Today's Law As Amended


PDF |Add To My Favorites | print page

AB-963 Taxation: marijuana.(2017-2018)



As Amends the Law Today


SECTION 1.

 Section 6369.6 is added to the Revenue and Taxation Code, to read:

6369.6.
 (a) There are exempted from the taxes imposed by this part the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of, medical cannabis, medical cannabis concentrate, edible medical cannabis products, or topical cannabis as those terms are defined in Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code when a person with an identification card or primary caregiver furnishes the seller with both his or her card issued under Section 11362.71 of the Health and Safety Code and a valid government-issued identification card.
(b) For purposes of this section, “person with an identification card” and “primary caregiver” have the same meanings as those terms are defined in Section 11362.7 of the Health and Safety Code.
(c) Any purchaser that furnishes the seller with a false or falsified identification card shall be liable to the state for the amount of tax that would be due if he or she had not given such a card. In addition to the tax, the purchaser shall be liable to the state for a penalty of 10 percent of the tax or five hundred dollars ($500), whichever is greater, for each purchase made for personal gain or to evade the payment of tax. For purposes of this subdivision, a “false or falsified identification card” includes any driver’s license or other identification card issued by a governmental agency, including a card issued under Section 11362.71 of the Health and Safety Code, that has been stolen, altered, forged, duplicated, reproduced, or counterfeited.
(d) A seller is relieved of liability for the sales tax if the purchaser furnishes the seller with valid identification cards described in subdivision (a), and the seller takes the identification cards in good faith.

SEC. 2.

 Section 6471.5 is added to the Revenue and Taxation Code, to read:

6471.5.
 Any person required to make prepayment pursuant to Article 1.7 (commencing with Section 6480.50) may not be required to make additional prepayment pursuant to this article, provided that more than 75 percent of the gross receipts of that person are from the retail sale of marijuana or marijuana products.

SEC. 3.

 Article 1.7 (commencing with Section 6480.50) is added to Chapter 5 of Part 1 of Division 2 of the Revenue and Taxation Code, to read:

