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Business Taxes Law Guide – Revision 2023
 

BTLG Table of Contents > Cannabis Tax Law > entire chapter

Cannabis Tax Law

Revenue and Taxation Code

Division 2. Other Taxes
Part 14.5. Cannabis Tax



34010. Definitions. This part shall be known, and may be cited, as the "Cannabis Tax Law." For purposes of this part:

(a) "2020–21 fiscal year baseline" means the total amount of funds disbursed in the sub-trust accounts in fiscal year 2021–22 for the third allocation of the fiscal year 2020–21 revenue, pursuant to subdivision (f) of Section 34019, as determined by the Department of Finance.

(b) "Arm's length transaction" shall mean a sale entered into in good faith and for valuable consideration that reflects the fair market value in the open market between two informed and willing parties, neither under any compulsion to participate in the transaction.

(c) "Average market price" shall mean both of the following:

(1) (A) In an arm's length transaction, the average retail price determined by the wholesale cost of the cannabis or cannabis products sold or transferred to a cannabis retailer, plus a mark-up, as determined by the department on a biannual basis in six-month intervals.

(B) Notwithstanding subparagraph (A), the department shall not increase the mark-up amount during the period beginning on and after the operative date of the act amending this section by adding this subparagraph and before July 1, 2021.

(2) In a nonarm's length transaction, the cannabis retailer's gross receipts from the retail sale of the cannabis or cannabis products.

(d) "Cannabis" has the same meaning as set forth in Section 11018 of the Health and Safety Code and shall also mean medicinal cannabis.

(e) "Cannabis products" has the same meaning as set forth in Section 11018.1 of the Health and Safety Code and shall also mean medicinal concentrates and medicinal cannabis products.

(f) "Cannabis flowers" means the dried flowers of the cannabis plant as defined by the board.

(g) "Cannabis leaves" means all parts of the cannabis plant other than cannabis flowers that are sold or consumed.

(h) "Cannabis retailer" means a person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code as a retailer, non-storefront retailer, microbusiness, or nonprofit, or any other person otherwise authorized under Division 10 (commencing with Section 26000) of the Business and Professions Code to engage in retail sales.

(i) "Cultivator" means all persons required to be licensed to cultivate cannabis pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.

(j) "Department" means the California Department of Tax and Fee Administration or its successor agency.

(k) "Designated for donation" means medicinal cannabis donated by a cultivator to a cannabis retailer for subsequent donation to a medicinal cannabis patient pursuant to Section 26071 of the Business and Professions Code.

(l) "Distributor" means a person required to be licensed as a distributor pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.

(m) "Enters the commercial market" means cannabis or cannabis products, except for immature cannabis plants and seeds, that complete and comply with a quality assurance review and testing, as described in Section 26110 of the Business and Professions Code.

(n) "Gross receipts" has the same meaning as set forth in Section 6012.

(o) "Manufacturer" means a person required to be licensed as a manufacturer pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code.

(p) "Medicinal cannabis patient" means a qualified patient, as defined in Section 11362.7 of the Health and Safety Code, who possesses a physician’s recommendation that complies with Article 25 (commencing with Section 2525) of Chapter 5 of Division 2 of the Business and Professions Code, or a qualified patient or primary caregiver for a qualified patient issued a valid identification card pursuant to Section 11362.71 of the Health and Safety Code.

(q) "Retail sale" has the same meaning as set forth in Section 6007.

(r) "Nonprofit" has the same meaning as set forth in Section 26070.5 of the Business and Professions Code.

(s) "Person" has the same meaning as set forth in Section 6005.

(t) "Retail sale" has the same meaning as set forth in Section 6007.

(u) "Sale" and "purchase" mean any change of title or possession, exchange, or barter, conditional or otherwise, in any manner or by any means whatsoever, for consideration.

(v) "Sub-trust accounts" means the sub-trust accounts created under subdivision (f) of Section 34019.

(w) "Tax fund" means the California Cannabis Tax Fund created by Section 34018.

(x) "Transfer" means to grant, convey, hand over, assign, sell, exchange, or barter, in any manner or by any means, with or without consideration.

(y) "Unprocessed cannabis" includes cannabis flowers, cannabis leaves, or other categories of harvested cannabis, categories for unprocessed or frozen cannabis or immature plants, or cannabis that is shipped directly to manufacturers.

History—Added by Proposition 64, approved by voters at the November 8, 2016 election, in effect November 9, 2016. Stats. 2017, Ch. 27 (SB 94), in effect June 27, 2017, substituted "cannabis" for "marijuana" throughout; added subdivisions (a) and (b), relettered former subdivisions (a) – (g) as (c) – (i); added "State" after "shall mean the" in subdivision (c); substituted "medicinal" for "medical" in subdivisions (f) and (g); deleted former subdivisions (h) – (j); added subdivisions (j) – (m); relettered former subdivisions (h), (i), (j), (k), and (l) to (n), (r), (q), (o), and (p), respectively; and added subdivisions (s), (t), and (u). Stats. 2017, Ch. 253 (AB 133), in effect September 16, 2017, substituted "department" for "board" after "determined by" in paragraph (1) of subdivision (b); substituted "Department" shall mean the California Department of Tax and Fee Administration" for "Board" shall mean the State Board of Equalization" before "or its successor agency" in subdivision (c); add ", except for immature cannabis plants and seeds," after "cannabis or cannabis product" and substituted "complete and comply with a quality assurance review" for "has completed and complies with all quality assurance, inspection," before "and testing" in subdivision (m); added subdivision (v). Stats. 2018, Ch. 92 (SB 1289), in effect January 1, 2019, deleted "the average market price means" after "transaction, the average" in paragraph (1), and deleted "the average market price means" after "length transaction, the" in paragraph (2), of subdivision (b); substituted "means" for "shall mean" and "has" for "shall have" throughout section; deleted "shall" after "Sale" and "purchase" in subdivision(s); and substituted "includes" for "shall include" after "Unprocessed cannabis" in subdivision (u). Stats. 2019, Ch. 837 (SB 34), in effect January 1, 2020, substituted "mean both of the following:" for "mean" after "Average market price" shall" in subdivision (b); added "non-storefront retailer," after "licensed as a retailer," in subdivision (j); substituted "products" for "product," after "cannabis or cannabis" in subdivision (m); and added subdivisions (w) and (x). Stats. 2020, Ch. 93 (AB 1872), in effect September 18, 2020, redesignated former paragraph (b)(1) as paragraph (b)(1)(A); and added subparagraph (1)(B) to subdivision (b). Stats. 2021, Ch. 70 (AB 141), in effect July 12, 2021, repealed subdivision (d); and relettered former subdivisions (e) – (x) as subdivisions (d) – (w), respectively. Stats. 2022, Ch. 56 (AB 195), in effect June 30, 2022, added "This part shall be known, and may be cited, as the Cannabis Tax Law." before "For purposes of this part" in the first paragraph; relettered former subdivisions (a) and (b) as subdivisions (b) and (c), respectively; added subdivision (a); deleted former subdivisions (c) and (d); relettered former subdivisions (e) – (j) as subdivisions (d) – (i), respectively; substituted "department" for "board" after "defined by the" in subdivision (f); added "pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code" after "to be licensed", substituted "nonprofit, or any other person otherwise authorized under" for "nonprofit pursuant to" after "microbusiness, or", and substituted "Code to engage in retail sales" for "Code" after "Business and Professions" in subdivision (h); added subdivisions (j) and (k); relettered former subdivisions (k) – (m) as subdivisions (l) – (n), respectively; deleted former subdivision (n); added subdivisions (o) – (p); relettered former subdivisions (n) – (r) as subdivisions (q) – (u), respectively; substituted "Section 26001" for "paragraph (3) of subdivision (a) of Section 26070" after "as set forth in" in subdivision (q); added subdivisions (v) and (w); relettered former subdivisions (s) and (t) as subdivisions (x) and (y), respectively; and repealed subdivisions (u) – (w).

34011. Cannabis excise tax. (a) (1) Effective on and after January 1, 2018, and before January 1, 2023, a cannabis excise tax shall be imposed upon purchasers of cannabis or cannabis products sold in this state at the rate of 15 percent of the average market price of any retail sale by a cannabis retailer.

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 subdivision is sufficient to relieve the purchaser from further liability for the tax to which the invoice, receipt, or other document refers..

(2) Each cannabis retailer shall provide a purchaser with an invoice, receipt, or other document that includes a statement that reads: "The cannabis excise taxes are included in the total amount of this invoice."

(3) The department may prescribe other means to display the cannabis excise tax on an invoice, receipt, or other document from a cannabis retailer given to the purchaser.

(b) (1) A distributor in an arm's length transaction shall collect the cannabis excise tax imposed by this section from the cannabis retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the cannabis retailer. A distributor in a nonarm's length transaction shall collect the cannabis excise tax from the cannabis retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the cannabis retailer, or at the time of retail sale by the cannabis retailer, whichever is earlier. A distributor shall report and remit the cannabis excise tax to the department pursuant to Section 34015. A cannabis retailer shall be responsible for collecting the cannabis excise tax from the purchaser and remitting the cannabis excise tax to the distributor in accordance with rules and procedures established under law and any regulations adopted by the department.

(2) A distributor shall provide an invoice, receipt, or other similar document to the cannabis retailer that identifies the licensee receiving the product, the distributor from which the product originates, including the associated unique identifier, the amount of cannabis excise tax, and any other information deemed necessary by the department. The department may authorize other forms of documentation under this paragraph.

(c) 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.

(d) 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.

(e) 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.

(f) 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.

(g) (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.

(h) This section shall be inoperative on April 1, 2023.

