CHAPTER
5. California Community Health Fund
104895.50.
The following definitions apply for purposes of this chapter:(a) “California Native American tribe” means any California Indian tribe, band, nation, or other organized group or community that appears on the consultation contact list maintained by the Native American Heritage Commission, which includes tribes not recognized as eligible for the special programs and services provided by the United States to Native Americans because of their status as Indians.
(b) “California tribal organization” means the recognized governing body of any California Native American tribe or any legally established organization of Native Americans that is controlled, sanctioned, or chartered by a governing body or
is democratically elected by the adult members of the California Native American community to be served by the organization, and includes the maximum participation of Native Americans in all phases of its activities.
(c) “Caloric sweetener” means any substance or combination of substances that contains calories, that is suitable for human consumption, and that humans perceive as sweet. Caloric sweetener includes, but is not limited to, sugar, sucrose, dextrose, fructose, glucose, monosaccharide and disaccharide, corn syrup or high-fructose corn syrup, or honey.
(d) “Committee” means the California Community Health Fund Oversight and Accountability Committee.
(e) “Concentrate” means liquid, gel, powder, frozen, or solid form with a mixture of ingredients, including, but not limited to, caloric sweeteners, that is
intended to be mixed with water or another liquid for purposes of human consumption.
(f) “Cultural and linguistic competency” means a set of integrated attitudes, knowledge, and skills that enables an organization to interact effectively with individuals from diverse cultures, groups, and communities and the ability to communicate with individuals who do not speak English, have limited ability to speak English, or for whom English is not their primary language.
(g) “Distributor” means any person, including a manufacturer or wholesale dealer, who distributes sugary drinks or concentrates for sale to retailers that operate business in the state, regardless of whether the person sells those products to consumers.
(h) “Distribution” or “distribute” means to supply to a distributor or retailer, deliver to a retailer,
facilitate acquisition by a retailer, or transport into the state for the purpose of selling any sugary drink product in the state, or any combination of these activities. “Distribution” or “distribute” does not mean retail sale to a consumer.
(i) “Fund” means the California Community Health Fund.
(j) “Person” means an individual, trust, firm, joint stock company, business concern, business trust, government, receiver, trustee, syndicate, social club, fraternal organization, estate, corporation, including, but not limited to, a limited liability company, and association, or any group or combination acting as a unit.
(k) “Powder” means any solid mixture, containing one or more caloric sweeteners as an ingredient, intended to be used in making, mixing, or compounding a sugary drink by combining the powder with one or
more other ingredients.
(l) “Retailer” means any person who serves sugary drink products to a consumer.
(m) “Retail sale” means any compensated transaction from a retailer to a consumer.
(n) “Sale” means a transaction between two parties where compensation is traded for a sugary drink or ingredients specifically formulated and premeasured to produce a sugary drink.
(o) (1) “Sugary drink” means either of the following:
(A) A nonalcoholic beverage intended for human consumption that contains any added caloric sweetener. A nonalcoholic beverage means any beverage that is not subject to tax under Part 14 (commencing with Section 32001) of Division 2 of the Revenue
and Taxation Code.
(B) A concentrate, whether in liquid, gel, powder, frozen, or solid form with a mixture of ingredients, that meets both of the following criteria:
(i) It contains a caloric sweetener.
(ii) It is intended for use as an ingredient in a liquid described in subparagraph (A).
(2) The following liquid or concentrate product is not a sugary drink for purposes of this chapter:
(A) A beverage that includes, as a primary ingredient, milk, soy, rice, or a similar plant-based milk substitute.
(B) The original liquid is either the result from the pressing of fruit or vegetables or from the reconstitution of pure fruit
or vegetable juice concentrate.
(C) The liquid is the result of the restoration of water to dehydrated fruit or vegetable juice.
(D) Infant formula.
(E) A beverage for medical use suitable for human consumption and manufactured for use as an oral nutritional therapy for persons who cannot absorb or metabolize dietary nutrients from food or beverages. “Beverage for medical use” also means “medical food” as defined in Section 360ee(b)(3) of Title 21 of the United States Code. “Beverage for medical use” excludes drinks commonly referred to as “sports drinks” or any other common names that are derivations thereof.
