Compare Versions


Bill PDF |Add To My Favorites | print page

SB-1293 Income taxation: credits: cannabis: equity applicants and licensees.(2021-2022)



Current Version: 06/22/22 - Amended Assembly

Compare Versions information image


SB1293:v96#DOCUMENT

Amended  IN  Assembly  June 22, 2022
Amended  IN  Senate  April 28, 2022
Amended  IN  Senate  March 16, 2022

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 1293

Introduced by Senator Bradford

February 18, 2022

An act to add and repeal Sections 17053.82 and 23682 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


SB 1293, as amended, Bradford. Income taxation: credits: cannabis: equity applicants and licensees.
The Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure approved as Proposition 64 at the November 8, 2016, statewide general election, authorizes a person who obtains a state license under AUMA to engage in commercial adult-use cannabis activity pursuant to that license and applicable local ordinances.
The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.
Existing federal law imposes an income tax upon every corporation, except as specified, and prohibits the allowance of a deduction or credit for any amount paid or incurred during the taxable year in carrying on any trade or business consisting of trafficking in controlled substances, including cannabis.
This bill, under both laws, for taxable years beginning on or after January 1, 2022, and before January 1, 2027, would allow a credit to a cannabis equity applicant or licensee, as defined, licensee who is eligible for a specified fee waiver and deferral program administered by the Department of Cannabis Control, in an amount equal to $10,000.
Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
This bill would include additional information required for any bill authorizing a new tax expenditure.
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.

 The Legislature makes the following findings and declarations:
(a) The War on Drugs has harmed individuals and communities, particularly communities of color.
(b) The Legislature has taken actions to assist individuals and communities harmed by past criminal prohibition related to cannabis as a way of righting past wrongs. And yet, many cannabis businesses owned by equity licensees still struggle to turn a profit and keep their doors open.
(c) The challenge is made worse because federal law under Section 280E of Title 26 of the United States Code does not allow deduction or credit for any amount paid or incurred during the taxable year in carrying on a trade or business that consists of trafficking in controlled substances prohibited by federal or state law. The federal Controlled Substances Act, in turn, lists cannabis as a Schedule I controlled substance.
(d) It is the intent of the Legislature to help equity licensees obtain a personal income or corporate tax credit.

SEC. 2.

 Section 17053.82 is added to the Revenue and Taxation Code, to read:

17053.82.
 (a) For each taxable year beginning on or after January 1, 2022, and before January 1, 2027, there shall be allowed a credit against the “net tax,” as defined in Section 17039, to a qualified taxpayer in an amount equal to ten thousand dollars ($10,000).
(b) For purposes of this section, “qualified taxpayer” means an equity applicant or licensee as defined in subdivision (c) of eligible for the fee waiver and deferral program established pursuant to Section 26249 of the Business and Professions Code. Code, as administered by the Department of Cannabis Control.
(c) On January 1, 2023, and annually thereafter, the Department of Cannabis Control shall provide the Franchise Tax Board with a list of equity applicants and licensees, as defined in subdivision (c) of licensees eligible for the fee waiver and deferral program established pursuant to Section 26249 of the Business and Professions Code, for the purposes of administering this section.
(d) In the case where the credit allowed by this section exceeds the “net tax,” the excess may be carried over to reduce the “net tax” in the following taxable year, and succeeding seven years if necessary, until the credit is exhausted.
(e) This section and Section 23682 shall be known and may be cited as the Cannabis Equity Tax Credit.
(f) This section shall remain in effect only until December 1, 2027, and as of that date is repealed.

SEC. 3.

 Section 23682 is added to the Revenue and Taxation Code, to read:

23682.
 (a) For each taxable year beginning on or after January 1, 2022, and before January 1, 2027, there shall be allowed a credit against the “tax,” as defined in Section 23036, to a qualified taxpayer in an amount equal to ten thousand dollars ($10,000).
(b) For purposes of this section, “qualified taxpayer” means an equity applicant or licensee as defined in subdivision (c) of eligible for the fee waiver and deferral program established pursuant to Section 26249 of the Business and Professions Code. Code, as administered by the Department of Cannabis Control.
(c) On January 1, 2023, and annually thereafter, the Department of Cannabis Control shall provide the Franchise Tax Board with a list of equity applicants and licensees, as defined in subdivision (c) of licensees eligible for the fee waiver and deferral program established pursuant to Section 26249 of the Business and Professions Code, for the purposes of administering this section.
(d) In the case where the credit allowed by this section exceeds the “tax,” the excess may be carried over to reduce the “tax” in the following taxable year, and succeeding seven years if necessary, until the credit is exhausted.
(e) This section and Section 17053.82 shall be known and may be cited as the Cannabis Equity Tax Credit.
(f) This section shall remain in effect only until December 1, 2027, and as of that date is repealed.

SEC. 4.

 For the purposes of complying with Section 41 of the Revenue and Taxation Code, with respect to Sections 17053.82 and 23682 of the Revenue and Taxation Code, as added by this act, the Legislature finds and declares all of the following:
(a) The specific goals, purposes, and objectives that the credits will achieve include all of the following:
(1) Provide relief for individuals who are low income or who have directly or indirectly been negatively impacted by past cannabis policies.
(2) Assist cannabis equity applicants and licensees to stay in business or grow their business.
(b) Detailed performance indicators for the Legislature to use in determining whether the credits meet the goals, purposes, and objectives described in subdivision (a) are the number of credits claimed and the total dollar amount of credits claimed.
(c) (1) The Franchise Tax Board shall analyze the performance indicators in subdivision (b) for each taxable year and shall report its findings, findings to the Legislature, on or before July 31, 2023, March 1, 2025, and annually thereafter, thereafter while the credit is operative, in compliance with Section 9795 of the Government Code, to the Legislature. Code.
(2) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542 under Article 2 (commencing with Section 19542) of Chapter 7 of Part 10.2 of Division 2 of the Revenue and Taxation Code.

SEC. 5.

 This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.