History—Added by Proposition 64, approved by voters at the November 8, 2016 election, in effect November 9, 2016. Stats. 2017, Ch. 27 (SB 94), in effect June 27, 2017, substituted "cannabis" for "marijuana" throughout; substituted "average market price" for "gross receipts" after "upon purchasers of", substituted "a cannabis retailer" for "a dispensary or other person required to be licensed pursuant to Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code or a retailer, microbusiness, nonprofit, or other person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code to sell marijuana and marijuana products directly to a purchaser" in the first sentence, and added the second and third sentences, to subdivision (a); deleted former subdivisions (b) and (c); added subdivision (b); relettered former subdivisions (d), (e), (f), and (g) to (c), (d), (e), and (f); substituted "(commencing with Section 6001)" for "of this division" after "the sales and use tax under Part 1" in subdivision (d); substituted "shall not" for "may" after "Cannabis or cannabis products" in subdivision (e); substituted "taxes" for "tax" after "The sales and use", substituted "medicinal" for "medical" throughout, and substituted "Division 10 (commencing with Section 26000)" for "Chapter 3.5 (commencing with Section 19300) of Division 8" after "terms are defined in", in subdivision (f). Stats. 2017, Ch. 253 (AB 133), in effect September 16, 2017, substituted "department" for "board" throughout; added paragraph designation (1) to former sole paragraph, deleted the last sentence which read "Each cannabis retailer shall provide … are included in the total amount of this invoice.", and added paragraphs (2) and (3), to subdivision (a). Stats. 2018, Ch. 92 (SB 1289), in effect January 1, 2019, substituted "taxes" for "tax" after "sales and use" in subdivision (d). Stats. 2019, Ch. 837 (SB 34), in effect January 1, 2020, substituted "their" for "his or her" after "qualified patient provides" in subdivision (f); and added subdivision (g). Stats. 2021, Ch. 70 (AB 141), in effect July 12, 2021, added subdivision (h). Stats. 2022, Ch. 56 (AB 195), in effect June 30, 2022, added "on and after" after "Effective" and added ", and before January 1, 2023," after "January 1, 2018," in paragraph (1) of subdivision (a); added "imposed by this section" after "collect the cannabis excise tax" in the first sentence of paragraph (1) of subdivision (b); added "cannabis" after "The" in subdivision (c); added "cannabis" after "unless the", substituted "imposed by this section" for "required by law" after "excise tax" in subdivision (e); deleted subdivision (f); relettered former subdivisions (g) and (h) as subdivisions (f) and (g), respectively; substituted "This" for "Nothing in this" before "section shall", added "not" after "section shall", and substituted "a cannabis" for "an" after "construed to impose" in subdivisions (f) and (g); added "cannabis" after "liable for the" in paragraph (2) of subdivision (g); and added subdivision (h).

34011.01. Cannabis excise tax owed before January 1, 2023. Any amount owed by a cannabis retailer to a distributor in connection with the collection of cannabis excise tax owed prior to January 1, 2023, shall be paid by the retailer to the distributor on or before April 1, 2023. This section shall not be construed to require the department to enforce this obligation.

(b) A cannabis retailer may claim a credit on the cannabis excise tax return for cannabis excise tax amounts paid to a distributor, pursuant to Section 34011, before January 1, 2023, on cannabis or cannabis products sold to a purchaser on or after January 1, 2023, for which the cannabis retailer is responsible for remitting to the department.

History—Added by Stats. 2022, Ch. 56 (AB 195), in effect June 30, 2022.

34011.1. Vendor compensation. (a) (1) Until December 31, 2025, a licensed cannabis retailer that has received approval from the Department of Cannabis Control for a fee waiver under Section 26249 of the Business and Professions Code may retain vender compensation in an amount equal to 20 percent of the cannabis excise tax. For purposes of this paragraph, approval for a fee waiver under Section 26249 includes approval for a fee waiver that is contingent upon the availability of funds.

(2) To apply to retain vendor compensation pursuant to this section, a cannabis retailer shall complete a one-page application in a form and manner prescribed by the department that sets forth the name under which they transact or intend to transact business, the location of their place or places of business, and any other information the department may require. The cannabis retailer shall also include with the application their seller’s permit number and cannabis tax permit number and a copy of their cannabis license and Department of Cannabis Control approved fee waiver. An application for a permit shall be authenticated in a form or pursuant to methods as may be prescribed by the department.

(3) Upon verification that a licensed cannabis retailer meets the requirements of this subdivision, the department shall issue the cannabis retailer a notice approving vendor compensation under this section.

(4) To maintain eligibility for vendor compensation under this section, a licensed cannabis retailer shall maintain eligibility for a fee waiver under Section 26249 of the Business and Professions Code and any relevant implementing regulations. An approval for vendor compensation under this section shall expire on the last day of the calendar quarter following notification to the department pursuant to paragraph (5) that a cannabis retailer is no longer eligible for a fee waiver. If a cannabis retailer maintains eligibility for a fee waiver, an approval for vendor compensation under this subdivision shall remain valid for one year commencing on the first day of the calendar quarter following the date the department issues the notice, and may be renewed pursuant to paragraph (2) or other procedures as may be prescribed by the department.

(5) To notify the department of a cannabis retailer’s eligibility for vendor compensation under this section, the Department of Cannabis Control shall do either of the following:

(A) Maintain a database accessible to the department reflecting whether a cannabis retailer is eligible or has become ineligible for a fee waiver under Section 26249 of the Business and Professions Code and implementing regulations.

(B) Otherwise provide information upon request of the department for purposes of verifying a cannabis retailer’s eligibility under this section.

(b) This section shall become operative on January 1, 2023.

History—Added by Stats. 2022, Ch. 56 (AB 195), in effect June 30, 2022.

34011.2. Imposition and rate of cannabis excise tax. (a) (1) Effective on and after January 1, 2023, 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.

(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.

History—Added by Stats. 2022, Ch. 56 (AB 195), in effect June 30, 2022.

34012. Cultivation tax. (a) (1) Effective January 1, 2018, and before July 1, 2022, 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.

(A) The tax for cannabis flowers shall be nine dollars and twenty-five cents ($9.25) per dry-weight ounce.

(B) The tax for cannabis leaves shall be set at two dollars and seventy-five cents ($2.75) per dry-weight ounce.

(2) Notwithstanding paragraph (1), the cultivation tax imposed by this subdivision shall not apply to harvested cannabis that enters the commercial market and no tax collection is required pursuant to subdivision (h) if any of the following apply:

(A) The harvested cannabis was first sold or transferred by a cultivator to a manufacturer on or after July 1, 2022.

(B) The harvested cannabis was first sold or transferred by a cultivator to a distributor on or after July 1, 2022.

(C) The harvested cannabis, or cannabis products containing that harvested cannabis, was first sold or transferred by a microbusiness to a distributor or manufacturer that arranges for laboratory testing pursuant to subdivision (a) of Section 26110 of the Business and Professions Code on or after July 1, 2022.

(3) It is the intent of the Legislature that the suspension of the cultivation tax imposed by paragraph (2) apply only to cannabis that is ultimately subject, at retail sale as either cannabis or as cannabis products containing the harvested cannabis, to the cannabis excise tax imposed pursuant to Section 34011.2.

(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 enter 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 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 or medicinal cannabis or medicinal cannabis products designated for donation, 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 (Proposition 215), found in Section 11362.5 of the Health and Safety Code.

(k) (1) For the 2020 calendar year, the rates set forth in subdivisions (a), (b), and (c) shall be adjusted by the department for inflation.

(2) For the 2021 calendar year, the rates shall be those imposed for the 2020 calendar year in paragraph (1) and shall not be adjusted for inflation unless the adjustment is for an inflation rate that is less than zero.

(3) For the 2022 calendar year, until July 1, 2022, the rates shall be those imposed for the 2021 calendar year in paragraph (2) and shall be adjusted by the department for inflation.

(l) The Department of Cannabis Control is not responsible for enforcing any provisions of the cultivation tax.

History—Added by Proposition 64, approved by voters at the November 8, 2016 election, in effect November 9, 2016. Stats. 2017, Ch. 27 (SB 94), in effect June 27, 2017, substituted "cannabis" for "marijuana" throughout; substituted "cultivators" for "persons required to be licensed to cultivate marijuana pursuant to Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code or Division 10 (commencing with Section 26000) of the Business and Professions Code" after "commercial market upon" in the first sentence, and added "and enters the commercial market" at the end of the second sentence, of subdivision (a); substituted "specifications," for "specifications" after "shall be of the designs,", deleted "Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code" after "by any license under", in subdivision (e); substituted "cannabis shall not" for "no marijuana may" after "regulation provide that" in subdivision (f); substituted "26068" for "26170" after "pursuant to" in subdivision (g); substituted "Cultivators" for "Persons required to be licensed to cultivate marijuana pursuant to Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code or Division 10 (commencing with Section 26000) of the Business and Professions Code" before "shall be responsible" in the first sentence, and substituted "A cultivator's liability … document refers. Cannabis shall not" for "No marijuana may" before "be sold unless" in the second sentence, and added paragraphs (1) – (4), to subdivision (h); added "of 1996 (Section 11362.5 of the Health and Safety Code" after "Compassionate Use Act" in subdivision (j); and added subdivision (l). Stats. 2017, Ch. 253 (AB 133), in effect September 16, 2017, substituted "department" for "board" throughout; substituted "on all harvested cannabis that enters" for "upon entry" after "from a cultivator" in paragraph (1), and deleted "All cultivation tax applicable to a unique identifier shall be paid upon the first sale or transfer of cannabis or cannabis product with an associated unique identifier" in paragraph (2)(A), of subdivision (h). Stats. 2019, Ch. 837 (SB 34), in effect January 1, 2020, substituted "waste or medicinal cannabis or medicinal cannabis products designated for donation," for "waste," after "except for plant" in subdivision (i); and substituted "(Proposition 215), found in Section" for "(Section" after "Compassionate Use Act of 1996" and substituted "Code" for "Code)" after "Health and Safety" in subdivision (j). Stats. 2020, Ch. 93 (AB 1872), in effect September 18, 2020, redesignated subdivision (k) as subdivision (k)(1); substituted "For the 2020 calendar year" for "Beginning January 1, 2020" before "the rates set forth in", deleted "annually thereafter" after "by the department" in paragraph (1), and added paragraphs (2), (3), and (4), to subdivision (k). Stats. 2021, Ch. 70 (AB 141), in effect July 12, 2021, added ", except as otherwise exempt pursuant to Section 34012.2" after "under this section" in subdivision (i); substituted "Cannabis Control" for "Food and Agriculture" after "Department of" in subdivision (l). Stats. 2022, Ch. 56 (AB 195), in effect June 30, 2022, redesignated former subdivision (a) as paragraph (a)(1); added ", and before July 1, 2022," after "January 1, 2018" in paragraph (1), redesignated former paragraphs (a)(1) and (a)(2) as subparagraphs (a)(1)(A) and (a)(1)(B), and added paragraphs (a)(2) and (a)(3) to subdivision (a); added ", until July 1, 2022," after "2022 calendar year" in paragraph (k)(3); and deleted paragraph (4) of subdivision (k).