(F) Any beverage designed as supplemental, meal replacement, or sole-source nutrition that includes proteins, carbohydrates, and multiple
vitamins and minerals.
(G) An oral electrolyte solution for infants and children formulated to prevent dehydration due to illness.
(H) A sugary drink product with fewer than 25 calories per 12 fluid ounces.
104895.51.
(a) The California Community Health Fund is hereby established in the State Treasury.(b) Upon appropriation by the Legislature, all moneys in the fund shall be expended only for the purposes expressed in this chapter and shall be used only to supplement existing levels of service. Moneys in the fund shall not supplant any federal, state, or local funding for existing levels of service.
(c) The fund shall consist of all fees, interest, penalties, and other amounts collected pursuant to this chapter. Refunds and reimbursements for expenses incurred in the administration and collection of the fees and required allocations to other agencies shall be payable from the fund,
upon appropriation by the Legislature.
104895.52.
(a) There is hereby imposed, except as otherwise provided in this chapter, a fee on every distributor for distributing bottled sugary drinks and concentrate in the state for deposit into the fund. The fees shall be calculated as follows:(1) The fee on sugary drinks and concentrate shall be calculated at a rate of two cents ($0.02) per ounce that is sold or offered to a retailer for sale in the state to a consumer.
(2) The fee on syrups and powders sold or offered to a retailer for sale in the state to a consumer, either as syrup or powder or as a sugary drink derived from that syrup or powder, shall be calculated at a rate of two cents ($0.02) per ounce of sugary drink
produced from that syrup or powder.
(3) For purposes of calculating the fee, the volume of sugary drink produced from syrups or powders shall be the greater of either the largest volume resulting from use of the syrups or powders according to any manufacturer’s instructions, or the volume actually produced by the retailer, as reasonably determined by the California Department of Tax and Fee Administration.
(b) The distributor shall be liable for the fee imposed pursuant to this chapter. The fee shall be paid upon the first nonexempt distribution of a sugary drink product in the state. However, if a distributor or a retailer receives taxable products on which the fee has not been paid, the distributor or retailer shall be liable for the fee.
(c) The California Department of Tax and Fee Administration shall adjust the
fees, as described in subdivision (a), for inflation every other year.
104895.53.
(a) A fee shall not be imposed pursuant to this chapter on a distributor for a sugary drink product if the fee has already been paid.(b) If a sugary drink product is either manufactured or produced by including one or more other sugary drink products, a fee shall not be imposed pursuant to this chapter on a caloric sweetener contained in the resulting sugary drink product if a fee was previously imposed pursuant to this chapter on that caloric sweetener.
(c) A retailer is liable for the fee imposed pursuant to this chapter upon a sugary drink product only if the fee on that product has not been previously paid by the distributor.
(d) The distribution of sugary drinks or concentrate by a distributor to either of the following persons shall be exempt from the fee imposed by this chapter:
(1) A person to whom the bottled sugary drink or concentrate is contractually obligated to be shipped, and is shipped, to a point outside of California by the distributor, by means of either of the following:
(A) Delivery to a facility operated by the distributor.
(B) Delivery by the distributor to a carrier, customs broker, or forwarding agent, regardless of whether the distributor was hired by the purchaser, for shipment to the out-of-state point.
(2) A person who is otherwise exempt from the fee of that sale, use, or consumption
pursuant to the United States Constitution, federal law or regulation, or the California Constitution.
(e) Pursuant to subdivision (d), a purchasing distributor shall be required to issue an exemption certificate to a selling distributor.
104895.54.
(a) There is hereby established a California Community Health Fund Oversight and Accountability Committee within the state government to distribute funds locally, monitor the distribution and implementation of local grants funded by the fund, and provide oversight to ensure the local projects are fulfilling their goals and outcomes.(b) The committee shall be comprised of 15 members, with diverse and relevant background in health equity and prevention, appointed by the Governor and Legislature. The members of the committee shall be appointed as follows:
(1) Seven members shall be appointed by the Governor.
(2) Four members shall be appointed by the Speaker of the Assembly.
(3) Four members shall be appointed by the Senate Committee on Rules.
(c) The committee shall use no more than ____ percent of the revenues generated to cover its administrative costs.
