Bill Text

PDF |Add To My Favorites |Track Bill | print page

AB-420 Personal income tax: deduction: medical cannabis or marijuana activity.(2017-2018)

SHARE THIS:share this bill in Facebookshare this bill in Twitter
Date Published: 06/13/2017 09:00 PM
AB420:v98#DOCUMENT

Amended  IN  Senate  June 13, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 420


Introduced by Assembly Member Wood Members Wood, Bonta, Cooley, Dahle, Jones-Sawyer, and Lackey

February 09, 2017


An act to amend Section 26151 of, and to add Section 19327.3 to, the Business and Professions Code, relating to marijuana. add Section 17209 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 420, as amended, Wood. Marijuana and medical cannabis: advertisements: license number disclosure. Personal income tax: deduction: medical cannabis or marijuana activity.
Existing law, the Medical Cannabis Regulation and Safety Act (MCRSA), authorizes a person who obtains both a state license under MCRSA and the applicable local license to engage in commercial medical cannabis activity pursuant to those licenses, as specified.

This bill would require an advertisement for the sale of medical cannabis or medical cannabis products to identify the MCRSA licensee responsible for its content by including, at a minimum, the license number of the MCRSA licensee.

Existing law, the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA) that was added by the approval of Proposition 64 at the November 8, 2016, statewide general election, authorizes a person who obtains a state license under AUMA to engage in commercial marijuana activity, which does not include medical cannabis activity, pursuant to that license and any applicable local ordinances. AUMA requires all advertisements for the sale of nonmedical marijuana or nonmedical marijuana products, as specified, to identify accurately and legibly the licensee responsible for its content. AUMA authorizes legislative amendment of specified sections of AUMA with a majority vote of both houses, without submission to the voters, to implement the substantive provisions of those sections, provided that the amendments further its purposes and intent.

This bill would require an advertisement for the sale of nonmedical marijuana or nonmedical marijuana products to include, at a minimum, the license number of the AUMA licensee responsible for its content. The bill would declare that it furthers the purposes and intent of AUMA.

The Personal Income Tax Law and the Corporation Tax Law allow various deductions in computing the income that is subject to the taxes imposed by those laws. The Personal Income Tax Law conforms as of a specified date to federal income tax laws with respect to itemized deductions, including business deductions and items not deductible, except as specifically provided. The Corporation Tax Law does not conform to those federal income tax provisions, but specifically provides for deductions for purposes of that law. The Personal Income Tax Law, by conformity to federal income tax laws, disallows a deduction or credit for business expenses of a trade or business whose activities consist of trafficking specified controlled substances, including marijuana.
This bill would specifically provide in the Personal Income Tax Law for nonconformity to that federal law disallowing a deduction or credit for business expenses of a trade or business whose activities consist of trafficking specified controlled substances, only for commercial cannabis activity, as defined, commercial marijuana activity, as defined, or both, thus allowing deduction of business expenses for a cannabis or marijuana trade or business under the Personal Income Tax Law, as provided.
This bill would take effect immediately as a tax levy.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Section 17209 is added to the Revenue and Taxation Code, to read:

17209.
 Section 280E of the Internal Revenue Code, relating to expenditures in connection with the illegal sale of drugs, shall not apply to the carrying on of any trade or business that is commercial cannabis activity, as defined in subdivision (j) of Section 19300.5 of the Business and Professions Code, or commercial marijuana activity, as defined in subdivision (d) of Section 26001 of the Business and Professions Code, or both.

SEC. 2.

 This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.
SECTION 1.Section 19327.3 is added to the Business and Professions Code, to read:
19327.3.

(a)For purposes of this section, “advertisement” includes any written or verbal statement, illustration, or depiction which is calculated to induce sales of medical cannabis or medical cannabis products, including any written, printed, graphic, or other material, billboard, sign, or other outdoor display, public transit card, other periodical literature, publication, or in a radio or television broadcast, or in any other media; except that such term shall not include:

(1)Any label affixed to any cannabis or cannabis products, or any individual covering, carton, or other wrapper of such container that constitutes a part of the labeling under provisions of this division.

(2)Any editorial or other reading material (e.g., news release) in any periodical or publication or newspaper for the publication of which no money or valuable consideration is paid or promised, directly or indirectly, by any licensee, and which is not written by or at the direction of the licensee.

(b)An advertisement shall identify the licensee responsible for its content by including, at a minimum, the license number of the licensee.

SEC. 2.Section 26151 of the Business and Professions Code is amended to read:
26151.

(a)(1)All advertisements and marketing shall accurately and legibly identify the licensee responsible for its content.

(2)An advertisement shall identify the licensee responsible for its content pursuant to paragraph (1) by including, at a minimum, the license number of the licensee.

(b)Any advertising or marketing placed in broadcast, cable, radio, print and digital communications shall only be displayed where at least 71.6 percent of the audience is reasonably expected to be 21 years of age or older, as determined by reliable, up-to-date audience composition data.

(c)Any advertising or marketing involving direct, individualized communication or dialogue controlled by the licensee shall utilize a method of age affirmation to verify that the recipient is 21 years of age or older prior to engaging in such communication or dialogue controlled by the licensee. For purposes of this section, such method of age affirmation may include user confirmation, birth date disclosure, or other similar registration method.

(d)All advertising shall be truthful and appropriately substantiated.

SEC. 3.

The Legislature finds and declares that Section 2 of this act amending Section 26151 of the Business and Professions Code implements and furthers the purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act because this amendment ensures effective enforcement of provisions relating to the marketing and advertising of nonmedical marijuana.