34012.1. Medicinal cannabis or medicinal cannabis product designated for donation. (a) Notwithstanding Section 34012, on and after the operative date of the act adding this section, the cultivation tax shall not be imposed on medicinal cannabis designated for donation by a cultivator in the track and trace system.

(b) A person licensed under Division 10 (commencing with Section 26000) of the Business and Professions Code that certifies in writing that medicinal cannabis or a medicinal cannabis product will be donated to a medicinal cannabis patient and sells or uses the medicinal cannabis or medicinal cannabis product in some manner or for some purpose other than donation, shall be liable for the taxes under this part. The certification in writing shall relieve the cultivator that donates the medicinal cannabis from liability for the taxes imposed and shall relieve the distributor from liability for the taxes required to be collected under this part, only if the certification is taken in good faith.

(c) A distributor or manufacturer shall not collect or remit the cultivation tax for medicinal cannabis or medicinal cannabis products designated for donation by a cultivator.

(d) A cultivator shall keep records of any medicinal cannabis or medicinal cannabis products designated for donation.

(e) Nothing in this part shall be construed to impose a cultivation tax upon medicinal cannabis or medicinal cannabis products designated for donation.

(f) For purposes of this section, "medicinal cannabis" and “medicinal cannabis product” shall mean cannabis and cannabis product, as defined in Section 26001 of the Business and Professions Code, intended for use pursuant to the Compassionate Use Act of 1996 (Proposition 215), found in Section 11362.5 of the Health and Safety Code, by a medicinal cannabis patient.

(g) (1) This section shall become operative upon completion of the necessary changes to the track and trace program in order to implement the act adding this section, as determined by the Department of Food and Agriculture, or on March 1, 2020, whichever occurs first.

(2) This section shall remain in effect only until five years after it becomes operative, and as of that date is repealed.

History—Added by Stats. 2019, Ch. 837 (SB 34), in effect January 1, 2020.

34012.2. Trade samples. (a) On and after January 1, 2022, there is exempt from the cultivation tax imposed pursuant to Section 34012 the cultivation of all harvested cannabis that will be, or has been, designated a trade sample pursuant to Section 26153.1 of the Business and Professions Code and all harvested cannabis that is used to manufacture a cannabis product that is designated a trade sample pursuant to Section 26153.1 of the Business and Professions Code.

(b) (b) The department shall adopt regulations prescribing the procedures for how the exemption provided in subdivision (a) shall be implemented.

(c) A person licensed under Division 10 (commencing with Section 26000) of the Business and Professions Code that sells cannabis exempt from the cultivation tax pursuant to subdivision (a) or sells any cannabis product that is manufactured with cannabis exempt from the cultivation tax pursuant to subdivision (a) 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) Notwithstanding any other law, the department may adopt and readopt emergency regulations to implement this section. The provisions of this section shall be applicable to emergency regulations adopted or readopted pursuant to this section. The emergency regulations authorized by this section shall be deemed an emergency and necessary for the immediate preservation of public peace, health, safety or general welfare.

History—Added by Stats. 2021, Ch. 70 (AB 141), in effect July 12, 2021.

34012.3. Cultivation tax. (a) The cannabis excise tax required to be collected by a cannabis retailer, and any amount not returned to the purchaser that is not tax but was collected from the purchaser under the representation by the cannabis retailer that it was tax, constitutes debt owed by the cannabis retailer to this state.

(b) This section shall become operative on January 1, 2023.

History—Added by Stats. 2022, Ch. 56 (AB 195), in effect June 30, 2022.

34012.5. Excess tax. (a) The cultivation tax and cannabis excise tax imposed pursuant to Section 34011 required to be collected by the distributor, or required to be collected by the manufacturer pursuant to paragraph (2) of subdivision (h) of Section 34012, and any amount unreturned to the cultivator or cannabis retailer that is not tax but was collected from the cultivator or cannabis retailer under the representation by the distributor or the manufacturer that it was tax constitute debts owed by the distributor or the manufacturer to this state.

(b) A distributor or manufacturer that has collected any amount of tax in excess of the amount of tax imposed by this part and actually due from a cultivator or cannabis retailer, may refund such amount to the cultivator or cannabis retailer, even though such tax amount has already been paid over to the department and no corresponding credit or refund has yet been secured. The distributor or manufacturer may claim credit for that overpayment against the amount of tax imposed by this part that is due upon any other quarterly return, providing that credit is claimed in a return dated no later than three years from the date of overpayment.

(c)Any tax collected from a cultivator, cannabis retailer, or purchaser that has not been remitted to the department shall be deemed a debt owed to the State of California by the person required to collect and remit the tax.

History—Added by Stats. 2017, Ch. 27 (SB 94), in effect June 27, 2017. Stats. 2017, Ch. 253 (AB 133), in effect September 16, 2017, substituted "department" for "board" throughout. Stats. 2022, Ch. 56 (AB 195), in effect June 30, 2022, added "imposed pursuant to Section 34011" after "cannabis excise tax" in subdivision (a); and substituted "cultivator, cannabis retailer, or purchaser" for "cultivator or cannabis retailer" after "from a" in subdivision (c).

34013. Administration. (a) The department shall administer and collect the taxes imposed by this part pursuant to the Fee Collection Procedures Law (Part 30 (commencing with Section 55001) ). For purposes of this part, the references in the Fee Collection Procedures Law to "fee" shall include the taxes imposed by this part, and references to "feepayer" shall include a person required to pay or collect the taxes imposed by this part.

(b) (1) A person licensed to engage in commercial cannabis activity under Division 10 (commencing with Section 26000) of the Business and Professions Code that failed to remit amounts due by means of electronic funds transfer on and after January 1, 2022, and before January 1, 2023, is not subject to or is relieved of any of the penalties imposed by Section 55050 for that failure.

(2) On or after January 1, 2022, subdivision (a) of Section 55050 shall not apply to a person required to pay or collect the taxes imposed by this part on a person licensed to engage in commercial cannabis activity under Division 10 (commencing with Section 26000) of the Business and Professions Code if the department deems it necessary to facilitate the collection of amounts due.

(c) The department may prescribe, adopt, and enforce regulations relating to the administration and enforcement of this part, including, but not limited to, collections, reporting, refunds, and appeals.

(d) The department shall adopt necessary rules and regulations to administer the taxes in this part. Such rules and regulations may include methods or procedures to tag cannabis or cannabis products, or the packages thereof, to designate prior tax payment.

(e) Until January 1, 2024, the department may prescribe, adopt, and enforce any emergency regulations as necessary to implement, administer, and enforce its duties under this division. Any emergency regulation prescribed, adopted, or enforced pursuant to this section shall be adopted in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, and, for purposes of that chapter, including Section 11349.6 of the Government Code, the adoption of the regulation is an emergency and shall be considered by the Office of Administrative Law as necessary for the immediate preservation of the public peace, health and safety, and general welfare. Notwithstanding any other law, the emergency regulations adopted by the department may remain in effect for two years from adoption, and may be readopted in accordance with subdivision (h) of Section 11346.1 of the Government Code.

(f) Any person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code who fails to pay the taxes imposed under this part shall, in addition to owing the taxes not paid, be subject to a penalty of at least one-half the amount of the taxes not paid, and shall be subject to having its license revoked pursuant to Section 26031 of the Business and Professions Code.

(g) The department may bring such legal actions as are necessary to collect any deficiency in the tax required to be paid, and, upon the department's request, the Attorney General shall bring the actions.

History—Added by Proposition 64, approved by voters at the November 8, 2016 election, in effect November 9, 2016. Stats. 2017, Ch. 27 (SB 94), in effect June 27, 2017, substituted "cannabis" for "marijuana" throughout; deleted "of Division 2)" after "(commencing with Section 55001)" in the first sentence, and substituted "taxes" for "tax" throughout the second sentence, of subdivision (a); substituted "Until January 1, 2019, the" for "The" before "board may prescribe" and substituted "administer," for "administer" in the first sentence of subdivision (d); added "required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code" after "Any person" and deleted "Code or pursuant to Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code" after "Section 26031 of the Business and Professions Code" in subdivision (e). Stats. 2018, Ch. 228 (AB 1741), in effect August 28, 2018, substituted "department" for "board" throughout section; added subdivision (b), redesignated former paragraphs (b) – (f) as (c) – (g); and deleted "provision of" after "Notwithstanding any other" in the last sentence of subdivision (e). Stats. 2022, Ch. 56 (AB 195), in effect June 30, 2022, added paragraph (1) and redesignated former subdivision (b) as paragraph (2) in redesignated subdivision (b); substituted "2024" for "2019" after "Until January 1," in the first sentence and added ",and may be … of the Government Code" after "two years from adoption" in the last sentence of subdivision (e). Stats. 2022, Ch. 474 (SB 1496), in effect January 1, 2023, substituted "January 1, 2023," for "the operative date of the act adding this paragraph" after ", and before" in paragraph (1) and substituted "On or after" for "Until" before "January 1, 2022" in paragraph (2) of subdivision (b).