(d) The committee shall report annually to the Legislature the amount of funds, appropriations, unspent funds, and a description of all programs funded and recommendations for improvement.
(e) A report submitted pursuant to this subdivision shall be submitted in compliance with Section 9795 of the Government Code.
104895.55.
(a) Fifty percent of the fund revenues shall be distributed to the State Department of Public Health, the State Department of Health Care Services, the State Department of Education, the Department of Food and Agriculture, and the State Water Resources Control Board to promote health equity, to reduce health disparities, to improve oral health, and to prevent the leading causes of illness, injury, and premature death, especially those caused by sugary drink consumption. Illnesses include obesity and diseases exacerbated by obesity, such as diabetes, heart disease, and cancer, that are caused by sugary drink consumption. Those moneys shall be allocated as follows:(1) ____ percent to the State Department of Public Health to support
health equity and prevention efforts, support health in all policies work, surveillance of chronic disease and injury, statewide media campaigns, and oral health programs.
(2) ____ percent as annual allocations to all local health departments and to the system of tribal organizations to advance health equity and prevention. Allocations should be based on a defined formula proportional to county or tribal population and the absolute number of residents living in poverty, equally weighted, and required presentation of plans congruent with fund priorities and with demonstrated community participation, with a floor allocation of ____ dollars ($____) and a requirement that each jurisdiction shall prioritize underserved populations at greatest risk using approved indices. These funds may be used only for the defined purposes and shall not be used to supplant existing funding.
(3) ____
percent for competitive grants to community-based, statewide, and regional nonprofit entities to advance and strengthen locally determined priorities to create long-term, sustained conditions for greater equity in health. In the case of statewide and regional nonprofit entities, this funding may include provision of technical assistance and capacity building.
(4) ____ percent for competitive grants to community health centers and school-based health centers for promotion of health equity and prevention of childhood obesity, diabetes, dental disease or to address other sources of health inequity.
(5) ____ percent to the State Department of Health Care Services to support health equity and prevention efforts for underserved communities including:
(A) ____ percent to expand access to primary care programs.
(B) ____ percent for nutrition counseling, and diabetes and prediabetes education and exercise and fitness classes.
(C) ____ percent to promote the National Diabetes Prevention Program by raising awareness of the benefit and supporting activities that promote enrollment in that program.
(6) ____ percent to the State Department of Education to support health equity and prevention efforts, administer a competitive grant program for school districts for educational, environmental, policy, and other public health approaches that promote nutrition, physical activity and help address health inequities in school children or improve, supply, construct, or staff recreational facilities. These shall include the funding to support all of the following:
(A) ____
percent drinking water infrastructure, including drinking fountains, water bottle refilling stations, and other infrastructure to ensure access to clean drinking water throughout the school day.
(B) ____ percent to Farm-to-School activities to help schools provide healthier food to children, support local farmers, and reduce greenhouse gas emissions.
(C) ____ percent to Safe Routes to School activities that make it possible for children to safely walk, bike, or use public transportation to school.
(D) ____ percent to support for physical education and activity, including physical education and physical activity programs, afterschool activities, coaches, equipment, physical education teachers, or joint-use programs.
(7) ____ percent to the State Water
Resources Control Board to support health equity and prevention efforts including all of the following:
(A) ____ percent to a competitive grant program to communities for safe and affordable drinking water to secure increased access to quality water, including community drinking fountains, water bottle filling stations, and any needed filter systems to assure removal of contaminants in affected areas.
(B) ____ percent to ensure quality water for schools and other community sites, such as parks, streets, plazas, bus or train stops, and senior centers.
(C) ____ percent for infrastructure investments to improve drinking water supplies in disadvantaged communities, to be administered through competitive grants to public agencies and community organizations.
(8) ____ percent to the Department of Food and Agriculture Office of Farm to Fork to support health equity and prevention efforts and administer a competitive grant program to communities for all of the following:
(A) ____ percent to healthy food incentive programs for fruit and vegetable incentives.
(B) ____ percent to community food projects and to aid community food producers, as defined under Section 113752, or socially disadvantaged, beginning, military veteran, or limited resource specialty crop producers that improve the health and resilience of their communities by increasing access to any variety of fresh, canned, dried, or frozen whole or cut fruits and vegetables without added sugars, fats or oils, and salt.