Article  1.7. Prepayment of Sales Tax on Marijuana and Marijuana Products
6480.50.
 For purposes of the imposition of the prepayment of sales tax on marijuana and marijuana products pursuant to this article:
(a) “Marijuana” and “marijuana products” have the same meanings as those terms are defined in Section 34010.
(b) “Cultivator” and “manufacturer” shall have the same meaning as those terms are defined pursuant to Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code or Division 10 (commencing with Section 26000) of the Business and Professions Code.
(c) “Distribution” shall mean the sale or delivery of marijuana and marijuana products from a wholesaler to a retailer.
(d) “Wholesaler” has the same meaning as that term is defined in Section 34010.
(e) With respect to marijuana and marijuana products, “sale” means the transfer of title or possession, exchange, or barter, conditional or otherwise, in any manner or by any means whatsoever, of marijuana or marijuana products to a retailer for a consideration, or a distribution without consideration.
6480.51.
 (a) At any time a wholesaler makes a distribution of marijuana or marijuana products in this state to a retailer, the wholesaler shall collect a prepayment of the retail sales tax, in the following manner:
(1) When the distribution is a sale, the prepayment shall be based on the gross receipts derived from that sale of marijuana or those marijuana products.
(2) If a cultivator or a manufacturer is also the retailer, the prepayment shall be based on the wholesale cost of the marijuana or marijuana products, as determined by the board.
(3) If the wholesaler is not required to hold a seller’s permit pursuant to this part, the prepayment shall be based on the wholesale cost, as determined by the board.
(b) (1) Each wholesaler shall report and pay the prepayment amounts to the board, in a form as prescribed by the board, in the period in which the marijuana or marijuana products are distributed. The prepayment amounts shall be collected by the wholesaler from the retailer to which the marijuana or marijuana products are distributed. Subject to any credit or refund due to the retailer, the prepayment amount is deemed to be public moneys that are the property of the State of California. The wholesaler required to collect and remit the prepayment amount shall hold the prepayment amount in trust for the state. The prepayment amount constitutes a debt owed by the wholesaler to this state until reported and paid to the board, until satisfactory proof has been submitted to prove that the retailer of the marijuana or marijuana products has paid the retail sales tax to the board, or until a wholesaler that has consumed the marijuana or marijuana products has paid the use tax to the board on the sales price, if applicable, of the amount consumed.
(2) Each wholesaler shall provide the retailer with an invoice for, or other evidence of the collection of, the prepayment amounts, which shall be separately stated on the invoice.
(3) Each wholesaler shall report to the board, in a form as prescribed by the board and for the period in which the marijuana and marijuana products were distributed, all of the following:
(A) The amount of marijuana and marijuana products distributed, the gross receipts derived from any sale, or the wholesale cost, whichever is applicable, the amount of sales tax prepayments collected by the wholesaler, and any other information deemed necessary by the board.
(B) If the amount of sales tax prepayments collected by the wholesaler is greater than the amount of sales tax prepayments made by the wholesaler, then subject to any credit or refund due to the retailer, the excess is deemed to be public moneys that are the property of the State of California. The wholesaler required to collect and remit the sales tax prepayment shall hold the amount of the excess in trust for the state. The excess constitutes a debt owed by the wholesaler to the state until reported and paid to the board, or until satisfactory proof has been submitted that the retailer of the marijuana or marijuana products has paid the tax to the board.
(c) The amount of a prepayment paid by the retailer shall constitute a credit against its sales and use taxes due and payable for the period in which the retail sale was made. Failure of the wholesaler to report prepayments or a wholesaler’s failure to comply with any other duty under this article shall not constitute grounds for denial of the credit to the retailer, either on a temporary or permanent basis or otherwise. To be entitled to the credit, the retailer shall retain for inspection by the board any receipts, invoices, or other documents showing the amount of sales tax prepaid to its wholesaler, together with the evidence of payment.
(d) The rate of the prepayment required to be collected shall be the combined rate of tax imposed pursuant to this part, Part 1.5 (commencing with Section 7200), and Section 35 of Article XIII of the California Constitution on all sales of marijuana or marijuana products sold by wholesalers in this state.
6480.52.
 (a) If the board determines that it is necessary for the efficient administration of this part, the board may require a wholesaler to provide the board with a list of retailers to which the marijuana or marijuana products were distributed.
(b) In addition to any other reports required under this article, the board may, by rule and otherwise, require additional, other, or supplemental reports, in any form which the board may require, from wholesalers with respect to their distributions of marijuana or marijuana products, which shall include, but not be limited to, the name of the retailer to whom the marijuana or marijuana products was distributed, the retailer’s license number issued pursuant to Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code or Division 10 (commencing with Section 26001) of the Business and Professions Code, a description of the product distributed, including the weight of the marijuana included in each distribution, the date of each sale or distribution, and any gross receipts derived from each sale of marijuana or marijuana product.
(c) Any wholesaler that fails to comply with this section is guilty of a misdemeanor punishable as provided in Section 7153.
6480.53.
 The wholesaler shall file its prepayment form together with a remittance of the prepayment amounts, if any, required to be collected pursuant to Section 6480.51 payable to the board, on or before the last day of the month following the monthly period to which the prepayment form or each prepayment relates.
6480.54.
 (a) Any wholesaler that fails to make a timely remittance to the board of the prepayment amounts, if any, required pursuant to Sections 6480.51 and 6480.53 shall also pay a penalty of 10 percent of the amount of the prepayment due but not paid, plus interest at the modified adjusted rate per month, or fraction thereof, established pursuant to Section 6591.5, from the date the prepayment became due and payable to the state until the date of payment.
(b) The penalty amount specified in subdivision (a) shall be 25 percent if the wholesaler knowingly or intentionally fails to make a timely remittance.
6480.55.
 (a) The following persons that have paid prepayment amounts either directly to the board or to the wholesaler from which the marijuana or marijuana products were purchased shall be refunded those amounts:
(1) Any retailer that sells marijuana or marijuana products that are exempt from the sales or use tax pursuant to Section 6352 or 6381.
(2) Any retailer that has lost the marijuana or marijuana products through fire, flood, theft, spoilage, or accident, prior to any retail sale.
(3) Any retailer that has paid prepayment amounts on products exempted from the sales and use tax pursuant to Section 6369.6, when the prepayment amounts paid are in excess of the amount due and payable for the period in which the retail sale of those products was made.
(b) In lieu of a refund, the board may authorize a credit to be taken by the person to whom the refund is due upon his or her prepayment form or sales and use tax return.
6480.56.
 (a) The board may require any wholesaler subject to this article to place with the board any security that the board determines is necessary to ensure compliance with this article. The amount of the security shall be fixed by the board but shall not be greater than three times the estimated average liability of wholesalers required to file returns for monthly periods, determined in any manner that the board deems proper, or five hundred thousand dollars ($500,000), whichever amount is less. These amounts apply regardless of the type of security placed with the board. The amount of the security may be increased or decreased by the board subject to the maximum amounts.
(b) The board may sell the security at public auction if it becomes necessary to so do in order to recover any tax or any amount required to be collected or penalty due. Notice of the sale may be served upon the person that placed the security personally or by mail. If service is by mail, service shall be made in the manner prescribed for service of a notice of a deficiency determination and shall be addressed to the person’s address as it appears in the records of the board. However, security in the form of a bearer bond issued by the United States or the State of California which has a prevailing market price may be sold by the board at a private sale at a price not lower than the prevailing market price thereof. Upon any sale, any surplus above the amounts due shall be returned to the wholesaler that placed the security.
6480.57.
 A wholesaler that is not required to hold a seller’s permit pursuant to this part shall register with the board on a form prescribed by the board and shall set forth the name under which the wholesaler transacts or intends to transact business, the location of the wholesaler’s place or places of business, and other information as the board may require.
6480.58.
 This article shall become operative on July 1, 2018.

SEC. 4.

 Section 6592 of the Revenue and Taxation Code is amended to read:

6592.
 (a) (1)  If the department board  finds that a person’s failure to make a timely return or payment is due to reasonable cause and circumstances beyond the person’s control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person shall be relieved of the penalties provided by Sections 6452.05,  6476, 6477, 6479.3, 6480.4, 6480.8, 6480.54,  6511, 6565, 6591, 7051.2, 7073, and 7074.
(2) If the department finds, with respect to the information return required by Section 6452.05, that a person’s failure to accurately disclose information is due to reasonable cause and circumstances beyond the person’s control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person shall be relieved of the relevant penalty provided by Section 6591.3.
(b) Except as provided in subdivision (c), a (c) any  person seeking to be relieved of the penalty shall file with the department board  a statement under penalty of perjury setting forth the facts upon which the person bases the  he or she bases his or her  claim for relief.
(c) The department board  shall establish criteria that provides for efficient resolution of requests for relief pursuant to this section.

SEC. 5.

 Section 6901 of the Revenue and Taxation Code is amended to read:

6901.
 If the board determines that any amount, penalty, or interest has been paid more than once or has been erroneously or illegally collected or computed, the board shall set forth that fact in the records of the board and shall certify the amount collected in excess of the amount legally due and the person from whom it was collected or by whom paid. The excess amount collected or paid shall be credited by the board on any amounts then due and payable from the person from whom the excess amount was collected or by whom it was paid under this part, and the balance shall be refunded to the person, or his or her successors, administrators, or executors, if a determination by the board is made in any of the following cases:
(a) Any amount of tax, interest, or penalty was not required to be paid.
(b) Any amount of prepayment of sales tax, interest, or penalty paid pursuant to Article 1.5 (commencing with Section 6480) or Article 1.7 (commencing with Section 6480.50)  of Chapter 5 was not required to be paid.
(c) Any amount that is approved as a settlement pursuant to Section 7093.5.
Any overpayment of the use tax by a purchaser to a retailer who is required to collect the tax and who gives the purchaser a receipt therefor pursuant to Article 1 (commencing with Section 6201) of Chapter 3 shall be credited or refunded by the state to the purchaser. Any proposed determination by the board pursuant to this section with respect to an amount in excess of fifty thousand dollars ($50,000) shall be available as a public record for at least 10 days prior to the effective date of that determination.