34013.1. Information disclosure. Notwithstanding Sections 7056 and 55381:

(a) The department may disclose the name, business name, business city location, account number, and account status of a person registered with the department for purposes of collecting and remitting the cannabis excise tax.

(b) (1) Notwithstanding subdivision (a), the department shall, upon written request, provide to a state and local law enforcement agency any and all information collected by the department under this part regarding a person required by this part to collect and remit the cannabis excise tax and information collected under Part 1 (commencing with Section 6001). The state and local law enforcement agencies authorized by this subdivision shall only access and use this information to the extent necessary to carry out the functions and duties of that agency and the agency shall adhere to all state laws, policies, and regulations pertaining to the protection of personal information and individual privacy.

(2) For purposes of this section, "law enforcement agency" means the Department of the California Highway Patrol, a sheriff department, a police department, or a California state, city, county, or city and county agency or department designated by the governing body of that agency to enforce state cannabis laws or local cannabis ordinances and regulations.

(c) The department is authorized to share information obtained under this part and under Part 1 (commencing with Section 6001), with a licensing authority, pursuant to a memorandum of understanding, as deemed necessary by the department.

History—Added by Stats. 2022, Ch. 474 (SB 1496), in effect January 1, 2023.

34014. Permits. (a)(1) Until January 1, 2023, all distributors must obtain a separate permit from the department pursuant to regulations adopted by the department. No fee shall be charged to any person for issuance of the permit. Any person required to obtain a permit who engages in business as a distributor without a permit or after a permit has been canceled suspended, or revoked, and each officer of any corporation that so engages in business, is guilty of a misdemeanor.

(2) On and after January 1, 2023, all cannabis retailers shall obtain a separate cannabis tax permit from the department pursuant to regulations adopted by the department. A fee shall not be charged to any person for issuance of the permit. Any person required to obtain a permit who engages in business as a cannabis retailer without a permit or after a permit has been canceled, suspended, or revoked, and each officer of any corporation that so engages in business, is guilty of a misdemeanor.

(b) The department may require every licensed distributor, retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed, to provide security to cover the liability for taxes imposed by state law on cannabis produced or received by the retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed in accordance with procedures to be established by the department. Notwithstanding anything herein to the contrary, the department may waive any security requirement it imposes for good cause, as determined by the department. "Good cause" includes, but is not limited to, the inability of a distributor, retailer, cultivator, microbusiness, nonprofit, or other person required to be licensed to obtain security due to a lack of service providers or the policies of service providers that prohibit service to a cannabis business.

(c) In fixing the amount of any security required by the department, the department shall give consideration to the financial hardship that may be imposed on licensees as a result of any shortage of available surety providers.

History—Added by Proposition 64, approved by voters at the November 8, 2016 election, in effect November 9, 2016. Stats. 2017, Ch. 27 (SB 94), in effect June 27, 2017, substituted "cannabis" for "marijuana" throughout; substituted "distributors" for "persons required to be licensed involved in the cultivation and retail sale of marijuana or marijuana products" after "All" in the first sentence and substituted "distributor" for "cultivator, dispensary, retailer, microbusiness or nonprofit pursuant to Chapter 3.5 (commencing with Section 19300) of Division 8 or Division 10 (commencing with Section 26000) of the Business and Professions Code" after "engages in business as a" in the second sentence, of subdivision (a); substituted "distributor, retailer," for "dispensary," after "every licensed" and added "retailer" after "received by the" in the first sentence, added "distributor, retailer" after "inability of a" in the third sentence, and substituted "executed," for "executed" in the fourth sentence, of subdivision (b). Stats. 2022, Ch. 56 (AB 195), in effect June 30, 2022, substituted "department" for "board" throughout; redesignated former subdivision (a) as paragraph (a)(1); substituted "Until January 1, 2023, all" for "All" before "distributors must obtain" in the first sentence and substituted "that" for "which" after "of any corporation" in the second sentence of paragraph (1) and added paragraph (2) to subdivision (a); deleted former fourth sentence that read "A person may not commence or continue any business or operation relating to cannabis cultivation until any surety required by the board with respect to the business or operation has been properly prepared, executed, and submitted under this part." in subdivision (b).

34014.1. Permit suspension and revocation. (a) Whenever any person fails to comply with any provision of this part relating to the cannabis excise tax or any rule or regulation of the department relating to the cannabis excise tax prescribed and adopted under this part, or when a person’s seller’s permit has been suspended or revoked under Part 1 (commencing with Section 6001), or when a person’s license has been suspended or revoked under Division 10 (commencing with Section 26000) of the Business and Professions Code, the department upon conducting a hearing, after giving the person 10 days’ notice in writing specifying the time and place of hearing and requiring the person to show cause why the person’s permit or permits should not be revoked, may revoke or suspend any one or more of the permits held by the person. The department shall give to the person written notice of the suspension or revocation of any of the person’s permits. The notices herein required may be served personally or by mail in the manner prescribed for service of notice of a deficiency determination under subdivision (d) of Section 55061 of the Revenue and Taxation Code. The department shall not issue a new permit after the revocation of a permit unless it is satisfied that the former holder of the permit will comply with the provisions of this part relating to the cannabis excise tax and the regulations of the department.

(b) A person whose permit has been previously suspended or revoked shall pay the department a new issuance fee of one hundred dollars ($100) for the reissuance of a permit.

History—Added by Stats. 2022, Ch. 56 (AB 195), in effect June 30, 2022.

Text of Section Operative November 9, 2016

34015. Due date; returns and payments. (a) Unless otherwise prescribed by the department pursuant to subdivision (c), the cannabis excise tax imposed by Section 34011 and cultivation tax imposed by this part is due and payable to the department quarterly on or before the last day of the month following each quarterly period of three months. On or before the last day of the month following each quarterly period, a return for the preceding quarterly period shall be filed with the department by each distributor using electronic media. Returns shall be authenticated in a form or pursuant to methods as may be prescribed by the department. If the cultivation tax is paid by stamp pursuant to subdivision (d) of Section 34012, the department may by regulation determine when and how the tax shall be paid.

(b) The department may require every person engaged in the cultivation, distribution, manufacturing, retail sale of cannabis or cannabis products, or any other person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code to file, on or before the 25th day of each month, a report using electronic media respecting the person's inventory, purchases, and sales during the preceding month and any other information as the department may require to carry out the purposes of this part. Reports shall be authenticated in a form or pursuant to methods as may be prescribed by the department.

(c) The department may adopt regulations prescribing the due date for returns and remittances of cannabis excise tax collected by a distributor in an arm's length transaction pursuant to subdivision (b) of Section 34011.

(d) The department may make examinations of the books and records of any person licensed, or required to be licensed, pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code, as it may deem necessary in carrying out this part.

(e) This section shall remain in effect only until April 30, 2023, and as of that date is repealed.

History—Added by Proposition 64, approved by voters at the November 8, 2016 election, in effect November 9, 2016. Stats. 2017, Ch. 27 (SB 94), in effect June 27, 2017, substituted "cannabis" for "marijuana" throughout; substituted "Unless otherwise prescribed … to subdivision (c), the" for "Marijuana" before "excise tax imposed" in the first sentence, and substituted "distributor" for "person required to be licensed for cultivation or retail sale under Chapter 3.5 (commencing with Section 19300) of Division 8 or Division 10 (commencing with Section 26000) of the Business and Professions Code" after "with the board by each" in the second sentence of subdivision (a); substituted "manufacturing," for "or," after "engaged in the cultivation," and substituted "cannabis or cannabis products, or any other person" for "marijuana and marijuana products" after "retail sale of", and deleted "Chapter 3.5 (commencing with Section 19300 of Division 8" after "required to be licensed pursuant to", in subdivision (b); and added subdivisions (c) and (d). Stats. 2022, Ch. 56 (AB 195), in effect June 30, 2022, substituted "department" for "board" throughout; added "cannabis" after "subdivision (c), the" and substituted "34012," for "34012" after "subdivision (d) of Section" in the third sentence of subdivision (a); added "cannabis" after "remittances of" in subdivision (c); and added subdivision (e).

Text of Section Operative January 1, 2023

34015. Due date; returns and payments. (a) Unless otherwise prescribed by the department, the cannabis excise tax imposed by Section 34011.2 is due and payable to the department quarterly on or before the last day of the month following each quarterly period of three months. On or before the last day of the month following each quarterly period, each cannabis retailer shall file a return for the preceding quarterly period with the department using electronic media prescribed by the department. Returns shall be authenticated in a form or pursuant to methods as may be prescribed by the department.

(b) The department may require every person engaged in the cultivation, distribution, manufacturing, or retail sale of cannabis or cannabis products, or any other person required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code to file, on or before the 25th day of each month, a report using electronic media prescribed by the department with respect to the person’s inventory, purchases, and sales during the preceding month and any other information as the department may require to carry out the purposes of this part. Reports shall be authenticated in a form or pursuant to methods as may be prescribed by the department.

(c) The department may examine the books and records of any person licensed, or required to be licensed, pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code, as it may deem necessary in carrying out this part.

(d) This section shall become operative on January 1, 2023.

History—Added by Stats. 2022, Ch. 56 (AB 195), in effect June 30, 2022.

34015.1. Deficiency determination; unlicensed persons. (a) (1) Any unlicensed person who is required to be licensed pursuant to Division 10 (commencing with Section 26000) of the Business and Professions Code and who possesses, keeps, stores, or retains for the purpose of sale, or sells or offers to sell any cannabis or cannabis products, shall be liable for the cultivation tax imposed pursuant to Section 34012 as if the person were the cultivator of the harvested cannabis and that cannabis entered the commercial market, the cannabis excise tax imposed pursuant to Section 34011 or 34011.2 as if the person were the purchaser of the cannabis or cannabis product in a retail sale from a cannabis retailer, and for applicable penalties and interest, if any, which shall become immediately due and payable.