(9) ____ percent to the University of California Office of the President to administer
a competitive grant program to California-based institutions, to design, test, and evaluate interventions to improve health equity or to reduce the negative effects of sugary drinks on health and health equity.
(A) All research funds shall be awarded on the basis of scientific merit as determined by an open, competitive peer review process that assures objectivity, consistency, and high quality. All qualified investigators, regardless of institutional affiliation, shall have equal access and opportunity to compete for 70 percent of the funding allocated under this paragraph.
(B) Thirty percent of the funding allocated under this paragraph shall be administered through competitive grants to nonprofit and community-based research institutes and organizations that are representative of underserved and priority populations or have demonstrated experience working with those groups
through participatory engagement.
(b) Fifty percent of the fund revenues generated shall be distributed to the committee and shall be made available to communities and community-based organizations through competitive grants.
104895.56.
(a) A state department that receives funds pursuant to this chapter may administer grants or allocations to local organizations to achieve the objectives specified in subdivision (a) of Section 104895.55. If a department administers grant programs, funds shall be distributed in communities or institutions serving those with the highest rates of health inequities with a particular focus on all of the following target populations:(1) African American, Hispanic, Native American and Alaska Native, Asian American, and Native Hawaiian and Pacific Islanders.
(2) Residents living below 150 percent of the federal poverty limit.
(3) Communities identified as underserved with regard to dental health services or that have high rates of dental disease.
(4) Communities identified with other marked health disparities to be addressed.
(b) State departments that receive funding pursuant to this chapter shall use the most current data available to target moneys in the fund to address the needs of the identified priority populations and to reach the greatest number of residents in the identified priority groups.
(c) (1) Notwithstanding subdivisions (a) and (b), most community-level investments shall be targeted. However, funds may be employed by recipients to pursue media campaigns, as described in paragraph (2) that may benefit all residents of a community or jurisdiction.
(2) (A) Media campaigns shall support health, education, and wellness programs designed to prevent and treat obesity, diabetes, and heart and dental disease and to reduce the burden of attendant health conditions that result from the overconsumption of sugary drinks.
(B) A media campaign shall be reviewed and approved by the state entity that is directly administering the competitive grant program.
(d) Grantees shall employ culturally and linguistically competent approaches appropriate to their communities.
(e) The state entity that is responsible for administering the competitive grant program shall conduct biennial financial audits to ensure that the annual allocation to grantees is awarded by the fund consistent with the requirements
of this chapter.
(f) Revenues deposited in the fund that are unexpended at the end of a fiscal year shall remain in the fund and shall not revert to the General Fund.
(g) The award of contracts, grants, or funding allocations entered into or amended pursuant to subdivision (a) shall be exempt from Part 2 (commencing with Section 10100) of Division 2 of the Public Contract Code and is exempt from approval by the Department of General Services prior to their execution.
104895.57.
(a) A community or community-based organization that receives a grant from the committee pursuant to this chapter may utilize those funds for the objectives specified in subdivision (a) of Section 104895.55. Grant funds received by communities or community-based organizations shall be distributed in communities or institutions serving those with the highest rates of health inequities with a particular focus on all of the following target populations:(1) African American, Hispanic, Native American and Alaska Native, Asian American, and Native Hawaiian and Pacific Islanders.
(2) Residents living below 150 percent of the federal poverty limit.
(3) Communities identified as underserved with regard to dental health services or that have high rates of dental disease.
(4) Communities identified with other marked health disparities to be addressed.
(b) Communities or community-based organizations that receive grants from the committee pursuant to this chapter shall use the most current data available to target moneys in the fund to address the needs of the identified priority populations and to reach the greatest number of residents in the identified priority groups.
(c) (1) Notwithstanding subdivisions (a) and (b), most community-level investments shall be targeted. However, funds may be employed by recipients to pursue media campaigns, as described in paragraph (2) that may
benefit all residents of a community or jurisdiction.
(2) (A) Media campaigns shall support health, education, and wellness programs designed to prevent and treat obesity, diabetes, and heart and dental disease and to reduce the burden of attendant health conditions that result from the overconsumption of sugary drinks.