SEC. 6.

 Section 34010 of the Revenue and Taxation Code is amended to read:

34010.
 For purposes of this part:
(a) “Arm’s 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. “Board” shall mean the State Board of Equalization or its successor agency. 
(b) “Average market price” shall mean both of the following:
(1) (A) In an arm’s 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 the operative date of the act amending this section by adding this subparagraph and before July 1, 2021.
(2) In a nonarm’s length transaction, the cannabis retailer’s 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) (b)  “Bureau” means  shall mean  the Bureau of Cannabis Marijuana  Control within the Department of Consumer Affairs.
(e) (c)  “Tax Fund” means the California Cannabis Marijuana  Tax Fund created by Section 34018.
(f) (d)  “Cannabis” has  “Marijuana” shall have  the same meaning as set forth in Section 11018 of the Health and Safety Code and shall also mean medicinal medical  cannabis.
(g) (e)  “Cannabis “Marijuana  products” has  shall have  the same meaning as set forth in Section 11018.1 of the Health and Safety Code and shall also mean medicinal medical  concentrates and medicinal medical  cannabis products.
(h) (f)  “Cannabis “Marijuana  flowers” means  shall mean  the dried flowers of the cannabis marijuana  plant as defined by the board.
(i) (g)  “Cannabis “Marijuana  leaves” means  shall mean  all parts of the cannabis marijuana  plant other than cannabis marijuana  flowers that are sold or consumed.
(j) “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.
(k) “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.
( (h) 
l
)  “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. “Gross receipts” shall have the same meaning as set forth in Section 6012. 
(m) (i)  “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. “Retail sale” shall have the same meaning as set forth in Section 6007. 
(n) (j)  “Gross receipts” has “Person” shall have  the same meaning as set forth in Section 6012. 6005. 
(o) (k)  “Microbusiness” has  shall have  the same meaning as set forth in paragraph (3) of subdivision (a) of Section 26070 of the Business and Professions Code.
(p) (l)  “Nonprofit” has  shall have  the same meaning as set forth in Section 26070.5 of the Business and Professions Code.
(q) “Person” has the same meaning as set forth in Section 6005.
(r) “Retail sale” has the same meaning as set forth in Section 6007.
(s) “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.
(t) “Transfer” means to grant, convey, hand over, assign, sell, exchange, or barter, in any manner or by any means, with or without consideration.
(u) “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.
(v) “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.
(w) (m)  “Medicinal cannabis patient”  “Wholesaler”  shall mean a qualified patient, as defined in Section 11362.7 of the Health and Safety Code, who possesses a physician’s 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. person that makes a distribution of marijuana or marijuana products. For purposes of this subdivision and for the imposition of marijuana excise taxes pursuant to this part, “distribution” shall mean sale or delivery of marijuana or marijuana products from a wholesaler to a retailer. 
(x) “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. 7.

 Section 34011 of the Revenue and Taxation Code is amended to read:

34011.
 (a) (1)  Effective January 1, 2018, a cannabis marijuana  excise tax shall be imposed upon purchasers of cannabis marijuana  or cannabis marijuana  products sold in this state at the rate of 15 percent of the average market price  gross receipts  of any retail sale by a cannabis retailer. A purchaser’s 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. dispensary or other person required to be licensed pursuant to Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code or a retailer, microbusiness, nonprofit, or other person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code to sell marijuana and marijuana products directly to a purchaser. 
(2) (b)  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.” Except as otherwise provided by regulation, the tax levied under this section shall apply to the full price, if nonitemized, of any transaction involving both marijuana or marijuana products and any other otherwise distinct and identifiable goods or services, and the price of any goods or services, if a reduction in the price of marijuana or marijuana products is contingent on purchase of those goods or services. 
(3) 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) (c)  (1)  A distributor in an arm’s 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 nonarm’s 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 dispensary or other person required to be licensed pursuant to Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code or a retailer, microbusiness, nonprofit, or other person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code  shall be responsible for collecting the cannabis excise tax from the purchaser and remitting the cannabis excise tax to the distributor this tax and remitting it to the board  in accordance with rules and procedures established under law and any regulations adopted by the department. board. 
(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.
(c) (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.
(d) (e)  Gross receipts from the sale of cannabis marijuana  or cannabis marijuana  products for purposes of assessing the sales and use taxes tax  under Part 1 (commencing with Section 6001) shall include the tax levied pursuant to this section.
(e) (f)  Cannabis  No marijuana  or cannabis marijuana  products shall not  may  be sold to a purchaser unless the excise tax required by law has been paid by the purchaser at the time of sale.
(f) 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.
(g) 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.

SEC. 8.

 Section 34011.51 is added to the Revenue and Taxation Code, to read:

34011.51.
 (a) For purposes of the imposition of the prepayment of marijuana excise tax pursuant to this part:
(1) “Arm’s length transaction” is defined as a sale in good faith and for valuable consideration that reflects the fair market value in the open market between two informed and willing parties, neither under any compulsion to participate in the transaction. A sale between relatives, related companies, or partners is presumed not to be made at “arm’s length.”
(2) “Retailer” means a dispensary or other person required to be licensed pursuant to Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code, or a retailer, microbusiness, nonprofit, or other person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code, to sell marijuana or marijuana products directly to a purchaser.
(3) “Sale” means the transfer of title or possession, exchange, or barter, conditional or otherwise, in any manner or by any means whatsoever, of marijuana or marijuana products to a retailer for a consideration.
(b) At any time that marijuana or marijuana products are distributed to a retailer in this state, the wholesaler shall collect a prepayment of the marijuana excise tax as follows:
(1) When the distribution is a sale, the prepayment shall be based on the gross receipts derived from the sale of marijuana or marijuana products to that retailer in an arm’s length transaction.
(2) If a cultivator or a manufacturer is also the retailer, the prepayment shall be based on the wholesale cost of the marijuana and marijuana products, as determined by the board.
(c) (1) Each wholesaler shall report and pay the prepayment amounts to the board, in a form as prescribed by the board, in the period in which the marijuana or marijuana products are distributed. The prepayment amounts shall be collected by the wholesaler from the retailer to which the marijuana or marijuana products are distributed.
(2) Subject to any credit or refund due to the retailer, prepayment amount is deemed to be public moneys that are the property of the State of California and shall be used for the purposes set forth in Sections 34018 and 34019. The wholesaler required to collect and remit the prepayment amount shall hold the prepayment amount in trust for these purposes. The prepayment amount constitutes a debt owed by the wholesaler to this state until reported and paid to the board, or until satisfactory proof has been submitted to prove that the retailer of the marijuana or marijuana products has paid the marijuana excise tax to the board.
(d) (1) Each wholesaler shall provide the retailer with an invoice for, or other evidence of the collection of, the prepayment amounts, which shall be separately stated thereon.
(2) Each wholesaler shall report to the board, using electronic media, for the period in which the marijuana and marijuana products were distributed, all of the following:
(A) The amount of marijuana and marijuana products distributed, the gross receipts derived from the sale or wholesale cost, the amount of marijuana excise tax prepayments collected by the wholesaler, and any other information deemed necessary by the board.
(B) If the amount of marijuana excise tax prepayments collected by the wholesaler is greater than the amount of marijuana excise tax prepayments made by the wholesaler, then subject to any credit or refund due to the retailer, the excess is deemed to be public moneys that are the property of the State of California and shall be used for the purposes set forth in Sections 34018 and 34019. The wholesaler required to collect and remit the marijuana excise tax prepayments shall hold the excess in trust for these purposes. The excess constitutes a debt owed by the wholesaler to the state until reported and paid to the board, or until satisfactory proof has been submitted that the retailer of the marijuana or marijuana products has paid the tax to the board.
(e) The amount of a prepayment paid by the retailer shall constitute a credit against its marijuana excise taxes due and payable for the period in which the sale was made. Failure of the wholesaler to report prepayments or a wholesaler’s failure to comply with any other duty under this part shall not constitute grounds for denial of the credit to the retailer, either on a temporary or permanent basis or otherwise. To be entitled to the credit, the retailer shall retain for inspection by the board any receipts, invoices, or other documents showing the amount of marijuana excise tax prepaid to its wholesaler, together with the evidence of payment.
(f) (1) The rate of the prepayment required to be collected shall be ____ on the gross receipts or wholesale cost of the marijuana or marijuana products distributed to a retailer by a wholesaler in this state.
(2) (A) In the case where a wholesaler does not make a sale to a dispensary at the time of distribution, the wholesaler shall maintain a copy of the contract provided in paragraph (3) of subdivision (c) of Section 19326 of the Business and Professions Code, or other information deemed necessary by the board, indicating the price and quantity of marijuana or marijuana products to be sold and any other information deemed necessary by the board.
(B) In the case of a person with a Type 10A, or producing dispensary, license or other person required to be licensed under Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code or Division 10 (commencing with Section 26001) of the Business and Professions Code where the cultivator or manufacturer and dispensary or retailer to whom the marijuana or marijuana product is distributed are the same person, a wholesaler shall maintain any information deemed necessary by the board to ascertain wholesale cost.
(g) Returns or reports shall be authenticated in a form or pursuant to methods as may be prescribed by the board. If the prepayment of marijuana excise tax is paid by stamp or other marking pursuant to Section 34011.57, the board may by regulation determine when and how the tax shall be paid.
(h) This section shall become operative on July 1, 2018.

SEC. 9.

 Section 34011.52 is added to the Revenue and Taxation Code, to read:

34011.52.
 (a) If the board determines that it is necessary for the efficient administration of this part, the board may require a wholesaler to provide the board with a list of purchasers to which the marijuana or marijuana products were sold.
(b) In addition to any other reports required under this part, the board may, by rule and otherwise, require additional, other, or supplemental reports, in any form which the board may require, from wholesalers with respect to their distribution of marijuana or marijuana products to a retailer, which shall include, but not be limited to, the name of the purchaser, the number of the purchaser’s license issued pursuant to Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code or Division 10 (commencing with Section 26000) of the Business and Professions Code, a description of the product distributed, including the date of each distribution, and the wholesale cost or gross receipts derived from each sale of marijuana or marijuana products.
(c) Any wholesaler that fails to comply with this section is guilty of a misdemeanor punishable as provided in subdivision (e) of Section 34016.
(d) This section shall become operative on July 1, 2018.

SEC. 10.

 Section 34011.53 is added to the Revenue and Taxation Code, to read:

34011.53.
 (a) The wholesaler shall file its prepayment form together with a remittance of the prepayment amounts, if any, required to be collected pursuant to Section 34011.51 payable to the State Board of Equalization, on or before the last day of the month following the monthly period to which the prepayment form or each prepayment relates.
(b) This section shall become operative on July 1, 2018.

SEC. 11.

 Section 34011.54 is added to the Revenue and Taxation Code, to read:

34011.54.
 (a) Any wholesaler that fails to make a timely remittance to the board of the prepayment amounts, if any, required pursuant to Sections 34011.51 and 34011.53 shall also pay a penalty of 10 percent of the amount of the prepayment due but not paid, plus interest at the modified adjusted rate per month, or fraction thereof, established pursuant to Section 6591.5, from the date the prepayment became due and payable to the state until the date of payment.
(b) The penalty amount specified in subdivision (a) shall be 25 percent if the wholesaler knowingly or intentionally fails to make a timely remittance.
(c) The board may relieve the penalty imposed by this section in accordance with Section 55044.
(d) This section shall become operative on July 1, 2018.