(2) (A) The department shall ascertain as best it may the category and amount of the harvested cannabis deemed as having entered the commercial market, and the average market price or gross receipts, based on any information within the department’s possession or that may come into its possession, of the retail sale of the cannabis or cannabis product deemed as purchased from a cannabis retailer, and shall determine immediately the tax on that amount, adding to the tax a penalty of 25 percent of the amount of tax or five hundred dollars ($500), whichever is greater, and shall give the unlicensed person notice of that determination in the same manner as prescribed for service of notice by Section 55061. However, if the department determines that the failure to secure a license was due to reasonable cause, the department may waive the penalty. Sections 55101 and 55102 shall be applicable with respect to the finality of the determination and the right of the person to petition for a redetermination.

(B) Any person seeking to be relieved of the penalty imposed pursuant to subparagraph (A) shall file with the department a signed statement setting forth the facts upon which they base the claim for relief. Any person who signs a statement pursuant to this section that asserts the truth of any material matter that they know to be false is guilty of a misdemeanor punishable by imprisonment of up to one year in the county jail, or a fine of not more than one thousand dollars ($1,000), or both the imprisonment and the fine.

(3) If the department believes that the collection of any amount of tax required to be paid by any person under this part will be jeopardized by delay, it may make a jeopardy determination pursuant to Article 4 (commencing with Section 55101) of Chapter 3 of Part 30.

(4) The department may collect the tax, penalty, and interest due from the person by seizure and sale of property in the manner prescribed for the collection pursuant to Section 55181.

(5) In the suit, a copy of the jeopardy determination certified by the department shall be prima facie evidence that the person is indebted to the state in the amount of the tax, penalties, and interest at the modified adjusted rate per month, or fraction thereof, established pursuant to Section 6591.5, from the date the amount, or any portion thereof, should have been reported until the date of payment.

(6) The foregoing remedies of the state are cumulative.

(7) No action taken pursuant to this section relieves the person in any way from the penal provisions of this part or the Fee Collection Procedures Law (Part 30 (commencing with Section 55001)).

(b) Any licensed person, on or after January 1, 2023, who sells or transfers to any person cannabis or cannabis products and who knowingly does not report or falsely reports that sale or transfer 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 regulations promulgated for purposes of that chapter, shall be, with respect to the cannabis or cannabis products knowingly not reported or falsely reported in the track and trace system, liable for the cannabis excise tax imposed pursuant to Section 34011 or 34011.2 as if the person were the purchaser of the cannabis or cannabis product in a retail sale from a cannabis retailer, and for applicable penalties and interest, if any, which shall become immediately due and payable.

History—Added by Stats. 2022, Ch. 56 (AB 195), in effect June 30, 2022.

34015.2. Personal liability. (a) Upon the termination, dissolution, or abandonment of the business of a corporation, partnership, limited partnership, limited liability partnership, or limited liability company, any officer, member, manager, partner, or other person having control or supervision of, or who is charged with the responsibility for the filing of returns or the payment of tax for, or who is under a duty to act for the corporation, partnership, limited partnership, limited liability partnership, or limited liability company in complying with any requirement of this part, shall, notwithstanding any provision in the Corporations Code to the contrary, be personally liable for any unpaid taxes and interest and penalties on those taxes, if the officer, member, manager, partner, or other person willfully fails to pay or to cause to be paid any taxes due from the corporation, partnership, limited partnership, limited liability partnership, or limited liability company pursuant to this part.

(b) The officer, member, manager, partner, or other person shall be liable only for taxes that became due during the period they had the control, supervision, responsibility, or duty to act for the corporation, partnership, limited partnership, limited liability partnership, or limited liability company described in subdivision (a), plus interest and penalties on those taxes.

(c) Personal liability may be imposed pursuant to this section only if the department can establish that the corporation, partnership, limited partnership, limited liability partnership, or limited liability company is required to collect the cannabis excise tax imposed pursuant to Section 34011 or 34011.2 or cultivation tax imposed pursuant to Section 34012 and that it failed to report and pay the tax.

(d) Except as provided in subdivision (e), the sum due for the liability under this section may be collected by determination and collection in the manner provided in Chapter 3 (commencing with Section 55040) and Chapter 4 (commencing with Section 55121) of Part 30.

(e) A notice of deficiency determination under this section shall be mailed within three years after the last day of the calendar month following the quarterly period in which the department obtains actual knowledge, through its audit or compliance activities, or by written communication by the business or its representative, of the termination, dissolution, or abandonment of the business of the corporation, partnership, limited partnership, limited liability partnership, or limited liability company, or, within eight years after the last day of the calendar month following the quarterly period in which the corporation, partnership, limited partnership, limited liability partnership, or limited liability company business was terminated, dissolved, or abandoned, whichever period expires earlier. If a business or its representative files a notice of termination, dissolution, or abandonment of its business with a state or local agency other than the department, this filing shall not constitute actual knowledge by the department under this section.

(f) For purposes of this section, "willfully fails to pay or to cause to be paid" means that the failure was the result of an intentional, conscious, and voluntary course of action.

History—Added by Stats. 2022, Ch. 56 (AB 195), in effect June 30, 2022.

34016. Inspection authority. (a) Any peace officer or department employee granted limited peace officer status pursuant to paragraph (6) of subdivision (a) of Section 830.11 of the Penal Code, upon presenting appropriate credentials, is authorized to enter any place as described in paragraph (2) and to conduct inspections in accordance with the following paragraphs, inclusive.

(1) Inspections shall be performed in a reasonable manner and at times that are reasonable under the circumstances, taking into consideration the normal business hours of the place to be entered.

(2) Inspections may be at any place at which cannabis or cannabis products are sold to purchasers, cultivated, or stored, or at any site where evidence of activities involving evasion of tax may be discovered.

(3) Inspections shall be conducted no more than once in a 24-hour period.

(b) Any person who fails or refuses to allow an inspection shall be guilty of a misdemeanor. Each offense shall be punished by a fine not to exceed five thousand dollars ($5,000), or imprisonment not exceeding one year in a county jail, or both the fine and imprisonment. The court shall order any fines assessed be deposited in the California Cannabis Tax Fund.

(c) (1) (A) The department or a law enforcement agency may seize cannabis or cannabis products from a person who possesses, stores, owns, or has made a retail sale of those cannabis or cannabis products if any of the following apply:

(i) Until January 1, 2023, the cannabis or cannabis products are without evidence of tax payment.

(ii) The cannabis or cannabis products are not contained in secure packaging.

(iii) The person is an unlicensed person specified in paragraph (1) of subdivision (a) of Section 34015.1.

(iv) The cannabis or cannabis products were not reported in the track and trace system, as specified in subdivision (b) of Section 34015.1.

(B) Any cannabis or cannabis products seized by a law enforcement agency or the department shall be deemed forfeited and the department shall comply with the procedures set forth in Sections 30436 through 30449, inclusive.

(2) Any seizures authorized pursuant to paragraph (1) of this subdivision are in addition to any criminal or civil penalties that may be imposed by law, including subdivision (e) of this section.

(d) Any person who renders a false or fraudulent report is guilty of a misdemeanor and subject to a fine not to exceed one thousand dollars ($1,000) for each offense.

(e) Any violation of any provisions of this part, except as otherwise provided, is a misdemeanor and is punishable as such.

(f) All moneys remitted to the department under this part shall be credited to the California Cannabis Tax Fund.

History—Added by Proposition 64, approved by voters at the November 8, 2016 election, in effect November 9, 2016. Stats. 2017, Ch. 27 (SB 94), in effect June 27, 2017, substituted "cannabis" for "marijuana" throughout; and deleted "requested or" after "shall be" in paragraph (3) of subdivision (a). Stats. 2022, Ch. 474 (SB 1496), in effect January 1, 2023, substituted "department" for "board" after "peace officer or" and substituted "(2)" for "(3)" after "described in paragraph" in subdivision (a); added subparagraph (1)(A) to subdivision (c); redesignated former subdivision (c) as subparagraph (c)(1)(B); deleted the first sentence that read "Upon discover by the board or a law enforcement agency that a licensee or any other person possesses, stores, owns, or has made a retail sale of cannabis or cannabis products, without evidence of tax payment or not contained in secure packaging, the board or the law enforcement agency shall be authorized to seize the cannabis or cannabis products", substituted "department shall" for "board shall within seven days" after "agency or the", and substituted "department" for "board" after "forfeited and the" in subparagraph (c)(1)(B), and added paragraph (2) to subdivision (c); and substituted "department" for "board" after "remitted to the" in subdivision (f).

34017. Legislative report; Legislative Analyst's Office. The Legislative Analyst's Office shall submit a report to the Legislature by January 1, 2020, with recommendations to the Legislature for adjustments to the tax rate to achieve the goals of undercutting illicit market prices and discouraging use by persons younger than 21 years of age while ensuring sufficient revenues are generated for the programs identified in Section 34019.

History—Added by Proposition 64, approved by voters at the November 8, 2016 election, in effect November 9, 2016.

34018. California Cannabis Tax Fund. (a) The California Cannabis Tax Fund is hereby created in the State Treasury. The Tax Fund shall consist of all taxes, interest, penalties, and other amounts collected and paid to the department pursuant to this part, less payment of refunds.

(b) Notwithstanding any other law, the California Cannabis Tax Fund is a special trust fund established solely to carry out the purposes of the Control, Regulate and Tax Adult Use of Marijuana Act and all revenues deposited into the Tax Fund, together with interest or dividends earned by the fund, are hereby continuously appropriated for the purposes of the Control, Regulate and Tax Adult Use of Marijuana Act without regard to fiscal year and shall be expended only in accordance with the provisions of this part and its purposes.

(c) Notwithstanding any other law, the taxes imposed by this part and the revenue derived therefrom, including investment interest, shall not be considered to be part of the General Fund, as that term is used in Chapter 1 (commencing with Section 16300) of Part 2 of Division 4 of Title 2 of the Government Code, shall not be considered General Fund revenue for purposes of Section 8 of Article XVI of the California Constitution and its implementing statutes, and shall not be considered "moneys" for purposes of subdivisions (a) and (b) of Section 8 of Article XVI of the California Constitution and its implementing statutes.

