Amended
IN
Senate
May 08, 2019 |
Amended
IN
Senate
April 29, 2019 |
Amended
IN
Senate
April 04, 2019 |
Amended
IN
Senate
March 26, 2019 |
Introduced by Senator Skinner (Coauthor: Senator Bradford) |
February 21, 2019 |
AUMA, and as further amended by statute, imposes a cultivation tax on all harvested cannabis that enters the commercial market upon all cultivators and requires a distributor or a manufacturer to collect that tax from a cultivator, as specified. Existing law requires the California Department of Tax and Fee Administration to administer that tax.
This bill, on and after January 1, 2020, would prohibit the cultivation tax from being imposed on cannabis that
is designated a trade sample
by the cultivator who harvested the cannabis or by a cannabis licensee who purchased the cannabis directly from that cultivator. The bill would require a distributor or manufacturer to refund the cultivator for any cultivation tax
collected on cannabis exempt from the tax pursuant to the above-described provision.
(a)Effective January 1, 2018, there is hereby imposed a cultivation tax on all harvested cannabis that enters the commercial market upon all cultivators. The tax shall be due after the cannabis is harvested and enters the commercial market.
(1)The tax for cannabis flowers shall be nine dollars and twenty-five cents ($9.25) per dry-weight ounce.
(2)The tax for cannabis leaves shall be set at two dollars and seventy-five cents ($2.75) per dry-weight ounce.
(b)The department may adjust the tax rate for cannabis leaves annually to reflect fluctuations in the relative price of cannabis flowers to cannabis leaves.
(c)The department may from time to time establish other categories of harvested cannabis, categories for unprocessed or frozen cannabis or immature plants, or cannabis that is shipped directly to manufacturers. These categories shall be taxed at their relative value compared with cannabis flowers.
(d)The department may prescribe by regulation a method and manner for payment of the cultivation tax that utilizes tax stamps or state-issued product bags that indicate that all required tax has been paid on the product to which the tax stamp is affixed or in which the cannabis is packaged.
(e)The tax stamps and product bags shall be of the designs, specifications, and denominations as may be prescribed by the department and may be purchased by any licensee under Division 10 (commencing with Section 26000) of the Business
and Professions Code.
(f)Subsequent to the establishment of a tax stamp program, the department may by regulation provide that cannabis shall not be removed from a licensed cultivation facility or transported on a public highway unless in a state-issued product bag bearing a tax stamp in the proper denomination.
(g)The tax stamps and product bags shall be capable of being read by a scanning or similar device and must be traceable utilizing the track and trace system pursuant to Section 26068 of the Business and Professions Code.
(h)Cultivators shall be responsible for payment of the tax pursuant to regulations adopted by the department. A 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 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 a cannabis product that fails quality assurance, inspection, and testing as described in Section 26110 of the Business and Professions Code.
(i)All cannabis removed from a cultivator’s premises, except for plant waste, shall be presumed to be sold and thereby taxable under this section, except as otherwise exempt pursuant to Section 34012.2.
(j)The tax imposed by this section shall be imposed on all cannabis cultivated in the state pursuant to rules and regulations promulgated by the department, but shall not apply to cannabis cultivated for personal use under
Section 11362.1 of the Health and Safety Code or cultivated by a qualified patient or primary caregiver in accordance with the Compassionate Use Act of 1996 (Section 11362.5 of the Health and Safety Code).
(k)Beginning January 1, 2020, the rates set forth in subdivisions (a), (b), and (c) shall be adjusted by the department annually thereafter for inflation.
(l)The Department of Food and Agriculture is not responsible for enforcing any provisions of the cultivation tax.
(a)For purposes of this section, “cannabis licensee” means a person licensed to engage in commercial cannabis activity pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.
(b)On and after January 1, 2020,
the cultivation tax shall not be imposed on cannabis that is designated a trade sample pursuant to Section 26153.1 of the Business and Professions Code by the cultivator who harvested the cannabis or by a cannabis licensee who purchased the cannabis directly from that cultivator.
(c)A person who sells, or uses in a manner or for a purpose other than as a trade sample, cannabis exempt from the cultivation tax pursuant to subdivision (b) shall be liable for the cultivation tax imposed by Section 34012 as if the person were a cultivator of the cannabis at the time of sale.
(d)(1)A cultivator shall keep records of any cannabis or cannabis product designated as a trade sample that was exempt from the cultivation tax pursuant to subdivision
(b).
(2)A distributor or manufacturer shall keep records of cannabis or cannabis products designated as trade samples that are exempt from the cultivation tax pursuant to subdivision (b) and shall communicate the amount of cannabis designated as a trade sample to the cultivator of the cannabis.
(3)A distributor or manufacturer shall refund the cultivator for any cultivation tax collected pursuant to Section 34012 on cannabis exempt from the cultivation tax pursuant to subdivision (b).