SEC. 12.

 Section 34011.55 is added to the Revenue and Taxation Code, to read:

34011.55.
 (a) Any person that has paid prepayment amounts either directly to the board or to the person from which the marijuana or marijuana products were distributed shall be refunded those amounts with respect to marijuana or marijuana products lost through fire, flood, theft, spoilage, or accident, prior to any retail sale.
(b) In lieu of a refund, the board may authorize a credit to be taken by the person to whom the refund is due upon his or her prepayment form or marijuana excise tax return.
(c) This section shall become operative on July 1, 2018.

SEC. 13.

 Section 34011.56 is added to the Revenue and Taxation Code, to read:

34011.56.
 (a) The board may require any wholesaler subject to this part to place with the board any security that the board determines is necessary to ensure compliance with this part. The amount of the security shall be fixed by the board but shall not be greater than three times the estimated average liability of wholesalers required to file returns for monthly periods, determined in any manner that the board deems proper, or five hundred thousand dollars ($500,000), whichever amount is less. These amounts apply regardless of the type of security placed with the board. The amount of the security may be increased or decreased by the board subject to the maximum amounts.
(b) The board may sell the security at public auction if it becomes necessary to so do in order to recover any tax or any amount required to be collected or penalty due. Notice of the sale may be served upon the person that placed the security personally or by mail. If service is by mail, service shall be made in the manner prescribed for service of a notice of a deficiency determination and shall be addressed to the person’s address as it appears in the records of the board. However, security in the form of a bearer bond issued by the United States or the State of California which has a prevailing market price may be sold by the board at a private sale at a price not lower than the prevailing market price thereof. Upon any sale, any surplus above the amounts due shall be returned to the wholesaler that placed the security.
(c) This section shall become operative on July 1, 2018.

SEC. 14.

 Section 34011.57 is added to the Revenue and Taxation Code, to read:

34011.57.
 The board may prescribe by regulation a method and manner for prepayment of the marijuana excise tax that utilizes tax stamps or other markings that indicate that all required tax has been paid on the product to which the tax stamp or marking is affixed.

SEC. 15.

 Section 34012 of the Revenue and Taxation Code is amended to read:

34012.
 (a) Effective January 1, 2018, there is hereby imposed a cultivation tax on all harvested cannabis marijuana  that enters the commercial market upon all cultivators.  persons required to be licensed to cultivate marijuana pursuant to Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code or Division 10 (commencing with Section 26000) of the Business and Professions Code.  The tax shall be due after the cannabis is harvested and enters the commercial market. marijuana is harvested. 
(1) The tax for cannabis marijuana  flowers shall be nine dollars and twenty-five cents ($9.25) per dry-weight ounce.
(2) The tax for cannabis marijuana  leaves shall be set at two dollars and seventy-five cents ($2.75) per dry-weight ounce.
(b) The department board  may adjust the tax rate for cannabis marijuana  leaves annually to reflect fluctuations in the relative price of cannabis marijuana  flowers to cannabis marijuana  leaves.
(c) The department board  may from time to time establish other categories of harvested cannabis, marijuana,  categories for unprocessed or frozen cannabis marijuana  or immature plants, or cannabis marijuana  that is shipped directly to manufacturers. These categories shall be taxed at their relative value compared with cannabis marijuana  flowers.
(d) The board may prescribe the following by regulation:
(d) (1)  The department may prescribe by regulation a  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 marijuana  is packaged.
(2) A method and manner for collection and remittance of the cultivation tax by wholesalers.
(A) Subject to any credit or refund due to the cultivator all sums of money paid by a person as the cultivation tax are public moneys that are the property of the State of California and shall be used for the purposes set forth in Sections 34018 and 34019. The wholesaler required to collect and remit the cultivation tax shall hold the cultivation tax in trust for these purposes. The collected cultivation tax constitutes a debt owed to the state until reported and paid to the board, or until satisfactory proof has been submitted that the cultivator has paid the cultivation tax to the board. A wholesaler that has collected any amount of cultivation tax in excess of the amount of the cultivation tax actually due from a cultivator, may refund that overpayment to the cultivator, even though the overpayment has already been paid over to the board and a corresponding credit or refund has not yet been secured. The wholesaler may claim a credit for that overpayment against the amount of cultivation tax due upon any other quarterly return, if the credit is claimed in a return dated no later than three years from the date of overpayment.
(B) Every cultivator in this state is liable for the cultivation tax until it has been paid to this state, except that payment to a wholesaler with a permit issued under this part is sufficient to relieve the cultivator from further liability for the tax. Any cultivation tax collected from a cultivator that has not been remitted to the board shall be deemed public moneys that are the property of the State of California. The collected tax constitutes a debt owed to the state by the wholesaler until reported and paid to the board. Nothing in this part shall impose any obligation upon a wholesaler to take any legal action to enforce the collection of the cultivation tax. The wholesaler shall provide the board with amounts uncollected which total ____ dollars ($____) or more on a cumulative basis with respect to a single cultivator along with the names, addresses, and reasons of the cultivators refusing to pay the cultivation tax.
(C) The tax required to be collected by the wholesaler from the cultivator shall be stated separately from the price or value of the harvested marijuana on the invoice or other price or value displayed on any proof of sales or documentation of a transaction.
(e) The tax stamps and product bags shall be of the designs, specifications, and denominations as may be prescribed by the department board  and may be purchased by any licensee under Division  Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code or 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 board  may by regulation provide that cannabis shall not no marijuana may  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 26170  of the Business and Professions Code.
(h) Cultivators shall be responsible for payment of the tax pursuant to regulations adopted by the department. A cultivator’s 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  Persons required to be licensed to cultivate marijuana pursuant to Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code or Division 10 (commencing with Section 26000) of the Business and Professions Code shall be responsible for payment of the tax pursuant to regulations adopted by the board. No marijuana may  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 marijuana  removed from a cultivator’s premises, except for plant waste or medicinal cannabis or medicinal cannabis products designated for donation,  waste,  shall be presumed to be sold and thereby taxable under this section.
(j) The tax imposed by this section shall be imposed on all cannabis marijuana  cultivated in the state pursuant to rules and regulations promulgated by the department, board,  but shall not apply to cannabis marijuana  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  (Section  11362.5 of the Health and Safety Code. Code). 
(k) (1) Beginning   For the 2020 calendar year, the  January 1, 2020, the  rates set forth in subdivisions (a), (b), and (c) shall be adjusted by the department  board annually thereafter  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, the rates shall be those imposed for the 2021 calendar year in paragraph (2) and shall be adjusted by the department for inflation.
(4) Beginning January 1, 2023, the rates imposed for the previous calendar year shall be adjusted by the department annually for inflation.
(l) The Department of Food and Agriculture is not responsible for enforcing any provisions of the cultivation tax.