History—Added by Proposition 64, approved by voters at the November 8, 2016 election, in effect November 9, 2016. Stats. 2017, Ch. 27 (SB 94), in effect June 27, 2017, substituted "cannabis" for "marijuana" throughout. Stats. 2018, Ch. 92 (SB 1289), in effect January 1, 2019, added "Title 2 of" after "of Division 4 of" in subdivision (c). Stats. 2022, Ch. 474 (SB 1496), in effect January 1, 2023, substituted "department" for "board" after "paid to the" in the second sentence of subdivision (a).

34019. Disposition of proceeds. (a)(1) For each fiscal year, the Department of Finance shall estimate revenues to be received pursuant to Sections 34011, 34011.2, and 34012 and provide those estimates to the Controller no later than June 15 of each year. The Controller shall use these estimates when disbursing funds pursuant to this section. Except as provided in paragraph (2), before any funds are disbursed pursuant to subdivisions (b), (c), (d), and (e) of this section, the Controller shall disburse from the tax fund to the appropriate account, without regard to fiscal year, the following:

(A) Reasonable costs incurred by the board for administering and collecting the taxes imposed by this part; provided, however, such costs shall not exceed 4 percent of tax revenues received.

(B) Reasonable costs incurred by the Department of Cannabis Control for implementing, administering, and enforcing Division 10 (commencing with Section 26000) of the Business and Professions Code to the extent those costs are not reimbursed pursuant to Section 26180 of the Business and Professions Code. This paragraph shall remain operative through the 2022–23 fiscal year.

(C) Reasonable costs incurred by the Department of Fish and Wildlife, the State Water Resources Control Board, and the Department of Pesticide Regulation for carrying out their respective duties under Division 10 (commencing with Section 26000) of the Business and Professions Code to the extent those costs are not otherwise reimbursed.

(D) Reasonable costs incurred by the Governor’s Office of Business and Economic Development for implementing, administering, and enforcing Chapter 23 (commencing with Section 26240) of Division 10 of the Business and Professions Code.

(E) Reasonable costs incurred by the Controller for performing duties imposed by the Control, Regulate and Tax Adult Use of Marijuana Act, including the audit required by Section 34020.

(F) Reasonable costs incurred by the Department of Finance for conducting the performance audit pursuant to Section 26191 of the Business and Professions Code.

(G) Reasonable costs incurred by the Legislative Analyst's Office for performing duties imposed by Section 34017.

(H) Sufficient funds to reimburse the Division of Labor Standards Enforcement and the Division of Occupational Safety and Health within the Department of Industrial Relations and the Employment Development Department for the costs of applying and enforcing state labor laws to licensees under Division 10 (commencing with Section 26000) of the Business and Professions Code.

(2) Notwithstanding paragraph (1), the Controller shall not make disbursements pursuant to subparagraph (A), (B), (C), (E) or (H) for the 2022–23 and 2023–24 fiscal years.

(b) The Controller shall next disburse the sum of ten million dollars ($10,000,000) to a public university or universities in California annually beginning with the 2018–19 fiscal year until the 2028–29 fiscal year to research and evaluate the implementation and effect of the Control, Regulate and Tax Adult Use of Marijuana Act, and shall, if appropriate, make recommendations to the Legislature and Governor regarding possible amendments to the Control, Regulate and Tax Adult Use of Marijuana Act. The recipients of these funds shall publish reports on their findings at a minimum of every two years and shall make the reports available to the public. The Department of Cannabis Control shall select the universities to be funded. The research funded pursuant to this subdivision shall include but not necessarily be limited to:

(1) Impacts on public health, including health costs associated with cannabis use, as well as whether cannabis use is associated with an increase or decrease in use of alcohol or other drugs.

(2) The impact of treatment for maladaptive cannabis use and the effectiveness of different treatment programs.

(3) Public safety issues related to cannabis use, including studying the effectiveness of the packaging and labeling requirements and advertising and marketing restrictions contained in the act at preventing underage access to and use of cannabis and cannabis products, and studying the health-related effects among users of varying potency levels of cannabis and cannabis products.

(4) Cannabis use rates, maladaptive use rates for adults and youth, and diagnosis rates of cannabis-related substance use disorders.

(5) Cannabis market prices, illicit market prices, tax structures and rates, including an evaluation of how to best tax cannabis based on potency, and the structure and function of licensed cannabis businesses.

(6) Whether additional protections are needed to prevent unlawful monopolies or anticompetitive behavior from occurring in the adult-use cannabis industry and, if so, recommendations as to the most effective measures for preventing such behavior.

(7) The economic impacts in the private and public sectors, including, but not necessarily limited to, job creation, workplace safety, revenues, taxes generated for state and local budgets, and criminal justice impacts, including, but not necessarily limited to, impacts on law enforcement and public resources, short- and long-term consequences of involvement in the criminal justice system, and state and local government agency administrative costs and revenue.

(8) Whether the regulatory agencies tasked with implementing and enforcing the Control, Regulate and Tax Adult Use of Marijuana Act are doing so consistent with the purposes of the act, and whether different agencies might do so more effectively.

(9) Environmental issues related to cannabis production and the criminal prohibition of cannabis production.

(10) The geographic location, structure, and function of licensed cannabis businesses, and demographic data, including race, ethnicity, and gender, of licenseholders.

(11) The outcomes achieved by the changes in criminal penalties made under the Control, Regulate and Tax Adult Use of Marijuana Act for cannabis-related offenses, and the outcomes of the juvenile justice system, in particular, probation-based treatments and the frequency of up-charging illegal possession of cannabis or cannabis products to a more serious offense.

(c) The Controller shall next disburse the sum of three million dollars ($3,000,000) annually to the Department of the California Highway Patrol beginning with the 2018–19 fiscal year until the 2022–23 fiscal year to establish and adopt protocols to determine whether a driver is operating a vehicle while impaired, including impairment by the use of cannabis or cannabis products, and to establish and adopt protocols setting forth best practices to assist law enforcement agencies. The department may hire personnel to establish the protocols specified in this subdivision. In addition, the department may make grants to public and private research institutions for the purpose of developing technology for determining when a driver is operating a vehicle while impaired, including impairment by the use of cannabis or cannabis products.

(d) The Controller shall next disburse the sum of ten million dollars ($10,000,000) beginning with the 2018–19 fiscal year and increasing ten million dollars ($10,000,000) each fiscal year thereafter until the 2022–23 fiscal year , at which time the disbursement shall be fifty million dollars ($50,000,000) each year thereafter, to the Governor's Office of Business and Economic Development, in consultation with the Labor and Workforce Development Agency and the State Department of Social Services, to administer a community reinvestments grants program to local health departments and at least 50 percent to qualified community-based nonprofit organizations to support job placement, mental health treatment, substance use disorder treatment, system navigation services, legal services to address barriers to reentry, and linkages to medical care for communities disproportionately affected by past federal and state drug policies. The office shall solicit input from community-based job skills, job placement, and legal service providers with relevant expertise as to the administration of the grants program. In addition, the office shall periodically evaluate the programs it is funding to determine the effectiveness of the programs, shall not spend more than 4 percent for administrative costs related to implementation, evaluation and oversight of the programs, and shall award grants annually, beginning no later than January 1, 2020.

(e) The Controller shall next disburse the sum of two million dollars ($2,000,000) annually to the University of California San Diego Center for Medicinal Cannabis Research to further the objectives of the center, including the enhanced understanding of the efficacy and adverse effects of cannabis as a pharmacological agent.

(f) By July 15 of each fiscal year beginning in the 2018–19 fiscal year, the Controller shall, after disbursing funds pursuant to subdivisions (a), (b), (c), (d), and (e), disburse funds deposited in the tax fund during the prior fiscal year into sub-trust accounts, which are hereby created, as follows:

(1) Sixty percent shall be deposited in the Youth Education, Prevention, Early Intervention and Treatment Account, and disbursed by the Controller to the State Department of Health Care Services for programs for youth that are designed to educate about and to prevent substance use disorders and to prevent harm from substance use. The State Department of Health Care Services shall enter into interagency agreements with the State Department of Public Health and the State Department of Education to implement and administer these programs. The programs shall emphasize accurate education, effective prevention, early intervention, school retention, and timely treatment services for youth, their families, and caregivers. The programs may include, but are not limited to, the following components:

(A) Prevention and early intervention services including outreach, risk survey and education to youth, families, caregivers, schools, primary care health providers, behavioral health and substance use disorder service providers, community and faith-based organizations, fostercare providers, juvenile and family courts, and others to recognize and reduce risks related to substance use, and the early signs of problematic use and of substance use disorders.

(B) Grants to schools to develop and support student assistance programs, or other similar programs, designed to prevent and reduce substance use, and improve school retention and performance, by supporting students who are at risk of dropping out of school and promoting alternatives to suspension or expulsion that focus on school retention, remediation, and professional care. Schools with higher than average dropout rates should be prioritized for grants.

(C) Grants to programs for outreach, education and treatment for homeless youth and out-of-school youth with substance use disorders.

(D) Access and linkage to care provided by county behavioral health programs for youth, and their families and caregivers, who have a substance use disorder or who are at risk for developing a substance use disorder.

(E) Youth-focused substance use disorder treatment programs that are culturally and gender competent, trauma informed, evidence based, and that provide a continuum of care that includes screening and assessment (substance use disorder as well as mental health), early intervention, active treatment, family involvement, case management, overdose prevention, prevention of communicable diseases related to substance use, relapse management for substance use and other cooccurring behavioral health disorders, vocational services, literacy services, parenting classes, family therapy and counseling services, medication-assisted treatments, psychiatric medication, and psychotherapy. When indicated, referrals must be made to other providers.

(F) To the extent permitted by law and where indicated, interventions shall utilize a two-generation approach to addressing substance use disorders with the capacity to treat youth and adults together. This would include supporting the development of family-based interventions that address substance use disorders and related problems within the context of families, including parents, foster parents, caregivers, and all their children.

