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AB-3248 Cannabis excise tax: rate reduction.(2023-2024)

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Date Published: 03/22/2024 04:00 AM
AB3248:v98#DOCUMENT

Amended  IN  Assembly  March 21, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill
No. 3248

Introduced by Assembly Member Essayli

February 16, 2024

An act to amend Section 6066 34011.2 of the Revenue and Taxation Code, relating to taxation. taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 3248, as amended, Essayli. Sales and Use Tax Law. Cannabis excise tax: rate reduction.
The Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure, among other things, imposed a weight-based cultivation tax on harvested cannabis that enters the commercial market and a separate excise tax on purchasers of cannabis or cannabis products sold in this state at the rate of 15% of the gross receipts of any retail sale by a cannabis retailer, as specified. Existing law that amended AUMA, beginning on January 1, 2023, discontinued the cultivation tax, and, for the 2025–26 fiscal year and every 2 years thereafter, requires, on or before May 1 of the fiscal year immediately preceding the applicable fiscal year, the cannabis excise tax rate to be adjusted by a percentage that will generate an amount of revenue that would have been collected pursuant to the cultivation tax imposed prior to its discontinuation, as specified.
Under this bill, the portion of the rate of the excise tax that is not subject to the above-described cultivation tax adjustment would be reduced from 15% to 5%.
AUMA authorizes legislative amendment of its provisions with a 2/3 vote of both houses, without submission to the voters, to further its purposes and intent, except as specified.
This bill would declare that its provisions further the purposes and intent of AUMA.
This bill would take effect immediately as a tax levy.

Existing state sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state of, or on the storage, use, or other consumption in this state of, tangible personal property purchased from a retailer for storage, use, or other consumption in this state. The Sales and Use Tax Law requires a person desiring to engage in or conduct business as a seller within this state to file with the California Department of Tax and Fee Administration an application for a permit for each place of business, as prescribed.

This bill would make nonsubstantive changes to that provision.

Vote: MAJORITY2/3   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NO  

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


SECTION 1.

 Section 34011.2 of the Revenue and Taxation Code is amended to read:

34011.2.
 (a) (1) (A) Effective on and after January 1, 2023, and before January 1, 2025, a cannabis excise tax shall be imposed upon purchasers of cannabis or cannabis products sold in this state at 15 percent of the gross receipts of any retail sale by a cannabis retailer.
(B) Effective on and after January 1, 2025, a cannabis excise tax shall be imposed upon purchasers of cannabis or cannabis products sold in this state at 5 percent of the gross receipts of any retail sale by a cannabis retailer.
(2) For the 2025–26 fiscal year and every two years thereafter, the department, in consultation with the Department of Finance, shall on or before May 1 of the fiscal year immediately preceding the applicable fiscal year, adjust the cannabis excise tax rate upon purchasers of cannabis or cannabis products imposed in paragraph (1) by the additional percentage of the gross receipts of any retail sale by a cannabis retailer that the department estimates will generate an amount of revenue equivalent to the amount that would have been collected in the previous fiscal year pursuant to the weight-based cultivation tax imposed under Section 34012 as it read on the date before the effective date of the act adding this section. In no case shall the cannabis excise tax exceed 19 percent of the gross receipts of retail sale. The department shall round the rate calculated under this subdivision to the nearest one-quarter of 1 percent. The adjusted rate shall become operative the following July 1.
(3) On or before May 1, 2025, and each May 1 every two years thereafter, the department, in consultation with the Department of Finance, shall estimate the amount of revenue that would have been collected in the previous fiscal year pursuant to the weight-based cultivation tax imposed under Section 34012 as it read on the date before the effective date of the act adding this section. The department shall estimate this amount by projecting the revenue from weight-based cultivation taxes that would have been collected in the previous calendar year based on information available to the department, including, but not limited to, information in the track and trace system required pursuant to Chapter 6.5 (commencing with Section 26067) of Division 10 of the Business and Professions Code, or any implementing regulations, as a percentage of gross receipts from the retail sale of cannabis and cannabis products by cannabis retailers in the previous calendar year.
(b) 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 section is sufficient to relieve the purchaser from further liability for the tax to which the invoice, receipt, or other document refers.
(c) A cannabis retailer shall be responsible for collecting the cannabis excise tax from the purchaser and remitting that tax to the department in accordance with this division.
(d) The cannabis retailer shall provide each purchaser with an invoice, receipt, or other document that separately states the cannabis excise tax.
(e) The cannabis excise tax imposed by this section shall be in addition to the sales and use tax imposed by the state and local governments.
(f) Gross receipts from the sale of cannabis or cannabis products for purposes of assessing the sales and use taxes under Part 1 (commencing with Section 6001) shall include the tax levied pursuant to this section.
(g) Cannabis or cannabis products shall not be sold to a purchaser unless the cannabis excise tax imposed by this section has been paid by the purchaser at the time of sale.
(h) This section shall not be construed to impose a cannabis 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.
(i) (1) This section shall not be construed to impose a cannabis excise tax upon cannabis or cannabis products designated as a trade sample pursuant to Section 26153.1 of the Business and Professions Code.
(2) A person licensed under Division 10 (commencing with Section 26000) of the Business and Professions Code that sells cannabis or cannabis products designated as a trade sample pursuant to Section 26153.1 of the Business and Professions Code shall be liable for the cannabis excise tax imposed by this section as if the person were a cannabis retailer at the time of sale.
(j) This section shall become operative on January 1, 2023.

SEC. 2.

 The Legislature finds and declares that this act furthers the purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act.

SEC. 3.

 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 6066 of the Revenue and Taxation Code is amended to read:
6066.

(a)A person desiring to engage in or conduct business as a seller within this state shall file with the department an application for a permit for each place of business. An application for a permit shall be made upon a form prescribed by the department and shall set forth the name under which the applicant transacts or intends to transact business, the location of the applicant’s place or places of business, and other information as the department may require. An application for a permit shall be authenticated in a form or pursuant to methods as may be prescribed by the department. The application shall state that the applicant will actively engage in or conduct business as a seller of tangible personal property.

(b)An application filed pursuant to this section may be filed using electronic media as prescribed by the department.

(c)Electronic media includes, but is not limited to, computer modem, magnetic media, optical disk, facsimile machine, or telephone.