SEC. 16.

 Section 34013 of the Revenue and Taxation Code is amended to read:

34013.
 (a) The department board  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 tax  imposed by this part, and references to “feepayer” shall include a person required to pay or collect the taxes tax  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) (b)  The department board  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) (c)  The department board  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 marijuana  or cannabis marijuana  products, or the packages thereof, to designate prior tax payment.
(e) (d)  Until January 1, 2019, the department  The board  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 provision of  law, the emergency regulations adopted by the department board  may remain in effect for two years from adoption.
(f) (e)  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 or pursuant to Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions  Code.
(f) Whenever any person fails to comply with any provision of this part or any rule or regulation of the board prescribed and adopted under this part, the board, upon hearing, after giving the person at least 10 days’ notice in writing specifying the time and place of the hearing and requiring the person to show cause why the permit should not be suspended or revoked, may suspend or revoke the permit held by the person. The board shall give to the person written notice of the suspension or revocation of any of the person’s permits. The notices herein required may be served personally or by mail in the manner prescribed for service of notice of a deficiency determination. The board shall not issue a new permit after the revocation of a permit unless it is satisfied that the former holder of the permit will comply with the provisions of this part and the regulations of the board prescribed and adopted under this part.
(g) The department board  may bring such legal actions as are necessary to collect any deficiency in the tax required to be paid, and, upon the department’s board’s  request, the Attorney General shall bring the actions.

SEC. 19.SEC. 17.

 Section 34014 of the Revenue and Taxation Code is amended to read:

34014.
 (a) All distributors  persons required to be licensed involved in the cultivation, retail sale, or distribution of marijuana or marijuana products  must obtain a separate permit from the board pursuant to regulations adopted by the board. 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  cultivator, dispensary, retailer, microbusiness, distributor, or nonprofit pursuant to Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code or Division 10 (commencing with Section 26000) of the Business and Professions Code  without a permit or after a permit has been canceled, suspended, or revoked, and each officer of any corporation which so engages in business, is guilty of a misdemeanor.
(b) The board may require every licensed distributor, retailer,  dispensary,  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 marijuana  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. Notwithstanding anything herein to the contrary, the board may waive any security requirement it imposes for good cause, as determined by the board. “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 marijuana  business. A person may not commence or continue any business or operation relating to cannabis marijuana  cultivation until any surety required by the board 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, the board shall give consideration to the financial hardship that may be imposed on licensees as a result of any shortage of available surety providers.

SEC. 18.

 Section 34014.1 is added to the Revenue and Taxation Code, to read:

34014.1.
 (a) The board shall issue a permit to a cultivator, retailer, or wholesaler upon receipt of a completed application and any security required by the board, unless any of the following apply:
(1) The cultivator, retailer, or wholesaler, or if the cultivator, retailer, or wholesaler is not an individual, any person controlling the cultivator, retailer, or wholesaler, has previously been issued a permit that is suspended or revoked by the board for violation of any of the provisions of this division.
(2) The cultivator’s, retailer’s, or wholesaler’s permit was revoked or is subject to revocation proceedings for violation of any of the provisions of this division, unless it has been more than five years since a previous permit for the cultivator, retailer, or wholesaler was revoked.
(3) The cultivator, retailer, or wholesaler is applying for a permit for a premises or business that is the same as that of a cultivator, retailer, or wholesaler whose license was revoked or is subject to revocation proceedings for violation of any of the provisions of this part, unless the person applying for the permit provides the board with documentation demonstrating that the applicant has acquired or is acquiring the premises or business in an arm’s length transaction. For purposes of this section, an “arm’s length transaction” is defined as a sale in good faith and for valuable consideration that reflects the fair market value in the open market between two informed and willing parties, neither under any compulsion to participate in the transaction. A sale between relatives, related companies, or partners, or a sale for the primary purpose of avoiding the effect of the violations of this division that occurred at the cultivator or retailer location, is presumed not to be made at “arm’s length.”
(4) The cultivator, retailer, or wholesaler, or if the cultivator, retailer, or wholesaler is not an individual, any person controlling the cultivator, retailer, or wholesaler, has been convicted of a felony pursuant to Section 34016.1 or 34016.13.
(5) The cultivator, retailer, or wholesaler does not possess all required permits or licenses required under this code.
(b) (1) Any cultivator, retailer, or wholesaler who is denied a permit may petition for a redetermination of the board’s denial of the permit within 30 days after service upon that cultivator, retailer, or wholesaler, of the notice of the denial of the permit. If a petition for redetermination is not filed within the 30-day period, the determination of denial becomes final at the expiration of the 30-day period.
(2) Every petition for redetermination shall be in writing and shall state the specific grounds upon which the petition is founded. The petition may be amended to state additional grounds at any time prior to the date on which the board issues its order or decision upon the petition for redetermination.
(3) If the petition for redetermination is filed within the 30-day period, the board shall reconsider the determination of the denial and, if the cultivator, retailer, or wholesaler has so requested in the petition, shall grant the cultivator, retailer, or wholesaler an oral hearing and shall give the cultivator, retailer, or wholesaler at least 10 days’ notice of the time and place of the hearing. The board may continue the hearing from time to time as may be necessary.
(4) The order or decision of the board upon a petition for redetermination becomes final 30 days after mailing of notice thereof.