(G) Programs to assist individuals, as well as families and friends of drug using young people, to reduce the stigma associated with substance use including being diagnosed with a substance use disorder or seeking substance use disorder services. This includes peer-run outreach and education to reduce stigma, anti-stigma campaigns, and community recovery networks.

(H) Workforce training and wage structures that increase the hiring pool of behavioral health staff with substance use disorder prevention and treatment expertise. Provide ongoing education and coaching that increases substance use treatment providers' core competencies and trains providers on promising and evidenced-based practices.

(I) Construction of community-based youth treatment facilities.

(J) The departments may contract with each county behavioral health program for the provision of services.

(K) Funds shall be allocated to counties based on demonstrated need, including the number of youth in the county, the prevalence of substance use disorders among adults, and confirmed through statistical data, validated assessments or submitted reports prepared by the applicable county to demonstrate and validate need.

(L) The departments shall periodically evaluate the programs they are funding to determine the effectiveness of the programs.

(M) The departments may use up to 4 percent of the moneys allocated to the Youth Education, Prevention, Early Intervention and Treatment Account for administrative costs related to implementation, evaluation and oversight of the programs.

(N) If the Department of Finance ever determines that funding pursuant to cannabis taxation exceeds demand for youth prevention and treatment services in the state, the departments shall provide a plan to the Department of Finance to provide treatment services to adults as well as youth using these funds.

(O) The departments shall solicit input from volunteer health organizations, physicians who treat addiction, treatment researchers, family therapy and counseling providers, and professional education associations with relevant expertise as to the administration of any grants made pursuant to this paragraph.

(P) On or before July 10, 2023, the State Department of Health Care Services shall provide to the Legislature, pursuant to Section 9795 of the Government Code, a spending report of funds from the Youth Education, Prevention, Early Intervention and Treatment Account for the 2021–22 and 2022–23 fiscal years. On or before July 10, 2024, and annually thereafter, the State Department of Health Care Services shall provide to the Legislature, pursuant to Section 9795 of the Government Code, a spending report of funds from the Youth Education, Prevention, Early Intervention and Treatment Account for the prior fiscal year.

(2) Twenty percent shall be deposited in the Environmental Restoration and Protection Account, and disbursed by the Controller as follows:

(A) To the Department of Fish and Wildlife and the Department of Parks and Recreation for the cleanup, remediation, and restoration of environmental damage in watersheds affected by cannabis cultivation and related activities including, but not limited to, damage that occurred prior to enactment of this part, and to support local partnerships for this purpose. The Department of Fish and Wildlife and the Department of Parks and Recreation may distribute a portion of the funds they receive from the Environmental Restoration and Protection Account through grants for purposes specified in this paragraph.

(B) To the Department of Fish and Wildlife and the Department of Parks and Recreation for the stewardship and operation of state-owned wildlife habitat areas and state park units in a manner that discourages and prevents the illegal cultivation, production, sale and use of cannabis and cannabis products on public lands, and to facilitate the investigation, enforcement and prosecution of illegal cultivation, production, sale, and use of cannabis or cannabis products on public lands.

(C) To the Department of Fish and Wildlife to assist in funding the watershed enforcement program and multiagency taskforce established pursuant to subdivisions (b) and (c) of Section 12029 of the Fish and Game Code to facilitate the investigation, enforcement, and prosecution of these offenses and to ensure the reduction of adverse impacts of cannabis cultivation, production, sale, and use on fish and wildlife habitats throughout the state.

(D) For purposes of this paragraph, the Secretary of the Natural Resources Agency shall determine the allocation of revenues between the departments. During the first five years of implementation, first consideration should be given to funding purposes specified in subparagraph (A).

(E) Funds allocated pursuant to this paragraph shall be used to increase and enhance activities described in subparagraphs (A), (B), and (C), and not replace allocation of other funding for these purposes. Accordingly, annual General Fund appropriations to the Department of Fish and Wildlife and the Department of Parks and Recreation shall not be reduced below the levels provided in the Budget Act of 2014 (Chapter 25 of the Statutes of 2014).

(3) Twenty percent shall be deposited into the State and Local Government Law Enforcement Account and disbursed by the Controller as follows:

(A) To the Department of the California Highway Patrol for conducting training programs for detecting, testing, and enforcing laws against driving under the influence of alcohol and other drugs, including driving under the influence of cannabis. The department may hire personnel to conduct the training programs specified in this subparagraph.

(B) To the Department of the California Highway Patrol to fund internal California Highway Patrol programs and grants to qualified nonprofit organizations and local governments for education, prevention and enforcement of laws related to driving under the influence of alcohol and other drugs, including cannabis; programs that help enforce traffic laws, educate the public in traffic safety, provide varied and effective means of reducing fatalities, injuries and economic losses from collisions; and for the purchase of equipment related to enforcement of laws related to driving under the influence of alcohol and other drugs, including cannabis.

(C) To the Board of State and Community Corrections for making grants to local governments to assist with law enforcement, fire protection, or other local programs addressing public health and safety associated with the implementation of the Control, Regulate and Tax Adult Use of Marijuana Act. The board shall not make any grants to local governments that ban both indoor and outdoor commercial cannabis cultivation, or ban retail sale of cannabis or cannabis products pursuant to Section 26200 of the Business and Professions Code or as otherwise provided by law.

(D) For purposes of this paragraph, the Department of Finance shall determine the allocation of revenues between the agencies; provided, however, beginning in the 2022–23 fiscal year the amount allocated pursuant to subparagraph (A) shall not be less than ten million dollars ($10,000,000) annually and the amount allocated pursuant to subparagraph (B) shall not be less than forty million dollars ($40,000,000) annually. In determining the amount to be allocated before the 2022–23 fiscal year pursuant to this paragraph, the Department of Finance shall give initial priority to subparagraph (A).

(g) Funds allocated pursuant to subdivision (f) shall be used to increase the funding of programs and purposes identified and shall not be used to replace allocation of other funding for these purposes.

(h) Effective July 1, 2028, the Legislature may amend this section by majority vote to further the purposes of the Control, Regulate and Tax Adult Use of Marijuana Act, including allocating funds to programs other than those specified in subdivisions (d) and (f). Any revisions pursuant to this subdivision shall not result in a reduction of funds to accounts established pursuant to subdivisions (d) and (f) in any subsequent year from the amount allocated to each account in the 2027–28 fiscal year . Prior to July 1, 2028, the Legislature may not change the allocations to programs specified in subdivisions (d) and (f).

History—Added by Proposition 64, approved by voters at the November 8, 2016 election, in effect November 9, 2016. Stats. 2017, Ch. 27 (SB 94), in effect June 27, 2017, substituted "cannabis" for "marijuana" and deleted "Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code" throughout; substituted "the 2017-18 fiscal year" for "fiscal year 2017-2018" after "Beginning with" in the first sentence, substituted "the 2022-23 fiscal year" for "fiscal year 2022-2023" in paragraph (2), and substituted "Department of Finance" for "State Auditor" in paragraph (5), of subdivision (a); substituted "the 2018-19 fiscal year until the 2028-29 fiscal year" for "fiscal year 2018-19 until fiscal year 2028-2029" after "annually beginning" in the first sentence, substituted "adult-use cannabis" for "nonmedical marijuana" after "behavior from occurring in the" in paragraph (6), of subdivision (b); substituted "with the 2018-19 fiscal year until the 2022-23 fiscal year" for "fiscal year 2018-2019 until fiscal year 2022-2023" after "California Highway Patrol beginning" in the first sentence of subdivision (c); substituted "with the 2018-19 fiscal year" for "fiscal year 2018-2019" after "($10,000,000) beginning" and "the 2022-23 fiscal year" for "fiscal year 2022-2023" after "thereafter until" in the first sentence, and substituted "evaluation," for "evaluation" in the last sentence, of subdivision (d); substituted "center," for "center" after "objectives of the" in subdivision (e); substituted "the 2018-19 fiscal year" for "fiscal year 2018-2019" after "fiscal year beginning in" in the first sentence, substituted "fostercare" for "fostercare" after "faith-based organizations," in paragraph (1)(A), substituted "education," for "education" after "programs for outreach," in paragraph (1)(C), substituted "cooccuring" for "co-occurring" after "substance use and other" in the first sentence of (1)(E), substituted "assessments," for "assessments" after "statistical data, validated" in paragraph (1)(K), of subdivision (f); substituted "evaluation," for "evaluation" after "implementation," in paragraph (1)(M); substituted "sale," for "sale" after "cultivation, production," and substituted "enforcement," for "enforcement" after "facilitate the investigation" in paragraph (2)(B), substituted "prevention," for "prevention" after "governments for education," and "injuries," for "injuries" after "reducing fatalities," in paragraph (3)(B), substituted "the 2022-23 fiscal year" for "fiscal year 2022-2023" throughout paragraph (3)(D), in subdivision (f); and substituted "the 2027-28 fiscal year" for "the fiscal year 2027-2028" after "to each account in" in the second sentence of subdivision (h). Stats. 2020, Ch. 93 (AB 1872), in effect September 18, 2020, substituted "that ban both indoor and outdoor commercial cannabis cultivation, or ban" for "which banned the cultivation…the Health and Safety Code, or" after "any grants to local governments" in the second sentence of paragraph (3)(C) of subdivision (f). Stats. 2021, Ch. 70 (AB 141), in effect July 12, 2021, substituted "Department of Cannabis Control" for "bureau, the Department…Public Health" after "incurred by the" in the first sentence of paragraph (2), added paragraph (4), and renumbered former paragraphs (4) – (7) paragraphs (5) – (8), respectively, in subdivision (a); and substituted "Department of Cannabis Control" for "bureau" in the third sentence of subdivision (b). Stats. 2022, Ch. 56 (AB 195), in effect June 30, 2022, redesignated former sole paragraph of subdivision (a) as paragraph (a)(1); substituted "For each" for "Beginning with the 2017-18" before "fiscal year" in the first sentence of paragraph (a)(1), substituted "34011, 34011.2," for "34011" after "pursuant to Sections" in the first sentence, and substituted "Except as provided in paragraph (2), before" for "Before" before "any funds" and substituted "tax fund" for "Tax Fund" after "disburse from the" in the second sentence of paragraph (a)(1), redesignated former paragraphs (1) – (8) as subparagraphs (1)(A) – (1)(H), and added paragraph (2) to subdivision (a); and substituted "tax fund" for "Tax Fund" after "deposited in the" in subdivision (f). Stats. 2022, Ch. 394 (AB 2925), in effect January 1, 2023, substituted "anticompetitive" for "anti-competitive" after "unlawful monopolies or" in paragraph (6) of subdivision (b); substituted "short- and long-term" for "short and long term" after "public resources," in paragraph (7) of subdivision (b) and substituted "licenseholders" for "license holders" after "and gender, of" in paragraph (10) of subdivision (b); substituted "families," for "families" after "services for youth, their" in the third sentence of paragraph (1), substituted "trauma informed, evidence based, and that" for "trauma-informed, evidence-based and" after "gender competent," and substituted "medication," for "medication" after "treatments, psychiatric" in the first sentence of subparagraph (1)(E), substituted "caregivers," for "caregivers" after "foster parents," in the second sentence of subparagraph (1)(F), and added subparagraph (1)(P), and substituted "testing," for "testing" after "programs for detecting," in subparagraph (3)(A) of subdivision (f).