(B) Any media campaign that is funded by a grant shall be reviewed and approved by the committee.
(d) Grantees shall employ culturally and linguistically competent approaches appropriate to their communities.
(e) The committee shall conduct biennial financial audits to ensure that the annual allocation to grantees is awarded by the fund consistent with the requirements of this chapter.
(f) Revenues deposited in the fund that are unexpended at the end of a fiscal year shall remain in the fund and shall not revert to the General Fund.
(g) The award of contracts, grants, or funding allocations entered into or amended pursuant to subdivision (a) shall be exempt from Part 2 (commencing with Section 10100) of Division 2 of the Public Contract Code and is exempt from approval by the Department of General Services prior to their execution.
104895.58.
(a) (1) The California Department of Tax and Fee Administration shall administer and collect the fees imposed by this chapter pursuant to the Fee Collection Procedures Law (Part 30 (commencing with Section 55001) of Division 2 of the Revenue and Taxation Code).(2) For purposes of this section, “department” means the California Department of Tax and Fee Administration.
(b) The department may use no more than 3 percent of the revenues generated to cover its administrative costs in collecting the fees imposed under this chapter.
(c) (1) The department may promulgate
and enforce regulations relating to the administration and enforcement of this chapter, including matters regarding collections, reporting, refunds, and appeals.
(2) The department may adopt emergency regulations to implement this chapter. The adoption of emergency regulations shall be conclusively presumed to be necessary for the immediate preservation of the public peace, health, safety, or general welfare within the meaning or purposes of Section 11346.1 of the Government Code. The adoption, amendment, repeal, or readoption of a regulation is deemed to address an emergency, for purposes of Sections 11346.1 and 11349.6 of the Government Code, and the department is hereby exempted for this purpose from the requirements of subdivision (b) of Section 11346.1 of the Government Code.
(d) The department shall develop an internet website and post materials to inform distributors,
retailers, and the general public about the fee and its scope and operation at least two months prior to the effective date.
(e) The fees imposed by this chapter are due and payable to the department on or before the last day of the first month following each calendar quarter.
(f) The department shall collect the charges imposed by this chapter beginning January 1, 2022.
(g) Upon appropriation in the annual budget, the department shall receive ____ dollars ($____) in the form of startup costs for the purpose of establishing, administering, and collecting the charges imposed by this chapter during the first year of activity.
(h) The department shall require online registration for every distributor in the state who is subject to the fee on the
department’s internet website.
104895.59.
(a) On or before the last day of the first month following each calendar quarter, a return for the preceding calendar quarter shall be filed, using electronic media, with the California Department of Tax and Fee Administration.(b) The California Department of Tax and Fee Administration may prescribe forms and reporting requirements as are necessary to implement the fees, including information regarding the total amount of sugary drinks and concentrate sold and the amount due.
(c) Returns shall be authenticated in a form or pursuant to methods prescribed by the California Department of Tax and Fee Administration.
104895.60.
A distributor who is required to pay the fees imposed under this chapter shall register with the California Department of Tax and Fee Administration. An application for registration shall be made upon a form prescribed by the California Department of Tax and Fee Administration and shall set forth the name that the applicant transacts or intends to transact business with, the location or locations of each place of business, and any other information as required. An application for an account under this section shall be authenticated in a form or pursuant to methods prescribed by the California Department of Tax and Fee Administration. 104895.61.
The distribution of sugary drinks or concentrate by a distributor to either of the following persons shall be exempt from the fees imposed by this chapter:(a) A person who is located out of state, and pursuant to a sales contract, receives a shipment of a sugary drink or concentrate from either a facility operated by the distributor or a carrier, customs broker, or forwarding agent, whether hired by the purchaser or not, for shipment to a location out of state.
(b) A person who is otherwise exempt from the taxation of that sale, use, or consumption under the United States Constitution, federal law or regulation, or the California Constitution.
104895.62.
A distributor who has paid a fee, either directly to the state or to another distributor registered under this chapter, and makes a subsequent distribution of sugary drinks or concentrate may claim a credit on the distributor’s return for the period when a subsequent sale or distribution occurs.