SEC. 21.SEC. 19.

 Section 34015 of the Revenue and Taxation Code is amended to read:

34015.
 (a) Unless otherwise prescribed by the board pursuant to subdivision (c), the  The marijuana  excise tax and cultivation tax imposed by this part is due and payable to the board 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 by each distributor  person required to be licensed for cultivation or retail sale under Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code or Division 10 (commencing with Section 26000) of the Business and Professions Code  using electronic media. Returns shall be authenticated in a form or pursuant to methods as may be prescribed by the board. If the cultivation tax is paid by stamp or remitted by the wholesaler  pursuant to subdivision (d) of Section 34012 the board may by regulation determine when and how the tax shall be paid.
(b) The board may require every person engaged in the cultivation, distribution, manufacturing, or  retail sale of cannabis or cannabis products, or any other person  marijuana and marijuana products  required to be licensed pursuant to Division  Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code or 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 person’s inventory, purchases, and sales during the preceding month and any other information as the board 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.
(c) The board may adopt regulations prescribing the due date for returns and remittances of excise tax collected by a distributor in an arm’s length transaction pursuant to subdivision (b) of Section 34011.
(d) The board 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.

SEC. 22.SEC. 20.

 Section 34016 of the Revenue and Taxation Code is amended to read:

34016.
 (a) Any peace officer or board employee granted limited peace officer status pursuant to paragraph (6) of subdivision (a) of Section 830.11 of the Penal Code, upon presenting appropriate credentials, is authorized to enter any place as described in paragraph (3) and to conduct inspections in accordance with the following paragraphs, inclusive.
(1) Inspections shall be performed in a reasonable manner and at times that are reasonable under the circumstances, taking into consideration the normal business hours of the place to be entered.
(2) Inspections may be at any place at which cannabis marijuana  or cannabis marijuana  products are sold to purchasers, cultivated, or stored, or at any site where evidence of activities involving evasion of tax may be discovered.
(3) Inspections shall be requested or  conducted no more than once in a 24-hour period.
(b) Any person who fails or refuses to allow an inspection shall be guilty of a misdemeanor. Each offense shall be punished by a fine not to exceed five thousand dollars ($5,000), or imprisonment not exceeding one year in a county jail, or both the fine and imprisonment. The court shall order any fines assessed be deposited in the California Cannabis Marijuana  Tax Fund.
(c) Upon discovery by the board or a law enforcement agency that a licensee or any other person possesses, stores, owns, or has made a retail sale of cannabis marijuana  or cannabis marijuana  products, without evidence of tax payment or not contained in secure packaging, the board or the law enforcement agency shall be authorized to seize the cannabis marijuana  or cannabis marijuana  products. Any cannabis marijuana  or cannabis marijuana  products seized by a law enforcement agency or the board shall within seven days be deemed forfeited and the board shall comply with the procedures set forth in Sections 30436 through 30449, inclusive.
(d) Any person who renders a false or fraudulent report is guilty of a misdemeanor and subject to a fine not to exceed one thousand dollars ($1,000) for each offense.
(e) Any violation of any provisions of this part, except as otherwise provided, is a misdemeanor and is punishable as such.
(f) All moneys remitted to the board under this part shall be credited to the California Cannabis Tax Fund. Any person required to make, render, sign, or verify any return or report who makes any false or fraudulent return or report with intent to defeat or evade the determination required by law to be made is guilty of a misdemeanor. The person shall for each offense be fined not less than three hundred dollars ($300) and not more than five thousand dollars ($5,000), or be imprisoned for not exceeding one year in the county jail, or be subject to both fine and imprisonment, in the discretion of the court. 

SEC. 21.

 Section 34016.05 is added to the Revenue and Taxation Code, to read:

34016.05.
 Any person who fails or refuses to file any report required to be made or who fails or refuses to furnish a supplemental report or other data required by the board is guilty of a misdemeanor and subject to a fine not to exceed one thousand dollars ($1,000) for each offense.

SEC. 22.

 Section 34016.1 is added to the Revenue and Taxation Code, to read:

34016.1.
 (a) Any person who falsely or fraudulently makes, forges, alters, reuses, or counterfeits any evidence of the cultivation tax or marijuana excise tax imposed by this part, or tampers with any metering machine authorized by regulation under this part, or causes or procures to be falsely or fraudulently made, forged, altered, reused, or counterfeited, any such evidence of the cultivation tax or marijuana excise tax or knowingly and willfully utters, publishes, passes, or tenders as genuine any such false, forged, altered, reused, or counterfeited evidence of the cultivation tax or marijuana excise tax, for the purpose of evading the taxes imposed by this part, is guilty of a felony and subject to imprisonment for two, three, or four years, or to a fine of not less than one thousand dollars ($1,000) and not more than twenty-five thousand dollars ($25,000), or to both fine and imprisonment.
(b) Any person who possesses, sells or offers to sell, or buys or offers to buy, any false or fraudulent evidence of the cultivation tax or marijuana excise tax imposed by this part in a dollar amount of less than ____ dollars ($____) is guilty of a misdemeanor, punishable by a fine not to exceed five thousand dollars ($5,000) or imprisonment not exceeding one year in a county jail, or by both the fine and imprisonment.
(c) Any person who possesses, sells or offers to sell, or buys or offers to buy, any false or fraudulent evidence of the cultivation tax or marijuana excise tax imposed by this part in a dollar amount of ____ dollars ($____) or greater, is guilty of a misdemeanor, punishable by a fine not to exceed fifty thousand dollars ($50,000) or imprisonment not exceeding one year in a county jail, or by both the fine and imprisonment.
(d) The board shall destroy any evidence of the cultivation tax or marijuana excise tax seized under this section.

SEC. 23.