34019.01. Disposition of proceeds; additional requirements. Notwithstanding subdivision (f) of Section 34019, for the 2021–22 fiscal year, the 2022–23 fiscal year, and the 2023–24 fiscal year, after disbursing funds pursuant to subdivisions (a), (b), (c), (d), and (e) of Section 34019, by November 1 following the fiscal year, the Controller shall disburse funds deposited in the tax fund during the prior fiscal year into sub-trust accounts in an amount not to exceed the 2020–21 fiscal year baseline. Any amount of funds that exceeds the 2020–21 fiscal year baseline shall remain in the tax fund for that fiscal year and shall be disbursed, as follows:

(a) (1) For the 2021–22 fiscal year, by November 1, 2022, the Controller shall disburse from the tax fund, to the extent available, an amount necessary to enable funds disbursed to the sub-trust accounts for the 2021–22 fiscal year pursuant to subdivision (f) of Section 34019 and Section 34019.1 to be equal to the 2020–21 fiscal year baseline.

(2) For the 2022–23 fiscal year, by November 1, 2023, the Controller shall disburse, to the extent available, an amount necessary to enable funds disbursed to the sub-trust accounts for the 2022–23 fiscal year pursuant to subdivision (f) of Section 34019 and Section 34019.1 to be equal to the 2020–21 fiscal year baseline.

(3) For the 2023–24 fiscal year, by November 1, 2024, the Controller shall disburse, to the extent available, an amount necessary to enable funds disbursed to the sub-trust accounts for the 2023–24 fiscal year pursuant to subdivision (f) of Section 34019 and Section 34019.1 to be equal to the 2020–21 fiscal year baseline.

(b) On or before January 1, 2026, any remaining moneys in the tax fund retained pursuant to this section and any interest derived shall be disbursed to the sub-trust accounts pursuant to subdivision (f) of Section 34019.

History—Added by Stats. 2022, Ch. 56 (AB 195), in effect June 30, 2022.

34019.1. Fund appropriation. (a) In the 2022–23 fiscal year, the sum of ten thousand dollars ($10,000) is hereby appropriated from the General Fund for the purposes of this section. In the 2023–24 fiscal year, the sum of one hundred fifty million dollars ($150,000,000) is hereby appropriated from the General Fund, as specified in subdivision (b), for the purposes of this section. In no event shall any funds in excess of those amounts be transferred pursuant to this section. These funds shall be available for encumbrance or expenditure until June 30, 2025.

(b) Upon the order of the Department of Finance, the Controller shall make the following transfers from the General Fund, in an amount not to exceed one hundred fifty million dollars ($150,000,000) in fiscal years 2023–24 and 2024–25, cumulatively:

(1) By November 1, 2023, the Controller shall, subject to the limitation in subdivision (a), transfer from the General Fund an amount that would enable funds disbursed to the sub-trust accounts for the 2022–23 fiscal year, pursuant to subdivision (f) of Section 34019, Section 34019.01, and this paragraph, to be equal to the 2020–21 fiscal year baseline.

(2) By November 1, 2024, the Controller shall, subject to the limitation in subdivision (a), transfer from the General Fund an amount that would enable funds disbursed to the sub-trust accounts for the 2023–24 fiscal year, pursuant to subdivision (f) of Section 34019, Section 34019.01, and this paragraph, to be equal to the 2020–21 fiscal year baseline.

(c) This section shall remain in effect only until December 31, 2026, and as of that date is repealed.

History—Added by Stats. 2022, Ch. 56 (AB 195), in effect June 30, 2022.

34019.5. Contracts to Implement and administer youth substances abuse prevention programs. Contracts entered into or amended by the State Department of Health Care Services to implement and administer the programs identified in paragraph (1) of subdivision (f) of Section 34019 shall be exempt from Chapter 6 (commencing with Section 14825) of Part 5.5 of Division 3 of Title 2 of the Government Code, Section 19130 of the Government Code, Part 2 (commencing with Section 10100) of Division 2 of the Public Contract Code, shall be exempt from the State Administrative Manual, and shall not be subject to the review or approval of any division of the Department of General Services.

History—Added by Stats. 2019, Ch. 40 (AB 97), in effect January 1, 2020.

34020. Tax fund audit. The Controller shall periodically audit the Tax Fund to ensure that those funds are used and accounted for in a manner consistent with this part and as otherwise required by law.

History—Added by Proposition 64, approved by voters at the November 8, 2016 election, in effect November 9, 2016.

34020.1. Report. (a) On or before March 1, 2025, the Department of Cannabis Control, in consultation with the Department of Finance and the California Department of Tax and Fee Administration, shall submit a report to the Legislature on the condition and health of the cannabis industry in the state. The report shall include, but is not limited to, the following information:

(1) How many local jurisdictions have permitted commercial cannabis activity.

(2) How many local jurisdictions have not permitted commercial cannabis activity.

(3) Information or analysis concerning the potential expansion or contraction of the cannabis market in the state, which may include information concerning any increase in retail cannabis sales and activity in the illicit market.

(4) How many equity licensees have been approved by the Department of Cannabis Control.

(5) In what counties the state equity licensees located.

(6) The health of the Cannabis Tax Fund, and any future projections of Cannabis Tax Fund revenues.

(7) Information on the viability of cannabis businesses in the state, and the ability to continue to operate cannabis businesses in the state, from a general and equity licensee standpoint.

(8) The impacts of the suspension of the cultivation tax imposed by paragraph (2) of subdivision (a) of Section 34012, including whether that suspension resulted in a decrease in retail cannabis prices or increased participation in the legal cannabis market.

(b) The report may include recommendations to strengthen the state’s legal cannabis market.

(c) The Department of Cannabis Control may contract with a public university or universities in California to prepare the report. Subject to approval by the Department of Cannabis Control, the university or universities may contract with other organizations in connection with the report.

(d) The Department of Cannabis Control may consolidate this report with any other reports required under Division 10 (commencing with Section 26000) of the Business and Professions Code.

History—Added by Stats. 2022, Ch. 56 (AB 195), in effect June 30, 2022.

34021. Local preemption. The taxes imposed by this part shall be in addition to any other tax imposed by a city, county, or city and county.

History—Added by Proposition 64, approved by voters at the November 8, 2016 election, in effect November 9, 2016.

34021.5. Local tax authorization. (a) (1) A county may impose a tax on the privilege of cultivating, manufacturing, producing, processing, preparing, storing, providing, donating, selling, or distributing cannabis or cannabis products by a licensee operating under Division 8 or Division 10 (commencing with Section 26000) of the Business and Professions Code.

(2) The board of supervisors shall specify in the ordinance proposing the tax the activities subject to the tax, the applicable rate or rates, the method of apportionment, if necessary, and the manner of collection of the tax. The tax may be imposed for general governmental purposes or for purposes specified in the ordinance by the board of supervisors.

(3) In addition to any other method of collection authorized by law, the board of supervisors may provide for the collection of the tax imposed pursuant to this section in the same manner, and subject to the same penalties and priority of lien, as other charges and taxes fixed and collected by the county. A tax imposed pursuant to this section is a tax and not a fee or special assessment. The board of supervisors shall specify whether the tax applies throughout the entire county or within the unincorporated area of the county.

(4) The tax authorized by this section may be imposed upon any or all of the activities set forth in paragraph (1), as specified in the ordinance, regardless of whether the activity is undertaken individually, collectively, or cooperatively, and regardless of whether the activity is for compensation or gratuitous, as determined by the board of supervisors.

(b) A tax imposed pursuant to this section shall be subject to applicable voter approval requirements imposed by law.

(c) This section is declaratory of existing law and does not limit or prohibit the levy or collection of any other fee, charge, or tax, or a license or service fee or charge upon, or related to, the activities set forth in subdivision (a) as otherwise provided by law. This section shall not be construed as a limitation upon the taxing authority of a county as provided by law.

(d) This section shall not be construed to authorize a county to impose a sales or use tax in addition to the sales and use taxes imposed under an ordinance conforming to the provisions of Sections 7202 and 7203 of this code.

History—Added by Proposition 64, approved by voters at the November 8, 2016 election, in effect November 9, 2016. Stats. 2017, Ch. 27 (SB 94), in effect June 27, 2017, substituted "cannabis" for "marijuana" and deleted "Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code" in paragraph (1) of subdivision (a); substituted "taxes" for "tax" after "the sales and use" and substituted "this code" for "the Revenue and Taxation Code" after "7202 and 7203" in subdivision (d).