cultivation tax.
This bill, on or before June 1, 2020, would require the department to determine and implement a method by which a licensee under MAUCRSA may remit any cannabis excise tax or cannabis cultivation tax amounts due by payment using stablecoins, as defined. The bill would authorize the department in determining this method to either accept stablecoins directly into a state-controlled digital wallet or to utilize a third-party digital asset payment processor that allows for the immediate conversion of any payments made by stablecoins into United States dollars and deposit into a state account. The bill would allow the department to consult with the State Treasurer’s office as needed to implement that payment method.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Section 37101.3 is added to the Government Code, to read:

37101.3.
 (a) For purposes of this section, all of the following definitions shall apply:
(1) “Cannabis licensee” means any licensee under the Medicinal and Adult-Use Cannabis Regulation and Safety Act (Division 10 (commencing with Section 26000) of the Business and Professions Code).
(2) “City cannabis tax” means any license tax authorized pursuant to Section 37101, or any similar tax that may be imposed by a charter city through its powers derived under Section 5 of Article XI of the California Constitution, and includes any tax imposed on a cannabis licensee for the privilege of cultivating, manufacturing, producing, processing, preparing, storing, providing, donating, selling, or distributing cannabis or cannabis products.
(3) (A) “Digital asset” means a digital representation of value that is used as a medium of exchange, unit of account, or store of value and is not legal tender, whether or not denominated in legal tender.
(B) “Digital asset” shall not include either of the following:
(i) A transaction in which a merchant grants, as part of an affinity or rewards program, value that cannot be taken from or exchanged with the merchant for legal tender, bank credit, or virtual currency.
(ii) A digital representation of value issued by or on behalf of a publisher and used solely within an online game, game platform, or family of games sold by the same publisher or offered on the same game platform.
(4) “Stablecoin” means a digital asset that has price stable characteristics pegged to United States dollars and United States dollars serve as collateral to that digital asset.
(b) On and after January 1, 2020, the legislative body of a city may determine and implement a method by which a cannabis licensee may remit any city cannabis tax amounts due by payment using stablecoins. The method determined by the legislative body may accept stablecoins directly into a city-controlled digital wallet or utilize a third-party digital asset payment processor that would allow for the immediate conversion of any payments made by stablecoins into United States dollars and deposit into a city account.

SEC. 2.

 Section 34015.5 is added to the Revenue and Taxation Code, to read:

34015.5.
 (a) For purposes of this section, all of the following definitions shall apply:
(1) “Cannabis licensee” means any licensee under the Medicinal and Adult-Use Cannabis Regulation and Safety Act (Division 10 (commencing with Section 26000) of the Business and Professions Code) who is required to remit a tax to the department pursuant to this part.
(2) (A) “Digital asset” means a digital representation of value that is used as a medium of exchange, unit of account, or store of value and is not legal tender, whether or not denominated in legal tender.
(B) “Digital asset” shall not include either of the following:
(i) A transaction in which a merchant grants, as part of an affinity or rewards program, value that cannot be taken from or exchanged with the merchant for legal tender, bank credit, or virtual currency.
(ii) A digital representation of value issued by or on behalf of a publisher and used solely within an online game, game platform, or family of games sold by the same publisher or offered on the same game platform.
(3) “Stablecoin” means a digital asset that has price stable characteristics pegged to United States dollars and United States dollars serve as collateral to that digital asset.
(b) In addition to any other payment methods authorized pursuant to the Fee Collection Procedures Law (Part 30 (commencing with Section 55001)), on or before June 1, 2020, the department shall determine and implement a method by which a cannabis licensee may remit any tax amounts due under this part by payment using stablecoins. The method determined by the department may accept stablecoins directly into a state-controlled digital wallet or utilize a third-party digital asset payment processor that would allow for the immediate conversion of any payments made by stablecoins into United States dollars and deposit into a state account. The department may consult with the State Treasurer’s office as needed to implement this section.

SEC. 3.

 Section 34021.5 of the Revenue and Taxation Code is amended to read:

34021.5.
 (a) (1) A county may impose a tax on the privilege of cultivating, manufacturing, producing, processing, preparing, storing, providing, donating, selling, or distributing cannabis or cannabis products by a licensee operating under Division 10 (commencing with Section 26000) of the Business and Professions Code.
(2) The board of supervisors shall specify in the ordinance proposing the tax the activities subject to the tax, the applicable rate or rates, the method of apportionment, if necessary, and the manner of collection of the tax. The tax may be imposed for general governmental purposes or for purposes specified in the ordinance by the board of supervisors.
(3) In addition to any other method of collection authorized by law, the board of supervisors may provide for the collection of the tax imposed pursuant to this section in the same manner, and subject to the same penalties and priority of lien, as other charges and taxes fixed and collected by the county. A tax imposed pursuant to this section is a tax and not a fee or special assessment. The board of supervisors shall specify whether the tax applies throughout the entire county or within the unincorporated area of the county.
(4) The tax authorized by this section may be imposed upon any or all of the activities set forth in paragraph (1), as specified in the ordinance, regardless of whether the activity is undertaken individually, collectively, or cooperatively, and regardless of whether the activity is for compensation or gratuitous, as determined by the board of supervisors.
(b) A tax imposed pursuant to this section shall be subject to applicable voter approval requirements imposed by law.
(c) This section is declaratory of existing law and does not limit or prohibit the levy or collection of any other fee, charge, or tax, or a license or service fee or charge upon, or related to, the activities set forth in subdivision (a) as otherwise provided by law. This section shall not be construed as a limitation upon the taxing authority of a county as provided by law.
(d) This section shall not be construed to authorize a county to impose a sales or use tax in addition to the sales and use taxes imposed under an ordinance conforming to the provisions of Sections 7202 and 7203 of this code.
(e) (1) For purposes of this subdivision, all of the following definitions shall apply:
(A) “Cannabis licensee” means any licensee under the Medicinal and Adult-Use Cannabis Regulation and Safety Act (Division 10 (commencing with Section 26000) of the Business and Professions Code).
(B) “County cannabis tax” means any tax described in subdivision (a) or any license tax authorized pursuant to Section 7284 that is imposed on a cannabis licensee.
(C) (i) “Digital asset” means a digital representation of value that is used as a medium of exchange, unit of account, or store of value and is not legal tender, whether or not denominated in legal tender.
(ii) “Digital asset” shall not include either of the following:
(I) A transaction in which a merchant grants, as part of an affinity or rewards program, value that cannot be taken from or exchanged with the merchant for legal tender, bank credit, or virtual currency.
(II) A digital representation of value issued by or on behalf of a publisher and used solely within an online game, game platform, or family of games sold by the same publisher or offered on the same game platform.
(D) “Stablecoin” means a digital asset that has price stable characteristics pegged to United States dollars and United States dollars serve as collateral to that digital asset.
(2) On and after January 1, 2020, the board of supervisors may determine and implement a method by which a cannabis licensee may remit any county cannabis tax amounts due by payment using stablecoins. The method determined by the legislative body may accept stablecoins directly into a county-controlled digital wallet or utilize a third-party digital asset payment processor that would allow for the immediate conversion of any payments made by stablecoins into United States dollars and deposit into a county account.