 Section 34016.11 is added to the Revenue and Taxation Code, to read:

34016.11.
 (a) Any person who knowingly possesses, or keeps, stores, or retains for the purpose of sale, or sells or offers to sell, any marijuana flowers, marijuana leaves, marijuana, marijuana products, and any other product subject to tax under this part to which there is no evidence of the cultivation tax or marijuana excise tax authorized to be made upon secure packaging under this part, or on which tax is due but has not been paid, when those products have been obtained from any source whatever, is guilty of a misdemeanor and shall for each offense be fined an amount not to exceed twenty-five thousand dollars ($25,000), or be imprisoned for a period not to exceed one year in the county jail, or, at the discretion of the court, be subject to both fine and imprisonment in the county jail.
(b) This section shall not apply to a permitted cultivator that possesses, keeps, stores, or retains marijuana flowers, marijuana leaves, or any other product subject to tax pursuant to Section 34012 before the necessary evidence of cultivation tax is affixed.

SEC. 24.

 Section 34016.12 is added to the Revenue and Taxation Code, to read:

34016.12.
 If any cultivator, retailer, or wholesaler is convicted under any provision of this part, the board shall revoke all permits issued to that person under the Sales and Use Tax Law (Part 1 (commencing with Section 6001)).

SEC. 25.

 Section 34016.13 is added to the Revenue and Taxation Code, to read:

34016.13.
 Notwithstanding any other provision of this part, any person who violates this part with intent to defeat or evade the determination of an amount due required by law to be made is guilty of a felony when the amount of tax liability aggregates twenty-five thousand dollars ($25,000) or more in any 12-consecutive-month period. The determination shall be approved by the executive director or his or her designee. Each offense shall be punished by a fine of not less than five thousand dollars ($5,000) and not more than twenty thousand dollars ($20,000), or imprisonment for 16 months, two years, or three years, or by both the fine and imprisonment in the discretion of the court.

SEC. 26.

 Section 34016.14 is added to the Revenue and Taxation Code, to read:

34016.14.
 Any person convicted of a crime under this part may be charged the costs of investigation and prosecution at the discretion of the court.

SEC. 27.

 Section 34016.15 is added to the Revenue and Taxation Code, to read:

34016.15.
 (a) (1) Restitution orders or any other amounts imposed by a court of competent jurisdiction for criminal offenses upon a person or any other entity that are due and payable to the board may be collected by the board in any manner provided by law for collection of a delinquent cultivation tax or marijuana excise tax liability, including, but not limited to, issuance of an order and levy under Article 4 (commencing with Section 706.070) of Chapter 5 of Division 2 of Title 9 of Part 2 of the Code of Civil Procedure in the manner provided for earnings withholding orders for taxes.
(2) Amounts imposed by a court of competent jurisdiction as an order of restitution for criminal offenses shall be treated as final and due and payable to the State of California on the date that amount is established on the records of the board.
(b) This part shall apply to amounts collected under this section in the same manner and with the same force and effect and to the full extent as if the language of those laws had been incorporated in full into this section, except to the extent that any provision is either inconsistent with this section or is not relevant to this section.
(c) Notwithstanding Chapter 5 (commencing with Section 55221) of Part 30, a refund or credit shall not be allowed for any amounts paid or payments applied under this section.
(d) Amounts authorized to be collected pursuant to this section may accrue interest at the greater of the rate applicable to the amounts being collected or the rate provided under Section 6591.5 from and after the date the amounts are established on the records of the board.
(e) Amounts authorized to be collected pursuant to this section shall not be subject to any statute of limitations set forth in Section 55365.
(f) Notwithstanding Chapter 14 (commencing with Section 7150) of Division 7 of Title 1 of the Government Code, any portion of the amounts authorized to be collected under this section that remain unsatisfied may be collected by the recording of a notice of state tax lien. The board may record or extend a recorded notice of state tax lien at any time until the amount due, including any accrued interest, is paid in full.

SEC. 30.SEC. 28.

 Section 34018 of the Revenue and Taxation Code is amended to read:

34018.
 (a) The California Cannabis Marijuana  Tax Fund is hereby created in the State Treasury. The Tax Fund shall consist of all  All  taxes, interest, penalties, and other amounts collected and paid  paid, or otherwise remitted,  to the board pursuant to this part, less payment of refunds. refunds, shall be credited to the Tax Fund. 
(b) Notwithstanding any other law, the California Cannabis Marijuana  Tax Fund is a special trust fund established solely to carry out the purposes of the Control, Regulate and Tax Adult Use of Marijuana Act and all revenues deposited into the Tax Fund, together with interest or dividends earned by the fund, are hereby continuously appropriated for the purposes of the Control, Regulate and Tax Adult Use of Marijuana Act without regard to fiscal year and shall be expended only in accordance with the provisions of this part and its purposes.
(c) Notwithstanding any other law, the taxes imposed by this part and the revenue derived therefrom, including investment interest, shall not be considered to be part of the General Fund, as that term is used in Chapter 1 (commencing with Section 16300) of Part 2 of Division 4 of Title 2 of  the Government Code, shall not be considered General Fund revenue for purposes of Section 8 of Article XVI of the California Constitution and its implementing statutes, and shall not be considered “moneys” for purposes of subdivisions (a) and (b) of Section 8 of Article XVI of the California Constitution and its implementing statutes.
SEC. 29.
 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.
SEC. 30.
 The Legislature finds and declares that this act furthers the purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act (Act) by providing the State Board of Equalization with the authority and resources necessary to collect the taxes imposed by the Act and thereby protecting the Act’s anticipated funding for education, public health programs, law enforcement training, environmental cleanup, and marijuana business licensing. By providing the board with the authority and resources, this act will simplify compliance with the Act’s tax laws, arrest sales of marijuana by criminal operations, level the playing field for marijuana businesses complying with the laws, prevent marijuana businesses from going underground, and further the Act’s purposes of curbing illegal growing, distribution, and retail sales of marijuana, while also driving out the illicit market.